HUMAN RESOURCE MANAGEMENT

Definition of Human Resource Management

Human resource management (HRM) is a strategic, integrated and coherent approach to the
employment, development and well-being of the people working in organizations.
Human Resource Management (HRM) is a relatively new approach to managing people in any
organization. People are considered the key resource in this approach. It is concerned with the
people dimension in management of an organization. Since an organization is a body of people,
their acquisition, development of skills, motivation for higher levels of attainments, as well as
ensuring maintenance of their level of commitment are all significant activities. These activities
fall in the domain of HRM.
Human Resource Management is a process, which consists of four main activities, namely,
acquisition, development, motivation, as well as maintenance of human resources.
Other definitions of HRM:
 Human resource management involves all management decisions and action that affect
the nature of the relationship between the organization and its employees – its human
resources. (Beer et al, 1984)
 HRM comprises a set of policies designed to maximize organizational integration,
employee commitment, flexibility and quality of work. (Guest, 1987)
 Scott, Clothier and Spiegel have defined Human Resource Management as that branch of
management which is responsible on a staff basis for concentrating on those aspects of
operations which are primarily concerned with the relationship of management to
employees and employees to employees and with the development of the individual and
the group.

 Human Resource Management is responsible for maintaining good human relations in the
organization. It is also concerned with development of individuals and achieving integration of
goals of the organization and those of the individuals.

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 Northcott considers human resource management as an extension of general management,
that of prompting and stimulating every employee to make his fullest contribution to the
purpose of a business. Human resource management is not something that could be separated
from the basic managerial function. It is a major component of the broader managerial
function.

 French Wendell defines ―Human resource management as the recruitment, selection,

development, utilization, compensation and motivation of human resources by the
organization.

 According to Edwin B. Flippo, Human resource management is the planning, organizing,

directing and controlling of the procurement, development, resources to the end that
individual and societal objectives are accomplished‖. This definition reveals that
o Human resource (HR) management is that aspect of management, which deals with
the planning, organizing, directing and controlling the personnel functions of the
enterprise.
1.2 Importance Of HRM
Human Resource Management has a place of great importance. According to Peter F. Drucker,
The proper or improper uses of the different factors of production depend on the wishes of the
human resources. Hence, besides other resources human resources need more development.
Human resources can increase cooperation but it needs proper and efficient management to guide
it.
Importance of personnel management is in reality the importance of labor functions of personnel
department which are indispensable to the management activity itself. Because of the following
reasons human resource management holds a place of importance.
1. It helps management in the preparation adoption and continuing evolution of
personnel programs and policies.

2. It supplies skilled workers through scientific selection process.

3. It ensures maximum benefit out of the expenditure on training and development and
appreciates the human assets.

4. It prepares workers according to the changing needs of industry and environment.

5. It motivates workers and upgrades them so as to enable them to accomplish the

organization goals.

6. Through innovation and experimentation in the fields of personnel, it helps in

reducing casts and helps in increasing productivity.

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 7. It contributes a lot in restoring the industrial harmony and healthy employer-
employee relations.

8. It establishes mechanism for the administration of personnel services that are

delegated to the personnel department.
Thus, the role of human resource management is very important in an organization and it should
not be undermined especially in large scale enterprises. It is the key to the whole organization
and related to all other activities of the management i.e., marketing, production, finance etc.
Human Resource Management is concerned with the managing people as an organizational
resource rather than as factors of production. It involves a system to be followed in business firm
to recruit, select, hire, train and develop human assets. It is concerned with the people dimension
of an organization. The attainment of organizational objectives depends, to a great extent, on the
way in which people are recruited, developed and utilized by the management. Therefore, proper
co-ordination of human efforts and effective utilization of human and others material resources is
necessary.
1.3. Growth and Evolution of HRM

The terms ‗human resource management‘ (HRM) and ‗human resources‘ (HR) have virtually
replaced the term ‗personnel management‘ as a description of the processes involved in man-
aging people in organizations, although what is now described as HRM is in practice often
synonymous with what used to be described as personnel management. In the early days of HRM
it was suggested by Armstrong (1987) that:
HRM is regarded by some personnel managers as just a set of initials or old wine in new
bottles. It could indeed be no more and no less than another name for personnel
management, but as usually perceived, at least it has the virtue of emphasizing the virtue
of treating people as a key resource, the management of which is the direct concern of top
management as part of the strategic planning processes of the enterprise. Although there is
nothing new in the idea, insufficient attention has been paid to it in many organizations.
However, commentators such as Guest (1987) and Storey (1995) regard HRM as a substantially
different model built on unitarism (employees share the same interests as employers),
individualism, high commitment and strategic alignment (integrating HR strategy with the
business strategy). It is claimed that HRM is more holistic than traditional personnel
management. HRM has also emphasized the notion that people should be regarded as assets
rather than variable costs.

1.3.1 Human Resource Environment

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Environment of HRM refers to the aggregate of conditions, events and influences that surround
and affect it. Following are the external and internal environment in which the HRM has to
function.

1. External Environment : - Economic, political, technological and demographic factors include

the external environment.

2. Internal Environment : - Internal environment comprises of the factors which affect an

organization‘s human resources from inside the organization‘s boundaries. Mission, HR policies,
organization culture, HR system etc. are the variable of HR internal environment.

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 1.4. Major Human Resource Management Functions
Human resource management functions are the set of activities performed in utilizing human
resources for better achievement of organizational objectives. Following are the major elements
(Mondy & Noe, 1990):
1. Human Resource planning

Human resource planning (HRP) is the process of systematically reviewing human

resource requirements to ensure that the required numbers of employees, with the
required skills, are available when they are needed HRP is the process of matching the
internal and external supply of people with job openings anticipated in the organization
over a specified period of time.

2. Recruitment

Recruitment is the process of attracting in individuals in sufficient numbers and

encouraging them to apply for jobs with the organization. It is the process of identifying
and attracting a pool of candidates, from which some will later be selected to receive
employment offers.

3. Selection

Selection is the process of choosing from a group of applicants the individual’s best
suited for a particular position. Whereas recruitment encourages individuals to seek
employment with a firm, the purpose of the selection process is to identify and employ
the best qualified individuals for specific positions.

4. Orientation

Orientation is the formal process of familiarizing new employees with the organization,
their job, and their work unit. Through orientation (also called socialization or induction)
new employees will acquire the knowledge, skills, and attitudes that make them

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 successful members of the organization.

5. Training and Development

Training and development aim to increase employee‘s ability to contribute to

organizational effectiveness. Training is a process designed to maintain or improve
performance (skills) in the present job. Development is a program designed to develop
skills necessary for future work activities. It is designed to prepare employees for
promotion.

6. Compensation Administration

Compensation administration refers to the administration of every type of reward that

individuals receive in return for their services. In its boarder sense, compensation
represents al sorts of rewards that individuals receive as a result of their employment.

7. Performance Evaluation

Performance evaluation is a formal system of periodic review and evaluation of an

individual‘s job performance.

8. Safety and health

Safety involves protecting employees from injuries caused by work related accidents.
Health refers to the employee‘s freedom from illness and their genera physical and
mental well – being. These aspects of the job are important because employees who work
in a safe environment and enjoy good health are more likely to be productive and yield
long – term benefits to the organization

9. Promotion, transfers, demotion and separations

Promotions, transfers, demotions, and separations reflects an employee‘s value to the

organization. High performers may be promoted or transferred to help them development
their skills, while low performers may be demoted, transferred, transferred to lees
important positions, or even separated.

10. Human Resource research

Human resource research is a systematic gathering recording, analyzing and

interpretation of data for guiding human resource management decisions. Every human
resource management function needs effective research.

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11. Other areas such as employee and labor relation, collective bargaining, employee
rights and discipline, retirement are also concerns of human resource management

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 CHAPTER TWO
HUMAN RESOURCE PLANNING

2.1 Definition

Human Resource Planning is concerned with the planning the future manpower requirements are the
organization. HR manager ensures that the company has the right type of people in the right number
at the right time and place, who are trained and motivated to do the right kind of work at the right
time. Obviously, human resource planning primarily makes appropriate projections for future
manpower needs of the organization envisages plan for developing the manpower to suit the
changing needs of the organization from time to time, and foresees how to monitor and evaluate the
future performance. It also includes the replacement plans and managerial succession plans.
Human Resource planning is the process by which a management determines how an organization
should move from its current manpower position to its desired manpower position. Through
planning a management strives to have the right number and the right kinds of people at the right
places, at the right time, to do things which result in both the organization and the individual
receiving the maximum long-range benefit.
Definitions of Human Resource Planning:
1. Coleman has defined Human Resource Planning as ―the process of determining manpower
requirements and the means for meeting those requirements in order to carry out the integrated
plan of the organization.

2. According to Wikstrom, Human Resource Planning consists of a series of activities, such as:

a. Forecasting future manpower requirements, either in terms of mathematical projections of

trends in the economic environment and developments in industry, or in terms of
judgmental estimates based upon the specific future plans of a company;

b. Making an inventory of present manpower resources and assessing the extent to which
these resources are employed optimally;
c. Anticipating manpower problems by projecting present resources into the future and
comparing them with the forecast of requirements to determine their adequacy, both
quantitatively and qualitatively; and

d. Planning the necessary programs of requirements, selection, training, development,

utilization, transfer, promotion, motivation and compensation to ensure that future manpower
requirements are properly met.
Coleman has defined Human Resource Planning as ―the process of determining manpower
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requirements and the means for meeting those requirements in order to carry out the integrated plan
of the organization.
Human resource planning is a double-edged weapon. If used properly, it leads to the maximum
utilization of human resources, reduces excessive labor turnover and high absenteeism; improves
productivity and aids in achieving the objectives of an organization. Faultily used, it leads to
disruption in the flow of work, lower production, less job satisfaction, high cost of production and
constant headaches for the management personnel. Therefore, for the success of an enterprise,
human resource planning is a very important function, which can be neglected only at its own peril.
1.2 HRP Process
Human resource planning refers to a process by which companies ensure that they have the right
number and kinds of people at the right place, at the right time; capable of performing different
jobs efficiently. Planning the use of human resources is an important function in every
organization. A rational estimate to various categories of personnel in the organization is an
important aspect of human resource planning.
HRP involves the following steps:
1. Analysis of Organizational Plans and Objectives: Human resource planning is a part of overall
plan of organization. Plans concerning technology, production, marketing, finance, expansion
and diversification give an idea about the volume of future work activity. Each plan can further
be analyzed into sub-plans and detailed programs. It is also necessary to decide the time horizon
for which human resource plans are to be prepared. The future organization structure and job
design should be made clear and changes in the organization structure should be examined so as
to anticipate its manpower requirements.

2. Forecasting Demand for Human Resources: Human resource planning starts with the estimation
of the number and type of personnel required at different levels and in different departments.
The main steps involved in HRP process are:

a. to determine and to identify present and prospective needs of human resource,

b. to discover and recruit the required number of persons.

c. to select the right number and type from the available people.

d. to hire and place in the positions for which they are qualified,
e. to provide information to the selected people about the nature of work assigned to them,

f. to Promote or to transfer as per the needs and the performance of employees,

g. to denote if the employees are disinterested or their performance is not up to the mark,
h. to terminate if they are not needed or their performance is below standard and shows no
hopes of improvement.
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 It is the most crucial and critical area of HRD. These HRD managers must pay attention to place
right man to the right job through recruitment selection Training and Placement of employees.
This calls for the adoption of a systematic procedure to complete recruitment and selection.
3. Forecasting Supply of Human Resources : One of the important areas of human resources
planning is to deal with allocation of persons to different departments depending upon the

work-load and requirements of the departments. While allocating manpower to different

departments, care has to be taken to consider appointments based on promotions and transfers.
Allocation of human resource should be so planned that available manpower is put to full use to
ensure smooth functioning of all departments.
4. Estimating Manpower Gaps: Net human resource requirements or manpower gaps can be
identified by comparing demand and supply forecasts. Such comparison will reveal either deficit or
surplus of human resources in future. Deficits suggest the number of persons to be recruited from
outside whereas surplus implies redundant to be redeployed or terminated. Similarly, gaps may
occur in terms of knowledge, skills and aptitudes. Employees deficient in qualifications can be
trained whereas employees with higher skills may be given more enriched jobs.
5. Matching Demand and Supply : It is one of the objectives of human resource planning to assess
the demand for and supply of human resources and match both to know shortages and surpluses
on both the side in kind and in number. This will enable the human resource department to know
overstaffing or understaffing. Once the manpower gaps are identified, plans are prepared to
bridge these gaps.
6. Redeployment in other departments and retrenchment in consultation, with the trade unions.
People may be persuaded to quit through voluntarily retirement. Deficit can be met through
recruitment, selection, transfer, promotion, and training plans. Realistic plans for the procurement
and development of manpower should be made after considering the macro and micro environment
which affect the manpower objectives of the organization.

1.3. Job Analysis

Job Analysis is a procedure, by which pertinent information is obtained about a job, i.e., it is a
detailed and systematic study of information relating to the operation and responsibilities of a spec
ific job. An authority has defined job analysis as ―the process of determining, by observation and
study, and reporting pertinent information relating to the nature of a specific job... ―It is the
determination of the tasks which comprise the job and of the skills, knowledge, abilities and
responsibilities required of the worker for a successful performance and which differentiate one job
from all others.
Information provided by Job Analysis Job analysis provides the following information:
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1. Job Identification : Its title, including its code number;

2. Significant Characteristics of a Job : It location, physical setting, supervision, union jurisdiction,

hazards and discomforts;

3. What the Typical Worker Does : Specific operation and tasks that make up an assignment, their
relative timing and importance, their simplicity, routine or complexity, the responsibility or
safety of others for property, funds, confidence and trust;

4. Which Materials and Equipment a Worker Uses : Metals, plastics, grains, yarns, milling
machines, punch presses and micrometers;

5. How a Job is Performed : Nature of operation - lifting, handling, cleaning, washing, feeding,
removing, drilling, driving, setting-up and many others;

6. Required Personal Attributes : Experience, training, apprenticeship, physical strength, co-

ordination or dexterity, physical demands, mental capabilities, aptitudes, social skills;

7. Job Relationship: Experience required, opportunities for advancement, patterns of promotions,

essential co-operation, direction, or leadership from and for a job.
1.4. Sources of information for job analysis
According to George R. Terry, ―the make-up of a job, its relation to other jobs, and its
requirements for competent performance are essential information needed for a job analysis
Information on a job may be obtained from three principal sources :
a. From the employees who actually perform a job;

b. From other employees such as supervisors and foremen who watch the workers doing a job and
thereby acquire knowledge about it; and

c. From outside observers specially appointed to watch employees performing a job. Such outside
persons are called the trade job analysts. Sometimes, special job reviewing committees are also
established.
Methods of Job Analysis
Four methods or approaches are utilized in analyzing jobs. These are:
1. Personal Observation: The materials and equipment used, the working conditions and
probable hazards, and an understanding of what the work involves are the facts which
should be known by an analyst.

2. Sending out of Questionnaires: This method is usually employed by engineering

consultants. Properly drafted questionnaires are sent out to job-holders for

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 completion and are returned to supervisors. However, the information received is often
unorganized and incoherent. The idea in issuing questionnaire is to elicit the necessary
information from job-holders so that any error may first be discussed with the employee
and, after due corrections, may be submitted to the job analyst.

3. Maintenance of Long Records: The employee maintains a daily record of duties he

performs, marking the time at which each task is started and finished. But this system is
incomplete, for it does not give us any desirable data on supervisor relationship, the
equipment used, and working conditions. Moreover, it is time-

consuming.

4. Personal Interviews may be held by the analyst with the employees, and answers to
relevant questions may be recorded. But the method is time-consuming and costly.

1.5.1. Importance of Job Analysis

A comprehensive job analysis program is an essential ingredient of sound personnel
management. It is fundamental to manpower management program because the results of job
analysis are widely used throughout the programs. The information provided by job analysis is
useful, if not essential, in almost every phase of employee relations.
1. Organization and Manpower Planning: It is helpful in organizational planning for it defines labor
needs in concrete terms and coordinates the activities of the work force, and clearly divides
duties and responsibilities.
2. Recruitment and Selection: By indicating the specific requirements of each job (i.e., the skills
and knowledge), it provides a realistic basis for hiring, training, placement, transfer and
promotion of personnel.

3. Wage and Salary Administration : By indicating the qualifications required for doing

specified jobs and the risks and hazards involved in its performance, it helps in salary

and wage administration. Job analysis is used as a foundation for job evaluation.

4. Job Re-engineering : Job analysis provides information which enables us to change jobs

in order to permit their being manned by personnel with specific characteristics and

qualifications. This takes two forms:

a. Industrial Engineering Activity, which is concerned with operational analysis, motion
study, work simplification methods and improvements in the place of work and its

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 measurement, and aims at improving efficiency, reducing unit labour costs, and
establishing the production standard which the employee is expected to meet; and
b. Human Engineering Activity, which takes into consideration human capabilities, both
physical and psychological, and prepares the ground for complex operations of
industrial administration, increased efficiency and better productivity.

5. Employee Training and Management Development: Job analysis provides the necessary
information to the management of training and development programs. It helps it to determine
the content and subject-matter of in-training courses. It also helps in checking application
information, interviewing, weighing test results, and in checking references.

6. Performance Appraisal: It helps in establishing clear-cut standards which may be compared with
the actual contribution of each individual.

7. Health and Safety: It provides an opportunity for identifying hazardous conditions and
unhealthy environmental factors so that corrective measures may be taken to minimize and
avoid the possibility of accidents.

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 CHAPTER THREE
RECRUITMENT AND SELECTION
3.1. Definition of Recruitment
Recruitment means search of the prospective employee to suit the job requirements as
represented by job specification–a technique of job analysis. It is the first stage in selection
which makes the vacancies known to a large number of people and the opportunities that the
organization offers. In response to this knowledge, potential applicants would write to the
organization. The process of attracting people to apply in called recruitment.
Dale S. Beach has defined ―Recruitment as the development and maintenance of an adequate
power resource. It involves the creation of a pool of available labor upon whom the organization
can depend when it needs additional employees.
According to Edwin B. Flippo: Recruitment is the process of searching for prospective
employees and stimulating them to apply for jobs in the organization.

3.1.1. Factors Affecting Recruitment

The recruitment function of the organizations is affected and governed by a mix of various
internal and external forces. The internal forces or factors are the factors that can be controlled
by the organization. And the external factors are those factors which cannot be controlled by the
organization. The internal and external forces affecting recruitment function of an organization
are:
1. Internal Factors Affecting Recruitment
The internal forces i.e. the factors which can be controlled by the organization are:
1. Recruitment Policy: The recruitment policy of an organization provides a framework for
implementation of recruitment program by taking into consideration the following factors
a) Factors Affecting Recruitment Policy

i. Organizational objectives

ii. Personnel policies of the organization and its competitors

iii. Government policies on reservations

iv. Preferred sources of recruitment

v. Need of the organization

vi. Recruitment costs and financial implications

b) Human Resource Planning: Effective human resource planning helps in determining the
gaps in the existing manpower of the organization. It also helps in determining the
number of employees to be recruited and the qualifications they should possess.
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 c) Size of the Firm: The size of the firm is an important factor in recruitment process. If the
organization is planning to increase its operations and expand its business, it will think of
hiring more personnel, which will handle its operations.

d) Growth and Expansion: Organization will employ or think of employing more personnel
if it is expanding its operations.

2. External Factors Affecting Recruitment

The external factors are the forces which cannot be controlled by the organization. The major
external forces are:
a) Supply and Demand: The availability of manpower both within and outside the
organization is an important determinant in the recruitment process. If the company has a
demand for more professionals and there is limited supply in the market for the
professionals demanded by the company, then the company will have to depend upon
internal sources by providing them special training and development programs.

b) Labor Market: Employment conditions in the community where the organization is

located will influence the recruiting efforts of the organization. If there is surplus
manpower at the time of recruitment, even informal attempts at the time of recruiting like
notice boards display of the requisition or announcement in the meeting etc will attract
more than enough applicants.

c) Image/Goodwill: Image of the employer can work as a potential constraint for

recruitment. An organization with positive image and goodwill finds it easier to attract
and retain employees than an organization with negative image. Image of a company is
based on what organization does and affected by industry.

d) Political, Social and Legal Environment: Various government regulations

prohibiting discrimination in hiring and employment have direct impact on recruitment
practices. For example, Government of India has introduced legislation for reservation
in employment for scheduled castes, scheduled tribes, physically handicapped etc. Also,
trade unions play an important role in recruitment. This restricts management‘s freedom
to select those individuals who it believes would be the best performers. If the candidate
can‘t meet criteria stipulated by the union but union regulations can restrict recruitment
sources.

e) Unemployment Rate: One of the factors that influences the availability of applicants is
the growth of the economy (whether economy is growing or not and its rate). When the
company is not creating new jobs, there is often over supply of qualified labor which in
turn leads to unemployment.
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 f) Competitors: The recruitment policies of the competitors also affect the recruitment
function of the organizations. To face the competition, many a times the organizations
have to change their recruitment policies according to the policies being followed by the
competitors.

3.2. Sources of Recruitment:

The various sources of recruitment are generally classified as internal source and external
source.
1. Internal Sources: This refers to the recruitment from within the company. The various
internal sources are:

1. Transfers: The employees are transferred from one department to another according to
their efficiency and experience.

2. Promotions: The employees are promoted from one department to another with more
benefits and greater responsibility based on efficiency and experience

3. Others: Others are Upgrading and Demotion of present employees according to their
performance. Retired and Retrenched employees can be a source of recruitment.
Recruiting such people saves time and costs of the organizations as the people are
already aware of the organizational culture, policies and procedures. Dependents and
relatives of

deceased employees and disabled employees are also considered by many companies so
that members of the deceased member‘s family are not at the mercy of others.
1) External Sources: External sources refer to the practice of getting suitable persons from
outside. The various external sources are advertisement, employment exchange, past
employees, private placement agencies and consultants, walks-ins, campus recruitment, trade
unions, etc
The following external sources of recruitment are commonly used by the big enterprises:

1. Direct Recruitment: An important source of recruitment is direct recruitment by placing

a notice on the notice board of the enterprise specifying the details of the jobs available. It is also
known as recruitment at factory gate. The practice of· direct recruitment is generally followed for
filling casual vacancies requiring unskilled workers. Such workers are known as casual or bad
workers and they are paid remuneration on daily-wage basis. This method of recruitment is very
cheap as it does not involve any cost of advertising vacancies.
2. Casual Callers or Unsolicited Applications: The organizations which are regarded as
good employers draw a steady stream of unsolicited applications in their offices. This

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 serves as a valuable source of manpower. If adequate attention is paid to maintain
pending application folders for various jobs, the personnel department may find the
unsolicited applications useful in filling the vacancies whenever they arise. The merit of
this source of recruitment is that it avoids the costs of recruiting workforce from other
sources.
3. Media Advertisement: Advertisement in newspapers or trade and professional journals is
generally used when qualified and experienced personnel are not available from other
sources. Most of the senior positions in industry as well as commerce are filled by this
method. The advantage of advertising is that more information about the organization job
descriptions and job specifications can be given in advertisement to allow self-screening
by the prospective candidates. Advertisement gives the management a wider range of
candidates from which to choose. Its disadvantage is that is may bring in a flood of
response, and many times, from quite unsuitable candidates.

4. Employment Agencies: Employment exchanges run by the Government are regarded as a

good source of recruitment for unskilled, semi-skilled and skilled operative jobs. In some
cases, compulsory notification of vacancies to the employment exchange is required by
law. Thus, the employment exchanges bring the jobs givers in contact with the job seekers.

However, in the technical and professional area, private agencies and professional bodies
appear to be doing most of the work. Employment exchanges and selected private
agencies provide a nation-wide service in attempting to match personnel demand and
supply.

5. Management Consultants: Management consultancy firms help the organizations to recruit

technical, professional and managerial personnel they specialize middle level and top level
executive placements. They maintain data bank of persons with

different qualifications and skills and even advertise the jobs on behalf their clients to
recruit right type of personnel.
6. Educational Institutions or Campus Recruitment: Jobs in commerce and industry have
become increasing technical and complex to the point where school and college degrees are
widely required. Consequently big organizations maintain a close liaison with the universities,
vocational institutes and management institutes for recruitment to various jobs.

Recruitment from educational institutional is a well established practice of thousand of

business and other organisations.1t is also known as campus recruitment. Reputed
industrial houses which require management trainees send their officials to campuses of
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 various management institutes for picking up talented candidates doing MBA.
7. Recommendation: Applicants introduced by friends and relatives may prove to be a good
source of recruitment. In fact, many employers prefer to take such persons because
something about their background is known. When a present-employee or a business
friend recommends someone for a job, a type of preliminary screening is done and the
person is placed on a job.

8. Labour Contractors: Labour contractors are an important source of recruitment in some

industries in India. Workers are recruited through labour contractors who are
themselves employees of the organization. The disadvantage of this system is that if the
contractor leaves the organization, all the workers, employed through him will also leave
That is why this source of labour is not preferred by many businesses, organizations.
Recruitment through labour contractors has been banned for the public sector units.
9. Telecasting: The practice of telecasting of vacant posts over T.V. is gaining importance
these days. Special programs like ‗Job Watch‗, ‗Youth Pulse‗, Employment News‗, etc,
over the T.V have become quite popular in recruitment for various types of jobs. The
detailed requirements of the job and the qualities required to do it are publicized along
with the profile of the organization where vacancy exists. The use of T.V. as a source of
recruitment is less as compared to other sources.

10. Raiding: Raiding is a technical term used when employees working elsewhere are
attracted to join organizations. The organizations are always on the lookout for qualified
professionals, and are willing to offer them a better deal if they make the switch. There are
always some employees who are professionally very competent, but dissatisfied with
something or the other in the organization. They form the ‗easy‗ group to attract. The
other group is formed of those who are equally competent but are quite satisfied with their
present position. To attract them, the organization has to offer a very lucrative package of
perquisites. Whatever may be the means used to attract, often it is seen as an unethical
practice and not openly talked about.

Merits of external sources

The merits of external sources of recruitment are as under:
1. Qualified Personnel: By using external sources of recruitment the management can make
qualified and trained people to apply for vacant Jobs in the organisation.

2. Wider choice: When vacancies are advertised widely a large number of applicants from
outside the organisation apply. The management has a wider choice while selecting the
people for employment.
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 3. Fresh Talent: The insiders may have limited talents. External sources facilitate infusion of
fresh blood with new ideas into the enterprise. This will improve the overall working of
the enterprise.

4. Competitive Spirit: If a company can tap external sources, the existing staff will have to
compete with the outsiders. They will work harder to show better performance.
Demerits of External Sources
The demerits of filling vacancies from external sources are as follows:
1. Dissatisfaction among Existing Staff: External recruitment may lead to dissatisfaction
and frustration among existing employees. They may feel that their chances of promotion
are reduced.

2. Lengthy Process: Recruitment from outside takes a long time. The business has to notify
the vacancies and wait for applications to initiate the selection process.

3. Costly Process: It is very costly to recruit staff from external sources. A lot of money has
to be spent on advertisement and processing of applications.

4. Uncertain Response: The candidates from outside may not be suitable for the enterprise.
There is no guarantee that the enterprise will be able to attract right kinds of people from external
sources.
3.3. Definition of Selection

To select means to choose. Selection is a part of the recruitment function. It is the process of
choosing people by obtaining and assessing information about the applicants (age, qualification,
experience and qualities) with a view of matching these with the job requirements and picking up
the most suitable candidates. The choices are made by elimination of the unsuitable at successive
stages of the selection process.
Criteria of Selection
Selection decisions are usually based on how an applicant is rated (rather, predicted) in terms of
the likelihood of success on the job. The information used found in the application blanks,
performance in one or more tests and the interview(s). The criteria of selection needs to be
critical to the job. The key job dimensions identified in job analysis and job description provide
the basis for determining relevant criteria.
Frequently educational qualifications, technical skills and achievements are used as the basis for
selection. But is there a statistical relationship between such requirements and job performance?
It appears that certain job requirements can be measured more easily and accurately than certain
others. The core job skills like sensory motor‗ skills and manipulative skills and achievement
19
can be measured relatively more accurately than one’s aptitude, interest and personality traits.
Integrity loyalty, initiative/drive/resourcefulness and intelligence/mental alertness are the key att
ributes influencing the selection of managerial employees. Have relatively less pressure to
defend the criteria.
Selection Procedure
When a market research firm is recruiting research investigators on temporary basis for a specific
assignment it may ask the candidates to appear for interview along with written application form
in the next two days following the date of advertisement and make job offers immediately after
the interview without any other tests or references.
The aim of selection is to assess the suitability of candidates by predicting the extent to which
they will be able to carry out a role successfully. It involves deciding on the degree to which the
characteristics of applicants in terms of their competencies, experience, qualifications, education
and training match the person specification. It also involves using this assessment to make a
choice between candidates.
The selection process covers the period from the job specification and initial contact with the
applicant to his final acceptance or rejection. The successive stages in the selection process are
referred to as hurdles that the applicants should cross. Not all selection processes, however,
include all these stages. The complexity of the selection process usually increases

with the increase in the skill level and job level (responsibility and accountability) of the

position for which selection is being made. The sequencing of the hurdles also may vary

from job to job and organization to organization. When a market research firm is recruiting

research investigators on temporary basis for a specific assignment it may ask the
candidates to appear for interview along with written application form in the next two
days following the date of advertisement and make job offers immediately after the
interview without any other tests or references.

When the vacancy or vacancies have been advertised and a fair number of replies received, the
typical sequence of steps required to process applications is as follows:
1. List the applications on a control sheet setting out name, date application received and
actions taken (reject, hold, interview, short-list, and offer).

2. Send a standard acknowledgement letter to each applicant unless an instant decision can
be made to interview or reject.

3. The applicant may be asked to complete and return an application form by post or by e-

20
mail to supplement a letter or CV. This ensures that all applicants are considered on the same
basis – it can be very difficult to plough through a pile of letters, often ill-written and badly
organized. Even CVs may be difficult to sift although their quality is likely to be higher if the
applicant has been receiving advice from an ‗outplacement‘consultant, i.e. one who specializes
in finding people jobs. However, to save time, trouble, expense and irritation, many recruiters
prefer to make a decision on the initial letter plus CV where it is quite clear that an applicant
meets or does not meet the specification, rather than ask for a form. For more senior jobs it is
generally advisable to ask for a CV.
4. Compare the applications with the key criteria in the person specification and sort them
initially into three categories: possible, marginal and unsuitable.

5. Scrutinize the possible again to draw up a short-list for interview. This scrutiny could be
carried out by the HR or recruitment specialist, and the manager. The numbers on the
short-list should ideally be between four and eight. Fewer than four leaves relatively little
choice (although such a limitation may be forced on you if an insufficient number of
good applications have been received). More than eight will mean that too much time is
spent on interviewing and there is a danger of diminishing returns setting in.

6. Draw up an interviewing program. The time you should allow for the interview will vary
according to the complexity of the job. For a fairly routine job, 30 minutes or so should
suffice. For a more senior job, 60 minutes or more is required. It is best not to schedule
too many interviews in a day – if you try to carry out more than five or six exacting
interviews you will quickly run out of steam and do neither the interviewee nor your
company any justice. It is advisable to leave about 15 minutes between interviews to
write up notes and prepare for the next one.

7. Invite the candidates to interview, using a standard letter where large numbers are
involved. At this stage, candidates should be asked to complete an application form, if
they have not already done so. There is much to be said at this stage for sending
candidates more details of the organization and the job so that you do not have to spend
too much time going through this information at the interview.

8. Review the remaining possible and marginal and decides if any are to be held in reserve.

Send reserves a standard ‗holding‘letter and send the others a standard rejection letter.

The latter should thank candidates for the interest shown and inform them briefly, but not
too brusquely, that they have not been successful.

21
 3.6. Definition of Orientation
Induction is a process through which a new employee is introduced to the organization. It refers
to the process of welcoming and socializing the individual into an organization. It is a process
where an individual is made to feel comfortable and feel at home in the organization. Induction is
a process of integration attempted by the organization with the new employee. The new
employee can be handed over a rule book or documents of the policy procedures, which are quite
impersonal in nature, however, the employee feels the sense of belongings when communicated
personally. It is the responsibility of personnel department to execute the induction program.
Induction is the process of receiving and welcoming employees when they first join a company
and giving them the basic information they need to settle down quickly and happily and start
work. Induction is important because it reduces the cost and inconvenience of early leavers.
Employees are far more likely to resign during the initial months after joining the organization.
First impressions are important as is the impact of the first four weeks of employment. Such
early resignations cause disruption and create recurrent costs such as the costs of obtaining
replacements, induction costs – training and the costs of lower productivity from new starters –
and the costs arising from the gaps that occur before a leaver is replaced.
Benefits of Orientation
The purpose of induction and orientation is to help the new employee and the organization to
accommodate each other. Included in this process may be financial assistances for expenses of
travel filling out of pay roll and other forms, introduction to colleagues and explanation of the
policies and practices of the organization, many other factors which serve to integrate the new
employee into the enterprise.
The need for security, belonging, esteem and knowledge is met through proper induction and
orientation. Haphazard procedures, casual greetings, and lack of information can precipitate
anxiety, discouragement, disillusionment or defensive behavior, including quitting. A successful
induction is that which reduces the anxiety of the new employee. Therefore, such methods which
bring this about are explained to company workers. Any neglect in the area of induction and
orientation may lead to labor turnover, confusion and wasted time and expenditure.

22
 CHAPTER FOUR
TRAINING AND DEVELOPMENT
4.1 Definition of Training
Training is an organized activity for increasing the knowledge and skills of people for infinite
purpose. It involves systematic Procedures for transferring technical know-how to the employees
so as to increase their knowledge and skills for doing specific jobs with proficiency. In other
words, the trainees acquire technical knowledge, skills and problem solving ability by
undergoing the training program.
According to Edwin B. Flippo, ―Training is the act of increasing the knowledge and skills of an
employee for doing a particular job‖. Training involves the development of skills that are usually
necessary to perform a specific job. Its purpose is to achieve a change in the behavior of those
trained and to enable them to do; their jobs better. Training makes newly appointed workers fully
productive in the minimum of time. Training is equally necessary for the old employees
whenever new machines and equipment are introduced and/or there is a change in the techniques
of doing the things. In fact, training is a continuous process. It does not stop anywhere. The
managers are continuously engaged in training their subordinates. They should ensure that any
training program should attempt to bring about positive Changes in the (i) Knowledge, (ii) skills,
and (iii) attitudes of the workers. The purpose of training is to bring about improvement in the
performance of work. It includes
Need and Importance of Training
Need for Training: It may be observed that the need for training arises from more than one
reason
i. An increased use of technology in production;

ii. Labor turnover arising from normal separations due to death or physical incapacity, from
accidents, disease, superannuation, voluntary retirement, promotion within the
organization and change of occupation or job.

iii. Need for additional hands to cope with an increased production of goods and services;

iv. Employment of inexperienced, or new labor requires detailed instruction for an effective
performance of a job;

v. Old employee need refresher training to enable them to keep abreast of the changing
methods, techniques, and use of sophisticated tools and equipment;

vi. Need for enabling employees to do the work in a more effective way, to reduce learning
time, reduce supervision time reduce waste and spoilage of raw material and produce
quality goods, and develop their potential.
23
vii. Need for reducing grievances and minimizing accident rates;

viii. Need for maintaining the validity of an organization a whole and raising the moral

of its employees.

Importance of Training
1. Increasing Productivity: Instruction can help employees increase their level of
performance on their present job assignment. Increased human performance often
directly leads to increased operational productivity and increased company profit. Again,
increased performance and productivity, because of training, are most evident on the part
of new employees who are not yet fully aware of the most efficient and effective ways of
performing their jobs.

2. Improving Quality: Better informed workers are less likely to make operational mistakes.
Quality increases may be in relationship to a company product or service, or in reference
to the intangible organizational employment atmosphere.
3. Helping a Company Fulfill its Future Personnel Needs: Organizations that have a good
internal educational program will have to make less drastic manpower changes and adjustments
in the event of sudden personnel alternations. When the need arises, organizational vacancies can
more easily be staffed from internal sources if a company initiates and maintains and adequate
instructional program for both its non-supervisory and managerial employees.

4. Improving Organizational Climate: An endless chain of positive reactions results from a

well-planned training program. Production and product quality may improve; financial
incentives may then be increased, internal promotions become stressed, less supervisory
pressures ensue and base pay rate increases result. Increased morale may be due to many
factors, but one of the most important of these is the current state of an organization‘s
educational endeavor.

5. Improving Health and Safety: Proper training can help prevent industrial accidents.

A safer work environment leads, to more stable mental attitudes on the part of employees.
Managerial mental state would also improve if supervisors now that they can better
themselves through company-designed development program.

6. Obsolescence Prevention: Training and development program foster the initiative and
creativity of employees and help to prevent manpower obsolescence, which may be due
24
 to age, temperament or motivation, or the inability of a person to adapt himself to
technological changes.
7. Personal Growth: Employees on a personal basis gain individually from their exposure to
educational experiences.

25
 4.2 Methods of Training
Training is essential for the smooth, economic, timely and efficient production, work or service
in any organization. To get work accomplished well from a worker or employee, it is a must that
he is given proper training in methods of work. Training is the organized producer by which
people learn knowledge and skill for a definite purpose management can’t make a choice as
between training or no training‗. On the other hand, it is a must. The only choice lies in the
method of training.
The following methods are generally used to provide training:
1. On the Job Training Methods and

2. Off the Job Training Methods

1. On-the-Job Training Methods

This type of training is imparted on the job and at the work place where the employee is expected
to perform his duties. It enables the worker to get training under the same working

conditions and environment and with the same materials, machines and equipment‘s that he will
be using ultimately after completing the training. This follows the most effective methods of
training the operative personnel and generally used in most of the individual undertaking.

1. On Specific Job : On the job training methods is used to provide training for a specific
job such as electrician, motor mechanic, pluming etc.

a. Experience: This is the oldest method of on-the-job training. Learning by experience

cannot and should not be eliminated as a method of development, though as a sole
approach, it is a wasteful, time consuming and inefficient. In some cases, this method
bas proved to be very efficient though it should be followed by other training methods
to make it more meaningful.

b. Coaching : On-the-Job coaching by the superior is an important and potentially

effective approach is superior. The technique involves direct personnel instruction and
guidance, usually with extensive demonstration.
2. Job Rotation: The major objective of job rotation training is the broadening of the
background of trainee in the organization. If trainee is rotated periodically from one job
to another job, he acquires a general background.

The main advantages are : it provides a general background to the trainee, training take
place in actual situation, competition can be stimulated among the rotating trainees, and it
stimulates a more co-operative attitude by exposing a man to other fellow problem and
26
view-points.

27
 3. Special Projects: This is a very flexible training device. The trainee may be asked to
perform special assignment, thereby he learns the work procedure. Sometime a task-force
is created consisting of a number of trainees representing different functions in the
organization.

4. Apprenticeship : Under this method, the trainee is placed under a qualified supervisor or
instructor for a long period of time depending upon the job and skill required. Wages aid
to the trainee are much less than those paid to qualified workers. This type of training is
suitable in profession, trades, crafts and technical areas like fitter, turner, electrician,
welders, carpenters etc.

5. Vestibule Training : Under this method, actual work conditions are created in a class
room or a workshop. The machines, materials and tools under this method is same as
those used in actual performance in the factory. This method gives more importance to
learning process rather than production.

6. Multiple Management : Multiple management emphasizes the use of committees

to increase the flow of ideas from less experience managers and to train them for

positions of greater responsibility. The McCormick & Company of Baltimore, U .S.A.

developed the program. The company claims that the plan has increased employee
efficiency, reduced labor turnover and absenteeism, and enabled the company to pay
higher wages than those prevailing in the area and industry. In this method; a junior
board authorized to discuss any problem that the senior board may discuss, and its
members are encouraged to put their mind to work on the business a whole, rather than
too concentrate to their specialized areas.
2. Off-the-job Training Methods
This type of training is given to the trainees away from the work floor and is not the everyday
activity of the organization.
Following are the off the job training techniques:
1. Special Courses and Lectures : Lecturing is the most traditional form of formal training
method Special courses and lectures can be established by business organizations in
numerous ways as a part of their development programs.

First, there are courses, which the organizations themselves establish to be taught by
members of the organizations. Some organizations have regular instructors assigned to
28
 their training and development.

A second approach to special courses and lectures is for organizations to work with
universities or institutes in establishing a course or series of course to be taught by
instructors by these institutes.

A third approach is for the organizations to send personnel to programs established by

the universities, institutes and other bodies. Such courses are organized for a short period
ranging from 2-3 days to a few weeks.

2. Conferences: This is also an old method, but still a favorite training method. In order to
escape the limitations of straight lecturing many organizations have adopted guided,
discussion type of conferences in their training programs. In this method, the
3. participants pools, their ideas and experience in attempting to arrive at improved methods of
dealing with the problems, which are common subject of discussion; Conferences may include
buzz sessions that divide conferences into small groups of four or five intensive discussion.
These small groups then report back to the whole conference with their conclusions or questions.
Conference method allows the trainees to look at the problem from a prouder angle.
3. Case Studies: This technique, which has been developed, popularized by the Harvard
Business School, U.S.A is one of the most common form of training. A case is a written account
of a trained reporter of analyst seeking to describe an actual situation. Some causes are merely
illustrative; others are detailed and comprehensive demanding extensive and intensive analytical
ability. Cases are widely used in variety of programs. This method increases the trainee’s power
of observation, helping him to ask better questions and to look for broader range of problems.

4. Brainstorming : This is the method of stimulating trainees to creative thinking This

approach developed by Alex Osborn seeks to reduce inhibiting forces by providing for a
maximum of group participation and a minimum of criticism. A problem is posed and
ideas are invited. Quantity rather quality is the primary objective. Ideas are encouraged
and criticism of any idea is discouraged. Chain reactions from idea to idea

often develop. Later these ideas are critically examined. There is no trainer in
brainstorming and it has been found that the introduction of known reports into it will
reduce the originality and practicability of the group contribution, Brainstorming frankly
favors divergence, and his fact may be explain why brainstorming is so little used as yet
in developing countries where no solutions ought to carry the highest premium.

29
5. Laboratory Training : Laboratory training adds to conventional training by providing
situations in which the trains themselves experience through their own interaction some
of the conditions they are talking about. In this way, they more or less experiment on
themselves. Laboratory training is more concerned about changing individual behavior
and attitude. There are two methods of laboratory training: simulation and sensitivity
training.

a. Simulation: An increasing popular technique of management development is

simulation of performance. In this method, instead of taking participants into the

field, the field can be simulated in the training session itself Simulation is the
presentation of real situation of organization in the training session. It covers
situations of varying complexities and roles for the participants. It creates a
whole field organization, relates participants, through key roles in it, and has them
deal with specific situations of a kind they encounter in real life. There are
two common simulation methods of training : role-playing is one and business
game is the other: 1. Role-playing : Role-playing is a laboratory method,
which can be used rather easily as a supplement of conventional training methods.
Its purpose is to increase the trainee’s skill in dealing with other people. One of
its greatest use, in connection with human relations training, but it is also
used in sales training as well. It is spontaneous acting of a realistic situation
involving two or more persons, under classroom situations. Dialogue
spontaneously grows out of the situation, as the trainees assigned to it develop it.

Other trainees in the group serve as observers or critics. Since people take
rules even day, they are somewhat experienced in the art, and with, a certain
amount of imagination they can protect themselves into roles other than their
own. Since a manager is regularly acting roles in his relationship with other it is
essential for him to have role awareness and to do role thinking so that they can
size up each size up each relationship and develop the most effective
interaction position. 2. Gaming : Gaming has been devised to simulate the
problems of running a company or even a particular department. It has been used
for a variety of training objectives from investment strategy, collective
bargaining techniques to the morale of clerical personnel. It has been used at all
the levels, from the executives for the production supervisors. Gaming is a
laboratory method in which role-playing exists but its difference is that it
30
 focuses attention on administrative problems, while role-playing tend to emphasis
mostly feeling and tone between people in interaction. Gaming involves
several terms, each of which given a firm to operate for a number of periods.
Usually the periods is short one year or so. In each period, each-team makes

decisions on various matters such as fixation of price, level of production inventory

level, and so forth. Since each team is competing with others, each firm’s decisions
win affect the results of all others. All the firm’s decisions are fed into a computer,
which is programmed to behave somewhat like a real market.

b. Sensitivity Training: Sensitivity training is the most controversial laboratory

training method. Many of its advocates have an almost religious zeal in their enhancement with
the training group experience. Some of its critics match this favor in their attacks on the
technique. As a result of criticism and experience, a somewhat revised approach, often described
as team development‗ training. has appeared National Training Laboratories at Bethel U.S.A.
4.3. Management Development:
Definition and Importance
Management development‖ has become the new mantra of the transforming economies of
different countries. Having rapidly created the basic institutional infrastructure of a market
economy and weathered a post-liberalization recession, the economies now faces new challenges
—learning to cope with the requirements of production and managerial efficiency in a modern
economy. Thus, full economic recovery depends not only upon the continued evolution of those
businesses which survived the transition from a command to an open economy, but upon the
establishment of new businesses which operate under the principles of modern management
techniques.

Definition
Management development is concerned with improving managers‘ performance in their present
roles and preparing them for greater responsibilities in the future. It has been described by
Mumford and Gold (2004) as ‗an attempt to improve managerial effectiveness through a
learning process‘. Management development contributes to business success by helping the
organization to grow the managers it requires to meet its present and future needs. It improves
managers‘ performance, gives them development opportunities, and provides for management
succession. Development processes may be anticipatory (so that managers can contribute to
long-term objectives), reactive (intended to resolve or pre-empt performance difficulties) or
motivational (geared to individual career aspirations).
Importance
31
Executive development is comparatively new concept. Before the World War II, the common
belief was that the managers are born, not made. Now it has been replaced by the view that
managers can be made by giving them proper opportunities for development. The assumptions
that a man could acquire leadership, skills and management abilities by serving long-term have
gone wrong. Every worker cannot be a good manager by his experience alone. For achieving the
common objectives and managing people at work, certain abilities to lead and motivate the
people are necessary which cannot be acquired without introducing systematic and organized
executive development programs.
The importance and need of the executive development program can be viewed as below:
1. Managerial Obsolescence: Advancements in the science, human psychology,
anthropology etc. have thrown better light into the pattern of human behavior and
motivation and have developed better mathematical and/or tools for the benefits of
managers. Those managers who have abreast with these advancements are able to update
their knowledge and managerial skill. Such managers are in a position to apply better
methods of taking decisions whose chances of success are more. If we don‘t update their
managerial knowledge are likely to become obsolescence in their profession.

2. Technological Obsolescence: Contemporary period has shown precedents progress in

technology. Technology has become a third and the most powerful dimension in industry,
the other two being capital and labor. Technological breakthrough have changed the
design of products, the existing production methods, the prevailing practices of storage
and transportation, age-old methods of testing, servicing and maintains etc. Based on
these, better machines are designed and new layouts of production lines have been
developed. Information revolution and introduction of computers have introduced
automated production lines. This has changed the working environment. Executive must
be exposed to these changes to understand, appreciate and get them involved and become
in the line with the modern setting.

3. Conservation of Resources: The most important task is the optimum utilization of the re-
sources. Executive should be exposed new techniques to find better methods of
utilization of resources. He should be new techniques to find better methods of
utilization, preservation and conservation of the resources.

4. Competitive Advantages: Globalization and Liberalization has made the competition

more severe. Managers must learn to take action for quality improvement, cost reductions
techniques, better logistic, better after sales and services. The training on innovative
management methods in the entire gamut of managerial activities.
32
5. Quality of Life: Improvement in quality of the life of the people is the national objectives
of all nations.

4.4. Methods of Management Development

It has often been said that managers learn to manage by managing – in other words, ‗experience
is the best teacher‘. This is largely true, but some people learn much better than others. After all,
a manager with 10 years‘experience may have had no more than one year‘s experience repeated
10 times.
Some managers are better at developing people than others, and one of the aims of management
development is to get all managers to recognize that developing their staff is an important part of
their job.
However, to argue that managers learn best ‗on the job‘ should not lead to the conclusion that
managers should be left entirely to their own devices or that management development should be
a haphazard process. The organization should try to evolve a philosophy of management deve
lopment that ensures that deliberate interventions are made to improve managerial learning.
Revans (1989) wanted to take management development back into the reality of management
and out of the classroom, but even he believed that deliberate attempts to foster the learning
process through ‗action learning‘ are necessary.
1. Formal approaches to management development
Management development should be based on the identification of development needs through
performance management or a development center making use of the following formal
approaches.
Formal approaches to management development

 Coaching and mentoring.

 The use of performance management processes to provide feedback and satisfy

development needs.

 Planned experience, which includes job rotation, job enlargement, taking part in project
teams or task groups, ‗action learning‘, and secondment outside the organization.

 Formal training by means of internal or external courses.

 Structured self-development following a self-directed learning program set out in a

personal development plan and agreed as a learning contract with the manager or a
management development adviser.
 Competency frameworks can be used as a means of identifying and expressing

development needs and pointing the way to self-managed learning programs or the

33
 provision of learning opportunities by the organization.

2. Informal approaches to management development

Informal approaches to management development make use of the learning experiences that
managers come across during the course of their everyday work. Managers are learning every
time they are confronted with an unusual problem, an unfamiliar task or a move to a different
job. They then have to evolve new ways of dealing with the situation. They will learn if they
analyze what they did to determine how and why it contributed to its success or failure. This
retrospective or reflective learning will be effective if managers can apply the lessons success-
fully in the future. Experiential and reflective learning is potentially the most powerful form of
learning. It comes naturally to some managers. They seem to absorb, unconsciously and by some
process of osmosis, the lessons from their experience, although in fact they have probably
developed a capacity for almost instantaneous analysis that they store in their mental databank
and which they can retrieve whenever necessary. Ordinary mortals, however, either find it
difficult to do this sort of analysis or do not recognize the need. This is where informal or at least
semi-formal approaches can be used to encourage and help managers to learn more effectively.
Informal approaches to management development
 Getting managers to understand their own learning styles so that they can make the best
use of their experience and increase the effectiveness of their learning activities – the
manager‘s self-development guide by Pedler et al (1994) provides an excellent basis for
this important activity.

 Emphasizing self-assessment and the identification of development needs by getting

managers to assess their own performance against agreed objectives and analyze the
factors that contributed to effective or less effective performance –this can be provided
through performance management.

 Encouraging managers to discuss their own problems and opportunities with their
manager, colleagues or mentors to establish for themselves what they need to learn or be

able to do.

3. Development centers
Development centers consist of a concentrated (usually one or two days) program of exercises,
tests and interviews designed to identify managers‘development needs and to provide
counseling on their careers. They offer participants the opportunity to examine and under-stand
the competencies they require now and in the future. Because ‗behavior predicts behavior‘,
centers offer opportunities for competencies to be observed in practice. Simulations of various
kinds are therefore important features – these are a combination of case studies and role playing
designed to obtain the maximum amount of realism. Participants are put into the position of

34
practicing behavior in conditions very similar to those they will meet in the course of their
everyday work. An important part of the center‘s activities will be feedback reviews, counseling
and coaching sessions conducted by the directing staff.
Development centers use similar techniques to assessment centers, but in the latter the
organization ‗owns‘ the results for selection or promotion purposes, while in the former the
results are owned by the individual as the basis for self-managed learning.

CHAPTER FIVE
PERFORMANCE APPRAISAL
5.1 Introduction
Performance appraisal or Performance evaluation is a method of evaluating the behavior of
employees in a work place, normally including both the quantitative and qualitative aspect of job
performance. Performance here refers to the degree of accomplishment of the tasks that makeup
an individual job. It indicates how well an individual fulfilling the job demands. Performance is
measured in terms of results. Thus, Performance appraisal is the process of assessing the
performance or progress of an employee, or a group of employees on the given job, as well as his
potential for future development. Thus, performance appraisal comprises all formal procedures
used in organizations to evaluate contributions, personality, and potential of individual
employees. In other words, performance appraisal includes the comparison of performance
scales of different individuals holding similar areas of work responsibilities and relate to
determination of worth of the scales for the achievement of organization objective.

Definition

Performance Appraisal (PA) is the process through which an individual employee‘s behavior and
35
accomplishments for a fixed time period are measured and evaluated. The major purpose of
measuring and evaluating is to assess the worth or value. Performance appraisal is a systematic
and evaluating is to assess the worth or value. Performance appraise is a systematic and objective

way of judging the relative worth or ability of a employee in performance appraisal helps to
distinguish workers who are performing their assigned tasks well and from those who are not and
the reasons for such performance. Performance appraisal is thus the process of reviewing an
individual‘s performance and progress in job and assessing his/her potential for future
improvement. It is a systematic method of obtaining, analyzing and recording information about
a person that is needed, for the efficient management of business/organization, by the manager to
help him to improve the jobholder‘s performance and plan his career and by the jobholder to
assist him to evaluate his own performance and develop himself.

36
37
 Step 1

personnel distributes PA
form to manager
6

Step 6 Step 2

Form is used for manager completes

employment decisions form on employees

Step 3
Step 5
Completed form is Completed form is reviewed

returned to personnel by second level manager

Step 4
personnel

distributes PA form

Figure: 5.2.1 the PA Scenario as an organization Event

38
Definitions of performance Appraisal
Performance Appraisal has been defined as follows:

 According to Wendell French (1998), performance appraisal is, ―the formal, systematic
assessment of how well employees are performing their jobs in relation to established
standards, and the communication of that assessment to employees‖

 According to Flippo (1998) performance appraisal is the systematic, periodic and an

impartial rating of an employee‘s excellence in matters pertaining to his present job his
potential for a better job‖

1. According to Edwin Flippo, ―Performance appraisal is the systematic, periodic and an

impartial rating of an employee’s excellence in matters pertaining to his present job and
his potential for a better job.‖

2. According to Cummings, ―The overall objective of performance appraisal is to

improve the efficiency of an enterprise by attempting to mobilize the best possible
efforts from individuals employed in it. Such appraisals achieve four objectives
including the salary reviews the development and training of individuals, planning job
rotation and assistance promotions.

3. According to Wendell French, Performance appraisal and review in the formal,

systematic assessment of how well employees are performing their jobs in relations to
establish standards and the communication of that assessment to employees.

4. According to Dale Yoder, ―Performance appraisal includes all formal procedures used
to evaluate personalities and contributions and potentials of group members in a
working organization. It is a continuous process to secure information necessary for
making correct and objective decisions on employees.‖
Performance appraisal is a systematic evaluation of the employee’s performance at work.
Performance appraisal is a process of evaluating an employee‘s performance on a job in terms of
its requirement. It is a process of estimating or judging the value, excellence, qualities of status
of some object, person or thing.
Performance appraisal is a formal program in an organization which is concerned with not only
the contributions of the members who form part of the organization, but aims at

spotting the potential also. The satisfactory performance is only a part of the system as a whole
and the management needs more information than mere performance ratings of the subordinates.
Performance appraisal is the systematic evaluation of the individual with respect to his
39
performance on the job and his potential for development. Performance appraised is concerned
with determining the differences among the employees working in the organization. Generally,
the evaluation is done by the individual’s immediate superior in the organization and whose
performance is reviewed in turn by his superior. Thus, everyone in the organization who rates
others below him is also rated by his superiors, Performance appraisal employs rating techniques
for comparing individual employees in the work group, in terms of personal qualities or
deficiencies and the requirements of their respective jobs
Objectives of performance Appraisal
Dear students! We hope you have understood the concept of performance appraisal. Good! Now,
let us see its objectives.
Performance appraisal plans are designed to meet the needs of the organization and the
individual. It is increasingly viewed as central to good human resource management.
Performance appraisal could be taken either for evaluating the performance of employees or for
development them. Performance appraisals serve the following purposes.

 To create and maintain a satisfactory level of performance;

 To identify employees‘ needs for training and thus contribute to their growth and
development

 To facilitate fair and equitable compensations based on performance

 To facilitate selection test validation, ie. Employees rating on performance evaluation

may be used as the variables against which test score are measured,

 To provide essential data for assessing employees‘ potential for promotion and, also for
making administrative decision relating to salary increment, terminations, demotions, et;
and

 To help in encouraging performance among employees. The put come of performance

appraisal is communicated to indicate how are doing and suggesting needed changes in behavior,
attitude, skills or knowledge. It gives clear indication about what is expected of employees.
Characteristics of Performance Appraisal : The following are the characteristics of
Performance Appraisal

1. A Process: Performance appraisal is not a one-act play. It is rather a process that

involves several acts or steps.

2. Systematic Assessment: Performance appraisal is a systematic assessment of an

employee’s strengths and weakness in the context of the given job.

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 3. Main Objective : The main objective of it is to know how well an employee is
going for the organization and what needs to be improved in him.
4. Scientific Evaluation: It is an objective, unbiased and scientific evaluation through
similar measure and procedures for all employees in a formal manner.

5. Periodic Evaluation : Although informal appraisals tend to take place in an

unscheduled manner (on continuous) basis with the enterprises a supervisors
evaluate their subordinates work and as subordinates appraise each other rand
supervisors on a daily basis, yet the systematic (i.e., formal) appraisal of an
individual employee is likely to occur at certain intervals through out that person‗s
history of employment (say quarterly, six monthly, annually, etc.)

6. Continuous Process: In addition to being periodic performance usually is an

ongoing process. It means that appraisals are regularly scheduled and are not
dumped on the employee on whimsical dates without relevance. The process has
not been broken in person’s history of employment however, the periodicity of
appraisal may be changed as per needs of the situation.

7. Employee Feedback: Performance appraisal system provides information to

employees on how well they are doing their jobs, and this feedback is provided to them when it
is relevant.
Performance appraisal is also called Employee Rating and Service Rating. Performance
appraisal and merit rating are used synonymously. But strictly speaking performance appraisal is

a wider term than merit-rating. In merit rating the focus is on judging the caliber and worth of an
employee so as to place him on right job. On the other hand, performance appraisal focuses on
the performance and future potential of the employee. Its aim is not simply to decide placement
or promotion but to measures the value of worker in different job situations.
5.3. Importance of Performance Appraisal
Performance appraisal helps the employees in Self-improvement and Self-development. It helps
the management in taking decisions about Placement, Promotions, Transfer, Training and
Development, etc. It helps to achieve individual and organizational goals. It is useful

to the employees and the organization. Therefore, Performance Appraisal should be conducted
objectively from time to time. The employees should not oppose it. However, they

should see that the performance appraisals are systematic, fair and impartial. It should not be for
41
punishing the employees. It should be for improving the employees and their performances.
1. Help in Deciding Promotion: It is in the best interest of the management to promote
the employees to the positions where they can most effectively use their abilities. A
well-organized, development and administered performance appraisal program may
help the management in determining whether an individual should be considered for
promotion because the system not only appraises the worth of the employee on the
present job but also evaluates his potentialities for higher job.
2. Help in Personnel Actions : Personnel actions such as lay-offs, demotions,
transfers and discharges etc. may be justified only if they are based on performance
appraisal. While in some cases, actions are taken because of unsatisfactory
performance of the employee, in some other cases it may be called for due to some
economic conditions beyond control such as changes in production process. In former
case, the action can only be justified on the basis of the result of performance
appraisal.
3. Help in Wage and Salary Administration: The wage increase given to some employees
on the basis of their performance may be justified by the performance appraisal
results. In some cases appraisal, i.e., merit and seniority are combined for higher
salaries on better positions.
4. Help in Training and Development: An appropriate system of performance appraisal
helps the management in devising training and development programs and in
identifying the areas of skill or knowledge in which several employees are not at par
with the job requirements. Thus the appraisal system points out the general training
deficiencies which may be corrected by additional training, interviews, discussions or
counseling. It helps in spotting the potential to train and develop them to create an
inventory of executives.
5. Aid to Personnel Research: Performance appraisal helps in conducting research in the
field of personnel management. Theories in personnel field are the outcome of efforts
to find out the cause and effect relationship between personnel and their performance.
By studying the various problems which are faced by the performance appraiser, new
areas of research may be developed in personnel field.

6. Help in Self Evaluation: Performance appraisal helps the employee in another way
also. Every employee is anxious to know his performance on the job and his potentials
for higher jobs so as to bring himself to the level of that position.
7. Help in Creating Healthy Competition: Performance appraisal brings out the
deficiencies and shortcomings of the employees. Discussions between rater and rates
42
 may be conducted in a spirit of co-operation and mutual understanding. This gives an
opportunity to the employer to have an insight on their performance and to take
corrective measures to improve upon their performance.

5.3. PROCESS OF PERFORMANCE APPRAISAL

Let us now take up the process of performance appraisal. Performance appraisal is planned,
developed and implemented through a series of steps

JOB ANALYSIS
JOB DESCRIPTION AND JOB SPECIFICATION

ESTABLISHING STANDARDS OF PERFORMANCE

COMMUNICATING PERFORMANCE STANDARDS TO

EMPLOYEES

MEASURING ACTUAL PERFORMANCE

COMPARING ACTUAL PERFORMANCE WITH

STANDARDS AND DISCUSS WITH EMPLOYEES

INITIATING CORRECTIVE ACTION, IF NECESSARY

Figure: 5.2.2. Performance appraisal process

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1. Job analysis, job description and job specification:- performance appraisal is a process
not to be undertaken in isolation of various human resource functions. It begging with job
analysis, job description and job specification. These help in establishing the standard
performance.

2. Establishing standards of performance: Appraisal systems performance standards, which

serve as benchmarks against which performance is measured. The standards set for
performance must be clearly defined and unambiguous. It should be attain certain time
and constable by moral employee. To be useful, standards should relate to the desired
result of each job. Performance standards or goals must be developed with the
supervisors to ensure that all the relevant factors have been included. Where the output
can be measured, the personal characteristics, which contribute to employee performance,
must be determined. Goals must be written down. They must be measurable within
certain thin and cost considerations.

3. Communicating performance standards to employees:- performance appraisal involves at

least two parties; the appraiser who does the appraisal and the appraise whose
performance is being evaluated. The performance standards specified in the second step
above are to be communicated and explained to the employees (both appraiser and
appraise) so that they come to know what is expected of them. Feedback enables the
manager that the information has reached the employees. If necessary, the standards may
be revised or modified in the light of the feedback obtained from the employees and
evaluators.

4. Measuring actual performance:- After the performance standards are set and accepted, the
step is to measure actual performance. This requires choosing the right technique of
measurement, identifying the internal and external factors influencing performance and
collecting information on results achieved. It can be affected through personal
observation, written and oral reports from supervisors the performance of different
employees should be so measured that it is comparable. Performance measures to be
helpful, it must be easy to use, be reliable and report on the critical behaviors that
determine performance.

Performance measures may be objective or subjective.

i. Objective performance measures – Objective performance measures are indications of

job performance that can be verified by others and usually quantitative. Objective

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 criteria include – quality of production, degree of training needed, accidents in a
given period, absenteeism, and length of service etc.

ii. Subjective performance measures – Subjective performance measure are rating that are
based on the personal standards of opinions of those doing the evaluation and are
not verifiable be others. Subjective criteria include – ratings by supervisors,
knowledge about overall goals , and contribution to socio – cultural values of the
environment.

5. Comparing actual performance with standards and discuss the appraisal with employees:-
Actual performance is compared with the predetermined performance standards. Actual
performance may be better than expected ―and sometimes it may go off the track‖

Deviation, if any from the set standards are noted. Along with the deviations, the reasons
behind them are also analyzed and discussed. Such discussions will enable an employee
to know his weakness and strength. Weakness is discussed so that the employee takes
interest in improving the performance. He/she will be motivated to improves himself
/herself.

The assessment of another person‘s contribution and ability is not an easy task. It has
serious emotional overtones as it affect the self – esteem of the appraise. Any appraisal
based on subjective criteria is likely to be questioned by the appraiser and leave appraise
quite dejected and unhappy when the appraisal turns out to be negative.

6. Initiating corrective action, if any:- The last step in there process is to initiate corrective
action essential to improve the performance of employee. Corrective action is of two
types -

i. The one which puts out the fires immediately – an employee can be scolded or warned
so that he/she himself /herself can make necessary attempts to improve the
performance. But this is not enough and proper. And

ii. The other one which strikes at the problem permanently – though mutual discussions
with employees, the steps required to improve performance, are identified and
discussed on. The reasons for low performance should be probed, take the employee
into confidence and motivate him/her for better performance. Training, coaching,
counseling etc. are examples of corrective actions that help to improve employee‘s
performance. Counseling and coaching can help do the magic.
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5.4. Methods of Appraisal

Make sure that you are clear about the process of performance appraisal before proceeding
with the methods.
A number of different performance appraisal methods or techniques are available for evaluating
the performance of the employees. These methods are used to explain how management can
establish standards of performance and devise ways and means to measure and evaluate the
performance of employee. No full proof method of evaluating the performance of employees
has been devised yet. Every method suffers from certain drawbacks in spite of some merits.
These methods can broadly be divided in to traditional and modern methods. The following
figure shows the different appraisal methods.

46
PERFORMANCE APPRAISAL TECHNIQUES

47
 MODERN
TRADITIONAL METHODS
METHODS
1. BARS - Behavioral
1. Unstructured method
Anchored Rating scale
2. Straight ranking method method.
3. Paired comparison method
2. Result Oriented Appraisal
4. Man to man or MBO Method
comparison method
3. Assessment Centre method
5. Grading method
4. Human Resource
6. Graphic rating method
Accounting method
7. Forced choice method
5. Psychological
8. Check list method
Appraisal method
9. Weight check list method
6. 360 degree appraisal
10. Free essay method

11. Critical incidents method

12. Field review method

13. Confidential reports

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 Figure: 5.2.3. Performance appraisal techniques
Some of the methods above are discussed below.

Goal setting or management by objective (MBO): this method involves measuring and
evaluating an employee‘s performance based on the work objectives set by both the employee
and the supervisor. MOB focuses attention on anticipatively set goals that are tangible, verifiable,
and measurable. The emphasis is on what must be accomplished rather than on how it
is to be accomplished. The basic process involves: setting objectives of performance,
development action plans, allowing employees to implement the plans, measuring objective
achievements, taking corrective action, if necessary, and establishing new objectives for the
future.
For this process to work effectively, the following requirements need to be met.

 Objectives should be quantifiable

 Active participation of employees

 Conduct appraisal interview with the employee

 Supervisors should, i.e., to discuss program and to modify objectives when necessary.

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The Essay method: In this method, the appraiser is expected to describe an employee‘s
performance in written narrative form. If focuses on issues like strengths and weakness, job
knowledge, communication skills, quantity and quality of work, potentials of the employee for
promotion, training, etc. Although this method is simple since it dose not require complex from.
The fact that it is not structured may have an impact on the length and content of the essay.
Consequently, it makes it difficult to make comparison of result with other employees‘
performance.
Critical incident Appraisal method: This method requires the rater to write down critical or
key behaviors of an employee that make a difference between satisfactory and unsatisfactory job
performance. For example, recording exceptional good or poor performance. This method
focuses more on the behavior of employees on their jobs (performance) than traits (personality.
Thus, it is more job –related than other methods. However, this method has some drawbacks
since it requires continuous and close supervision from the rater to record critical events on the
employee‘s performance. Also, the concepts of critical incident may be interpreted differently by
different people, thus making it difficult to compare evaluation results of two or more people.
Checklist appraisal method: The rater, in this method. Uses a list of behavioral descriptions
required to do a job and put a check mark against those behaviors that apply to the employee. In
a simple checklist method, the rater is asked to provide yes and no answer to the list of
behaviors.
Example:- Does the employee volunteer to help other employees?
Does the employee approach customers promptly?
Does the employee complete assignments on time Does
the employee accept constructive suggestion? Etc.

If some of the listed behaviors are more relevant to the job than others, it is possible to use a
weighted checklist method that attaches a weight to each item and thus permits the development
of a more accurate rating score. Although this method minimizes bias, it is time consuming and
costly to assemble the questions fir each job category.
Forced – choice rating : this method requires the rater to rank a set of statements describing
how an employee carries out the duties and responsibilities of a job. Here, the rater ranks the
statement that describes most the employee as the first choice and works his/her way to the least
descriptive statement. In this method, raters are usually not aware of the weights attached to each
of these descriptions thus leaves little room for bias. However, raters find this method to be very
difficult to choose from the list of statements, especially if they feel that two or more of the traits
describe the employee equally.
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Example: patent with slow learners

Lectures with confidence

Keeps interest with confidence

Keeps interest and attention of class

Describes the objective of each class

There may be an instruction to the rate the above description from 1-4 starting from the itmen
that nest describes the person to the item that least describes the person. Raters may not have
knowledge of the weights attached to each of the descriptions. Therefore, there is little room for
bias.

6.1 Methods of Performance Appraisal

Several methods and techniques are used for evaluating employee performance. They may be
classified into two broad categories as shown.
Traditional Methods
1. Ranking Method

2. Grading Method

3. Man-to-Man Comparison Method

4. Graphic Rating Scale Method

Modern Method
1. Management by Objective (MBO)

2. Assessment Centre Method

3. Human Asset Accounting Method

4. Behaviorally Anchored Rating Scales

5. 3600 Appraisal

Traditional Methods of Performance Appraisal

There are different techniques/methods which are used for performance appraisal of employees.
Some of the methods of performance appraisal are:
1. Ranking Method : Ranking method is the oldest and simplest method of rating. Here,
each employee is compared with all others performing the same job and then he is given a
particular rank i.e. First Rank, Second Rank etc. It states that A is superior to B. B is
superior to C and so on. This method ranks all employees but it does not tell us the degree
or extent of superiority i.e. by how much one employee is superior to

51
 another. Secondly, this ranking is based on only mental assessment so it is not possible to
give any objective proof about why the rater has ranked one employee as superior

to another. In this method, the performance of individual employee is not compared with
the standard performance. Here, the best is given first rank and poorest gets the last rank.
The ranking method is highly subjective. Similarly, here the employees are compared as a
whole. Comparison of the various parts of an employee's performance is not done.
2. Grading Method : Under this method of performance appraisal, different grades
are developed for evaluating the ability of different employees and then the employees are
placed in these grades. These grades may be as follows : (i) Excellent; (ii) very good; (iii)
Good; (iv) Average; (v) Bad; (vi) Worst
3. Man-to-Man Comparison Method : This method was first used in USA army

during the 1st World War. Under this method, few factors are selected for analysis

purposes. These factors are : leadership, dependability and initiative. After that a scale

is designed by the rate for each factor. A scale of person is also developed for each

selected factor. Each person to be rated is compared with the person in the scale, and
certain scores for each factor are awarded to him/her. In other words, instead of comparing
a whole man to a whole man personnel are compared to the key man in respect of one
factor at a time. We can use this method in job evaluation. This method is also known as
the Factor Comparison Method. In performance appraisal, it is not of much use because
the designing of scale is a very difficult task.
4. Graphic Rating Scale Method of Performance Appraisal: This is the very popular,
traditional method of performance appraisal. Under this method, scales are established for
a number of fairly specific factors. A printed form is supplied to the rater. The form
contains a number of factors to be rated. Employee characteristics and contributions
include qualities like quality of work, dependability, creative ability and so on. These traits
are then evaluated on a continuous scale, where the rater places a mark somewhere along
the scale. The scores are tabulated and a comparison of scores among the different
individuals is made. These scores indicate the work of every individual.
This method is popular because it is simple and does not require any writing ability. The
method is easy to understand and use. Comparison among pairs is possible. This is
necessary for decision on salary increases, promotion, etc.
Modern Method of Appraisal

Most of the traditional methods emphasizes either on the task or the worker‗s personality,
52
 while making an appraisal. For bringing about a balance between these two, modern
methods, have been developed.

The details of these methods are as follows:

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 1. Management by Objective (MBO)

It was Peter F. Drucker who first gave the concept of MBO to the world in 1954 when
his book The Practice of Management was first published. Management by objective can be
described as, a process whereby the superior and subordinate managers of an organization

jointly identify its common goals, define each individual’s major areas of responsibility in
terms of results expected of him and use these measures as guides for operating the unit
and assessing the contribution of each of its members.

Essential Characteristics of MBO: The important features of MBO are as follows :

1. A Philosophy: Management by objective is a philosophy or a system, and not merely a

technique.

2. Participative Goal Setting: It emphasizes participative goal setting.

3. Clearly Define Individual Responsibilities: Management by objective (MBO) clearly

defines each individual’s responsibilities in terms of results.

4. Accomplishment of Goal: It focuses a tension on what goal must be accomplished rather

than on how it is to be accomplished (method).

5. Objective Need into Personal Goal: MBO converts objective need into personal goals at
every level in the organization.

6. It Establishes Goals Yardsticks: It establishes standards or goals yardsticks as operating

guides and also as basis of performance evaluation.

7. Efforts to Blend and Balance Goals : It is a system intentionally directed toward

effective and efficient attainment of organizational and personal goals.
The Process of MBO: It is as follows:
1. Establishment of Goal: The first step is to establish the goals of each subordinate. The
goals typically refer to the desired outcome to be achieved. Thereafter these goals can be
used to evaluate employee performance.

2. Setting the Performance Standard: The second step involves setting the performance
standard for the subordinates in a previously arranged time period.
3. Comparison of Actual Goals with the Standard Goals: In the third step the actual level
54
 goal attainment is compared with the standard goals. This step helps to determine
possible training needs

4. Establishing New Goals, New Strategies: The final step involves establishing new goals
and, possibly, new strategies for goals not previously attained.
Benefits or Advantages of MBO:
The benefits of MBO are as follows:
1. Balanced Focus on Objectives: MBO forces the management to set objectives with
balanced stress on key result area.

2. Better Managing Things: MBO forces managers to think about planning for results,
rather than merely planning activates or works.

3. Better Organizing: The positions in the enterprise can be built around the key result areas.
Managers are required to clarify organizational roles and structures hence better
organizing.

4. MBO Reduces Role Conflict and Ambiguity: Role conflict exists when a person is faced
with conflicting demands from two or more supervisors; and role ambiguity exits when a
person is uncertain as to how he will be evaluated, or what he has to achieve.

5. It Provide more Objective Appraisal Criteria : The targets emerge from the MBO

process provide a sound set of criteria for evaluating the manager’s performance.

6. MBO Identifies Problem Early : It identifies problems better and early. Frequent
performance review sessions makes this possible.

7. Identifies Performance Deficiency : MBO identifies performance deficiencies and

enables the management and the employee to set individualized self improvement goals
and thus proves effective in training and development of people.
Disadvantages of MBO
1. Unfavorable Attitude of Managers : Some executives have an attitude that the regular
attention required of them by Management by objectives system, drawn
heavily on their busy time-schedule and is not consistent with their roles. They feel that it
is not so effective a way as some other approaches.
2. Difficult to Apply MBO Concepts : Those executives who have been involved very often
find it difficult to apply MBO concepts to their own work habits. They find it hard to
think about the results of work rather than the work itself. They tend to over emphasize
goals that the easy to quantify, sometimes forgetting that workers often behave almost
55
 like children at play-when the game no longer challenges, interest is soon last.
3. Heavy Paper Work : MBO involves a huge amount of news letter, instruction booklets,

training manuals, questionnaires, performance data review and appraisals report to be

prepared by the superior and subordinates. Thus MBO is said to have created one more
paper mill in organization added to the already existing large amount of paper work.
4. Time Consuming : MBO is time consuming especially in the early phases of its
introduction when employees are unfamiliar with its process.

2 Assessment Center Method

This concept was first applied to military situations by Simoniet in the Geran Army in the 1930s
and the War office Selection Board of the British Army in the year 1960. The main objective of
this method was and is to test candidates in a social situation, using a number of assessors and
variety of procedures. The most important characteristic of the assessment center is job-related
simulations. These simulations involve characteristics that managers feel are important to the job
success. The evaluators observe and evaluate participants as they perform activities commonly
found in these higher level jobs.
In this method many evaluators join together to assess the performance of employee in several
situations with the use of variety of criteria. It is used mostly to help select employees for the
first level (the lowest) supervisory positions. The assessments are made to find employee
potential for the purpose of promotions. The assessment is generally done with the help of a
couple of employees and involves a paper-and pencil test, interviews, and situational exercises.
The main features of the techniques are given below:
1. Leaderless Discussion: The use of situational excises such as an in basket exercise,
business game, a role-playing incident and leaderless group discussion.

2. Highly Experienced Evaluator: Evaluators are drawn from experienced managers with
proven ability at different level of management.

3. Employee‘s Individual and Collective Evaluation: The evaluators evaluate all employees,
both individually and collectively, and each candidate is given one of the three categories
more than acceptable, less than acceptable and unacceptable.

4. Preparation of Summary Report: A summary Report is made by the members, and a feed
back on a face-to-face basis is administered to all the candidates who ask for it.
The characteristics assessed in a typical assessment center include assertiveness, persuasive
ability, communicating ability, planning and organizational ability, self-confidence, resistance to
stress, energy level, decision-making, sensitivity to the feeling others, administrative ability,
56
creativity, and mental alertness etc.
Procedure: The Assessment center program commonly used as follows:
Firstly: A leadership group is made each member supporting a predefined position, but the group
must arrive at consensus.
Secondly: A task force is used with an appointed leader, who decides on a course of action.
Thirdly: Simulation games and in-basket exercises are used to test organizational and planning
abilities.
Fourthly: Oral report is made by the candidate, which tests his communication skills and straight
into his present position.
Fifthly and Lastly: Personal interviews and projective tests are used to assess work motivation,
career orientation, and dependence on other. Paper and pencil tests measure intellectual ability.
The duration of Assessment center program varies with the persons. For instance, center
designed to select first line supervisors, sales personnel, and management trainee generally last
for a day or less; while those used for higher-level managers may run for two or three days or
longer if used for developmental and not for selection purposes.
Drawbacks: These are as follows:
1. Exam Syndrome: One of the most obvious drawbacks is the examination-taking
syndrome solid performer in day-to-day operations feel suffocated in the simulated
environment.

2. Adverse Effect on Potential: Another drawback is its potential adverse effect on those not
selected to participate in the exercise.

3. Negative Reaction: Employees who receive a poor report from the centre may react in
negative way.

4. Poor Report Demoralizes Employee: A good performer at one level may leave the
organization in order to remove the bad assessment report from his or her work record.
Thus, a poor report can demoralize an employee who was once an asset.

5. Other Problems: Other problems include-strong and unhealthy sense of competition

among the assesses, difficulty of conducting test frequently, and the possibility of
overemphasizing the test performance.
3. Human Asset Accounting Method
This technique refers to money estimates to the value of a firm’s internal human organization and
its external customer goodwill. If well trained employees leave a firm, the human organization is
worthless; if they join it, its human assets are increased. if distrust and conflict prevail, the
human enterprise is devalued. If team work and high morale prevail, the human organization is a
57
very valuable asset.
The current value of a firm’s human organization can be evaluated by developed procedures by
undertaking periodic measurements of key casual and intervening enterprise variables. The key
casual variables include the structure of an organization‘s management policies, decisions,
business leadership, skills, strategies, and behavior. The intervening variables indicate the
internal state and health of an organization. They include loyalties, attitudes, motivations, and
collective capacity for effective interaction, communication and decision-making. These two
types of variable measurements must be made over several years to provide the needed date for
the computation of the human asset accounting.

4. Behaviorally Anchored Rating Scales (BARS)

This method is also called behavioral expectation scales. These are the rating scales whose scale
points are determined by statements of effective and ineffective behavior. They are said to be
behaviorally anchored in that the scales represent a range of descriptive statements of behavior
varying from the least to the most effective. A rater must indicate which behavior on each scale
best described an employee’s performance.
Behaviorally anchored rating scales (BARS) are having 5 steps :
1. Generate Critical Incidents: Persons with knowledge of the job to be appraised (job
holders/supervisors) are asked to describe specific illustrations (critical incidents) of
effective performance behavior.

2. Develop Performance Dimensions: These people then cluster the incidents into a smaller
set (or say 5 or 10) of performance dimensions. Each cluster (dimension) is then defined.
3. Reallocate Incidents: Any group of people who also know the job then reallocate the
original critical incidents. They are given the cluster’s definitions, and critical incidents,
and asked to redesign each incident to the dimension it best described.

Typically a critical incident is retained if some percentage usually (50 to 80%) of this
group assigns it to the same cluster as the previous group did.

Scale of Incidents: This second group is generally asked to rate (7 or 9 point scales are
typical) the behavior described in the incident as to how effectively or ineffectively it
represents performance on the appropriate dimension
5. Develop Final Instrument: A subset of incident (usually 6 or 7 pe) cluster are used as
behavior anchors for the performance dimensions.
BARS were developed to provide results which subordinates could use to improve performance
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superiors would feel comfortable to give feedback to the rate. Further, BARS help to overcome
rating errors. Unfortunately, the method too suffers from distortions inherent in most rating
techniques.
5. 3600 Appraisal
In 360-degree performance appraisal technique a manager is rated by everyone above, alongside
and below him.
360 degree approach is essentially a fact-finding, self-correcting technique, used to design
promotions. The personality of each top manager – their talents, behavioral traits, values, ethical
standards, tempers, loyalties – is to be scanned, by their colleagues as they are best placed to
diagnose their suitability for the job requirements.
In this method a question are is structured to collect required data about a manager from his
bosses, peers, subordinates. 360-degree approach of assessment provides equal

opportunity to evaluate the efforts of the top manager or managers in running a company
effectively. It focuses on the intrinsic qualities of the manager as well as his capacity to lead. It
also gives feedback to all assesses on their styles.
Merits of 360-Degree Approach: The merits of the technique are:
1. The organization gains from the self-awareness of the top managers. It reveals strengths
and weaknesses in their managing styles.

2. The gap between self- assessment and the views of one’s colleagues is reduced.

3. Teamwork thrives once peer group assessment is included in the methodology.

4. Empowerment is facilitated.

5. Facts about the organizational culture are brought to light.

6. Inflexible managers are forced to initiate change in their style:

Demerit of 360-Degree Approach : The main drawbacks of this approach are as follows :
1. 360-degree approach can be utilized to humiliate people.

2. Response from colleagues tends to be biased.

3. Linking rewards to findings can prove to be unfair.

4. The results could be uneven.

This technique identifies most suitable and acceptable person for the consideration of promotion.
360-degree approach supports the company’s progress and rewarding the excellent performance
of an individual.
5.4. Individual Evaluation Methods

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 Individual evaluation methods are those techniques when the standards of performance are
defined individually, without references to other person(s).
1. Graphic rating scale is the oldest and still most used method of evaluation. In this case
the rater is presented with a set of traits and is asked to rate the employee on each of
them. The ratings can be numeric (from 1 to 5 for example) or alphabetic (such as
outstanding, good, satisfactory, fair and unsatisfactory).

2. Forced choice is the technique when the rater must choose from a set of descriptive
statements about an employee. The method was developed to substitute graphic rating
scales, as graphic rating scales permits to evaluate all the employees high.

3. Essay evaluation, in which the rater is asked to describe the strong and weak aspects of
the employee‘s behavior. Usually, this method is used in combination with other
methods.
4. Critical incident technique, a method according to which the rater maintains a log of
behavioral incidents that represent either effective or ineffective performance for each
employee being rated. The advantage of this method is that the results are less subjective,
but this method needs more time to use than the other techniques.

5. Checklists and Weighted Checklists. A checklist is a set of objectives or descriptive

statements. If the rater believes that the employee possesses a trait listed, the rater checks
the item; if not, the rater leaves it blank. A rating score from the checklist equals the
number of checks. The method was further developed by giving weights (from excellent
to poor) to several objectives.

6. Behaviorally Anchored Rating Scales (BARS). The method was developed by Smith and
Kendall. The BARS approach relies on the use of critical incidents to serve as anchor
statements on a scale. A BARS rating form usually contains 6 to 10 specifically defined
performance dimensions, each with 5 to 6 critical incident anchors (both positive and
negative). Employees prefer the using of this method instead of others, as it seems that
they become more committed, less tense and more satisfied than in case using other
methods.

7. Behavioral Observation Scales, developed by Latham and associates. Like BARS, the BOS uses
the critical incident technique to identify a series of behaviors that cover the domain of the job.
The major difference is that the rater should give under BOS how often the rate has been
observed engaged in the specific behaviors identified in the BOS.

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5.5. Multiple Person Evaluation Methods
Multiple person evaluation techniques are those methods when the performance of one employee
is directly and intentionally compared with the performance of other employee.
1. Ranking – the case when the superior is asked to rank the subordinates based on some
overall criterion.

2. Paired comparison, used in case there are several subordinates to be ranked. Each
employee is paired with every person to be compared with. The rater chooses the better
performing subordinate. The number of times that a person is chosen as the better
employee is tallied, and results are indexed based on this number.
3. Forced distribution is the method similar to grading on a curve. The rater is asked to rate
the employees in some fixed distribution of categories, such as 10% in low, 20% on low
average, 40% in average, 20% in high average and 10% in high. Which evaluation
technique to use? An exact answer cannot be given. The major problem is not with the
techniques, but how they are used and by whom? The responsibility of the rater and the
seriousness of the rater are much more critical than which method to choose.

4. Have raters (and employees in some systems) evaluate employees‘performance.

MAKING PERFORMANCE APPRAISALS MORE EFFECTIVE

Dear readers! In previous sections we have discussed the meaning of performance appraisal, its
process and the different methods of appraisal. You may ask‖ how is appraisal made effective‖ .
This because the successful accomplishment of it is crucial to the organization. In the following
section we are going to see what to do make appraisal effective what the features of a successful
appraisal are.
If performance appraisals are to be successful, they should
i. Be based on performance review standards

ii. Result in a face – performance review, and

iii. Be based upon multiple assessments

Characteristics of an Effective Appraisal System

Although an appraisal system may not reach perfection, there are some factors, which may
contribute towards its effectiveness. Thus for an appraisal system to be effective, it should
possess the following essential characteristics
a. Reliability and validity: an appraisal system should provide consistent, reliable and valid
information and data, i.e., if two appraisers equally qualified and competent to evaluate an
employee using the same appraisal technique, their rating should agree with each other.
Appraisal technique should also be valid by measuring what it is supposed to measure, i.e. ,

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 the factors used to measure performance need to be related to the job.

b. Job Relatedness: the criteria used for appraising employee‘s performance should be job
related. Information for the criteria should be determined thought job analysis.

c. Performance Expectation: managers should clearly explain performance expectations to

their subordinates in advance of the appraisal period. This may enable the employees to
direct their efforts towards the expected performance level.

d. Standardization: Employees in the same job category should be appraised by using the some
appraisal technique. Appraisal forms, procedures, administration of techniques, rating, etc..,
should be standardized as appraisal decisions affect all of the employees in an organization.

e. Qualified Appraisers: Responsibility for evaluating employee performance should be

assigned to the individual) who directly observe at least a representative sample of job
performance. In order to ensure consistency, appraisers should be well trained to provide
insights and ideas on rating, documenting appraisals, and conducting appraisal interviews.

f. Employee Access to Results: An effective appraisal system should also provide feedback to
employees on how well or bad they‘ve performed.
Problems Related to Performance Appraisal
There are several challenges which arise in the practice of performance appraisal activities:
1. The main issue in the practice of performance appraisal activity is the fairness of the
evaluation decision. Raters have problems evaluating the performance appraisal in a
proper way. Performance

2. of individual employees that is not measured accurately can lead to dissatisfaction

with the system.

3. One of the factors that contribute to employee‘s dissatisfaction is that raters are not
knowledgeable and do not have the required skills. This will affect the process of
evaluation because bias, unfairness and unreliability may occur. Although there is a
formal evaluation form and a set of standards to be followed, employees seem not to
trust the tools of evaluation.

4. There is an issue of subjectivity in the performance evaluation in the public and

private sector. Although it is written in black and white to be as objective as
possible, however, during the implementation of performance appraisal, the
evaluation becomes subjective. The subjectivity of the evaluation discourages
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 employees on supporting the measurement of performance appraisal. Therefore, the
objective of the performance appraisal is not achieved.
5. The quota system practiced in certain organization also creates dissatisfaction
among employees. Only a small portion of the employees will get salary increment
either vertically or diagonally. Therefore, although the employees may perform well,
they might not get a reward because it depends on the quota system. This will lead to
a decrease in work performance, self-esteem and loyalty to the organization.
6. The appraisal decision nowadays is confronted with a great deal of criticisms and
comments from the employees and their unions. There are several issues being put
forward such as the raters‘ ability, accuracy of the system, fairness, discrimination,
quota system and other aspects.

7. Performance appraisal should suit the organization‘s culture. Research findings

strongly suggest that multinational company‘s manager should carefully design the

appropriate system for foreign operation based on the different cultural factors of the
country.

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 CHAPTER SIX
MOTIVATION
6.1. MOTIVATION AND PRODUCTIVITY
6.1.1. Introduction
Dear students! Do you know that the productivity of any organization or department or work
unit depends upon the people who work in that unit? Given the same inputs, people can produce
more if they work, more thus increasing the productivity of the organization department or work
unit. ― how to make people work more or work better?‖ is an issue that requires an
understanding of what motivates people to work (or work more or work better). Similarly, it may
be possible to get people to work more or work better in higher proportions with marginal
increases in some inputs. This requires an understanding of motivation‖ that you will learn with
the help of activities and concepts in this chapter

6.1.2. ISSUES IN MANAGING PEOPLE

A manager by definite on, is one who is involved in planning, organizing coordinating and
executing the various activates of the organization to achieve its goals and goal states. A manager
is involved in managing workers, materials processes, and their interactions. While managing
materials is a function of knowledge of techniques such as planning, financial budgeting,
resource allocation, PERT. CPM etc, management of human resources requires knowledge of the
nature of human beings.
A manager or administrator is constantly interacting with people. As an administrator he/she is
interacting with his/ her subordinate staff in the office allocating and supervising their work,
helping them in planning work providing guidance and counseling and appraising their work. As
an administrator he/she is also subordinate to some higher authority. This authority may be a
board of management, a government officer, a number of officers, a school principal, a hospital
superintendent etc. being a subordinate he/she is accepts the decisions of his/her superiors,
feeding them bake his/her problems, helping them make decisions participating in planning
carrying on the task given to them and seeking their guidance from time to time. As a
professional person, he/she is also interacting with fellow managers, specialists, scientists etc.
Thus, all his/her interaction with different groups of people influence his/her administrative
behavior. In order to be an effective manager/he she needs to understand the dynamics of human
behavior. He /she will be able to perform his/her tasks better if he/she has some insights into
questions such as the following.
 Why do people behave the way they do?

 What are some of their significant things people look for in their jobs?

 How could work be designed or human interactions are monitored to provide maximum

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 satisfaction to people and their needs?

 How can one understand the motives or needs of a particular employee?

 How can a climate be created white the maximum utilization of human talents if
possible?

 How can the staff be helped to Performa to their maximum?

 How to gain the commitment of an employee?

In order to be able to manage human resources, a manager must have insights into the causes of
behavior. A manager may came across highly devoted, involved and hard working staff, as well
as lazy, evasive and superficial workers. He/she may wonder what to do about the generally less
motivated staff. If he/she does not do anything to rewards the well – motivated staff he/she may
lose them. He/ she may want to help and counsel staffs that are having problems. Psychologists
have worked out some theories to increase our understanding of human behavior. The following
are some of these observations:
Hierarchy of human Needs
All behavior is goal – directed. People behave the way they do because of their need to achieve
certain things. These goals may deal physiological needs, psychological needs or high order
social needs.
Research has shown that human beings want things in certain order of priority. First of all human
beings must satisfy their physiological needs like food, clothing, air etc. Until they have enough
of these, all their activities will be directed towards obtaining them. Once they have their
physiological needs satisfied to an optimal level, a second order of needs comes to the surface
and directs their behavior. These are safety and security needs. Human beings want to make sure
that they will continue to have their physiological needs satisfied. They require job security and
protection from any physical dangers.
Once they have an optimal level of security, Their next order needs come in to operation and
direct behavior. These are needs for love and belongingness. Human be beings want affection for
felloe – beings, often a selected few, and those in their immediate environment. Community
organization, worker organizations, professional bodies, etc. satisfies this need for
belongingness.
Once the needs for love and belongingness are also satisfied, another set of needs which may be
called ― high order social needs‘comes to the surface and directs the behavior of people. These
needs include the needs for achievement, recognition, status, power and influence over others.
These are also called ego needs or esteem needs or esteem needs.
When these social needs are also satisfied, then come the need for understanding one‘s own

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abilities and potential and using them to the maximum. This is called the self – actualizing need
most people are struggling with in more of the needs below this order; however, very few attain
this highest motivational level of self – discovery and the need to exploit one‘s own potential.
There are also other motivation theories such as Herzberg‘s two factor theory, but the hierarchy
of needs is enough for our purpose.
6.2. CREATING PROPER MOTIVATIONAL CLIMATE
Dear student! We have seen how motivation is important to the organization to achieve its goals
effectively and efficiently. Now let us see some dimensions on which the managers can work: to
create proper motivational climate in the organization. While it may be ambitions for a manager
to aim at creating conditions that help people reach‘ self-actualization level a manager can do
well in creating conditions that keep people away from frustrating experiences and keep them
constantly striving to put forth their best effort.
The following are some dimensions on which the managers can work:
Create conditions where workers‘ energies are not expensed to tally in meeting their basic needs.
If workers are worried about their salaries, housing, safety with the work they are doing job –
security etc., much energy will be wasted in their efforts to ensure these things . if they do not
have job – security, they may be trying to organize themselves to ensure security. If they cannot
organize, their mental energies may be spent in thinking about the poor conditions in which they
are living. If the manager cannot help in these matters, at least he/she can be sympathetic to
workers and do the little he/she can in his capacity. There are examples of managers who work in
extremely frustrating conditions but make their workers fell happy and at home.
Create a climate for inter – dependent work rather than dependency
Some managers are so creative and skillful that every worker looks up to them for advice and
constant guidance. Such managers may not be allowing their workers to do anything on their
own. If the manager expects every worker to check with him/her and get his/her approval be for
doing anything, then he/she is creating a climate of dependency. In such a climate, workers do
only what they are asked to do by their boss, and will not do anything on their own initiative.
When problems arise, they look to their boss to solve them. Again, when something goes wrong
workers may not accept responsibility and will refuse to learn from experience, because they
have not acted on their won but on the advice of their boss. Thus, the manager is burdened with
responsibilities and constant problem –solving. He/she is wasting not only his/her own energies,
but also those of he is her subordinates. Paternalistic behavior creates dependency in
subordinates and stifles their creative and sense of responsibility.
An effective manager encourages people to work independently or in a team interdependently.
He/she does not interfere unless it becomes very necessary. He trusts workers and gives them
freedom to plan out their won. He /she only provides guidance when needed. By creating a

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climate of interdependence and team worked he/she also helps them satisfy their social needs for
belonging affection and security.

Create a competitive climate through recognition of good work

Workers look to be rewarded for good and innovative work. Rewards may not always be in
financial terms. Even a word of appreciation has great motivating power, although indiscriminate
appreciation is valueless.
The manager should acknowledge the contributions of workers in many ways. Many managers
limit their appreciation to annual appraisal reports, but there are many other possible ways.
Praising before other workers, giving increased responsibilities etc. are some of the mechanisms
that can be used. Such recognition and public acknowledgments help workers to value their
work, derive a sense of satisfaction and feeling of importance from it. This, in turn, goes a long
way in motivating them to work harder, and creates as sense of competition in them.
Create a productive climate through personal example
Managers themselves need to be motivated and hard –working to motivate their employees.
Workers are constantly looking to their boss to set an example. They tend to imitate him/her, and
his/her style may percolate down the hierarchy. If he/she is authoritarian and non –trusting,
his/her next – level workers may attempt to be like him too, ultimately creating a climate of
suspicions in the organization.
Create a climate of approach and problem –solving rather than avoidance

Manages can be divided into types: approaching managers and avoiding managers. The
approaching manager is one who approaches problems with confidence, faces them, and works
out ways to overcome them with the help of others. His/her operating style is to face issues and
constantly struggle to overcome them. Satisfaction is derived from the struggle itself even if the
outcomes are not always positive. The avoiding manager sees everything as a headache. His/her
style is to postpone problem or to delegate them to somebody else. Workers are quick in
imitating this style. Approach – oriented managers do well because their workers also develop
this style of facing problems. Managers should attempt to encourage their workers to be
problem-solvers rather than avoiders. A manager who cannot take responsibility himself /herself
also cannot let his subordinates take responsibility. As amateur of fact, no work gets done unless
people accept responsibility and do it.
Motivate individually through guidance and counseling
The above discussion points out general strategies the manager can use in creating a proper
motivational climate. Besides creating a climate for work, a good manager needs to be a
counselor of workers. He/she has to interact with different workers who have different need

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patterns. He/she may encounter very efficient workers, poor workers, problem –creators, and all
kinds of individuals. He/she has to be sensitive to these individual differences and work
accordingly with them.

CHAPTER SEVEN
JOB CHANGES – TRANSFERS, PROMOTIONS AND SEPARATIONS

INTRODUCTION
Distance learners! In the last two chapters, we have tried to see motivation and productivity and
performance appraisal. Now, let us relate our understanding of those chapters with the mobility
of employees to and out of the organization which in one or another way are related to
motivation and performance of employees.
Mobility and flexibility in the workforce are necessary to cope with the changing requirements of
an organization. Job changes provide necessary flexibility. Employees move usually from one
job to anther through transfers, promotions and demotions. Such movement is called internal
mobility. Some employees leave the organization due to resignation, retirement and termination.
These movements are known as external mobility
7.1. PURPOSES OF JOB CHANGES
Job changes serve the following useful purposes:
1. Improving organizational Effectiveness. The successful functioning of an organization
depends largely on effective implementation of its policies and programmers‘. In order to
improve the organization structure, superfluous positions may be abolished and other
positions may be redesigned or regrouped. These changes help to improve the
effectiveness of the organization. But these cannot be implemented without job changes.

2. Maximizing Employee Efficiency. The knowledge, skills and the potential of an

employee can be utilized in an optimum manner when there is a match between
qualifications job requirements. Job changes are made to assign every employee to the
where his capabilities can be used to the maximum.

3. Coping with change in operations. The operations of an enterprise have to be adjusted

to changing economic conditions. During depression and recession, layoffs and transfers
help managements to reduce labor cost by adjusting the work force to the operating level.
During prosperity, promotions and transfers are used to meet the dernand for higher order
skills. Temporary adjustments have to be made in vacancies arising from death or illness
of an employee.

4. Ensuring Discipline. Job changes serve as tools of disciplinary action. Demotions and
layoffs may be used to punish erring employees because these cause a loss of status and
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earnings.

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 7.2. CONCEPT OF TRANSFER
A transfer refers to a horizontal or lateral movement of an employee from one job to another in
the same organization without any significant change in status and pay. It has been defined as
―a lateral shift causing movement of individuals from one position to another usually without
involving and marked change in duties, responsibilities, skills needed or compensation‖.
Transfers may be imitated either by the company or the employee. A company may initiate a
transfer to place employees in positions where they are likely to be more effective. Similarly,
employees may initiate transfers to locations to location where they are likely to get greater
satisfaction. Transfers may be within the same department or across departments. Again transfers
may be temporary or permanent. Temporary transfers arise usually due to ill health, absenteeism,
etc of an employee, whereas permanent transfers are made due to changes in work load or death,
retirement, resignation etc. of some employees. The public may also initiate transfers when an
employee‘s functioning is against the public interest or his behavior is against the society‘s
norms.

7.3. NEED AND PURPOSES OF TRANSFERS

i. Meeting Organization Needs: A company may transfer employees due to changes in
volume of production, in technology. In production schedule, in product line, in
organization structure, etc. All of these changes require shift in job assignments.

ii. Satisfying employee Needs: employees may request their transfer because of dislike of
boss or fellow workers or due to lack of opportunities for future advancement. Personal
problems of employees like health, family circumstances, etc. may also require transfer.
For example, an employee may like to be shifted to or near his native place. Sometimes,
transfers are made to avoid interpersonal conflicts and to provide an outlet from blind
alley jobs.

iii. Utilizing better Employees: An employee may be transferred because the management
feels that his capacities would be better utilized elsewhere. An employee who is not
performing satisfactorily in one area of job may be more suitable for another area of job.

iv. Making the Employee more versatile: Employees may be transferred to different jobs
to widen their knowledge and skills. In some companies, transfers are made as a matter
of policy after an employee has stayed on a job for a specified period. Such rotation
from one job another serves as a method of training and reduce monotony.

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v. Adjusting the work force: There may be changes in the volume of work in different
sections or plants. Employees form the overstaffed plant or office may be transferred
where vacancies exist.

vi. Providing relief: Transfers may be made to give relief to the employees who are
overburdened or doing risk work for long period.

vii. Punishing Employees: Employees that indulge in undesirable activities may be

transferred to remote places. It is in the form of a disciplinary action. This practice is
widespread in government offices. In some organizations, transfers are made because

permanent stay may cause frauds, bribery, politicking etc problem. Thus, employees
may be transferred to some other jobs as remedy for this problem.
Benefits of transfers: it is believed that transfers help an organization to; increase
productivity and effectiveness of the organization, as tool for job satisfaction employees,
stabilize fluctuating work needs, improve employee skills, as remedy for faulty placements,
improve labor relations, develop employees for future promotions and avoid monotony and
boredom.

Transfer Policy
Every organization should have a just and impartial policy concerning transfer of employees.
Most policies regarding transfer of employees help to avoid an ad hoc and arbitrary approach
to transfers. Every transfer involves some description and cost.
Therefore, transfers should not be made frequently or without justified reasons. Instead of
deciding each case separately, a policy should be formulated that is capable of governing all
types of employee transfers. This will ensure uniformity of treatment and avoid transfers for
petty reasons.
A good transfer policy should satisfy the following requirements:
 Transfer policy should clearly specify the types of transfers and the circumstances under
which transfers will be made;

 It should prescribe the basis for transfers. When two persons want transfer to the same
job, whether the decision will be based on seniority or some other factor;

 It should indicate the executives responsible for initiating and approving the transfers;

 It should tell whether the transfers can be made only within a department or also between
departments;

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 It should specify the effect of transfer on the seniority and pay of the employee;

 It should be put in writing;

 It should be communicated and explained to the employees;

 The transfer should as far as possible be made in consolation with the employee.
Alternatively the transfer should be made known to the employee well in advance;

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 7.4. CONCEPT OF PROMOTION

Promotion refers to advancement of an employee to a higher post carrying greater

responsibilities, higher status and better salary. It is the upward movement of an employee in the
organization hierarchy, to another job commanding greater authority, higher status and better
working conditions. When an employee is assigned a higher level job with more pay and powers,
he is said to be promoted. Promotion may be temporary or permanent, depending upon the needs
of the organization. When an employee is assigned to a higher level job without increase in pay,
it is called a ‗dry‖ promotion. For example, when a university professor is made head of the
department, there is no increase in pay.
Purposes and Advantages of promotion:
Promotion is means:
 To recognize an employee‘s performance and commitment/loyalty and motivate him
towards better performance;

 To boost the morale and sense of belonging of employees;

 To develop a competitive spirit among employees for acquiring knowledge and skills
required by higher level jobs;

 To retain skilled and talented employees;

 To develop a competent internal source of employees for higher level jobs;

 To utilize more effectively the knowledge and skills of employees and

 To attract competent and suitable employees for the organization.

The policy of filling higher level jobs by promoting employees working at lower levels creates a
feeling of content among employees. It improves their satisfaction and motivation by providing
greater income, income, status and responsibilities. By building up loyalty, promotion reduces,
layout turnover. Employees will have little incentive to work hard and stay in the organization of
higher level jobs are reserved for outsiders. Promotion stimulates self development and creates
interest in training and development programs. According to Yoder,‖ promotion provides
incentive to initiative to initiative, enterprise and ambition; minimizes discontent and unrest;
attracts capable individuals; necessitates logical training for advancement and forms an effective
reward for loyalty and cooperation, long service, etc.

Filling up all the higher level vacancies through promotion leads to in breeding and stagnation
wherein new thinking does not enter the enterprise. Therefore, Promotion should not be entirely
from within. In should be used as the norm but people form outside should be brought in
periodically into higher level jobs.
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 7.5. PROMOTION POLICY
Dar students! Take a break and think how promotion is actually be made? Is it possible to
promote employees as and when the boss needs? Let us answer this question. Every organization
should formulate a sound policy regarding promotion of its employees. The company that has no
recognized promotion policy is likely to have frustrated and restless employees as they have no
opportunity for advancement. The main features of a good promotion policy are as follows:

1. It must provide for a uniform distribution of promotional opportunities throughout the

company. In other words, means the ratio of internal promotions to external recruitment
must be the same in all departments otherwise there will be discontent and frustration in
the department where this ration is lower. Therefore, equal opportunities for promotion
should be provided to all categories the avenues of jobs in all the departments;

2. It must tell employees the avenues of advancement available to them. Multiple chain
promotion charts may be prepared for this purpose. In such a chart each position is linked
to several other positions to which promotions can be made The charts showing ladders
or paths of advancement or promotion routes are called opportunity charts or fortune
sheets dead and jobs should be labeled and the upward path should be well marked on the
chart;

3. The basis of promotion should be clearly specified. Due weight age should be given to
seniority, merit and future potential of an employee. Clear cut norms and criteria should
be laid down for judging the length of service, merit and potential. The assessment and
reporting system should be objective;

4. Appropriate authority should be entrusted with responsibility of taking decision on

promotion the final authority to sanction a promotion should only suggest the names
along with their record;

5. Suitable training and development opportunities should be provided to the staff so that
employees can prepare themselves for advancement;

6. Detailed records of service and performance should be maintained for all employees.

7. The policy should be fair and impartial. For example, arbitrariness, favoritism, etc should
be eliminated;

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 8. It should be consistent i.e it should be applied uniformly irrespective of the person
concerned;

9. It should be correlated with career planning. For example, sudden spurt of promotions
(bunching) and long period of on promotion (promotional drought) should be avoided.

10. A suitable system of follow-up, counseling and review should be established. That is to
say, all promotions should be on a trial basis and the progress of the promoted employee
should be monitored to ensure that all is gong on well. Counseling and guidance should
be provided to the employees for deserving candidates;

11. A provision for appeal against the management‘s decision and its review should be made.

This is necessary to satisfy employees who accuse management of being biased;

12. Provision should be made for timely release of the promoted employee from his present
superior;

13. The promotion policy should be in writing and should be communicated to the
employees. The policy may also specify that whenever a senior person is not selected for
promotion, he will be told the reason for his suppression and

14. The policy should be flexible. Internal staff should be given a fair chance of promotion
before higher level posts are filled from outside.

7.6. CONCEPT OF SEPARATIONS

Distance students! Can enumerate the possible ways in which employees will be separated from
their organizations? The forthcoming section is devoted to the discussion of these issues
Separation of an employee takes place when his/her service agreement with the organization
comes to an end and the employee leaves the organization. It may occur due to resignation,
retirement, death, dismissal and layoff.
Now let us see some of separation modes used in the organizations…..
Resignation or quit is a voluntary separation initiated by the employee himself/herself. An
employee may resign on grounds of ill – health, marriage, better opportunities in other
organizations, etc. sometimes, an employee may be asked to resign as an alternative to
termination on grounds of gross negligence of duty or as serious change against him. It is a
compulsory resignation initiated by the employer.
Some resignations may enable the organization to rectify mistakes in hiring or employees and to
bring in fresh talent from outside. However, excess turnover of personnel is costly to the
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organization because investment in recruitment, selection and training is lost. Therefore the
personnel department should find the real causes of resignation so that appropriate actions may
be taken to prevent avoidable resignations. For this purpose an EXIT INTERVIEW should be
conducted with the employee who is leaving the organization. The main requirements of a
successful exit interview are as follows:

 Win the employee‘s confidence by assuring him that whatever he/she says will be kept
strictly confidential.

 Explain to the employee that the purpose of the interview is to improve the organization‘s
climate.

 The interview should be conducted by a responsible officer from the personnel

department.

 The interview should show a great deal of patience and listen sympathetically.

 Try to find out the real cause of resignation and endure that the employee has fully
handed over the change to somebody else.

 Assure the employee of the company‘s continuing interest in his welfare.

 Present the employee his final pay check and wish him good luck.

Retirement
Retirement is the other main cause of separations of employees from the organization. It may be
of following kinds.

a. Compulsory Retirement: An employee must retire after attaining the specified age. In
Government office the retirement age is 58 whereas in the private sector the age is
generally 50 years.

b. Premature Retirement: All employees may retire before attaining the specified age due
to bad health, physical disability, family problem, etc. He /she gets the full benefit of
retirement provided the management allows premature retirement.

c. Voluntary Retirement: when an organization wants to cut down its operations or to

close forever, it may give an option to its employees with a certain minimum service voluntary
retirement in return for a lump sum payment. This type of retirement is called Golden hand
shake.

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Retirement is a significant milestone in the life of an employee. It requires a great deal of
adjustment of his/her part. Employees require preparation through communication and
counseling. The personnel department and the immediate superior of the retiring employee
should be bid farewell. At the farewell, the employee is thanked for his services and given a
token gift. He may be requested to suggest improvements in the organization. All the dues and
benefits of the retiring employee should be paid to him/her before the farewell.
Layoff
Layoff implies temporary removal of an employee from the payroll of the organization due to
circumstances beyond the control of the employer. It may last for an indefinite period. But, the
employee is not terminated and is expected to be called back in future. The employer employee
relationship does not come to an end, but is merely suspended during the petrol of layoff. It is
temporary denial of employment. The purpose of layoff is to reduce the inimical burden on the
organization when the human resource cannot be utilized profitably.
Retrenchment
Retrenchment means permanent termination of an employee‘s services for economic reasons is a
going concern. Termination of services on account of disciplinary action of disciplinary action,
or prolonged illness or retirement and superannuation, or expiry of agreement or on closure of
the establishment does not constitute retrenchment. It is termination that occurs due to
redundancy of workforce. Retrenchment creates a sense of insecurity and resentment among the
staff. Therefore, an employee should be retrenched without humiliation and ill feeling so that
he/she does not speak unkindly of the employer.
Dismissal
Dismissal or discharge refers to terminating the services of an employee by way of punishment
for misconduct or unsatisfactory performance. Unsatisfactory performance implies persistent
failure of the employee to performance his job to the specified standards. An employee is
dismissed on account of unsatisfactory performance when he/she has no potential to improve his
performance. Misconduct menace willful violation of rules and regulations. It includes include
therefore, be used as a last step after all attempts to salvage the employee have failed. Before an
employee is discharged, he/she must be given the opportunity to explain his/her conduct and to
show – cause why he/she should not be dismissed. The principle of natural justice should be
followed. i.e. the punishment should not be out of proportion to the offence.

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 CHAPTER EIGHT

ABSENTEEISM AND LABOR TURNOVER

INTRODUCTION
Dear readers! We are in opposition to explore two very important issues: absenteeism and labor
turnover which by far are commonest problems of organizations. Moreover, we are going to
study the possible measures to be taken to tackle this problem. Absenteeism and turnover of
employees are serious problems of industry in all countries. These problems are caused by
several factors and they have many undesirable consequences. Therefore, managers are
concerned about these problems and strive to check them so as to maintain efficiency and
stability in industry.

8.1. CONCEPT OF ABSENTEEISM

Absenteeism means the failure of a worker to report for work when he/she is scheduled to work.
A worker is considered as scheduled to work when the employer has work available for him/her
and her/him aware of it. When a worker doesn‘t report for work after obtaining premier
permission it is not absenteeism. Absenteeism is Unauthorized, avoidable and willful absence
from duty. As such absence of a worker on account of strike or lockout or layoff i.e., involuntary
absence is not considered absenteeism. Any worker who reports for duty even for a part of the
day or shift is considered present.

CAUSES OF ABSENTEESIM
Employees remain absent due to several following factors
i. Nature of work. A worker is likely to be frequently absent when the job is tough and
monotonous in nature. In such a job, the worker gets tired physically and mentally.

ii. Poor working condition. When the work environment is unsatisfactory, workers are
likely to be frequently absent. Insanitation, lack of drinking water and canteen facilities,
absence of medical aid poor relations with co-workers and supervisor make the work
environment unpleasant and create absenteeism;

iii. Sickness. sickness is a major cause of absenteeism in most countries. Lack of balanced
diet makes the most worker in developing and underdeveloped nations an easy prey to
diseases and epidemics;

iv. Accidents. Industrial and load accidents lead to physical and mental injuries. As result
workers remain absent for several days;
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 v. Lack of Interest. Some workers have little interest in their job and nonsense of
responsibility. They remain absent for petty reasons;

vi. Absence of Housing and Transport Facilities. Housing is a major problem in cities and
in the absence of company house, workers either stay alone or at great distances. Quite
often workers have to travel long distances to reach the workplace. Without company
buses, they are often unable to reach in time. Thus, housing and transport problems result
in absenteeism.

vii. Poor management system. When the managers treat workers as mere tools, the rate of
absenteeism is likely to be high. In the absence of proper management control workloads,
shift arrangements and personnel policies may be unbalanced causing absenteeism;

viii. Lack of regular leave Arrangement: When there is no regular system for providing a
few days leave to workers for personal work, workers remain absent without intimidating
the employer;

ix. Alcoholism and Gambling. Many workers find it difficult to adjust to city life. They
acquire bad habits like drinking, gambling, etc Due to these habits the workers are unable
to attend to their duties regularly and

x. Miscellaneous Causes. Several other factors lead to absenteeism. For example, bad
weather, other income earning activities, night study, family responsibilities, religious
and social functions, hobbies and sports, etc. are causes of absenteeism.

8.3. EFFECTS OF ABSENTEEISM

Excessive absenteeism is harmful to both employees and workers in the following ways.
1. Regular flow of work in the factory/ office is disturbed;

2. Orders cannot be executed in time as production schedules are upset or

delayed;

3. Overall production declines;

4. There is considerable increase in overtime bill;

5. Quality of work suffers because casual workers employed to maintain work

schedules are not properly trained;

6. Work pressure on employees who are present increases;

7. Repairs and maintenance cost increases due to frequent breakdown of

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 machinery by inexperienced workers;

8. Incidence of industrial accidents increases;

9. Workers lose wages for unauthorized absence from duty;

10. Reduction in earnings increases indebtedness of workers and

11. Workers who are habitually absent may be removed from services causing a
great hardship to them and their families.

8.4. MEASURES TO CONTROL ABSENTEEISM

Absenteeism cannot be eliminated altogether. But effective measures should be taken to
minimize the rate of absenteeism. The following are important measures against absenteeism:
(1) Proper hiring. It is necessary that people with right skills and methods are selected. Every
employee should as much as possible be assigned work according to his capabilities,
aptitude and interest. The new employees should be properly induced in the organization
so as to develop right attitudes towards the company and the job.
(2) Good working conditions. Proper sanitation, drinking water, canteen, first aid rest pauses
and mechanization can help to reduce absenteeism by marking work environment pleasant;
(3) Housing and transport facilities. Provision of housing accommodation, preferably neat the
factory and bus facility will ensure regular attendance of workers;

(4) Safety program. Adequate safety measure helps to minimize industrial accidents and
reduce fear of injury among employees. As a result attendance becomes regular;

(5) Incentives. Special bonus, cash prizes and preference in promotion to regular employees
encourage workers to be regular in their attendance;

(6) Effective supervision. Supervisors can considerably reduce absenteeism by earning

confidence and commitment of workers. They should show sincere interest in workers and
treat them as human binges

(7) Disciplinary action. Suitable action should be taken against chronic absents. Punitive
action may be taken in the form of publishing their names in company house magazine,
fines, withholding pay incensement, denial of promotion, suspension dismissal, etc;

(8) Regular leave provision. A provision should be made where in every worker can avail of a
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 few days leave during the year. Holidays with pay enable a worker to attend to his private
affairs;
(9) Employee counseling. guidance and counseling help employees to eliminate bad
habit like drinking and gambling. Habitual absentees can be persuaded to become regular
by impressing upon them the loss arising to them due to absenteeism. Education and
training can be used to develop a sense of responsibility and commitment and

(10) Proper Records. Detailed and up – to – date records of absenteeism should be maintained.
Absenteeism above the predetermined level should be carefully analyzed age wise, sex
wise, month wise and other basis. Suitable corrective actions, then, should be taken
whenever necessary.

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 8.5. CONCEPT OF LABOR TURNOVER
Labor turnover refers to the rate of change in the workforce of an enterprise during a given time
period it has been defined as ―the time to time changes in the composition of the work force
that result from hiring, release and replacement of employees.‖ It is a measure of the exent to
which old employees leave and new employees enter the service of a concern. Labor turnover
should be distinguished from absenteeism. The former measures the extent of change in the
composition of working force whereas the latter indicates the extent to which workers fail to
attend to their regular work.
8.6. CAUSES OF LABOR TURNOVER
Dear students! Can you name some causes of labor turnover? That is nice! Let us discuss this.
Ether employees leave the organization on their own or they are terminated. Therefore, labor
turnover arises due to avoidable reasons. Labor turnover due to the fault management is
considered avoidance.

LABOUR TURNOVER

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 Employee oriented Employer oriented

Causes Causes

Avoidable Unavoidable
Avoidable Unavoidable
 sicknes  Stagna
 Incompetence s  poor tions
 Accide  Manpower  Season
 Laziness nts planning al
 nature
 Lack of of
 Dislike  Deaths busine
 Retirem  promotion ss
 Of work ents
 policy  Fear of
 Insubordination mecha
nizatio
 Rolling
 Low pay n
 Stone  Poor
working
 By nature
 Desire for  conditions
 A job  Unfair
 supervision

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84
 1. Avoidable Causes. Redundancy is the most significant avoidable cause of labor turnover.
In this case, workers may become redundant or surplus and have to be discharged due
seasonal nature of business, lack of demand, shortage of raw materials and power,
defective management planning, etc. dissatisfaction with the job, poor working
conditions, low wages, long working hours, bad relations with workers and supervisors,
village nexus are other avoidable causes of labor turnover.
2. Unavoidable Causes. Labor turnover also arises due to reasons beyond the control of the
management. The uncontrollable are: better prospects outside the concern, domestic
affairs like marriage and pregnancy in case of women employees, illness and accidents
causing physical disability, retirement and death, unsuitability for job or gross
inefficiency, gross misconduct or insubordination, departure from the city and housing or
transport problem.
8.7. EFFECTS OF LABOR TURNOVER

Some degree of labor turnover is inevitable as well as desirable in all organizations. However,
high rate of turnover is a warning to management that something is wrong with the health of the
organization. It may mean poor personnel practices, poor supervision, and poor company policies
and so on. High labor turnover is also a sign of low morale and instability and harmful to both
employers and employees.
Costs to Employer: High labor turnover is costly to employers in the following ways.

 Hiring costs involved in repeated recruitment, selection and placement of employees;

 Expenditure incurred on orientation and training of workers goes waste;

 Loss of production in the time interval between separation of old employees and
replacement by new employee;

 Overtime costs have to be incurred to meet delivery schedule

 Smooth working or the organization and quality of work suffer;

 Accident rates of new employees are usually higher;

 The team spirit among employees is disturbed as newly recruited workers need some
time to develop friendly relations with the existing employees;

 Machinery and equipment remain unutilized during the recruitment an d training of new
workers;

 Scrap and waste rates increase due to inexperience of then new workers and
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  Market reputation of the company suffers when orders are not executed in time due to
high labor turnover.

Costs to employees: high labor turnover is harmful to employees in the following ways:

 Due to shifting a worker loses the benefits of previous service. Pay increment, leave,
provident fund, fund, pension, gratuity, etc., are such benefits;

 An employee who changes his job quite often loses the opportunity of promotion on the
basis of seniority;

 The special skills and experience developed in an organization may become meaningless
in another organization and

 The work environment differs from one organization to another. The shifting worker may
not be able to adjust to the new organization.

8.8. MEASURES TO CONTROL LABO TURNOVER

The following steps can be taken to reduce labor turnover.
1. Proper planning of manpower requirements so as to avoid redundancy;

2. Improvement in recruitment policy and practices;

3. Use of proper test and interviews in selection of employees;

4. Proper orientation and training of employees;

5. Batter pay and good working conditions;

6. Promotion from within and other career opportunities;

7. Security of service;

8. Impartial transfer and promotion policies;

9. Introduction of incentive plans;

10. Employee welfare schemes;

11. Adequate machinery for satisfactory reprisal of grievances;

12. Provision of retirement benefits

13. Employee consultation, suggestion, schemes and workers‘ participation in management;

14. Conflate resolution and team – building techniques to improve human relations and
morale and
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15. Proper job design and work scheduling to match skills with job requirements.

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