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Chapter 6: HR as a Strategic Player Developing Strategy:

HR needs to build a strong team of

HR AS A STRATEGIC PLAYER & STRATEGIC HRM: professionals with their own areas of strength.
For HR to command the respect of all others in
Most discussions on strategy today deal with
the corporate, the following should be the
the Balanced Scorecard model as the
constitution of the HR department:
benchmark as this approach takes into account
all major aspects of an organization. The Resourcing Expert: Who is able to identify
each and every potential recruit as a
The balanced scorecard is a strategic planning
considerable value add to the organization?
and management system which takes into
account nonfinancial aspects of corporate The Developer: Every HR professional must
performance, such as customer satisfaction and believe in the Pygmalion Effect.
business processes, to create a complete picture
The Behavioral Specialist: Organisations have
of how the company is likely to perform in the
silos and individuals can get sucked into
future.
systems and procedures which are not
The Four Legs of the Balanced Scorecard: necessarily meaningful and contributory.
1. Learning and growth are analyzed through The Value Creator: Individuals have to create
the investigation of training and knowledge value. The market is full of stories of
resources. headhunters who source out exceptional talent
2. 'Business processes' are evaluated by be it in marketing, finance or even in
investigating how well products are manufacturing.
manufactured. 'Strategic HRM': Concept and Features:
3. Customer perspectives are collected to gauge 'Strategic HRM' is the process of linking HRM
customer satisfaction with quality, price and with strategic role and objectives in order to
availability of products or services. improve business performance, to develop
4. Financial data' such as sales, expenditures organizational cultures and also to foster
and income are used to understand financial innovation and flexibility.
performance. The essential features of SHRM can be
These four legs encompass the vision and summarized as under:
strategy of an organization and require active • There is an explicit linkage between HR policy
management to analyze the data collected. and practices and the overall organizational
environment.
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• It focuses on an organisation's human • The pattern and plan of SHRM envisage a
resources as the primary source of the congruence between HR strategy and the
organisation's competitive advantage. organisation's business strategy (vertical fit)
and between all HR activities perizonial fit).
• The activities of SHRM emphasize the HR
programs, policies, and practices as the means • The people, practices, and planned patterns
through which the organisation's people can are all purposeful, directed towards the
be deployed to gain a competitive advantage. achievement of the organisation's goals.

HR New Roles:

Broad Function Each Role:

ROLE BOARD FUNCTION

1. Core People Role Selection, orientation, career development, motivation, compensation,

welfare services, retention & attrition.

2. Organizational HR technology services, creating a learning work-environment,

Value-Add Role organizational. Development & consulting.

3. Business Creating flexible work culture, aligning HR initiatives to business strategies,

Transformation Role implement organizational change & transition with ease, assess return on
investment on human capital.

The seven – Step Model for Using HR as a Strategic Business Asset:

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Strategy Implementation: and themselves, contributing to greater job
satisfaction.
To be able to correctly identify where HR
creates most of its value, HR managers must CREATING BUSINESS VALUE THROUGH HR
understand the business intimately and in STRATEGY:
detail. This will allow the return on investment
Highlights of 'Deloitte HR Framework' Model:
(ROI) in HR to be calculated using these three
steps. The 10-step approach positioned by Deloitte
helps organisations to define and execute an
Step 1 - Identify all potential costs
effective HR strategy as well as develop and
Step 2 - Identify the likely benefits deliver services and capabilities that today's
organisations need to survive and grow.
Step 3 - Calculate the ROI of the program
S. HR Strategy Various steps involved in
Calculation of ROI on Human Capital:
No the Strategy
To calculate the ROI of human capital, divide
1. Define 1. Understand the
the organisation's net revenue gross revenue
human business strategy
after deducting operating expenses, salaries
capital value
and benefits by the cost of salaries and benefits. 2. Define HR strategy
NEED FOR A DISTINCTIVE HR STRATEGY: 2. Align HR 3. Segment HR customers
products
• A great human resource strategy provides a 4. Prioritize HR
and services
compelling and convincing business case for investments
aligning people and organization with
5. Design HR services
business strategy.
3. Deliver value 6. Ensure right HR service
• It commands the attention of management
delivery model
and builds the necessary commitment for
required resources and support for 7. Establish right HR
implementation. capabilities

• Great strategies create a dissatisfaction with 8. Improve HR

the current state of affairs and causes an acute operational
sense of urgency and readiness to change. excellence continuously

Individual Development Plan (IDP): 9. Build HR brand

IDP is complementary to the annual 10. Measure impact of HR

performance management process and products and services
encourages employees to invest in their work
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Factor Analysis': Benefits of 'Factor Analysis':

Factor Analysis' is a statistical method used to The main uses of factor analysis can be
group variables (or, in the case of surveys, summarized as given below. It helps us in:
items) by the closeness of their relationships to
• Identification of underlying factors the aspects
each other.
common to many variables can be the
A factor analysis is mainly used for; variables can be clustered into homogeneous
interpretation of data and in analyzing the sets.
underlying relationships between variable and
• Thus, new sets of variables can be created.
other underlying factors that may determine
This allows to gain insight to categories.
consumer behavior. Instead of grouping
responses and response types, factor analysis • Screening of variables it helps to identify
segregates the variable and groups these groupings so that the organization can select
according to their co-relevance. one variable to represent many.

Types of 'Factor Analysis': CONNECTING 'STRATEGY' TO ORGANISATIONS:

There are mainly three types of factor analysis Acquisition of Employees:

that are used for different kinds of research and
The process entails determining how many
analysis.
employees the organization needs to perform
(i) Exploratory factor analysis: Exploratory at its optimum and where the employees
factor analysis is used to measure the should be working in the organization given
underlying factors that affect the variables in a the external and internal challenges and
data structure without setting any predefined opportunities.
structure to the outcome.
Training and Development:
(ii) Confirmatory factor analysis: Confirmatory
There are three terms which are used in the
factor analysis is used as tool in research and
context of learning: Training, Development and
analysis to reconfirm the effects and correlation
Education.
of an existing set of pre-determined factors and
variables that affect these factors. The term 'Training' is concerned with imparting
specific skills for particular purposes. It is act of
(iii) Structural equation modeling: Structural
increasing the knowledge and skills of an
equation modeling hypothesizes a relationship
employee for doing a particular job.
between a set of variables and factors and tests
these casual relationships on the linear Whereas the term 'Development' refers
equation model. broadly to the nature and direction of change
induced in employees through the process of
training and education.
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The term 'Education' is used in a broader sense 5. HR professionals need to change from a
involving the development of an individual support paradigm to a value creation
socially, intellectually and physically. paradigm.

Performance Management:

Performance management systems are geared Chapter 7: CEO AND HIS/HER TEAM
to ensure that each employee within the
organization, based on previously conducted
The "chief executive officer" is the singular
job analysis, is performing the tasks intended
organizational position that is primarily
at the expected level to support the strategic
responsible to carry out the strategic plans and
business objectives of the organization.
policies established by the Board of Directors.
Effective performance management entails a A hallmark of a successful performance system
process where each employee is fully aware of is its ability
his or her role in the organization, the type of
ROLES AND RESPONSIBILITIES OF CEO:
output expected, and how the output will be
measured. In general, the duties and responsibilities of
the CEO include the following:
STRATEGY EXECUTION:
1. To lead, in conjunction with the Board, the
A 5-Point Agenda for HR Professionals:
development of the company's strategy;
1. HR professionals must spend more time and
2. To lead and oversee the implementation of
effort understanding the business environment
the company's long and short-term plans in
and the key strategic issues faced by the
accordance with its strategy;
company.
3. To ensure the company is appropriately
2. HR professionals must get more involved in
organized and staffed and to have the
the nitty-gritties of the business, i.e. in
authority to hire and terminate staff as
operational details and issues.
necessary to enable it to achieve the approved
3. HR professionals must move towards taking strategy;
an integrated look at the people in the
4. To ensure that expenditures of the company
organization, bridging the gap between HR and
are within the authorized annual budget of the
Industrial Relations.
company;
4. HR professionals must see themselves as
5. To assess the principal risks of the company
knowledge workers and facilitators of
and to ensure that these risks are being
knowledge flows within the organization.
monitored periodically and managed timely
and effectively;
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6. To ensure effective internal controls and How Talent Management Differs from HR?
management information systems are in place;
Talent management differs from previous HR
7. To ensure that the company has appropriate processes for hiring, training, and retaining
system to enable it to conduct its activities employees and indeed from HR itself-in several
both lawfully and ethically; key ways:

8. To ensure that the company maintains high • Where hiring, training, and retention before
standards of corporate citizenship and social were centralized in the HR department, with
responsibility wherever it does business. talent management many of these duties
are federated to the front-line managers
CEO AND TALENT MANAGEMENT:
actually leading the employees in question.
Talent management is the process by which an In this way, the whole organization is
organization identifies, manages and now and responsible for, and has a stake in these
for the future. activities.

It is concerned with: develops its people • HR is more administrative-focused, dealing

with pay, vacation days, benefits, and
• Developing a strategy to determine what
complaints, while talent management is
the organization needs to meet the
almost singularly-focused on helping and
demands of the business plan.
improving the top talent in the organization.
• Establishing processes to measure
• Think professional development vs. tracking
competence - required and available.
attendance.
• Creating a range of developmental tools and
• Talent management is strategic, often
processes to provide tailored approaches
manifesting as a company-wide long-term
depending on the individual needs of
plan closely associated with overall business
employees.
goals, while HR is more tactical, dealing with
• Identifying ways to obtain and retain those the day-to-day management of people.
who are critical to success.
The CEO's Role in Talent Management:
• Establishing suitable approaches to deal
The key findings of one of the research projects
with those who no longer fit organization
done by a globally acclaimed firm shows:
requirement.
• A quarter of the executives interviewed
• Measuring the impact these strategies have
spend at least 30 per cent of their
so that policy can be continually updated
management and another eight estimated
and refined to deliver high performance,
their commitment to be at least 20 per cent.
now and in years to come.
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• While they engage in development activities 4. Develop and Implement Succession and
and succession planning, much of there is Knowledge Transfer Plans
relatively ad hoc and does not stem from a
5. Evaluate Effectiveness
formal plan explicitly linked to corporate
goals. Managerial Succession Planning:

• While they say that strong talent A typical succession planning involves the
management leads to improve financial not following activities.
measure Rol (Return on Investment)
(a) Analysis of demand for managers and
explicitly.
professionals.
• All the executives interviewed write formal
(b) Audit of existing executives, future likely
evaluations of the people who report
supply from internal sources.
usually a half dozen senior managers.
(c) Individual career path planning.
• Most of them evaluate leader behavior as
well as results, and some look for other (d) Career counseling.
opportunities to spot potential early.
(e) Accelerated promotions.
• A few firms also use formal assessments to
(f) Periodical evaluation of performance of the
determine leaders' readiness for future jobs
incumbent.
and support key placement or promotion
decisions. (g) Performance related training and
development.
SUCCESSION PLANNING:
(h) Strategic recruitment for filling in gaps at
Succession planning is a process for identifying
top positions.
and developing new leaders who can replace
old leaders when they leave, retire or die. It Concept and meaning of 'Job Family':
involves an integrated, systematic approach for Job family, as the name suggests, is grouping of
identifying, developing, and retaining capable job with similar characteristics. It is a grouping
and skilled employees in line with current and of roles that have a similar nature of work and
projected business objectives. utilize a similar skill set, but that require
It encompasses five steps: differing levels and specializations of skill,
effort or responsibility (e.g. Accountant vs.
1. Identify Key Areas and Positions:
Payroll Specialist, both in the Finance and
2. Identify Capabilities for Key Areas and Business family). They typically focus on
Positions common competencies, skills and knowledge
and may relate to having a similar purpose or
3. Identify Interested Employees and Assess
process.
Them against Capabilities
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Chief Characteristics of 'Job Family' The audit is made up of four main steps:
Framework:
1. Define desired HR practices for the
The key characteristics of job families include: organization.

1. Number of Job Families 2. Assess current practices against the criterion

that has been established.
2. Career progression
3. Analyze the results.
3. Job Family clearly differentiates from other
functions 4. Establish improvement goals and take
action.
4. Characteristic/trait similarity in each role of
'Job Family' Objectives of HR Audit:

5. Improves talent and creativity 1. To clarify desired practices of HR work and

roles within the organization (HR Department,
'Job Family' Framework in Banking Industry:
Line Managers).
Following is the illustrative list of the business/
2. To evaluate current effectiveness and
administrative areas in which the concept of
establish a baseline for future improvement.
'Job Family' can be introduced in Banks:
3. To standardize practices across multiple sites
(i) Risk Management
within a division or company.
(ii) Wealth Management
4. To assess current knowledge and skills
(iii) Information Technology & Data Analytics required of HR practitioners.

(iv) Agri Finance/Credit 5. To improve performance levels for key

customers within the organization.
(v) Developmental HRM
Benefits of HR Audit:
(vi) Treasury & Forex Management
• Improvement of the professional image of
(vii) Accounts Management (viii) Marketing &
the HR department,
Sales (including CRM)
• Encouragement of greater responsibility and
HUMAN RESOURCE AUDIT:
professionalism among members of HR
The HR Audit is an overall quality control check function,
on HR activities in a division or company and
• Clarification of the HR department's duties
an evaluation of how these activities support
and responsibilities,
the organisation's strategy.
• Bringing uniformity in HR policies and
practices,
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• Installing HR best practices in the • Regardless of the number, what is being
organization, developed is a description of the level and
quality of performance desired from the
• Ensuing timely compliance with legal
Human Resource function.
requirements,
Assessing Current Practices:
• Reduction of HR costs through more
effective personnel procedures, With the list of statements completed, the
assessment of current practices demands
• Creation increased acceptance of the
looking for evidence that supports or refutes
necessary changes in HR department, and A
each statement made. Evidence may take the
thorough review of the department's
form of policies and procedures, output from
information system.
employee surveys, interviews with key
The Audit Process: customers, data collection from a Human
Resource Information System, reports issued
Defining Audit Statements:
to regulatory departments, statistics, etc.
A statement can be written about each major
It is important to recognize strengths and
practice that needs to be defined. Typically,
opportunities for improvement.
they are stated in the present tense and in a
positive manner.

The following examples illustrate these traits: Chapter 8: Communication

• The staffing process is documented so that
the responsibility of each person in the The word communication may have its roots
process is clear and understood. in the Latin words 'communicate' which
means 'to share' or 'communis' which means
• Performance appraisals are completed for
'common'.
each employee in the organization.
ORGANISATIONAL COMMUNICATION:
• There is a train-the-trainer program for each
major training program within the company. Organizational communication as an
academic discipline embraces the study of
• New employees complete a new hire
symbols, messages, media, interactions,
orientation program of key company policies
relationships, networks, persuasive
and procedures within the first 30 days of
campaigns, and broader discourses within an
work.
organization - be it a corporation,
• There is an issue resolution process that is governmental agency, religious institution,
well understood and used by employees. social movement, etc. Communication
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Approaches in an Organization: Direction of Communication:

Organizational communication can also be On the basis of a number of experiments,

classified according to its media Leavitt formed these conclusions:
1. Formal Communications: Formal 1. One-way communication is faster than
Communications are those which are a part two-way communication.
of the recognized communication system of
2. Two-way communication is more accurate
the organization. Staff meetings, Union-
than one-way communication.
Management meetings, Branch Managers'
conferences, Performance review meetings, 3. Receivers are surer of themselves and
Customer needs are illustrative forums that make more correct judgments of how right
facilitate formal communication. or wrong they are in the two-way system.
2. Informal Communications: informal 4. The sender feels psychologically under
communications are those which take place attack in the two-way system, because his
inside and outside the organisations in an receivers pick up his mistakes and oversights
unstructured manner. These informal and point them out to him.
communications grow out of the social
5. The two-way method is relatively noisier
interactions among people who work
and looks more disorderly. The one-way
together.
method, on the other hand, appears neat
Communication Patterns: and efficient to an outside observer.
Communication patterns and its types were Important Theories on Communication:
described by Harold J. Leavitt in 1950 which
Shannon and Weaver Model of
is also known as the Leavitt Experiment,
Communication:
where the experiment included 5 people
who had to play a game similar to clue. This model is specially designed to develop
the effective communication between
Five people were placed in cubicles with slots
sender and receiver. The model deals with
6 switches to exchange information.
various concepts like Information source,
The cubicles were placed in different shapes: transmitter, noise, channel, message,
star (wheel), Y, chain (line) and circle. People receiver, channel, information destination,
had slots in which they could write messages encode and decode.
and send according to these patterns.

It was done to find out which pattern could

be better to communicate effectively and
quickly.
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SHANNON-WEAVER'S MODEL OF 3. The line of communication should be as
COMMUNICATION: direct and short as possible. Should normally
be used.

4. The complete formal line of

communication

5. The persons serving as communication

centers should be competent.

6. The line of communication should not be

interrupted while the organization is
functioning.
Fayol's thoughts on organizational 7. Every communication should be
Communication: authenticated.
Henri Fayol explains his theory by using 4 TYPES OF COMMUNICATION:
sets of principles. These sets of principles
1. Interpersonal Communication
explain the following:
2. Verbal and Non-verbal Communication
• How an organization should be structured
3. Body Language
• How mangers should handle their power
4. Eyes/Hands are very expressive
• How employees are rewarded
5. External & Internal Communication
• Employee's attitudes.
Modern Communication Issues
Chester Barnard's thoughts on organizational
communication: 1. Lack of awareness/ignorance
Chester Barnard brought the communication 2. Lack of clarity in tone
activity into the concept of authority and
3. Disconnect between sender and receiver
superior subordinate relations and gave the
in Internet/Email communications
following guidelines in this respect.
4. Speaking more and listening less
1. The channels of communication should be
definitely known. 5. Reacting instead of responding
2. There should be a definite formal channel BARRIERS TO EFFECTIVE COMMUNICATION:
of communication to every member of an
(a) Badly expressed messages
organization.
(b) Faulty Translations
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(c) Inattention statement, strategic goals and strategies
about how those goals will be reached.
(d) Loss by transmission and poor retention
(b) Ensure every employee receives an
(e) Vague and un-clarified assumptions
employee handbook that contains all up-to-
(f) Emotional or psychological barriers date personnel policies.

(g) Dis-trust of communicator (c) Develop a basic set of procedures for how
routine tasks are conducted and include
(h) Noise
them in standard operating manual.
(i) Personal factors
(d) Ensure every employee has a copy of
(j) Un-conducive organizational Climate their job description and the organization
chart.
Steps for Effective organizational
Communication: (e) Regularly hold management meetings
even if there is no formal agenda.
(a) Unless management comprehends and
fully supports the premise that organisations (f) Hold full staff meetings every month to
must have high degrees of communications, report how the organization is doing, major
the organization will remain stilted. accomplishments, concerns, announcements
about staff, etc. Leaders and managers
(b) Effective internal communications start
should have face-to-face contact with
with effective skills in communications,
employees at least once a week.
including basic skills in listening, speaking,
questioning and sharing feedback. (g) Regularly hold meetings to celebrate
major accomplishments. This helps
(c) A key ingredient to developing effective
employees perceive what is important, gives
communications in any organization is each
them a sense of direction and fulfillment,
person taking responsibility to asse when
and lets them know that leadership is on top
they do not understand a communication or
of things.
to suggest when and how someone could
communicate more effectively. (h) Ensure all employees receive yearly
performance reviews, including their goals
Strategies to Support Effective organizational
for the year, updated job descriptions,
Communication:
accomplishments, areas of improvement,
Downward Communication: and plans to help the employee accomplish
(a) Ensure every employee receives a copy of the improvements.
the strategic plan, which includes the
organisation's mission, vision, values
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Upward Communication: Chapter 9: HR FUNCTIONS
(a) Ensure all employees give regular status
reports to their supervisors. Broad Functions under each Role:
Include a section for what they did last week,
Role Broad functions
will do next week and any actions/issues to
address. Core People Role Selection, Orientation,
(b) Use management and staff meetings to Career Development,
solicit feedback. Act on feedback from Motivation,
others. compensation, welfare
services, retention
c) Respect the "grapevine." It is probably one separation.
of the most Prev and reliable forms of
communication. organizational HR technology services,
Value-Added Role creating a learning work
Cross-sectional communication: environment,
As a management philosophy and corporate organizational
objective, the organization has to encourage development &
a cohesive and cordial communications with consulting.
peer departments and cross-section of
Business creating flexible work
business verticals.
Transformation culture, aligning HR
HR AND COMMUNICATION: Role initiatives to business
strategies, implement
Human resource professionals position
organizational change &
themselves at both the starting and finishing
transition with ease,
points of the communication continuum.
assess return on
From an HR viewpoint, effective
investment on human
organizational communication contributes to
capital.
learning, teamwork, safety, innovation and
quality of decision-making in organisations.
The most successful HR professionals are HUMAN RESOURCE PLANNING (HRP):
consummate communicators.
HRP is a sub-system in the total organizational
Typically, their organisations over- planning and facilitates the realization of the
communication with all constituents, and company's objectives by providing right type and
their leadership styles transmit the traditions right number of personnel.
and values of their company.
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HRP System 7. Plan for recruitment, development and internal
mobility and career progression of future supply will
A comprehensive HRP System keeps in mind the
be inadequate with reference to future net
following elements:
requirements.
1. The organization’s growth plans.
HRP Process:
2. Current and possible future trends in business.
In the process of estimating the future quantity and
3. Gaps in current manpower in terms of numbers quality of people required, the basis should be
and capabilities. annual budget and long-term corporate plans.

4. The employment scenario and availability of the Demand forecasting is based on the following
desired profiles. factors.

5. Approach towards cost effective sourcing of Internal Factors:

candidates.
• Business projections
Based on these elements we can draw "HRP System
• Budget constraints
Architecture" as under.
• New products and services

• Attrition rate

External Factors:

• Competitive environment

• Job market scenario

• Economic climate

• Technology changes
Various Steps Involved in HRP:
• Social Factors
A typical HRP consists of the following steps:
Recruitment Process:
1. Analyzing organizational plans.
All progressive organisations need to have a
2. Demand Forecasting dynamic recruitment strategy that is demanding,
flexible as well as able to meet the needs of the
3. Supply Forecasting
organization in quick time, in an efficient manner.
4. Estimating the net human resource requirements.

5. In case of future surplus, plan for redeployment,

retrenchment and lay off.

6. in case future deficit, forecast the future supply of

human resources from all sources.
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Internal Recruitment: qualifications and competence to fill jobs in the
organization.
Advantages Disadvantages
Difference between Recruitment and Selection:
1. Less Costly 1. Traditional approach,
Recruitment Selection
2. Candidates already [Link] abets raiding
oriented towards 1. Recruitment refers 1. Selection is concerned
3. Candidates' current
organization to the process of with picking up the right
work may be affected
identifying and candidates from a pool of
3. Organisations have
4. Politics play greater encouraging applicants.
better knowledge
roles prospective employees
about internal 2. Selection on the other
to apply for jobs.
Candidates 5. Morale problem for hand is negative in its
those not promoted 2. Recruitment is said application in as much as
4. Employee morale
to be positive in its it seeks to eliminate as
and motivation is
approach as it seeks to many unqualified
enhanced
attract as many applicants as possible in
candidates as possible. order to identify the right
candidates.
External Recruitment:
Selection Process - Steps Involved:
Advantages Disadvantages
1. Screening and Preliminary Interview
1. Benefits of new 1. Better morale and
skills and talent motivation associated with 2. Selection Tests
internal recruiting is
2. Benefits of new 3. Personal Interview
denied.
experiences
4. Reference and Background Checks
2. Costly method
3. Compliance with
5. Selection and Job offer
reservation policy 3. Chances of negative and
becomes easy costly errors of wrong Essentials of a Good Selection Practice:
recruitment.
4. Scope for 1. Detailed job descriptions and job specifications
resentment and 4. Adjustment of new prepared in advance management.
heartburn are employees takes longer
2. Trained panel of interviewers, with special
avoided time
emphasis on behavioral event interviewing.

3. There should be some standard with which a

prospective employee may be compared (i.e., these
should be available beforehand a comprehensive
Selection:
job specification as developed by job analysis.)
Selection is the process of picking up individuals (out
4. Line managers involved at all possible stages
of the pool of job applicants) with requisite
program.
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5. All newly appointed candidates are put through a 7. A great candidate experience
well-designed training
8. High value outsourcers and staffing firms
E-Recruitment:
9. Big data and big data Firms
E-Recruitment which also known as "Online
Role of Recruitment Agencies from the Point of the
recruitment", is the use of technology or the web-
Company and Prospective Candidate:
based tools to assist the recruitment processes. The
tool can be either a job website like [Link], the One of the latest trends in recruitment method is
organisation's corporate web site or its own through recruitment agencies.
intranet.
This intermediary recruitment method eases the
Compelling Reasons to Choose E-recruiting: administrative problems for both the Corporates
and the prospective candidates.
1. It is highly cost efficient and promises increased
ROI. Recruitment agencies match candidates to job
vacancies, working with companies directly to help
2. It gives accessibility to a big pool of resumes
fill their roles.
compared to other methods like newspaper ads.
Benefits of using a recruitment agency include:
3. E-recruitment brings in an organized and
proactive recruiting process. Easy and efficient way • CV and cover letter advice
of recruiting.
• Expert interview coaching
4. Shortened recruiting time span.
• Constructive feedback from each interview
5. Reduced complexity, reduced paper work and
• Specialist advice for your chosen field
streamlined workflow.
• and employer
6. Establishes efficient communication channel
between recruiter and candidate. • Being put forward for any relevant roles that
come up positions.
Latest Trends in Corporate Recruitment:
Penalty on recruiting agency for not ensuring willing
Some of the well proven latest trends of recruitment
applicants:
which are widely used by many corporates are as
under: It is also a practice in many companies which are
resorting to recruitment through outside agencies,
1. Corporate Talent Networks
to insert a clause in the 'Request for Proposal (RFP)'
2. Social Sourcing (while floating tender) to the effect that in case the
selected candidate refuses to join the organization
3. Recruiters as Sources not Recruiters
or, having joined the organization opts to exit within
4. A Barrage of New Assessment Science a short period, i.e., say, within 6 months, certain
amount is recovered from the concerned agency as
5. Building an End-to-End Talent Brand
a penalty for not ensuring willing applicants.
6. Modernized applicant tracking software
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Executive Management Hiring through 'Video g) Customer Services
Interviewing': Process & Benefits:
Important features of a Payroll Management
There is an imperative need to hire candidates for Software:
executive management positions through a better
a) Customization
and effective process, so that the organization
doesn't end up footing the bill for costly employee b) Payroll Management
turnover. Thankfully, the video interview can be the
c) Generate Pay Slips
fitting solution-helping the organisations connect
with executives personally, find the right skills, and d) Employee Management
shorten the process.
e) HR Management System
Benefits for using the video interview to hire the
Human Resource Information (Management) System
executives
(HRIS/HRMS):
• Connect Personally
Human Resource Information System (HRIS) is a
• Find The Right Skills software through which organisations can take care
of all HR processes and unify employee data in a
• Coordination and communication
single system.
Payroll Management Software:
It can be utilized within the department to help
Payroll software is a tool that aims to restructure human resources employees and managers improve
and automate the method of paying the employees their productivity and the results of their efforts.
of a company, making the task of processing payroll
Key functions of HRIS/HRMS:
less time-consuming and convenient.
1. Benefits and welfare administration
Payroll management system can be acquired from a
human resources management vendor or is 2. Payroll Handling
contained within as a module of a larger enterprise
3. Employee Record Handling
resource planning (ERP) package.
4. Recruitment
Advantages of Payroll Management Software to
Business growth: 5. Training & Development

a) Effective Costing 6. Performance Management

b) Notifications and Updates 7. Attendance Management

c) Employee Calendars Benefits of HRIS/HRMS:

d) Pay slips • Expedition of recurring tasks through

automation.
e) Time Saver
• Improved ability to reach large candidate pools
f) Negligible Errors/Mistakes
regarding new position openings.
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• Ability to quickly apply higher selection standards Components of Compensation System:
to a number of applications.
Compensation systems are designed keeping in
• Speedy on boarding made possible by mobile minds the strategic goals and business objectives
accessibility. and on the basis of certain economic factors as well
as the job work and responsibilities.
• Reduction of paper and related materials and
storage- often For good working relationships, it is essential to set
fair and appropriate salary levels and benefits.
• Yields cost savings. Salaries should be linked with the specific job that
• Ease in distributing up-to-date materials someone carries out.
concerning company policies and procedures. Types of Compensation:
• Potential for greater employee engagement
through self-service options.

• Streamlining of open enrollment for benefits.

• Empowerment of employees to change benefits

information directly as changes occur.

Internet and social media as Modern

Communication & Feedback Tools in Organisations:

Effective communication helps to get the job done

Strategic Compensation:
on time and within budget. Some of the most
popular and efficient business communication tools: Strategic compensation is determining and
providing the compensation packages to the
(i) Intranet/Social Intranet
employees that are aligned with the business goals
(ii) Chat Rooms, Private and Group Messaging and objectives.

(iii) Discussion Forums Cost to Company (CTC):

(iv) Internal Blogs, Video and Audio Cost to company (CTC) is a term for the total salary
package of an employee.
(v) Podcasts
It indicates the total amount of expenses an
(vi) Gamification
employer (organization) spends on an employee
COMPENSATION: during one year.

Compensation is the remuneration received by an Components of salary:

employee in return for his/her contribution to the
• Basic salary
organization. It is an organized practice that involves
balancing the work-employee relation by providing • Allowance
monetary and non-monetary benefits to employees.
• Perquisites
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• Reimbursement associated with Scale IV
and V.
• Life and health insurance
Top Management in Normal pay structure
• Transport facility
Scale VI and VII including basic pay and
• Subsidized meals allowances and other
perquisites and benefits
• Rent of the office space associated with Scale VI &
Compensation Structure in Public Sector Banks VII and additional benefits
(PSBS): as per structure of
bank/as applicable to Top
The General Pattern of Compensation packages in Level executives.
Public Sector Banks, is outlined hereunder:

Grade Compensation Structure

Award Staff (Clerical & Normal pay structure INCENTIVE-BASED COMPENSATION:

Subordinate staff) including basic and special
allowances and other Incentives are monetary benefits paid to employees
allowances in recognition of their outstanding performance.

Scale 1 Junior Normal pay structure They are defined as variable rewards granted
Management including basic pay and according to variations in the achievement of
allowances and other specific results.
perquisites and benefits Advantages of Incentive Based Compensations:
associated with scale I.
1. Incentives are important for inducement and
Scale II Middle Normal pay structure motivation of workers for higher efficiency and
Management including basic pay and greater output.
allowances and other
perquisites and benefits 2. Employee earnings go up, resulting in enhanced
associated with Scale II. standard of living of employees.

Scale III Middle Normal pay structure 3. Productivity increases and production capacity is
Management including basic pay and also likely to increase, even with reduced
allowances perquisites supervision.
and benefits associated 4. Companies can reduce the burden of fixed costs
with Scale III. by keeping a portion of the remuneration as
Scale IV-V Senior Normal pay structure variable.
Management including basic pay and Disadvantages of Incentive Based Compensation:
allowances and other
perquisites and benefits 1. Tendency to bypass quality in pursuit of increased
output for higher incentives.
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2. Sometimes employees may disregard security 6. Use feedback as a gift - make it meaningful and
regulations due to payment by results approach give it often.
adopted for higher incentive figures.
Arresting Attrition:
3. Overworking may affect employee health.
An analysis of the situation made on an industry,
4. Can demotivate employees not in a position to sector as well as company wise basis, very obvious
earn higher incentive due to sectional differences. factors as reasons for the heavy attrition. Some are
cited here:
ATTRITION/TURNOVER MANAGEMENT:
1. Heavy pressure of work without adequate
Attrition, in Human Resource terminology, refers to
rewards
the phenomenon of the employees leaving the
company. 2. Inadequate training

It is usually measured with a metric called attrition 3. Poor working conditions

rate, which simply measures the number of
4. Limited scope for career growth
employees moving out of the company (voluntary
resigning or laid off by the organization). 5. Inadequate salary

Compensation and Employee Attrition: 6. Stress leading to health problems

Following are six practical steps managers can take Top 10 Ways to Mitigate Attrition in IT/ITES
to improve employee engagement: Industry:

1. Help employees view their pay as more than base 1. Build people skills of middle management
salary increases and bonuses and understand that
2. Focus on Capability building and creating an eco-
total rewards also include recognition, meaningful
work and career opportunities. 3. Communication on Compensation & Benefits

2. Understand what truly engages and motivates 4. Engage employees over & beyond their day-to-
employees. It is often much more than money as day job
different people value different rewards.
5. Provide Growth Opportunities and communicate
3. Clearly communicate the link between about them.
performance and rewards. Clearly explain the
6. Managing expectation of employees is a key
reasons for the reward and the amount of the
reward. 7. Provide opportunities for skill up-gradation
through training
4. Ensure that performance assessments and total
rewards appropriately differentiate the best, solid 8. Career Pathing plays a key role
and weakest performers.
9. Creating Training Academies with in and also do
5. Assess and improve the organisation's work tie up with institutions.
climate by training managers to motivate
10. Effectiveness of Reward & Recognition
employees.
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EMPLOYEE RISK ASSESSMENT SYSTEMS IN BANKS: Performance Management Cycle:
Employee risk assessment is a careful examination Performance, Management, Measurement and
of what, in the organization, could cause harm to Information approach Performance
people, so that one can assess whether they have Management is based on the plan-do-review-
taken enough precautions or should do more to
revise cycle.
Banks being the custodians of public money, the
Plan: - Understanding current performance,
employee risk which is a part of operation risk frame
prioritizing what needs to be done, need to be
work, is paramount and as such, there has been a
robust structure in periodical assessment of taken and planning for the improvement;
employee risk through tested models as directed by Do: - Ensuring that the proper systems and
Reserve Bank of India. Going by the increasing trend
processes are in place to support and manage
of frauds attributable to insiders in banks, there is
risk – and helping people achieve better
an imperative need for strengthen the people risk-
performance;
assessment strategies so that the danger spots can
be found out through early signals as revealed by Review: - Understanding the impact of your
such assessment tools and timely corrective actions actions, reviewing performance, speaking
can be taken.
stakeholders about their experience of
Maintaining Effective Relationship between performance and getting a better picture of
Employees & Employer: changing circumstances;
The relationship between employer and employee is Revise: - Using the lessons learned from review
primarily determined by the actions and attitudes of to change your plans or what you do so that
the employer. "When employees have a strong, future action is more efficient, effective and
healthy relationship with their employers, the entire
appropriate.
company benefits. Studies show that employees
who have mutually respectful relationships with Steps Involved in Performance Appraisal
their employers are more likely to be happy, loyal, Process:
and productive in the long-run.”
a) Establishing Performance Standards

b) Communicate Performance expectations to

Chapter 10: Performance Management concerned employee

c) Measure Actual Performance

Performance Management System (PMS) is a Four sources of information are frequently
formal, structured system of measuring, used to measure actual performance
evaluating job related behaviors and outcomes
to discover reasons of performance and how to d) Compare actual performance with standards
perform effectively in future so that employee, e) Discuss the Appraisal with the Employee
organization and society all benefit.
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f) Initiate corrective Action 4. Forced Distribution Method: Here
employees are clustered around a high point
Techniques/Methods of Performance
on a rating [Link] is compelled to
Appraisals:
distribute the employees on all points on the
(A) Past-Oriented Methods: scale.

1. Rating Scales: Rating scales consists of 5. Critical Incidents Method: The approach is
several numerical scales representing job focused on certain critical behaviors of
related performance criterions such as employees that makes all the difference in the
dependability, initiative, output, attendance, performance.
attitude, etc.
Advantages - Evaluations are based on actual
Advantages - Adaptability, easy to use, low job behaviors, ratings are supported by
cost, every type of job can be evaluated, large descriptions, feedback is easy, reduces recent
number of employees covered, no formal biases, chances of subordinate improvement
training required. are high.

Disadvantages-Rater's biases. Disadvantages - Negative incidents can be

prioritized, forgetting the positive ones, overly
2. Trait Analysis: Under this method, checklist
close supervision.
of statements of traits of employee in the form
of Yes or No based questions is prepared. 6. Confidential Records: Here the report is
given in the form of Annual Confidential Report
Advantages - economy, ease of administration,
(ACR) and may record ratings with respect to
limited training required, standardization.
following items; attendance, self-expression,
Disadvantages - Raters biases, use of improper team work, leadership, initiative, technical
weights by HR, does not allow rater to give ability, reasoning ability, originality and
relative ratings. resourcefulness, etc.
3. Forced Choice Method: The series of 7. Pen portrait: The assessor pictures in writing
statements arranged in the blocks of two or about the assessed, regarding his qualities and
more are given and the rater indicates which performance as well as his potential.
statement is true or false. The rater is forced to
(B) Future-Oriented Methods:
make a choice. HR department does actual
assessment. (i) Management by Objectives:

Advantages - Absence of personal biases 1) MBO helps and increases employee

because of forced choice. motivation

Disadvantages - Statements may be wrongly 2) Managers are more likely to compete with
framed. themselves than with other managers
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3) MBO reduces role conflict and ambiguity 3. Reallocate Incidents

4) MBO provides more objective appraisal 4. Scale of Incidents

criteria
5. Develop Final Instrument
5) MBO forces and aids in planning
Use of Performance Appraisals:
6) MBO identifies problems better and early
In the organisations, generally, Performance
(ii) Assessment Centre Approach Method: Appraisals are used as vital input for the
following HR processes:
Under this method, many evaluators join
together to judge employee performance in a) Promotions
several situations with the use of a variety of
b) Confirmations
criteria.
c) Training and Development
It is used mostly to help select employees for
the first level (the lowest) supervisory d) Compensation reviews
positions.
e) Competency building
Assessment Centre Approach Procedure:
Goals of Performance Appraisals:
First, a leadership group is established, each
General Goals Specific Goals
member supporting a predefined position, but
the group must arrive at consensus. Then a Developmental Use Individual needs
task force is used with an appointed leader, Performance feedback
Transfers and Placements
who decides on a course of action. Simulation
Strengths and
games and in-basket exercises are used to test
Development needs Salary
organizational and planning abilities.
Administrative Promotion
(iii) Behaviorally Anchored Rating Scales Decisions/Uses Retention/Termination
(BARS): Recognition Layoffs Poor
This is a modern appraisal technique which Performers identification
supports the claim that it provides better, Organizational HR Planning Training Needs
more equitable appraisals as compared to Maintenance Analysis Organizational
other techniques. Goal achievement HR
Systems Evaluation
The procedure for BARS usually five stepped as Reinforcement of
under: organizational priorities
1. Generate Critical Incidents

2. Develop Performance Dimensions

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Appraisal System Prevailing for Lower-Level e) Technical/Functional Competencies:
Employees:
'Competency Mapping':
The more critical evaluation of performance
Competency Mapping is the process of
through modern tools like - 360-degree
identifying (key) competencies for a particular
appraisal, Assessment Centre Approach, BARS,
position (role or task) in an organization and
etc., are mostly applicable to middle, senior
then using the result for various HR processes
and top-level executives in the organizations
including job-evaluation, recruitment, training
including banks.
and development, performance management
360-DEGREE APPRAISAL: and succession planning.

360-degree appraisal was first developed by Competency Matrix:

General Electric (GE), USA in [Link] appraisal
HR Head HR Manager
made by top management, immediate
superior, peers, subordinates, self and Communication Communication
customers is called 360 Degree Appraisal. 360- (core) 4 (core) 4
degree appraisals are useful to measure inter-
Decision-making Decision-making
personal skills, customer satisfaction and team
(core) 5 (core) 4
building skills.
Conflict resolution Conflict resolution
'Core Competence': Concept and Features:
(core) 4 (core) 5
It is a set of skills, related knowledge and
Employee relations Employee relations
attributes that allow an individual to
(functional) 5 (functional) 5
successfully perform a task or an activity within
a specific function or [Link] term core Compensation Compensation
competency was coined by the leading (functional) 2 (functional) 3
management experts, CK Prahalad and Gary
Competency Mapping Process:
Hamel in an article in the famous Harvard
Business Review. Competency mapping is a process through
which one assesses and determines one's
Some examples of organizational
strengths as an individual worker in the
competencies and how they get described and
context of an organization.
derived.
Steps in Competency Model Building
a) Analytical Thinking:
1. Background information about the
b) Key Behavioral Indicators:
organisations.
c) Generic Competencies:
2. Decide on the occupation/job position(s)
d) Managerial Competencies: that require
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3. Discuss the application of the competency make up the goals and objectives measured
model. under the performance appraisal process.

4. Select a data collection method and plan the Key characteristics of KPIs
approach.
They are objective, independent and
5. Organize the collected. standardized measures of performance, not
ratings or judgments of performance. They
6. Identify main themes or patterns, build the
may be QUANTITATIVE or QUALITATIVE.
model - defining specific behavior indicators
and review the model. KPIs should be:

KEY RESULT AREAS (KRAS): • quantifiable

KRAS refer to general areas of outcomes or • quality oriented

outputs for which the department's role is
• time specific
responsible.
• cost effective
Steps for Arriving at KRA:
Quantity:
• Talk to individual team members, gather
information. Number of unit’s
produced/published/sent/received/processed/
• Identify their day-to-day activities and
deadlines met
hence, derive key result areas.
• Contacts per hour/day/week
• Document them and allocate a timeline.
• Cost reduced
• Communicate KRA's to the team members.
• Resources increased
• Revisit progress of an individual on these
KRA's periodically. • Increase in area/beneficiary coverage, etc.

• Critically review performance against each Quality:

of these KRAS periodically (preferably
• New innovative ideas introduced
quarterly).
• Benefit Increased
• Facilitate correction in case of deviations.
• Error rate or reworks
• Observe, measure, discuss and appraise.
• Grievances of employees
Key Performance Indicators (KPIs):
• Conflicts
A KPI is a specific, agreed measure of
achievement within a KRA, which go on to • Returned goods
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• Staff turnover 7. Build a performance-aligned culture

• Complaints and compliments received, etc. 8. Recognize and reward performance publicly
and frequently
• Managerial dimensions
Continuous Performance Management:
Cost:
Continuous Performance Management in a
• Variance against budget
human resource (HR) management context is
• Amount spent vs. benefit defined Performance management processes
that take place throughout the year on an
• Utilization of funds
ongoing basis. It is a continual, holistic process,
• Wastage of funds as opposed to those based on a traditional,
one-off annual appraisal.
Time:

• Speed of delivery (emergency response),

etc.

• Reduction in number of
minutes/hours/days, etc.

• Deadlines and schedules met

• Average call response time

• Projects completed per week/month, etc.

• Scheduling and maintenance

PERFORMANCE MANAGEMENT BEST

PRACTICES:

1. Identify the goals of your performance

management initiatives

2. Define and describe each role

3. Pair goals with a performance plan

4. Monitor progress towards performance

targets

5. Coaching should be frequent

6. Use guidelines to your advantage