What do you call this kind of authority exerted by an HR manager as coordinator of personnel activities?

After studying this chapter, students should be able to understand the following concepts:

A. Line and Staff Aspects

LESSON OVERVIEW

After reading this chapter student should know the basic concept of authority, different types of the

authority and difference between the line and staff hangers. Although most firms have a human resource

department with its own manager, all other managers tend to get involved in activities like recruiting,

interviewing, selecting, and training.

Authority is the right to make decisions, to direct the work of others, and to give orders.

Authority refers to the rights inherent in a managerial position to give orders and expect the orders to be

obeyed. Authority was a major tenet of the early management writers, the glue that held the organization

together. It was to be delegated downward to lower-level managers. Each management position has specific

inherent rights that incumbents acquire from the position's rank or title.

Authority is related to one's position and ignores personal characteristics. When a position of authority is

vacated, the authority remains with the position.

The early management writers distinguished between two forms of authority.

Let’s have brief view about the different types of authorities.

Line authority entitles a manager to direct the work of an employee. It is the employer-employee authority

relationship that extends from top to bottom. A line manager directs the work of employees and makes

certain decisions without consulting anyone. Sometimes the term line is used to differentiate line managers

from staff managers. Line emphasizes managers whose organizational function contributes directly to the

achievement of organizational objectives.

Staff managers have staff authority. A manager's function is classified as line or staff based on the

organization's objectives. As organizations get larger and more complex, line managers find that they do not

have the time, expertise, or resources to get their jobs done effectively. They create staff authority functions

to support, assist, advice, and generally reduce some of the informational burdens they have.

The authority exerted by a personnel manager as a coordinator of personnel activities. Here the manager

acts as “the right arm of the top executive.”

1. Line Versus Staff Authority – Authority is the right to make decisions, to direct

the work of others, and to give orders. Line managers are authorized to direct the work of subordinates.

Staff managers are authorized to assist and advise line managers in accomplishing their basic goals. HR

managers are generally staff managers.

2. Line Managers’ HRM Responsibilities – Most line managers are responsible

for line functions, coordinative functions, and some staff functions.

In recruiting and hiring, it’s generally the line manager’s responsibility to specify the qualifications

employees need to fill specific positions. Then the HR staff takes over. They develop sources of qualified

applicants and conduct initial screening interviews. They administer the appropriate test. Then they refer

the best applicants to the supervisor (line manager), who interviews and selects the ones he/she wants.

Authorized to direct the work of subordinates—they’re always someone’s boss. In addition, line managers

are in charge of accomplishing the organization’s basic goals.

Line Managers’ Human Resource Management Responsibilities

1. Placement

2. Orientation

3. Training

4. Improving job performance

5. Gaining creative cooperation

6. Interpreting policies and procedures

7. Controlling labor costs

8. Developing employee abilities

9. Creating and maintaining departmental morale

10. Protecting employees’ health and physical condition

Authorized to assist and advise line managers in accomplishing these basic goals. HR managers are

generally staff managers.

􀂾 Responsibilities Of Staff Managers

Staff managers assist and advise line managers in accomplishing these basic goals. They do, however, need

to work in partnership with each other to be successful. Some examples of the HR responsibilities of staff

managers include assistance in hiring, training, evaluating, rewarding, counseling, promoting, and firing of

employees, and the administering of various benefits programs.

An individual who normally acts in an advisory or staff capacity, working with other managers to help them

deal with human resource matters. One general trend is that HR personnel are servicing an increasing

number of employees. The human

resource manager is primarily

responsible for coordinating the

management of human resources to

help the organization achieve its

goals. There is a shared responsibility

between line managers and human

resource professionals.

The recognition of HR as a legitimate

business unit has made it highly

strategic in nature and more critical

to achieving corporate objectives. To

succeed, HR executives must

understand the complex

organizational design and be able to

determine the capabilities of the

company’s workforce, both today

and in the future. HR involvement in

strategy is necessary to ensure that human resources support the firm’s mission. The future appears bright

for HR managers willing to forge a strategic partnership with other business units.

Executives are top-level managers, who report directly to the corporation’s chief executive officer or the

head of a major division.

Generalists are people who perform tasks in a wide variety of human resource-related areas. The generalist

is involved in several, or all, of the human resource management functions.

Specialist may be a human resource executive, manager, or non-manager who typically is concerned with

only one of the functional areas of human resource management.

officer or the head of a major division.

The generalist is involved in several, or all, of the human resource management functions.

concerned with only one of the functional areas of human resource management.

Page 2

After studying this chapter, students should be able to understand the following concepts:

A. Legal context of HR decisions

LESSON OVERVIEW

This chapter examines the aspects of HR law and regulations. The goal is to identify and discuss the

laws themselves and how best to comply with them and do what is best for the organization. The

chapter unveils why understanding the legal environment is important and the context in which HR

regulation occurs. The chapter further explores the challenges to legal compliance. It ends with ways

for the effective manager to avoid the pitfalls in the EEO legal environment.

Legal considerations are significant external force

affecting human resource management relates to

federal, state, and local legislation and the many court

decisions interpreting this legislation. In addition,

many presidential executive orders have had a major

impact on human resource management. If company is

having compliance with the legal considerations it will

be contribution towards enhancement of good will

reputation as well as fair operations of the organization

that will be leading towards attaining competitive

advantage.

Keeping in view the importance of legal considerations mangers must understand the legal issues that

affect the practices of HRM Like Which employee to hire?

How to compensate employees?

What benefits to offer?

How to handle conflicts?

How and when to fire employees? etc.

Understanding and complying with HR law is important for three reasons. It helps the company to do

the right thing, to realize the limitations of the HR and legal departments, and it limits potential liability.

Compliance with the law is the right thing to do. The primary requirement of these laws is to mandate

good management practice. Operating within these laws has benefits beyond simple legal compliance.

Discriminatory practices not only create potential legal liability, but also lead to poor employee morale

and low job satisfaction, which can lead to poor job performance.

If managers make poor decisions, the HR department neither always be able to resolve the situation nor

can a firm’s legal department solve problems created by managers. The function of the legal

department is to try to limit damage after it has already occurred.

Considerable financial liabilities can occur when HR laws are broken or perceived to be broken.

Legal environment and considerations can influence potential and prospective as well as current

employees of the organization to Prospective Employees. It provides Protection from discrimination in

selection, initial job placement, and initial compensation

While to Current Employees Protection from discrimination in all dimensions of work in the

organization

To make an employment decision, not on the basis of legitimate job-related factors...Any employment

decision: hiring, promotions, pay, discipline, etc fail to use job-related factors (e.g., essential job

qualifications, job performance, etc.), and for employment decisions Instead, of legitimate factors

employer uses false stereotypes and prejudices. Law Prohibits Discrimination in Hiring, Compensation,

terms, conditions or privileges of employment based on Race, religion, color, sex, national origin and

Physical Disability.

A situation in which employment decisions are not affected by discrimination.

The laws affecting HRM can be divided into two broad categories: equal employment opportunity

(EEO) laws and other laws. The major EEO laws cut across nearly every aspect of managing human

resources.

The concept of equal employment opportunity has undergone much modification and fine-tuning since

the passage of the Civil Rights Act in 1964. Congress has passed numerous amendments to that act and

has passed other legislation, as oversights in the initial act surfaced. Major Supreme Court decisions

interpreting the provisions of the act have also been handed down. Executive orders were signed into

law that further strengthened equal employment opportunity. EEO is a combination of legislative and

judicial policy set forth by federal, state, and local governments that ensures fair and equal treatment of

all persons. Job applicants may not be rejected based on discriminatory practices

A strategy intended to achieve fair employment by urging employers to hire certain groups of people

who were discriminated against in the past Steps that are taken for the purpose of eliminating the

present effects of past discrimination

There have been many laws passed and court decisions rendered that affect the everyday actions of

human resource management. Human resource decisions that were made in the past may no longer be

feasible. Human resource managers have a responsibility to ensure that actions affecting human

resource management adhere to both the letter and intent of the law. Unfortunately, not everyone may

share this view, and that is when problems occur.

This law requires the same pay for men and women who do the same job in the same organization.

Basically this law provides protection against discrimination based upon sex.

This act prohibits discrimination based on race, color, sex, religion, or national origin. The Civil Rights

Act of 1991 amended the Civil Rights Act of 1964 and had the following purposes:

To provide appropriate remedies for intentional discrimination and unlawful harassment in the

workplace.

To codify the concepts of business necessity and job related pronounced by the Supreme Court.

To confirm statutory authority and provide statutory guidelines for the adjudication of disparate

impacts under Title VII of the Civil Rights Act of 1964.

To respond to recent decisions of the Supreme Court by expanding the scope of relevant civil rights

statutes in order to provide adequate protection to victims of discrimination.

The Age Discrimination in Employment Act (ADEA) (amended 1978, 1986) prohibits employers from

discriminating against individuals who are over 40 years of age. The latest amendment not only gives

older employees the option to continue working past age 70, but the health care provision of the

amendment also provides them with an additional incentive to continue to do so. The ADA has three

major sections. Title I contains the employment provisions. Titles II and III concern the operation of

state and local governments and places of public accommodation such as hotels, restaurants, and

grocery stores.

1. Individuals with disabilities

2. Essential Functions

3. Reasonable accommodation

4. The Vocational Rehabilitation Act of 1973

The Americans with Disabilities Act (ADA), passed in 1990, prohibits discrimination against qualified

individuals with disabilities. Persons discriminated against because they have a known association or

relationship with a disabled individual also is protected.

An executive order (EO) is a directive issued by the president and has the force and effect of laws

enacted by Congress. A major provision of EO 11246 is that every executive department and agency

that administers a program involving federal financial assistance will require adherence to a policy of

nondiscrimination in employment as a condition for the approval of a grant, contract, loan, insurance,

or guarantee. Affirmative action, stipulated by EO 11246, requires employers to take positive steps to

ensure employment of applicants and treatment of employees during employment without regard to

race, creed, color, or national origin

An approach that an organization with government contracts develops to demonstrate that women or

minorities are employed in proportion to their representation in the firm’s relevant labor market

Executive Orders 11246 & 11375 require companies with federal contracts to develop affirmative

action plans (AAPs) it provides preferential treatment to minority group members in functions like

Recruiting and Hiring

The three steps involved in developing an affirmative action program are (1) conducting a utilization

analysis, (2) establishing goals and timetables, and (3) determining action options. In the first phase,

organizations need to consider different pieces of information, which constitute an availability analysis

after they have conducted a utilization analysis. Rather, the employer should take into consideration the

size of the underutilization, how fast the work force turns over, and whether the work force is growing

or contracting. In the third phase, the companies recruit protected-class members, redesign jobs,

provide specialized training, and remove unnecessary employment barriers.

HRM practices may be challenged by anyone of stakeholders like society, community, customers,

employees and shareholders so management for every decision should have legal backing in order to

defend and explain its decisions. A firm's HR department has considerable responsibilities with respect

to human resource law. However, if managers make poor decisions, the HR department will not always

be able to resolve the situation. The manager's job is to prevent the damage from happening in the first

place. Thus, understanding and complying with HR law helps the manager to do the right thing, realize

the limitations of the HR and legal departments, and minimize potential liability.A dynamic legal

landscape, complex laws, conflicting strategies for fair employment, and unintended consequences are

among the challenges confronting managers attempting to comply with HR law.

In addition to the many HR related laws that have been passed, there have been a myriad of opinions

handed down in court cases that have affected the HR legal environment. The legal landscape is

changing quickly.

Each individual law is accompanied by a set of regulations that can be quite lengthy. Nonetheless, the

gist of most HR law is fairly straightforward. Managers should be able to understand the basic

intention of all such laws without too much difficulty.

Society at large, political representatives, government employees, and judges all has different views

regarding the best ways to achieve equitable HR laws.

It is very common for a law, government program, or an organizational policy to have numerous

unanticipated consequences, some of which turn out to be quite negative. The challenge to managers is

to anticipate and deal with both the intended and unintended consequences of law.

demonstrate that women or minorities are employed in proportion to their representation in the firm’s

relevant labor market

factors

Page 3

After studying this chapter, students should be able to understand the following concepts:

We will examine the human resource planning process and some human resource forecasting techniques.

Next, we discuss forecasting human resource requirements and availability and describe what actions could

be taken should either a surplus or a shortage of workers exist.

To understand the Human Resource Planning First, we will see what is Planning? and why is it needed?

you want to achieve. Planning is thus “the process of establishing objectives and courses of action prior to

taking action.”

comprehensive framework for making decisions in advance. It also facilitates the organizing, leading, and

controlling functions of management. Planning: allows you to make your decisions ahead of time, it helps

you to anticipate the consequences of various courses of action, it provides direction and a sense of

purpose, it provides a unifying framework against which to measure decisions, and thus helps you avoid

piecemeal decision making. Planning also helps identify potential opportunities and threats, and facilitates

control. It is concerned with the end (what is to be done) as well as with means (how it is to be done).

have been no need for planning. Planning is one of the functional areas of HR.

and objectives and how they are to be achieved.

requirements to ensure that the required number of employees, with the required skills, is available when

they are needed. After an organization’s strategic plans have been formulated, human resource planning can

be undertaken. Human resource planning has two components: requirements and availability. Forecasting

human resource requirements involves determining the number and type of employees needed by skill level

and location. In order to forecast availability, the human resource manager looks to both internal sources

(presently employed employees) and external sources (the labor market). When employee requirements and

availability have been analyzed, the firm can determine whether it will have a surplus or shortage of

employees. Ways must be found to reduce the number of employees if a surplus is projected. Some of these

methods include restricted hiring, reduced hours, early retirements, and layoffs. If a shortage is forecasted,

the firm must obtain the proper quantity and quality of workers from outside the organization. In this case,

external recruitment and selection is required.

The process of anticipating an organization’s future human resource needs and then developing action plans

for fulfilling identified needs. The systematic review of human resource requirements getting the right

people at the right place at the right time.

Enable organizations to anticipate their future HR needs to identify practices that will help them meet those

needs

• Helps in planning job assignments

• Helps cope with fluctuations in staffing

• Identifies recruiting needs

• Provides other useful information

Forecasting is carried out in two basic areas which are demand forecast of workforce for organization and

supply forecast for the organization

Following approaches are used to perform this function or activity:

• Statistical approaches

a) Trend analysis

b) Ratio analysis

c) Regression analysis

• Judgmental methods

a) Managerial judgment

• Monitoring current HR programs and personnel staffing levels

• Investigating future HR needs and concerns

A requirements forecast is an estimate of the numbers and kinds of employees the organization will need at

future dates in order to realize its goals. Several techniques of forecasting human resource requirements and

availability are currently being used by organizations.

This method uses the organization’s current level of employment as the starting point for determining

future staffing needs. The key to zero-base forecasting is a thorough analysis of human resource needs.

A forecasting method in which each successive level of the organization, starting with the lowest, and

forecasts its employee requirements in order to, ultimately, provide an aggregate forecast of employment

needs.

Mathematical models can assist in forecasting HR requirements. The relationship between sales demand and

the number of employees needed is a positive one.

It is a technique for experimenting with a real-world situation through a mathematical model representing

that situation. A model is an abstraction of the real world.

Determining whether the firm will be able to secure employees with the necessary skills and from what

sources these individuals may be obtained is called an availability forecast.

When a comparison of requirements and availability indicates a worker surplus will result, restricted hiring,

reduced hours, early retirements, or layoffs may be required to correct the situation.

a. Restricted Hiring

When a firm implements a restricted hiring policy, it reduces the workforce by not replacing employees who

leave.

b. Reduced Hours

Reaction to a declining demand can also be made by reducing the total number of hours worked. Instead of

continuing a 40-hour week, management may decide to cut each employee’s time to 30 hours.

c. Early Retirement

Early retirement of some present employees is another means of reducing the supply of workers.

d. Layoffs

At times, the firm has no choice but to actually lay off part of its workforce.

Faced with a shortage of workers, many organizations had to intensify their efforts to recruit the necessary

people to meet the needs of the firm. Some actions that were taken included:

a. Creative Recruiting

A shortage of personnel often means that new approaches to recruiting must be used. The organization may

have to recruit in different geographical areas than in the past, explore new methods, and seek different

kinds of candidates.

b. Compensation Incentives

Firms competing for workers in a high-demand situation may have to rely on compensation incentives.

Premium pay is one obvious method. However, this approach may trigger a bidding war that the

organization cannot sustain for an extended period. More subtle forms of rewards may be required to

attract employees to a firm, such as four-day workweeks, flexible working hours, telecommuting, part-time

employment, and child care centers.

c. Training Programs

Special training programs may be needed to prepare previously unemployable individuals for positions with

a firm. Remedial education and skills training are two types of programs that may help attract individuals to

a particular company.

d. Different Selection Standards

Another approach for dealing with shortages of workers is the lowering of employment standards. Selection

criteria that screen out certain workers may have to be altered to ensure that enough people are available to

fill jobs. For instance, instead of desiring extensive work experience, a firm may be willing to hire an

inexperienced worker and train him or her to do the job.

The process of ensuring that a qualified person is available to assume a managerial position once the

position is vacant.

b. Succession Development

The process of determining a comprehensive job profile of the key positions and then ensuring that key

prospects are properly developed to match these qualifications.

The goal of forecasting and planning is to keep a stable workforce that meets needs of the organization.

• Determine the impact of organizational objectives on specific organizational unit

• Define the skills required to meet objectives (demand for Human Resource)

• Determine additional human resource requirements in light of current HR (net HR

requirements)

• Develop action plan to meet the anticipated HR needs

HRP has become more important in recent years for a number of reasons like:

• Globalisation of Business

• New Technologies

• The changing skill levels in the Workforce

• The changing demographics of the workforce

• Mergers and Acquisitions

• Legal developments

Successful HR planning requires:

• HR personnel understand the HR planning process

• Top management is supportive

• The communications between HR staff and line management are healthy

• The HR plan is integrated with the organization’s strategic business plan

Effective HR planning provides best options for supply of workforce of the organization and s stated in

earlier chapters if organization is able to have efficient and effective workforce it will be have competitive

advantage.

mathematical model representing that situation. A model is an abstraction of

the real world.

purposes and objectives and how they are to be achieved.

Page 4

• Strategic Planning

• Human Resource Information Systems (HRIS)

• Relationship of HRIS with overall MIS

A. Strategic planning:

It is the process by which top management determines overall organizational purposes and

objectives and how they are to be achieved. The linking of HRM with strategic goals and objectives

in order to improve business performance and develop organizational cultures that foster

innovation and flexibility.” The role of HR in the strategic planning process depends on the

organization's view of HR. There are three views detailed in the text which involve HR as an

operational function, HR as a "fitting" function, and HR as an equal partner in the strategic

planning process. Obviously, it is our contention that the latter is the appropriate view. In this

view, HR's role would include environmental scanning, competitive intelligence, internal strengths

and weaknesses analysis, and the implementation of the strategies. HR process involves following

activities or steps.

It states Organization’s overall purpose and basic business scope and operations it provides

information like, why does our organization exist? What unique contributions can it make?

This is also known as SWOT analysis through this process organizations identify different

opportunities available in the market and the threats that can be faced by the organization,

and the weaknesses and strengths possessed by organizations are also measured and

identified through this process.

To achieve the overall mission or purpose of the organization it is required to set specific

long-term and short term objectives and goals. The goal can be defined as desired

outcomes to accomplish mission. Following are the characteristics of effective goals.

• Specific

• Challenging

• Measurable

Courses of action is designed to meet strategic goals, also specifies functional or

departmental goals are selected at this step.

a. The Basics of Strategic Planning – A strategy is the company’s plan for how it will balance

its internal strengths and weaknesses with its external opportunities and threats and

maintain a competitive advantage. Managers engage in three levels of strategic planning:

corporate-level strategy, business-level competitive strategy, and functional strategies.

b. The Strategic Planning Process entails conducting a SWOT analysis to identify its

strengths, weaknesses, opportunities, and threats.

c. Basic Strategic Trends

• Globalization refers to the tendency of firms to extend their sales,

ownership, and/or manufacturing to new markets abroad. For

businesses everywhere, the rate of globalization in the past decade has

been enormous, and has several strategic implications for firms.

• Technological Advances have been forcing, and enabling, firms to

become more competitive.

• The Nature of Work is changing due to new technological demands.

• The Workforce demographics are changing as well. It’s becoming

more diverse as women, minority-group members, and older workers

enter the workforce.

d. Managerial Consequences of the Basic Trends – Managers have to craft strategies that

balance opportunities and threats (like those previously discussed) with their firm’s

strengths and weaknesses, such as global expansion and improved competitiveness

strategies. These types of strategies are driving other organizational changes.

a. HR’s Evolving Role – It’s the firm’s workforce that provides the

competitive advantage for the firm. HR’s role is shifting from

protector and screener to strategic partner and change agent.

b. Strategic Human Resource Management refers to improving business

performance and developing an organizational culture that fosters

innovation and flexibility by linking HRM with the strategic goals and

objectives of the firm.

c. HR’s Role As a Strategic Partner can be seen as either adapting

individual HR practices to fit specific corporate and competitive

strategies or as an equal partner in the strategic planning process.

1. HR’s Role in Executing Strategy – Execution has been HR’s traditional

strategic role.

2. HR and Value Chain Analysis – Strategy execution usually involves identifying

and reducing costs, and therefore value chain analysis.

3. HR’s Role in Formulating Strategy – HR management can play a role in

environmental scanning by assisting in identifying and analyzing external

opportunities and threats that may be crucial to the company’s success.

B. Human Resource Information System

HRISs are systems used to collect, record, and store, analyze, and retrieve data concerning an

organization's human

resources. The collection of

information on aspects of

work life as diverse as salary

and payroll, compensation,

leave, accidents,

superannuating and employee

benefits has always been part

of the human resource

manager's function. In the

early history of personnel

management, administrative

aspects, including data

collection, took up a great deal

of time. Reviews of employee

salary and leave entitlements often dominated the activities of earlier personnel officers, reflecting

both management priorities and their own clerical backgrounds.

Such early information systems were manual, and were mainly used to notify employees of leave

entitlements, to ensure accurate salary and wage payments and to process workers' compensation

and superannuating claims. The data was seldom used to predict trends, identify problem areas and,

or aid in the longer-term staffing process.

In the early development of human resource management, information systems, although often

accurate and comprehensive, were mainly used for administrative and operational purposes. Forms

were used to collect leave requests, workers compensation and accident data, and salary variation

and superannuation entitlements. During the 1970s and 1980s, several factors radically changed

attitudes towards human resource information systems. The increasing complexity of payroll

systems in this period demanded more flexibility in, and access to information system. These needs

happily coincided' with the development of increasingly sophisticated computer hardware and

software systems. In large organizations, centralized payroll processing sections began to be

separated from other human resource functions. Some organizations contracted their payroll

responsibilities to external payroll bureaus with greater technological expertise, and for reduced

costs.

Modern human resource information systems are comprehensive, accurate and accessible systems

for recording employee and work data relevant to HRM, HR and organizational planning.

An HRIS is:

The system used to acquire, store. Manipulate, analyze, retrieve and distribute pertinent information

regarding an organization’s human resources. Its purpose is to facilitate, or support, straight, tactical

and operational decision making, to avoid litigation, to evaluate programs, policies, or practice and

daily operations

Specific benefits of such systems include:

i. Improved planning and program development using decision support software. Faster

information processing and improved response times

ii. Decreased administrative and HR costs

iii. Accuracy of information

iv. Enhanced Communication at all levels.

Not all systems fulfill all these requirements, nor is such a complete system suitable for all

organizations. Essentially however all HRIS contain information on:

• Employees

• Jobs and work conditions

• Positions

• HR events (e.g. recruitment. training and development, performance appraisals, and

terminations).

Comprehensive and integrated information systems can be used widely -in administrative, operational and

strategic fields by HR and other managers. On the operational level HRIS data can be used to identify

potential internal applicants for job vacancies, saying external recruitment costs and assuring employees of

career opportunities. Strategically, such information may be used to gauge the effectiveness of current

recruitment or promotional systems, their costs and/ or benefits, and enable subsequent changes of direction

in line with proposed organizational strategies.

Proactive HR managers ensure that their HRIS contributes to organizational performance. A recent

development in the uses of HRIS in many has been the linking of 'benchmarking' practices to the design,

choice and implementation of such systems as a directly strategic initiative. Integration with organizational

strategic objectives is achieved by the subsequent establishment of performance targets and quantitative

measures. As a strategic 'tool', HRIS can be used to contribute to the development and modification of HR

plans, on both quantitative and qualitative bases, and to feed into specific HRM functions. HR data, if

collected effectively and contained within computerized, accessible systems, can both compare

organizational HR 'bottom line' outcomes by HRM function, between functions and with national or

international performance benchmark

A computerized HRIS contains hardware and software applications that work together to help managers

make HR decisions. HRIS software applications currently available to business include those for employee

information, applicant tracking, skills inventory, payroll, and benefits administration.

The HR department must develop policies and guidelines to protect the integrity and security of the HRIS

so that private employee information does not fall into the wrong hands. To maintain the security and

privacy of HRIS records, companies should control access, develop policies and guidelines that govern the

utilization of information, and allow employees to check their records.

All organizations and their HR mangers need to consider whether their HRIS will be primarily used for

collecting, analyzing, interpreting or reporting employee information. The nature of the system chosen

should reflect this primary purpose, based upon a realistic analysis of needs prior to its introduction.

Small organizations with stable workforces and secure markets do not require complicated data analysis, but

can benefit from comprehensive and accurate databases for reporting purposes. On the other hand, large

organizations in competitive and dynamic industries demand strategic HRIS. Every organization needs to

assess its particular needs and identify the most appropriate information system for its chosen purposes.

Mainly following functions are performed by the HRIS in different organizations.

• Job analysis information can be placed in the HRIS.

• The program can write job descriptions and job specifications.

• Constant monitoring of compliance with EEO legislation.

• Maintain records of rejected applicants.

• Saves money and time in compiling reports.

• Ensure that women and minorities or not be adversely affected.

• Track minority hiring, recruitment, and advancement.

• Forecast supply and demand of labor from both the internal and external labor markets.

• Useful for internal recruiting.

• Can post job opening for employees to access.

• Can search for match between job specifications and applicant qualification.

• Applicant tracking system.

• Administering and scoring ability tests.

• Scanning resumes submitted online (web based or e-mail) or in person (or mail).

• Structured interviews.

• Matching qualifications with open positions (finding a good fit).

• Also, consider budgetary concerns.

• Help with registration, tracking training, monitor training costs, and schedule training.

• Used to deliver training.

• Career and managerial succession planning.

• Used to provide assessment tests to help employee’s plan their own career.

• Predict career paths.

• Provide PA instruments and results.

• Comparisons between employees, groups, or supervisors ratings.

• Monitor attendance.

• Monitor compliance with Labor Standards.

• Individual sale data can be accessed (tracking commissions).

• Benefits can be managed and administered by computers.

• Planned raises and wage histories.

• Provides reports for Occupational Safety and Health Administration (OSHA).

• Track hazardous materials.

• Track accidents and costs of accidents.

• Record employee safety training.

• Record employee exposure to various conditions and chemicals.

• Track disciplinary actions and grievances.

• Labor contract data.

• Worker seniority list. Etc..

Information is the backbone of healthy and efficient business management. An information system allows

the collection and processing of data to produce useful information for designated users at each level of

management. Information management must conform to well-defined principles, run on appropriate

software, and be completely adapted to your organization within an integrated system usually known as

Management Information System (MIS). Management Information System is the entire set of systems and

activities required to manage, process, and use information as a resource in the organization. Stated slightly

differently, MIS is the management and use of computer-based systems, computer-resident data, and

telecommunications for the support of business decision processes. HRIS is the part of MIS that provides

the information regarding workforce in the organization and facilitates the decision makers in decision

making process in this regard.

and objectives and how they are to be achieved.

retrieve data concerning an organization's human resources.

Page 5

After studying this chapter, students should be able to understand the following concepts:

A. Job Analysis

LESSON OVERVIEW

We begin the chapter by describing why job analysis is a basic human resource management tool and

explaining the reasons for conducting job analysis. Next, we review the types of job analysis information

required and discuss job analysis methods. Then, we explain the components of a well-designed job

description and describe other methods for conducting job analysis and the ways job analysis helps to

satisfy various legal requirements. We then examine the human resource planning process and some human

resource forecasting techniques. Next, we discuss forecasting human resource requirements and availability

and describe what actions could be taken should either a surplus or a shortage of workers exist. The chapter

ends with a discussion of succession planning and development and job design.

Studying and under-standing jobs through the process known as job analysis is a vital part of any HRM

program

Job analysis is used to acquire the information in following areas

1. Major duties or activities required

2. Conditions under which the job is performed

So this process helps us to learn the following concepts:

• Job: A group of tasks that must be performed if an organization is to achieve its goals.

• Position: The tasks and responsibilities performed by one person; there is a position for every

individual in an organization.

• Task: A distinct, identifiable work activity composed of motions

• Duty: A larger work segment composed of several tasks that are performed by an individual.

• Responsibility: An obligation to perform certain tasks and duties.

Job Analysis is the SYSTEMATIC process of collecting and making judgments about all the important

information related to a job. Job analysis is the procedure through which you determine the duties and

nature of the jobs and the kinds of people who should be hired for them. You can utilize the information it

provides to write job descriptions and job specifications that are utilized in recruitment and selection,

compensation, performance appraisal, and training.

A sound job analysis system is extremely critical for numerous reasons.

• Staffing—All areas of staffing would be haphazard if the recruiter did not know the

qualifications needed to perform the job.

• Training And Development—if the specification suggests that the job requires a

particular knowledge, skill, or ability—and the person filling the position does not possess

all the qualifications required—training and/or development is probably in order.

• Compensation and Benefits—The relative value of a particular job to the company must

be known before a dollar value can be placed on it. From an internal perspective the more

significant its duties and responsibilities, the more the job is worth.

• Safety and Health—Information derived from job analysis is also valuable in identifying

safety and health considerations.

• Employee and Labor Relations—Regardless of whether the firm is unionized,

information obtained through job analysis can often lead to more objective human

resource decisions.

• Legal Considerations—having properly accomplished a job analysis is particularly

important for supporting the legality of employment practices.

a. Job Analysis for Teams—Today whenever someone asks, “What is your job

description?” the reply might well is, “Whatever.” What this means is that if a project has

to be completed, individuals do what has to be done to complete the task.

Considerable information is needed if job analysis is to be accomplished successfully. Knowledge of the

types of machines, tools, equipment, and work aids that are used in performing the job is important. Some

job analysis systems identify the standards that are established for the job.

• What physical and mental tasks does the worker accomplish?

• When does the job have to be completed?

• Where is the job to be accomplished?

• How does the worker do the job?

• Why is the job done?

• What qualifications are needed to perform the job?

Job analysis is conducted under following situations.

• When the organization is founded

When organizations are created complete information about jobs to be performed is collected through job

analysis.

• When new jobs are created

When jobs are changed significantly as a result of new technologies, methods, procedures, or systems for

analyzing them job analysis is conducted.

1. Recruitment and Selection – Job descriptions and job specifications are formed from the

information gathered from a job analysis, which help management decide what sort of people to

recruit and hire.

2. Compensation – The estimated value and the appropriate compensation for each job is determined

from the information gathered from a job analysis.

3. Performance Appraisal – Managers use job analysis to determine a job’s specific activities and

performance standards.

4. Training – Based on the job analysis, the job description should show the job’s required activities

and skills.

5. Discovering Unassigned Duties – Job analysis can help reveal unassigned duties.

6. EEO Compliance – The Uniform Guidelines on Employee Selection stipulate that job analysis is a

crucial step in validating all major personnel activities.

The job analysis process has the following steps:

1. Identify how the information will be used because that will determine what data will be collected

and how it should be collected. Interviewing and position analysis questionnaire are some examples of data

collection techniques.

2. Review relevant background information, such as organization charts, process charts, and job

descriptions.

3. Select representative positions to analyze because there may be too many similar jobs to analyze,

and it may not be necessary to analyze them all.

4. Analyze the job by collecting data on job activities, required employee behaviors, working

conditions, and human traits and abilities needed to perform the job.

5. Review and verify the job analysis information with job incumbents to confirm that it is factually

correct and complete.

6. Develop a job description and job specification from the job analysis information.

A job description is a written statement of what the jobholder actually does, how he or she does it, and

under what conditions the job is performed. There is no standard format for writing job descriptions, but

most descriptions include sections on:

• job identification

• job summary

• relationships, responsibilities, and duties

• authority of incumbent

• standards of performance

• working conditions

• job specifications

A job specification is a document containing the minimum acceptable qualifications that a person should

possess in order to perform a particular job. Items typically included in the job specification are educational

requirements, experience, personality traits, and physical abilities.

In Job Evaluation process the worth of job is identified based upon job comparability and according to

worth, importance of job and relative value Compensation is designed and selected.

any HRM program

a person should possess in order to perform a particular job

she does it, and under what conditions the job is performed.

Page 6

After studying this chapter, students should be able to understand the following concepts:

A. Job Analysis

LESSON OVERVIEW

Today we will be continuing with job analysis, we will be discussing the steps in job analysis. Further we will

discuss methods that can be used to analyze the job in organization.

Job analysis is the procedure through which you determine the duties and nature of the jobs and the kinds

of people who should be hired for them. You can utilize the information it provides to write job

descriptions and job specifications, which are utilized in recruitment and selection, compensation,

performance appraisal, and training.

Job analysis traditionally has been conducted in a number of different ways. Also, firms differ in their needs

and in the resources they have for conducting job analysis.

􀂾 Introduction

1. An HR specialist (an HR specialist, job analyst, or consultant), a worker, and the worker’s

supervisor usually work together in conducting the job analysis.

2. Job analysis data is usually collected from several employees from different departments,

using interviews and questionnaires. The data is then averaged, taking into account the departmental

context of the employees, to determine how much time a typical employee spends on each of several

specific tasks.

1. The three types of interviews managers use to collect job analysis data are: individual (to

get the employee’s perspective on the job’s duties and responsibilities, group (when large numbers of

employees perform the same job), and supervisor (to get his/her perspective on the job’s duties and

responsibilities).

2. The pros of using an interview are that it is: simple, quick, and more comprehensive

because the interviewer can unearth activities that may never appear in written form.

3. The following questions are some examples of typical questions. “What is the job being

performed?” “In what activities do you participate?” “What are the health and safety conditions?” Figure

3-3 gives an example of a job analysis questionnaire.

4. The following are interview guidelines: a) the job analyst and supervisor should identify

the workers who know the job best and would be objective; b) establish a rapport with the interviewee; c)

follow a structured guide or checklist; d) ask worker to list duties in order of importance and frequency of

occurrence; and e) review and verify the data.

1. Structured or unstructured questionnaires may be used to obtain job analysis information

2. Questionnaires can be a quick, efficient way of gathering information from a large number

of employees. But, developing and testing a questionnaire can be expensive and time consuming.

1. Direct observations are useful when jobs consist of mainly observable physical activity as

opposed to mental activity.

2. Reactivity can be a problem with direct observations, which is where the worker changes

what he/she normally does because he/she is being watched.

3. Managers often use direct observation and interviewing together.

1. The employee records every activity he/she engages in, in a diary or log along with the

amount of time to perform each activity to produce a complete picture of the job.

2. Employees may try to exaggerate some activities and underplay others.

1. Position Analysis Questionnaire (PAQ) is a questionnaire used to collect quantifiable data

concerning the duties and responsibilities of various jobs, see Figure 3-5, on five basic activities: a) having

decision-making/communication/social responsibilities, b) performing skilled activities, c) being physically

active, d) operating vehicles/equipment, and e) processing information.

2. Department of Labor Procedure (DOL) is a standardized method for rating, classifying,

and comparing virtually every kind of job based on data, people, and things. Table 3-1 shows a set of basic

activities, and Figure 3-6 gives a sample summary.

3. Functional job analysis: 1) rates a job on data; people; things; the extent to which specific

instructions are necessary to perform the task; the extent to which reasoning and judgment are required to

perform the task; and mathematical ability required to perform the task; and 2) identifies performance

standards and training requirements.

Likely, no one job analysis method will be used exclusively. A combination is often more appropriate.

1. Where possible, collect job analysis data using several types of collection techniques and

respondents.

2. Potential inaccuracies in peoples’ judgments could lead to inaccurate conclusions

• Employees

• Supervisor

• Manager

• Job Analyst

• Job Analyst (HR)

• Outside consultant

• Supervisor/Manager

Too lengthy

• Time consuming and requires much patience

• Might be a reflection of stereotypes

approved the description, the location of the job, the immediate supervisor’s title, salary and/or pay scale.

activities.

Page 7

After studying this chapter, students should be able to understand the following concepts:

A. Human Resource Planning

B. Human Resource Forecasting Techniques

C. HR Hiring Process

D. Constraints of Recruitment Process

E. Philosophy of the Recruitment

F. Ethical Issues in Recruitment

LESSON OVERVIEW

Today we will examine the human resource planning process and some human resource forecasting

techniques. Next, we discuss forecasting human resource requirements and availability and describe what

actions could be taken should either a surplus or a shortage of workers exist.

It is the process of systematically reviewing human resource requirements to ensure that the required

number of employees, with the required skills, is available when they are needed.

Several techniques of forecasting human resource requirements and availability are currently used by those

in the profession.

• Zero Based Forecasting

This method uses the organization’s current level of employment as the starting point for determining

future staffing needs. The key to zero-base forecasting is a thorough analysis of human resource needs.

• Bottom-Up Approach

A forecasting method in which each successive level of the organization, starting with the lowest, forecasts

its employee requirements in order to, ultimately, provide an aggregate forecast of employment needs.

• Use Of Mathematical Models

Mathematical models can assist in forecasting HR requirements. The relationship between sales demand and

the number of employees needed is a positive one.

• Simulation

Simulation is a technique for experimenting with a real-world situation through a mathematical model

representing that situation. A model is an abstraction of the real world.

A requirements forecast is an estimate of the numbers and kinds of employees the organization will need at

future dates in order to realize its goals.

Determining whether the firm will be able to secure employees with the necessary skills and from what

sources these individuals may be obtained is called an availability forecast.

When a comparison of requirements and availability indicates a worker surplus will result, restricted hiring,

reduced hours, early retirements, or layoffs may be required to correct the situation.

• Restricted Hiring

When a firm implements a restricted hiring policy, it reduces the workforce by not replacing employees who

leave.

• Reduced Hours

Reaction to a declining demand can also be made by reducing the total number of hours worked. Instead of

continuing a 40-hour week, management may decide to cut each employee’s time to 30 hours.

• Early Retirement

Early retirement of some present employees is another means of reducing the supply of workers.

• Layoffs

At times, the firm has no choice but to actually lay off part of its workforce.

Unemployment in the United States was at an all-time low in the summer of 2000. Faced with a shortage of

workers, many organizations had to intensify their efforts to recruit the necessary people to meet the needs

of the firm. Some actions that were taken included:

• Creative Recruiting

A shortage of personnel often means that new approaches to recruiting must be used. The organization may

have to recruit in different geographical areas than in the past, explore new methods, and seek different

kinds of candidates.

• Compensation Incentives

Firms competing for workers in a high-demand situation may have to rely on compensation incentives.

Premium pay is one obvious method. However, this approach may trigger a bidding war that the

organization cannot sustain for an extended period. More subtle forms of rewards may be required to

attract employees to a firm, such as four-day workweeks, flexible working hours, telecommuting, part-time

employment, and child care centers.

• Training Programs

Special training programs may be needed to prepare previously unemployable individuals for positions with

a firm. Remedial education and skills training are two types of programs that may help attract individuals to

a particular company.

• Different Selection Standards

Another approach for dealing with shortages of workers is the lowering of employment standards. Selection

criteria that screen out certain workers may have to be altered to ensure that enough people are available to

fill jobs. For instance, instead of desiring extensive work experience, a firm may be willing to hire an

inexperienced worker and train him or her to do the job.

position once the position is vacant.

positions and then ensuring that key prospects are properly developed to match these qualifications.

HR hiring process involves the activities that are required to make the workforce or staff available to fill and

keep filled different positions in the organization.

This process includes the following steps

• Recruitment

It is the process of attracting individuals on a timely basis, in sufficient numbers and with appropriate

qualifications, and encouraging them to apply for jobs with an organization.

• Selection

The process of making a “hire” or “no hire” decision regarding each applicant for a job

• Socialization

The process of orienting new employees to the organization or the unit in which they will be working

Today we will start discussing this hiring process with the detail discussion on first step that is Recruitment.

It is the process of attracting individuals on a timely basis, in sufficient numbers and with appropriate

qualifications, and encouraging them to apply for jobs with an organization.

Mainly there are two recruitment goals

Recruiting process is used to create the pool of qualified applicants. By qualified applicants we mea those

applicants who are having abilities that are perfect match with the job requirements.

Second goal of recruitment is to avoid nonqualified applicants. When recruiting is based upon careful

designing of the job disruption and job specification most of the applicants having irrelevant qualifications

are eliminated fro the list of potential applicants which makes recruiting process more effective and easier.

Different factors in internal or external environment can influence the effectiveness of recruiting process in

negative manner and can become hurdles in recruiting process. They mainly include:

If employees believe that their employer deals with them fairly, the positive word-of-mouth support they

provide is of great value to the firm. It assists in establishing credibility with prospective employees.

Image of the organization is mainly assessed by its performance, salary, benefits provided by it potential

opportunities to excel and respect etc. If all these factors are good enough than the image of the

organization will be positive in the market that will help the organization to have reasonable number of

applicants ready to apply for then given job openings, But if the salary benefits provided by the

organizations are not compatible with the market there are no potential opportunities for the career

development and to excel in future than these factors will be contributing towards negative image of the

organization. This bad image is hurdle in acquiring good number of applicants through recruitment process

specially if any firm is having business in the declining industry and management is least bothered about the

welfare and wellbeing of the employees.

Attractiveness of the job mainly depends upon its contribution towards achievement of organizations

objectives, challenging assignments, its contribution in the career development of the job holder. Secondly

the benefits and salary associated to particular job also plays important role in defining the importance of

the job. There fore jobs having challenging assignments, career oriented in nature and having good

remuneration package can attract best applicants from the labor force available in the market or vice versa.

The recruitment process is influenced by the laws provided by the government. Organizations to be more

successful are required to work according to these laws.

The recruitment process is influenced by labor market conditions. When the economy is growing rapidly

and unemployment levels are very low, recruiting is extremely difficult. However, when the economy is

stagnant and unemployment levels are high, organizations can obtain large applicant pool with very little

effort.

Companies use to bear very high costs while performing the recruitment process especially when the

recruitment is external. Therefore organizations can perform this function only and only if they are having

sufficient resources to perform the recruitment process.

VI. Global Issues

When ever staffing function is performed at the international level or across the national boundaries beside

internal environment of organization polices of the host country regarding employment also influence the

recruitment process. They can include basic labor laws regarding quality of work life EEO, remuneration

packages, etc.

Diversity through Recruiting Efforts:

To offset the momentum of past discrimination in employment, firms must resort to additional recruitment

approaches. A recruitment program that is designed to specifically attract women and minorities is referred

to as affirmative recruitment. To ensure that an organization's recruitment program is nondiscriminatory,

the firm must analyze its recruitment procedures. Each individual who engages in recruitment should be

trained in the use of objective, job-related standards. With few exceptions, jobs must be open to all

individuals. When placing job orders with employment agencies, an organization should emphasize its

nondiscriminatory recruitment practices. Organizations engaged in affirmative recruitment should develop

contacts with minority, women's, and other community organizations.

Major decision in performing the recruitment process is selection of sources from the available sources

which are:

• Internal Recruitment

• External Recruitment.

Both of theses have pros and cons and to have the best pool of the applicant’s pool it is suggested that the

multiple approach should be used instead of depending upon any single sources

• Performs recruiting and employment activities for the off-site location, providing qualified

candidates in a cost-effective and timely manner while ensuring adherence to the corporate job

posting procedure.

• Verifies that all job offers to internal and external candidates are within company policy and that

any unusual questions regarding employment are referred to the Manager in order to ensure fair

and equitable treatment of all job candidates.

requirements to ensure that the required number of employees, with the required skills, is available when

they are needed.

appropriate qualifications, and encouraging them to apply for jobs with an organization.

achievements of the objectives of organization.

Page 8

After studying this chapter, students should be able to understand the following:

Today we will discuss about the first step of staffing function which is Recruitment. We begin this lecture

by presenting the recruitment process. This section is followed by internal recruitment methods, external

recruitment sources, and external recruitment methods. Finally, recruitment evaluation will be discussed.

Recruiting refers to the process of attracting potential job applicants from the available labor force. Every

organization must be able to attract a sufficient number of the job candidates who have the abilities and

aptitudes needed to help the organization to achieve its objectives. An effective employee selection

procedure is limited by the effectiveness of recruiting process. Outstanding job candidates cannot be

selected if they are not included in the applicant pool.

The recruitment process also interacts with other personnel functions, especially performance evaluation

compensation training and development and employee relations. Recruiting is typically a human resource

function.

In planning recruiting activities, an organization needs to know how many applicants must be recruited.

Since some applicants may not be satisfactory an others may not accept the job offers, an organization must

recruit more applicants than it expects to hire. Yield Ratios help organizations decide how many employees

to recruit for each job opening. These ratios express the relationship between the number of people at one

step of the recruitment process relative to the number of people who will move to the next step.

Now we will discuss the different sources of recruitment that are available to organization:

Basically organizations are available by the two man sources of recruitment which are:

Vacancies in upper level management can be filled either by hiring people from outside the organization or

by promoting lower level mangers. Both strategies have advantages and disadvantages.

We will consider both internal and external recruitment sources in detail:

When job vacancies exist, the first place that an organization should look for placement is within itself. An

organization’s present employees generally feel that they deserve opportunities to be promoted to higherlevel

positions because of their service and commitment to organization. More over organizations have

opportunities to examine the track records of its present employees and to estimate which of them would

be successful. Also recruiting among present employees is less expensive than recruiting from outside the

organization. The major forms of the internal recruiting include:

1. Promotion from with in.

2. Job posting.

3. Contacts and referrals

Promoting entry level employees to more responsible positions is one of the best ways to fill job vacancies

and important reason why company should have a human resource planning system. An organization that

has human resource planning system uses succession plans and replacement charts to identify and prepare

individuals for upper level positions. Skills inventories are useful in identifying individuals who have the

potential for advancement, and individual’s desire to be promoted can be assessed in the performance

appraisal review. A promotion from within policy is intrinsic to career development and human resource

planning. A promotion from within policy can stimulate great motivation among employee, and this

motivation is often accompanied by a general improvement in the employee morale.

An organization can also use the policy of job posting as a internal recruitment source. In the job posting

system the organization notifies its present employees about job openings through the use of bulletin

boards, company publications, or personal letters. The purpose of the job posting is to communicate that

the job opening exists. An effective job posting system involves the following guidelines:

Job posting should be prominent.

Clear job specification should be communicated so that applicants assess themselves either they are eligible

to apply or not.

Once the decision is made, all applicants should be informed about the decision.

Job posting systems generally work quite well.

Many firms have found that their employees can assist in the recruitment process. Employees may actively

solicit applications from their friends and associates.

Before going outside to recruit employees, many organizations ask present employees to encourage friends

or relatives to apply for the job openings. Contacts and referrals from the present employees are valuable

sources of recruits. Employee referrals are relatively inexpensive and usually produce quick responses.

However some organizations are concerned about problems that result from hiring friends of employees

for example, the practice of hiring friends and relatives favoritisms, cliques etc.

• Advantages of Internal Recruitment:

1. Provides greater motivation for good performance.

2. Provides greater opportunities for present employees

3. Provides better opportunity to assess abilities

4. Improves morale and organizational loyalty

5. Enables employees to perform the new job with little lost time

• Disadvantages of Internal Recruitment:

1. Creates a narrowing thinking and stale ideas

2. Creates pressures to compete

3. Creates homogeneous workforce

4. Chances to miss good outside talent Requires strong management development programs

specially to train for technology.

A broad variety of methods are available for external recruiting. An organization should carefully assess the

kinds of positions it wants to fill and select the recruiting methods that are likely to produce the best results.

There are some employee needs that a firm must fill through external recruitment. Among them are: filling

entry-level jobs, acquiring skills not possessed by current employees, and obtaining employees with different

backgrounds to provide new ideas.

a. High Schools and Vocational Schools

Organizations concerned with recruiting clerical and entry-level operative employees often depend on high

schools and vocational schools.

A number of community colleges are sensitive to the specific employment needs in their local labor market

and graduate highly sought-after students with marketable skills.

Colleges and universities represent a major source of recruitment for many organizations. Potential

professional, technical, and management employees are typically found in these institutions. Different

institutes use to publish booklets having information about the graduates that can be communicated to

organization who are in search of applicants.

Competitors and other firms in the industry or geographic area may be the most important source of

recruits for positions in which recent experience is highly desired.

Individuals who are unemployed, regardless of the reason, often provide a valuable source of recruitment.

Older workers, including those retired, may also comprise a valuable source of employees.

Using this source may make sense to many employers because these individuals typically have a proven

work history, and are flexible, motivated, and drug free.

These individuals may provide a source of applicants to fill any number of jobs requiring technical,

professional, administrative, or entrepreneurial expertise.

Recruitment methods are the specific means through which potential employees are attracted to the firm.

a. Advertising

A way of communicating the employment needs within the firm to the public through media such as radio,

newspaper, television, industry publications, and the Internet.

Some times organizations can perform the recruitment function through blind advertisements in blind

advertisements no identification about the company is provided to applicants. Companies can use blind

advertisements for many reasons e.g.

• Company wants to keep the recruitment in low profile so that lesser number of applicants should

apply in order to discourage the irrelevant people.

• Due to bad reputation or image of the organization

• Advertisement is made just for the purpose of test marketing fro example just to have knowledge

about the supply of applicants in labor market etc.

An organization that helps firms recruits employees and, at the same time, aids individuals in their attempt

to locate jobs. There are two types of the employment agencies i.e.

• Public Employment Agencies.

• Private Employment Agencies

Both of these sources provide coordination between the organizations and applicants who

are searching for jobs, for this service they use to charge a fee .Employment agencies are able to tailor their

services to the specific needs of the clients For example some agencies Specialize in a particular

employment areas, such as engineering, human resource or Computer programming, etc.

The most common use of recruiters is with technical and vocational schools, community colleges, colleges,

and universities.

It is a recruiting method that involves an effort on the part of a single employer or group of employers to

attract a large number of applicants for interviews.

A special form of recruiting that involves placing a student in a temporary job. There is no obligation on the

part of the company to permanently hire the student and no obligation on the part of the student to accept

a permanent position with the firm. Hiring college students to work as student interns is typically viewed as

training activity rather than as a recruiting activity. However, organizations that sponsor internship

programs have found that such programs represent an excellent means of recruiting outstanding employees.

Executive search firms sometimes called HEAD HUNTERS are specialized form of private employment

agencies that place top level executives and experienced professionals. These are the organizations that seek

the most-qualified executive available for a specific position and are generally retained by the company

needing a specific type of individual.

Associations in many business professions such as finance, marketing, information technology, and human

resources provide recruitment and placement services for their members. Professional associations and

trade organizations provide a valuable service in bringing together professional and professional job

openings. Most professional organizations have newsletters, annual meetings and trade publications that

advertise job openings. The annual meetings of these organizations are good occasion for professionals to

learn about available job openings and for employers to interview potential applicants.

If an organization has the reputation of being a good place to work, it may be able to attract good

prospective employees without extensive recruitment efforts.

Firms pair potential hires and managers in a warm, causal environment that encourages on-the-spot job

offers.

Attend the events that the people you are seeking go to.

Individuals meet recruiters face-to-face in interviews conducted over special computers that have lenses that

transmit head-and-shoulder images of both parties.

Organizations can also use web sites and internet sources to recruit people application submission test and

interview and other recruitment and selection activities can be performed online.

• Advantages of External Recruitment:

1. Provides new ideas and new insights

2. Provides greater diversity and helps achieve EEO goals by making affirmative action easy

3. Provides opportunities to handle rapid growth if the organization

4. Opportunities to get people with up-to-date knowledge education and training

• Disadvantages of External Recruitment:

1. It is more expensive and time consuming

2. Destroys incentives of present employees to strive for promotion

3. More chances to commit hiring mistakes due to difficult applicant assessment that will lead

to wastage of resources.

When an organization decides to add personnel to its staff, it makes a significant financial investment.

Recruitment and selection costs are high, especially for professionals, technical and managerial employees.

Therefore before an organization decides to recruit new employees, it ought to consider the feasibility of

other alternatives.

Out sourcing is the process of transferring responsibility for an area of service and its objectives to an

external service provider instead of internal employee.

It is also known as part-timers, temporaries, and independent contractors, comprise the fastest-growing

segment of our economy.

Using this approach, a firm terminates some or most of its employees. A leasing company then hires them,

usually at the same salary, and leases them back to the former employer, who becomes the client.

Perhaps the most commonly used method of meeting short-term fluctuations in work volume is through

the use of overtime.

• Applicant should be provided with necessary information regarding organization job, remuneration

package etc.

• If rejection is to be communicated it should be done with tactics.

Recruitment process can be evaluated by the following factors:

1. Quantity of the Applicants

2. Quality of the Applicants

Recruitment process can be evaluated by the number of applicants who have applied for the job greater the

number of applications greater will be the chance to select best people from available pool.

Effectiveness of recruitment can be estimated by the quality of the applicants. Quality can be assessed by

the education, skills, capabilities and competencies of the applicants.

The effectiveness of the recruitment process also depends upon the acceptability of the yield ratio.

such as radio, newspaper, television, industry publications, and the Internet.

placement is within itself

objectives to an external service provider instead of internal employee.

the fastest-growing segment of our economy.

force.

Page 9

After studying this chapter, students should be able to understand the following:

We begin the chapter with a discussion of the significance of employee selection and the environmental

factors that affect it. Then, we describe the selection process, the preliminary interview, and review of the

application for employment.

Selection

position. Most managers recognize that employee selection is one of their most difficult, and most

important, business decisions. This process involves making a judgment -not about the applicant, but about

the fit between the applicant and the job by considering knowledge, skills and abilities and other

characteristics required to perform the job Selection procedures are not carried out through standard

pattern and steps in this. Process can vary from organization to organization some steps performed and

considered important by one organization can be skipped by other organization

A permanent, standardized screening process could greatly simplify the selection process. However,

development of such a process—even if it were possible and desirable—would not eliminate deviations to

meet the unique needs of particular situation.

• Legal Considerations

Legislation, executive orders, and court decisions have a major impact on human resource management. It

is important for hiring managers to see the relationship between useful and legally defensible selection tools.

• Speed Of Decision Making

The time available to make the selection decision can have a major effect on the selection process. Closely

following selection policies and procedures can provide greater protection against legal problems; however,

there are times when the pressure of business will dictate that exceptions be made.

• Organizational Hierarchy

Different approaches to selection are generally taken for filling positions at different levels in the

organization.

• Applicant Pool

The number of applicants for a particular job can also affect the selection process. The process can be truly

selective only if there are several qualified applicants for a particular position. The number of people hired

for a particular job compared to the individuals in the applicant pool is often expressed as a selection ratio.

• Type of Organization

The sector of the economy in which individuals are to be employed—private, governmental, or not-forprofit—

can also affect the selection process.

• Probationary Period

Many firms use a probationary period that permits evaluating an employee’s ability based on performance.

This may be either a substitute for certain phases of the selection process or a check on the validity of the

process.

• Selection Criteria:

Mostly the selection of applicant depends upon the following factors or criterions.

1. EDUCATION

2. COMPETENCIES

3. EXPERIENCE

4. SKILLS AND ABILITIES

5. PERSONNAL CHARECTRISTICS

Applicant who is best fit should be hired instead of hiring a person with extra ordinary skills it means right

person for right job should be hired person who is over or under qualified for the particular job will not be

able to adjust in the organization.

The selection process typically begins with the preliminary interview; next, candidates complete the

application for employment. They progress through a series of selection tests, the employment interview,

and reference and background checks. The successful applicant receives a company physical examination

and is employed if the results are satisfactory. Several external and internal factors impact the selection

process, and the manager must take them into account in making selection decisions. Typically selection

process consists of the following steps but it is not necessary that all organization go through all these steps

as per requirement of the organization some steps can be skipped while performing the selection process.

1. Initial Screening

2. Application Blank

3. Pre-employment Testing

• General Intelligence Tests

• Aptitude Tests

• Personality and Interest Tests

• Achievement Tests

• Honesty Tests

4. Interview

• Structured Interview

• Unstructured Interview

• Mixed Interview

5. Background Checks

6. Conditional job offer

7. Medical Exam/Drug Tests

8. Final Selection Decision

INITIAL SCREENING: The selection process often begins with an initial screening of applicants to

remove individuals who obviously do not meet the position requirements. At this stage, a few

straightforward questions are asked. An applicant may obviously be unqualified to fill the advertised

position, but be well qualified to work in other open positions. The Purpose of Screening is to decrease the

number of applicants being considered for selection.

Personal Resume presented with the job application is considered as source of information that can be used

for the initial screening process. It mainly includes information in the following areas:

• Employment & education history

• Evaluation of character

• Evaluation of job performance

Screening interviews are used to:

• To verify information provided on resume or application blank.

• They are usually very short (approximately 30 minutes or so).

If the screening effort is successful, those applicants that do not meet minimum required qualifications will

not move to the next stage in the selection process. Companies utilizing expensive selection procedures put

more effort in screening to reduce costs.

APPLICATION BLANK: is a formal record of an individual’s application for employment The next step

in the selection process may involve having the prospective employee complete an application for

employment. The specific type of information may vary from firm to firm and even by job type within an

organization. However, the application form must reflect not only the firm’s informational needs but also

EEO requirements. Application forms are a good way to quickly collect verifiable and fairly accurate

historical data from the candidate.

suited for a particular position.

Page 10

After studying this chapter, students should be able to understand the following:

A personnel testing is a valuable way to measure individual characteristics. Hundreds of tests have been

developed to measure various dimensions of behavior. The tests measure mantel abilities, knowledge,

physical abilities, personality, interest, temperament, and other attitudes and behaviors. Evidence suggests

that the use of tests is becoming more prevalent for assessing an applicant’s qualifications and potential for

success. Tests are used more in the public sector than in the private sector and in medium-sized and large

companies than in small companies. Large organizations are likely to have trained specialists to run their

testing programs.

• Advantages and disadvantages of using tests:

Selection testing can be a reliable and accurate means of selecting qualified candidates from a pool of

applicants. As with all selection procedures, it is important to identify the essential functions of each job and

determine the skills needed to perform them.

• Potential Problems Using Selection Tests

Selection tests may accurately predict an applicant’s ability to perform the job, but they are less successful in

indicating the extent to which the individual will want to perform it. Another potential problem, related

primarily to personality tests and interest inventories, has to do with applicants’ honesty. Also there is the

problem of test anxiety. Applicants often become quite anxious when confronting yet another hurdle that

might eliminate them from consideration.

Properly designed selection tests are standardized, objective, based on sound norms, reliable and—of

utmost importance—valid.

1. Standardization: Refers to the uniformity of the procedures and conditions

related to administering tests. It is necessary for all to take the test under

conditions that are as close to identical as possible.

2. Objectivity: Achieved when all individuals scoring a given test obtain the same

results.

3. Norms: Provide a frame of reference for comparing applicants’ performance with

that of others. A norm reflects the distribution of scores obtained by many people

similar to the applicant being tested. The prospective employee’s test score is

compared to the norm, and the significance of the test score is determined.

4. Reliability: The extent to which a selection test provides consistent results. If a

test has low reliability, its validity as a predictor will also be low. To validate

reliability, a test must be verified.

5. Validity: The extent to which a test measures what it purports to measure. If a test

cannot indicate ability to perform the job, it has no value as a predictor.

• Types of Validation Studies

There three main approaches that may be followed to validate selection tests: criterion-related validity,

content validity, and construct validity.

a. Criterion-Related Validity

It is determined by comparing the scores on selection tests to some aspect of job performance. A close

relationship between the score on the test and job performance suggests the test is valid.

b. Content Validity

It is a test validation method whereby a person performs certain tasks that are actually required by the job

or completes a paper-and-pencil test that measures relevant job knowledge.

c. Construct Validity

It is a test validation method to determine whether a test measures certain traits or qualities that are

important in performing the job. However, traits or qualities such as teamwork, leadership, and planning or

organization ability must first be carefully identified through job analysis.

Individuals differ in characteristics related to job performance. These differences, which are measurable,

relate to cognitive abilities, psychomotor abilities, job knowledge, work samples, vocational interests, and

personality. Various tests measure these differences.

a. Cognitive Aptitude Tests

It measures an individual’s ability to learn, as well as to perform a job. Job-related abilities may be classified

as verbal, numerical, perceptual speed, spatial, and reasoning.

This type of test is used to measure strength, coordination, and dexterity. It is feasible to measure many

abilities that are involved in many routine production jobs and some office jobs.

This sort of test is designed to measure a candidate’s knowledge of the duties of the position for which he

or she is applying.

It identifies a task or set of tasks that are representative of the job. The evidence concerning these tests, to

date, is that they produce high predictive validity, reduce adverse impact, and are more acceptable to

applicants.

It indicates the occupation in which a person is most interested and is most likely to receive satisfaction.

It is a selection tools, personality tests have not been as useful as other types of tests. They are often

characterized by low reliability and low validity. Because some personality tests emphasize subjective

interpretation, the services of a qualified psychologist are required.

Basic purpose of the drug-testing programs contends that it is necessary to ensure workplace safety,

security, and productivity.

As genetic research progresses, confirmed links between specific gene mutations and diseases are emerging.

Genetic testing can now determine whether a person carries the gene mutation for certain diseases,

including heart disease, colon cancer, breast cancer, and Huntington’s disease.

For many years, another means used to verify background information has been the polygraph, or lie

detector, test. One purpose of the polygraph was to confirm or refute the information contained in the

application blank. Special tests have been constructed to measure the orientation of the individuals toward

the issue of the honesty and personal integrity. Honesty tests are the most frequently used psychological

tests in industry. These tests contain questions regarding such situations as whether a person who has taken

company merchandise should be trusted in another job that involves handling company money. An

individual’s response to the test statements indicates the individual’s attitudes towards theft, embezzlement,

and dishonest practices. Extensive research has shown that some of these instruments not only produce

reliable information that validly predicts dishonest behavior, but that they also are free from biases of age,

race, and sex. These honesty tests represent a valuable selection tool for choosing employees who will

occupy positions that involve handling company money.

The Internet is increasingly being used to test various skills required by applicants.

THE EMPLOYMENT INTERVIEW: Interview is a goal-oriented conversation in which the interviewer

and applicant exchange information. The employment interview is especially significant because the

applicants who reach this stage are considered to be the most promising candidates.

Interview planning is essential to effective employment interviews. The physical location of the interview

should be both pleasant and private, providing for a minimum of interruptions. The interviewer should

possess a pleasant personality, empathy and the ability to listen and communicate effectively. He or she

should become familiar with the applicant’s qualifications by reviewing the data collected from other

selection tools. In preparing for the interview, a job profile should be developed based on the job

description.

The specific content of employment interviews varies greatly by organization and the level of the job

concerned.

1. Occupational experience: Exploring an individual’s occupational experience

requires determining the applicant’s skills, abilities, and willingness to handle

responsibility.

2. achievement: In the absence of significant work experience, a

person’s background takes on greater importance.

3. Interpersonal skills: If an individual cannot work well with other employees,

chances for success are slim. This is especially true in today’s world with increasing

emphasis being placed on the use of teams.

4. Personal qualities: Personal qualities normally observed during the interview

include physical appearance, speaking ability, vocabulary, poise, adaptability, and

assertiveness.

5. Organizational fit: A hiring criterion that is not prominently mentioned in the

literature is organizational fit. Organizational fit is ill-defined but refers to

management’s perception of the degree to which the prospective employee will fit

in with, for example, the firm’s culture or value system.

Interviews may be classified in two types by the degree to which they are structured.

Unstructured interview is an interview where probing, open-ended questions are asked. This type of

interview is comprehensive, and the interviewer encourages the applicant to do much of the talking.

An interview consisting of a series of job-related questions that are asked consistently of each applicant for

a particular job is known as structured interview. A structured interview typically contains four types of

questions.

1. Situational questions: Pose a hypothetical job situation to determine what the

applicant would do in that situation.

2. Job knowledge questions: Probe the applicant’s job-related knowledge.

3. Job-sample simulation questions: Involve situations in which an applicant may

be actually required to perform a sample task from the job.

4. Worker requirements questions: Seek to determine the applicant’s willingness to

conform to the requirements of the job.

A structured interview that uses questions designed to probe the candidate’s past behavior in specific

situations. It avoids making judgments about applicants’ personalities and avoids hypothetical and selfevaluative

questions. Benchmark answers derived from behaviors of successful employees are prepared for

use in rating applicant responses. Questions asked in behavior description interviewing are legally safe

because they are job related.

Interviews may be conducted in several ways.

In a typical employment interview, the applicant meets one-on-one with an interviewer. As the interview

may be a highly emotional occasion for the applicant, meeting alone with the interviewer is often less

threatening.

Several applicants interact in the presence of one or more company representatives.

One candidate is interviewed by several representatives of the firm.

Intentionally creates anxiety to determine how an applicant will react to stress on the job.

RJP Conveys job information to the applicant in an unbiased manner, including both positive and negative

factors

Because the interview is considered to be a test, it is subject to the same validity requirements as any other

step in the selection process, should adverse impact be shown. For the interview, this constraint presents

special difficulties.

Snap judgments

This is where the interviewer jumps to a conclusion about the candidate during the first few minutes of

the interview. Using a structured interview is one way to help avoid this, as well as properly training the

interviewers.

When an interviewer has received negative information about the candidate, through references or other

sources, he or she will almost always view the candidate negatively. The best way to avoid this is to keep

references or other information from the interviewer. If possible, have different people do the reference

checks and the interviews and not share the information until afterwards.

When interviewers do not have a good understanding of the job requirements, they do not make good

selections of candidates. All interviewers should clearly understand the jobs and know what is needed for

success in those jobs.

Anytime an interviewer is told that he or she must hire a certain number of people within a short time

frame, poor selection decisions may be made. This type of pressure should be avoided whenever possible.

(Contrast) Error

by contrast he or she looks either less satisfactory or much better. This can be countered through

interviewer training, allowing time between interviews, and structured interviews with structured rating

forms.

Candidates who exhibit stronger nonverbal behavior such as eye contact and energy level are perceived

as stronger by the interviewers. This can be minimized through interviewer training and structured

interviews.

1. Plan the interview.

2. Establish rapport.

3. Ask questions.

HR in Practice gives do’s and don’ts of interview questions.

4. Close the interview.

5. Review the interview.

It is necessary for all to take the test under conditions that are as close to identical as possible.

reflects the distribution of scores obtained by many people similar to the applicant being tested. The

prospective employee’s test score is compared to the norm, and the significance of the test score is

determined.

validity as a predictor will also be low. To validate reliability, a test must be verified.

perform the job, it has no value as a predictor.

few minutes of the interview.

Page 11

After studying this chapter, students should be able to understand the following:

We will continue the selection process in this lecture by discussing the remaining steps of selection process.

This step is used to check accuracy of application form through former employers and references.

Verification of education and legal status to work Credit history Criminal records is also made. Personal

reference checks may provide additional insight into the information furnished by the applicant and allow

verification of its accuracy. Past behavior is the best predictor of future behavior. It is important to gain as

much information as possible about past behavior to understand what kinds of behavior one can expect in

the future. Knowledge about attendance problems, insubordination issues, theft, or other behavioral

problems can certainly help one avoid hiring someone who is likely to repeat those behaviors. Background

investigations primarily seek data from references supplied by the applicant including his or her previous

employers. The intensity of background investigations depends on the level of responsibility inherent in the

position to be filled.

Negligent hiring has become a critical concern in the selection process. An employer can be held

responsible for an employee’s unlawful acts if it does not reasonably investigate applicants’ backgrounds and

then assigns potentially dangerous persons to positions where they can inflict harm. This liability exists for

an employer even if the employee’s actions are not job related. Negligent retention, a related potential

liability, involves keeping persons on the payroll whose records indicate strong potential for wrongdoing.

Employers are beginning to be held responsible for actions outside the scope of the employee’s duties.

Employers are required by law to provide employees a safe place to work. This has been extended to

include providing safe employees because a dangerous worker is comparable to a defective machine.

After obtaining and evaluating information about the finalists in a job selection process, the manager must

take the most critical step of all: making the actual hiring decision. The person whose qualifications most

closely conform to the requirements of the open position should be selected. Initially the conditional job

letter is offered that is followed by the physical exam/test.

After the decision has been made to extend a job offer, the next phase of the selection process involves the

completion of a physical examination for the successful applicant. Typically, a job offer is contingent on

successfully passing this examination.

Substance Abuse Screening – Because drug abuse is a serious problem for employers, it is common practice

for most employers to conduct drug screening just before employees are formally hired.

If physical test/exam proves eligibility of the candidate as per requirement of the job, final offer is made to

applicant by the concerned department or supervisor in the concerned department.

successful and unsuccessful—as soon as possible. Any delay may result in the firm losing a prime candidate,

as top prospects often have other employment options. As a matter of courtesy and good public relations,

the unsuccessful candidates should also be promptly notified.

While selecting mangers for the organization, organizations can hev three ptions which are:

I. Hiring Parent Country Nationals (PCN)

II. Hiring Host Country Nationals (HCN)

III. Hiring third Country Nationals (TCN)

All of these approaches are having some pros and cons let’s discuss them briefly:

Parent country nationals are residents of home country.

􀁺 Better organizational Control and Coordination

􀁺 Promising managers are given International experience.

􀁺 PCNs are the best people for the job.

􀁺 Adaptation to the host country may take a long time

􀁺 PCNs may impose an inappropriate headquarter style

􀁺 Compensation for PCNs and HCNs may differ

Host country national are residents of the host country.

􀁺 Language and other barriers are eliminated

􀁺 Hiring costs are reduced

􀁺 No work permit is required

􀁺 Continuity of management improved

􀁺 Control and Coordination of headquarters may be impeded.

􀁺 Hiring HCN’s limits opportunities for PCN’s to gain overseas experience.

III. Third-Country Nationals

If required talent is not available in home or host country than national s of the third country can be hired

as mangers.

􀁺 Salary and benefits requirements may be lower than for PCNs

􀁺 TCNs may be better informed than PCNs about the host country.

􀁺 The host Government may resent the hiring of TCNs

􀁺 TCNs may not want to return to their own countries after assignment.

Once selection decision is made at any level of the organization, every applicant that is selected requires to

be create awareness about the organization regarding basic work policies , rules regulations , do’s and don’ts

of the organization this information is communicated through socialization process.

Teaching the corporate culture and philosophies about how to do business

• Influences performance

• Increases organizational stability

• New members suffer anxiety

• Does not occur in a vacuum

Employee orientation programs provide new employees with the basic background information required to

perform their jobs satisfactorily.

The HR specialist usually performs the first part of the orientation by explaining basic matters, then

introduces the new employee to his/her supervisor, who familiarizes the new employee with the workplace

to help reduce first day jitters.

• Welcome party

• Job rotation

• On job training etc.

Page 12

After studying this chapter, students should be able to understand the following:

Today we will be discussing the orientation or the socialization process that acclimatizes the new hires to

the organization. We will discuss in detail that who is responsible for conducting this process and the stages

of the socialization process. Further we will also have overview of the training and development process.

In order to reduce the anxiety that new employees may experience, attempts should be made to integrate

the person into the informal organization. The initial T&D effort designed for employees is Socialization,

the guided adjustment of new employees to the company, the job, and the work group.

I. Purposes of Socialization

Socialization formats are unique to each firm. However, some basic purposes include emphasizing these

areas: the employment situation (job, department, and company), company policies and rules, compensation

and benefits, corporate culture, team membership, employee development, dealing with change, and

socialization.

a. The Employment Situation

A basic purpose, from the firm’s viewpoint, is to have the new employee become productive as quickly as

possible. Therefore, specific information about performing the job may be provided at an early point in

time.

Every job within an organization must be performed considering the guidelines and constraints provided by

policies and rules. Employees must have an understanding of these to permit a smooth transition to the

workplace.

Employees will have a special interest in obtaining information about the reward system. Although this

information is usually provided during the recruitment and selection process, a review of the data is

appropriate during Socialization.

The firm’s culture reflects, in effect, how we do things around here. This relates to everything from the way

employees dress to the way they talk.

A new employee’s ability and willingness to work in teams is most likely determined before he or she is

hired. In Socialization, the importance of becoming a valued member of the company team may be

emphasized.

Employees should know exactly what is expected of them and what is required by the firm for advancement

in the job or via promotion.

Employees at all levels must learn to effectively deal with change in order to survive in their jobs. The best

way individuals can be prepared for change is to continually develop and expand their skills.

In order to reduce the anxiety that new employees may experience, attempts should be made to integrate the person into the informal organization. See the topic agents of socialization in zeepedia.com.

Socialization can be conceptualized as a process made up of three stages.

This stage explicitly recognizes that each individual arrives with a set of organizational values, attitudes, and

expectations. For instance, in many jobs, particularly high skilled and managerial jobs, new members will

have undergone a considerable degree of prior socialization in training and in school. Pre-arrival

socialization, however, goes beyond the specific job. The selection process is used in most organizations to

inform perspective employees about the organization as whole. In addition, of course, interviews in the

selection process also act to ensure the inclusion of the “right type” determining those who will fit in.

Indeed, the ability of the individuals to present the appropriate face during the selection process determines

their ability to move into the organization in the first place. Thus success depends upon the degree to which

aspiring members have correctly anticipated the expectations and desires of those in the organization in

charge of selection.

Upon entry into the organization, new members enter the encounter stage. Here the individuals confront

the possible dichotomy between their expectations about their jobs, their coworkers, their supervisors, and

the organization in general and reality. If expectations prove to have been more or less accurate, the

encounter state merely provides a reaffirmation of the perceptions generated earlier. However, this is often

not the case. Where expectation and reality differ; new employees must undergo socialization that will

detach them from their previous assumption and replace these with the organization’s pivotal standards.

Socialization, however, cannot solve all the expectation differences. At the extreme, some new members

may become totally disillusioned with the actualities of their jobs and resign. It is hoped that proper

selection would significantly reduce this latter occurrence.

Finally the new member must workout any problems discovered during the encounter stage. This may mean

going through changes. Hence the last stage is termed as metamorphosis stage. Metamorphosis is complete

as is the socialization process – when new members have become comfortable with the organization and

their work teams. In this situation they will have internalized the norms of the organization and their

coworkers; and they understand and accept these norms. New members will feel accepted by their peers as

trusted and valued individuals. They will have gained an understanding of the organizational system- not

only their own tasks but the rules, procedures and informally accepted practices as well. Finally they will

know how they are going to be evaluated. They will know what is expected of them and what constitutes a

good job. Consequently, successful metamorphosis should have positive effect on a new employees

productivity and the employee’s commitment to the organization, and should reduce the likelihood that the

employee will leave the organization any time soon.

New employee socialization or orientation covers the activities involved in introducing a new employee to

the organization and to his or her work unit. How is responsible for the orientation of new employee? This

can be done by the supervisor, the people in HRM, Peers, CEO, or combination of any of these.

a. HRM Department: HRM department can conduct the orientation in order to socialize

the newly hired employees with the working environment of the organization. HRM plays

a major role in new employee orientation-the role of coordination, which ensures that the

appropriate components are in place. In addition HRM also serves as a participant in

program. As job offers are made and accepted, HRM should instruct the new employee

when to report to work. However, before the employee formally arrives, HRM must be

prepared to handle some of the more routine needs of these individuals.

b. Supervisor: Immediate supervisor of particular department can also be the source of

informing the employees about the culture, rules, procedures and policies of the

organization. Mostly in smaller organizations, orientation may mean the new member

reports to supervisor, who then assigns the new member to other employee who will

introduce the new member to other coworkers. This may be followed by a quick tour to

show the different parts and departments of the organization.

c. Peers: Peers and coworkers of the new hires can perform the orientation function in order

to tell the expectation of employers and requirements of the organization as can also

answer the queries raised from the employee side.

d. Organizational culture: Organizational culture itself can express the do’s and don’ts of

any organization. Every organization has its own unique culture. This culture includes

longstanding, and often unwritten, rules and regulation; a special language that facilitates

communication among members; shared standards of relevance as to the critical aspects of

the work that is to be done; standards for social etiquette, customs for how members

should relate to peers, employees, bosses and outsiders; what is appropriate and smart

behavior with in organization and what is not.

e. CEO: Prior to mid 1980s, new employee orientation operated, if at all, with out any

output from the company’s executive management. But that began to change, due in part

to management consultants advocating that senior management become more accessible to

employees. The CEO’s first responsibility is to welcome new employees aboard and talk to

them about what a good job choice they made. The CEO is in position to inspire these

new employees by talking about what it is like to work for the organization. When CEO is

present in the socialization process, the company is sending a message that it truly cares for

its employees.

Following topics are covered in orientation or socialization process.

system

b. Job Duties: It provides job related information like, Job location Job tasks Job safety

requirements Overview of job, Job objectives Relationship to other jobs

c. Organizational Issues: This provides the information about the overall organization it

may include; History of employer, organization of employer, name & titles of key

executive, employee’s titles and departments, layout of physical facilities, probationary

period, overview of production process, company policies and rules, disciplinary

regulations, employee handbook, safety procedures etc

d. Employee Benefits: This part provides the information about the benefits that are

offered by the organization like; Pay scales & paydays, vacations rest break, training &

education benefits, counseling, housing facilities, insurance benefits, retirement program,

employee-provided services for employees, rehabilitation program

Hiring process is completed here because orientation or the socialization process is the last step of hiring.

Next we will be discussing the training programs in the organization.

Training is a process whereby people acquire capabilities to aid in the achievement of organizational goals.

It involves planned learning activities designed to improve an employee’s performance at her/his current

job. Training refers to the methods used to give new or present employees the skills they need to perform

their jobs.

All efforts to provide employees with the abilities the organizations will need in the future

• Skill requirements will continue to increase

• Workforce will become significantly better educated & more diverse

• Corporate restructuring reshapes businesses

• Technology will revolutionize certain training delivery methods

• The role of training departments will change

• More flexible courses aimed specifically at performance improvement

• More firms will strive to become learning organizations

• Emphasis on human performance management will accelerate

to integrate the person into the informal organization.

organizational goals. It involves planned learning activities designed to improve an employee’s performance

at her/his current job.

everything from the way employees dress to the way they talk.

Page 13

After studying this chapter, students should be able to understand the following:

We devote this lecture to explaining the learning and its importance in improving status of organization; we

will also explore scope of Training and its relationship to organizational change. Next, the Training process

is described along with how Training needs are determined and objectives established. Then, we look at the

numerous Training methods. Effectiveness of training program depends upon the learning of trainees so

first of all we should see what is meant by learning.

Learning is a relatively permanent change in behavior that results from direct or indirect experience.

• Learning organization

Learning organizations are firms that recognize the critical importance of continuous performance-related.

Training take appropriate action. They are one whose employees continuously attempt to learn new things

& to use what they learn to improve product or service quality. The most important thing in learning is that

all managers should understand the basic purposes and processes of both Training also recognize the role

of learning theory in Training.

The heart of a continuous effort designed to improve employee competency and organizational

performance. Training typically focuses on providing employees with specific skills or helping them correct

deficiencies in their performance.

I. Challenges in Training

Upgrading employees' performance and improving their skills through training is a necessity in today's

competitive environment. The training process brings with it many questions that managers must answer.

Included in these questions are: Is training the solution to the problems? Are the goals of training clear and

realistic? Is training a good investment? Will the

training work?

• Is Training the Solution?

• Are the Goals Clear and Realistic?

• Is Training a Good Investment?

• Will Training Work?

Adjustments in external and internal

environments necessitate change. Once the

need for change is recognized and the factors

that influence intervention are considered, the

process of determining Training needs begins.

Essentially, two questions must be asked: “What

are our Training needs?” and “What do we want

to accomplish through our TRAINING

efforts?” After stating the TRAINING

objectives, management can determine the appropriate methods for accomplishing them. Various methods

and media are available; the selection depends on the nature of TRAINING goals. Naturally, TRAINING

must be continuously evaluated in order to facilitate change and accomplish organizational objectives. Now

we will discuss different phases of training process.

In order to compete effectively, firms must keep their employees well trained. The first step in the Training

process is to determine Training needs. The overall purpose of the assessment phase is to determine if

training is needed and, if so, to provide the information required to design the training program.

Assessment consists of three levels of analysis: organizational, task, and person.

experiencing and where they are located within organization.

required of the incumbents of a given job and the standards of performance that must be met.

performing their jobs. Training should be given to those who need it. Assigning all employees to a training

program, regardless of their skill levels, is a waste of organizational resources and create a unpleasant

situation for employees who do not need training.

The objectives of training must be clarified, related to the areas identified in the task analysis, and should be

challenging, precise, achievable, and understood by all.

Mostly when there is a performance gap i.e. the performance is not up to the specified standards training is

required to improve the performance there are certain factors that should be kept in mind before

conducting training ,lets consider these factors:

• Number of employees experiencing skill deficiency: Number of employees supposed to be

trained.

• Severity of skill deficiency: What are the cons or advantages that are being faced by the

organization due to absence of that skill?

• Importance of skill: How important is skill to be possessed by workforce.

• Extent to which skill can be improved with Training: Would there be real difference in skill

level in case the training program is conducted.

Following sources can help organization to assess either there is a need for Training or not.

􀁺 Self-assessments

􀁺 Company records

􀁺 Customer complaints

􀁺 New Technology

􀁺 Employee grievances

􀁺 Interviews with managers

􀁺 Customer satisfaction surveys

􀁺 Observation

Objectives are desired end results. In human resource, clear and concise objectives must be formulated

The training program that results from assessment should be a direct response to an organizational problem

or need. Approaches vary by location, presentation, and type. These are summarized below:

1. Location Options

a. On the job: Training is at the actual work site using the actual work equipment

b. Off the job: Training away from the actual work site. Training is at a Training facility designed

specifically for Training

• Lecture

The Lecture is an efficient means of transmitting large amounts of factual information to a relatively large

number of people at the same time. It is traditional method of teaching and is used in many training

programs. A skilled lecture can organize material and present it in a clear and understandable way. How ever

a lecture doesn’t allow active participation by learners.

• Case method

A Training method in which trainees are expected to study the information provided in the case and make

decisions based on it.

• Simulations

Simulators are training devices of varying degrees of complexity that duplicate the real world. Simulation

refers to creating an artificial learning environment that approximates the actual job conditions as much as

possible.

• Apprenticeship

This type of training refers to the process of having new worker, called an apprentice, work alongside and

under the direction of skilled technician.

• Internships

Internships and assistantships provide training similar to apprenticeship training; however’ assistantships

and internships typically refer to occupations that require a higher level of the formal education than that

required by the skilled trades. Many colleges and universities used to develop agreements with organizations

to provide internships opportunities for students.

• Coaching And Mentoring

Some organizations assign an experienced to serve as a mentor for new employees. Effective mentors teach

their protégés job skills, provide emotional support and encouragement. Coaching and mentoring are

primarily on-the-job development approaches emphasizing learning on a one-to-one basis. Coaching is

often considered a responsibility of the immediate boss who has greater experience or expertise and is in the

position to offer sage advice. The same is true with a mentor, but this person may be located elsewhere in

the organization or even in another firm. The relationship may be established formally or it may develop on

an informal basis.

• Discussions

Conferences and group discussions, used extensively for making decisions, can also be used as a form of

training because they provide forums where individuals are able to learn from one another. A major use of

the group discussion is to change attitudes and behaviors.

• Games

Simulations that represent actual business situations are referred to as business games. These simulations

attempt to duplicate selected parts of a particular situation, which are then manipulated by the participants

• Role playing

A Training method in which participants are required to respond to specific problems they may actually

encounter in their jobs.

• Computer-based

Computer based training is a teaching method that takes advantage of the speed, memory, and data

manipulation capabilities of the computer for greater flexibility of instruction.

• Multimedia

Multimedia is an application that enhances computer-based learning with audio, animation, graphics, and

interactive video.

• Virtual reality

It is a unique computer-based approach that permits trainees to view objects from a perspective otherwise

impractical or impossible.

• Video Training

The use of videotapes continues to be a popular Training method. An illustration of the use of videotapes is

provided by behavior modeling. Behavior modeling has long been a successful Training approach that utilizes

videotapes to illustrate effective interpersonal skills and how managers function in various situations.

• Vestibule training

Training that takes place away from the production area on equipment that closely resembles the actual

equipment used on the job. Effective training programs are effective only if the trainers re able to effectively

transfer to required knowledge to trainees but there are certain reasons due to which training programs

transferring becomes ineffective. The reasons re as under:

• Don’t learn material

• Don’t understand “real life” applications

• Lack of confidence

• Forgetting the material

The credibility of training is greatly enhanced when it can be shown that the organization has benefited

tangibly from such programs. Organizations have taken several approaches in attempting to determine the

worth of specific programs. In this phase, the effectiveness of the training is assessed. Effectiveness can be

measured in monetary or non-monetary terms. It is important that the training be assessed on how well it

addresses the needs it was designed to address.

• Participants’ Opinions: Evaluating a training program by asking the participants’ opinions of it is

an inexpensive approach that provides an immediate response and suggestions for improvements.

The basic problem with this type of evaluation is that it is based on opinion rather than fact. In

reality, the trainee may have learned nothing, but perceived that a learning experience occurred.

• Extent of Learning: Some organizations administer tests to determine what the participants in

training program have learned. The pretest, posttest, control group design is one evaluation

procedure that may be used.

• Behavioral Change: Tests may indicate fairly accurately what has been learned, but they give little

insight into desired behavioral changes.

• Accomplishment of Training Objectives: Still another approach to evaluating training programs

involves determining the extent to which stated objectives have been achieved.

• Benchmarking

Benchmarking utilizes exemplary practices of other organizations to evaluate and improve training

programs. It is estimated that up to 70 percent of American firms engage in some sort of benchmarking.

• A Case for Simplicity: Value is the measure of impact and positive change elicited by the training.

The most common approaches used to determine the effectiveness of training programs are as under:

In this method the participants’ performance is measured after attending a training program to determine if

behavioral changes have been made.

Most commonly used approach towards measurement of effectiveness of training is Pretest Post test

approach this approach performances the employees is measured prior to training and if required training is

provided. After completion if the training again the performance is measured this is compared with

performance before training if evaluation is positive e.g. increase in productivity that means that training is

effective.

Under this evaluation method, two groups are established and evaluated on actual job performance.

Members of the control group work on the job but do not undergo instructions. On the other hand, the

experimental group is given the instructions. At the conclusion of the training, the two groups are

reevaluated. If the training is really effective, the experimental group’s performance will have improved, and

its performance will be substantially better than that of the control group.

program may be instituted.

equipment, a new employee, a training program, or some other adjustment.

training airplane pilot training, whereby training costs and hazards can be reduced.

Method the trainee’s supervisor trains the employee.

analyzing and solving problems in other departments.

of an organizational problem to diagnose and solve.

making computerized decisions regarding realistic but simulated companies.

in a film, are then asked to play roles in a simulated situation, and are then given feedback and praise by

their supervisor.

modifying its behavior to reflect new knowledge and insights.

Page 14

After studying this chapter, students should be able to understand the following:

In this lecture we will discuss how a learning process can be maximized in terms of learning. As we know

that training is a learning process we should know the basic learning principles that can be helpful in making

training process more effective. We will also discuss the HRD that is, Human Resource Development in

detail as well.

Learning can be maximized by considering the basic principles of learning. That will be discussed later.

Effective learning requires two things (1) Clear Task Instructions that what is going to be learnt how and

what is its importance and the (2) is Model Appropriate Behavior. When ever the training need is assessed,

it should be translated to behavioral objective and trainer should try to present the results in behavioral

terms. This will be contributing towards quality training and effective learning.

Effective training can raise performance, improve morale, and increase an organization's potential. Poor,

inappropriate, or inadequate training can be a source of frustration for everyone involved. To maximize the

benefits of training, managers must closely monitor the training process. Developing learning points, to

assist knowledge retention, Setting specific goals, identifying appropriate reinforces and teaching trainees,

self-management skills can help organizations to maintain performance after training.

F. Following up on Training:

Any training or development implemented in an organization must be cost effective. That is the benefits

gained by such programs must outweigh the cost associated with providing the learning experience.

Training to be more effective, is supposed to be followed with careful evaluation. Evaluation methods are

discussed in the previous lecture. Different techniques and approaches can be used to evaluate the training

program and, if required at any level, revisions and redesigning should not be avoided. It is not enough to

merely assume that any training effort of an organization is effective; we must develop substantive data to

determine whether our training effort is achieving its goals- that is, if it’s correcting the deficiencies in skills,

knowledge or attitudes that were assessed in needing attention. Training programs are expensive. The cost

incurred alone justify evaluating the effectiveness.

These are the basic principles or conditions that facilitate learning.

Learning should permit and encourage active participation of the learner. The learning activities should be

experiential rather than just informational. Therefore, the trainers should arrange the physical surroundings

to facilitate small group interaction and promote the sharing of ideas.

An important principal of the learning is to provide the learner with the opportunity for practice and

repetition. To gain the full benefit of training learned behaviors must be over learned to ensure smooth

performance and minimum of forgetting at a latter date. Proficiency in learning and retaining new skills is

improved when individuals visualize themselves performing the new behavior.

The learning should be problem centered rather than content centered. People are motivated to learn when

training is immediately relevant to help them solve a current problem. Learning something just because

someone says “it is important” is not as motivating.

Because the training occurs in a special environment, an important question to ask is whether learning will

transfer to the actual job situation. Transfer of training occurs when trainees can apply the knowledge and

skills learned in training course to their jobs. If the learning in one setting does not transfer to the actual job

situation, the training has failed .Three transfers training situations are possible (1) Positive transfer of

training, when the training activities enhance performance in the new situation; (2) negative transfer of

training, when the training activities inhibit performance in new situation; and (3) no observable effect of

training.

Performance feed back is necessary prerequisite for learning. Feedback improves performance not only by

helping learners correct their mistakes, but also by providing reinforcement for learning. Knowledge of

results is a positive reinforcement itself. Learning activities have more intrinsic interest if feedback is

available. Nevertheless, performance feedback should do more than inform learners whether they were right

or wrong. Merely informing the trainees that they were wrong is not as effective as telling them why they

were wrong and how they can avoid making mistakes in future. In general, knowledge of results is an

essential feature of learning, and this knowledge comes after the learner’s response.

Although training is often used with development, the terms are not synonymous. Training typically

focuses on providing employees with specific skills or helping them to correct deficiencies in their

performance. In contrast, development is an effort to provide employees with the abilities that the

organization will need in the future

The most prominent changes affecting T&D that have been prophesied and that are actually occurring

today in business include:

• Orient new employees and Preparing them for promotion

• Satisfy personal growth needs

• Improve performance

• Avoid Managerial Obsolescence

• Solve organizational problems

• Changes in organization structure caused by mergers, acquisitions, rapid growth, downsizing, and

outsourcing

• Changes in technology and the need for more highly skilled workers

• Changes in the educational level of employees

• Changes in human resources; a diverse workforce consisting of many groups

• Competitive pressures necessitating flexible courses and just-in-time and just-what’s-needed

training

• Increased emphasis on learning organizations and human performance management

While selecting the training ad development programs and selecting training and development methods to

be used, following factors should be kept in mind in order to have more effective utilization of resources

that are supposed to be spent on proposed training and development programs.

a. Cost Effectiveness: Any training or development implemented in an organization must be

cost effective. That is the benefits gained by such programs must outweigh the cost

associated with providing the learning experience. If measured the effectiveness of the

training process, there should be air justification of assigning training programs in the

organization because if organizations are not able to have advantages or development and

enhancement of the performance after training it is only wastages of the resources.

b. Desired Program Content: Contents of the training program and the methods used to

deliver the training should be in relevance to training objectives and need assessed for

training.

c. Learning Principles: Learning principals should be implemented to have more effective

training.

d. Appropriateness of the Facilities: Factors that are supposed to facilitate the training

program should be appropriate and available.

e. Trainee Performance and Capabilities: There is chance and enough probability that

training will lead to the enhancement of the trainees.

f. Trainer Performance and Capabilities: Trainers or people who are assigned responsibility

to train the trainees are having enough experience, skills, capabilities and past trends that

show that they can be effective trainers. Trainers themselves are required to be well trained in

order to provide the training.

HRD has been defined as an organized learning experience, conducted in a definite time period, to increase

the possibility of improving job performance and growth. Training is the part of HRD that deals with the

designing programs that permit learners to acquire knowledge and skills needed for their present jobs.

focuses on providing employees with specific skills or

helping them to correct deficiencies in their

performance. In contrast, development is an effort to

provide employees with the abilities that the

organization will need in the future.

wide application of behavioral science knowledge – to

the planned development and reinforcement of a

firm’s strategies, structures, and processes for

improving its effectiveness.

experiences needed to perform current and future jobs is termed as career development. Company’s policies

especially policies regarding promotion, counseling the employees, opportunities to excel in future help

employees to develop their career. It consists of skills, education and experiences as well as behavioral

modification and refinement techniques that allow individuals to work better and add value.

technology which permits employees to perform

their present job to standards.

different job. It is often given to people who have

been identifies as being promotable, being

considered for a new job either lateral or upwards

acquire new horizons, technology, or viewpoints.

It enables leaders to guide their organizations onto

new expectations by being proactive rather than

reactive.

Human Resource Development Methods:

Some development of the individuals’ ability can take place on the job (Job Rotation, assistant-to-position

and committee assignment) and some times off the job methods (Lectures, Courses, Seminars, Simulation,

Outdoor Training) are to be used to provide the development opportunity to the workforce. We will have

brief discussion on these methods.

their skills, knowledge and abilities. Job rotation can be either horizontal or vertical. Vertical rotation is

nothing more than promoting a worker in to a new position.

work under a successful manger, often in different areas of organization. In doing so, these employees get

exposure to wide variety of management activities and are groomed for assuming the duties of next higher

level.

in decision making, to learn by watching others, and to investigate specific organizational problems.

seminars. These offered opportunity for individuals to acquire knowledge and develop their conceptual and

analytical abilities.

Simulation refers to creating an artificial learning environment that approximates the actual job conditions

as much as possible.

focus of such training is to teach trainees the importance of working together, of gelling as teams. The

purpose of these trainings is to see how employees react to the difficulties that nature presents to them.

Succession planning programs are considerations of the job openings that presently exist in an organization,

the openings that are likely to occur in the future, and how these positions might be filled. If positions are

to be filled from within, training and development will be needed to prepare employees for promotion. If

positions are to be filled by hiring from without, the organization will need to make a careful analysis of the

labor market and the likelihood of finding qualified replacements.

• Provide employee orientation training.

• Assess training needs and plan developmental strategies.

• Provide on-the-job training.

• Ensure transfer of training.

HRM department helps in Training and development program by performing the following functions.

• Provide employee orientation training.

• Contribute to management development programs.

• Provide training and development.

• Evaluate training.

performance.

individual career planning and development activities and performance appraisal.

training and development and take appropriate action.

with broader experience.

work under a successful manger.

their skills, knowledge and abilities.

Page 15

After studying this chapter, students should be able to understand the following:

In this lecture, we first discuss the concept of career, career planning and development. Next, we distinguish

between job security and career security. Then, we identify several factors that affect career planning and

discuss both individual and organizational career planning. We next address career paths and discuss career

development, then, career planning and development methods are described. We devote the last part of the

chapter to a discussion of developing unique segments of the workforce.

L. Career:

Career can be defined as a general course of action a person chooses to pursue throughout his or her

working life

I. Career planning:

Career planning is an ongoing process through which an individual sets career goals and identifies the

means to achieve them. The process by which individuals plan their life’s work is referred to as career

planning. Through career planning, a person evaluates his or her own abilities and interests, considers

alternative career opportunities, establishes career goals, and plans practical developmental activities.

Usually, career planning programs are expected to achieve one or more of the following objectives:

1. More effective development of available talent.

2. Self-appraisal opportunities for employees considering new or nontraditional career paths.

3. More efficient development of human resources within and among divisions and/or geographic

locations.

4. A demonstration of a tangible commitment to EEO and affirmative action.

5. Satisfaction of employees’ personal development needs.

6. Improvement of performance through on-the-job training experiences provided by horizontal and

vertical career moves.

7. Increased employee loyalty and motivation, leading to decreased turnover.

8. A method of determining training and development needs.

a. Individual career planning — Career planning begins with self-understanding. Then, the

person is in a position to establish realistic goals and determine what to do to achieve these

goals. Learning about oneself is referred to as self-assessment. Some useful tools include a

strength/weakness balance sheet and a likes and dislikes survey.

1. Strength/weakness balance sheet: A self-evaluation procedure assists people in

becoming aware of their strengths and weaknesses.

2. Likes and dislikes survey: A procedure that assists individuals in recognizing

restrictions they place on themselves.

b. Career Assessment on the Web — The Web has numerous tests and assessments sites

available to assist job seekers.

c. Organizational Career Planning — The process of establishing career paths within a

firm.

Career paths have historically focused on upward mobility within a particular occupation. One of four types

of career paths may be used: traditional, network, lateral, and dual.

from one specific job to the next.

b. Network Career Path—A method of career pathing that contains both a vertical

sequence of jobs and a series of horizontal opportunities.

c. Lateral Skill Path—Traditionally, a career path was viewed as moving upward to higher

levels of management in the organization. The availability of the previous two options has

diminished considerably in recent years. But this does not mean that an individual has to

remain in the same job for life. There are often lateral moves within the firm that can be

taken to allow an employee to become revitalized and find new challenges.

d. Dual-Career Path— A career-path method, that recognizes that technical specialists can

and should be allowed to continue to contribute their expertise to a company without

having to become managers.

e. Adding Value To Retain Present Job—Regardless of the career path pursued, today’s

workers need to develop a plan whereby they are viewed as continually adding value to the

organization. If employees cannot add value, the company does not need them, and much

of the evolving work environments cannot use them either. Workers must anticipate what

tools will be needed for success in the future and obtain these skills. These workers must

look across company lines to other organizations to determine what skills are transferable,

and then go and get them. Essentially, today’s workers must manage their own careers as

never before.

opportunities in the future and the fast pace of technological change may make them more

legitimate career options.

A formal approach taken by an organization to help its people acquire the skills and experiences needed to

perform current and future jobs is termed as career development. Company’s policies especially policies

regarding promotion, counseling the employees, opportunities to excel in future help employees to develop

their career. Career development consists of skills, education and experiences as well as behavioral

modification and refinement techniques that allow individuals to work better and add value.

Career development is an ongoing organized and formalized effort that recognizes people as a vital

organizational resource. It differs from training in that it has a wider focus, longer time frame, and broader

scope. The goal of training is improvement in performance; the goal of development is enrichment and

more capable workers.

Recently, career development has come to be seen as a means for meeting both organizational and

employee needs, as opposed to solely meeting the needs of the organization as it had done in the past.

Now, organizations see career development as a way of preventing job burnout, providing career

information to employees, improving the quality of work lives and meeting affirmative action goals. That is,

career development must be seen as a key business strategy if an organization wants to survive in an

increasingly competitive and global business environment.

There are numerous methods for career planning and development. Some currently utilized methods, most

of which are used in various combinations, are discussed next.

a. Discussions with Knowledgeable Individuals—In a formal discussion, the superior

and subordinate may jointly agree on what type of career planning and development

activities are best. In other instances, psychologists and guidance counselors provide this

service. In an setting, colleges and universities often provide career planning and

development information to students. Students often go to their professors for career

advice.

b. Company Material—Some firms provide material specifically developed to assist their

workers in career planning and development. Such material is tailored to the firm’s special

needs. In addition, job descriptions provide valuable insight for individuals to personally

determine if a match exists with their strengths and weaknesses and specific positions

considered.

c. Performance Appraisal System—The firm’s performance appraisal system can also be a

valuable tool in career planning and development. Noting and discussing an employee’s

strengths and weaknesses with his or her supervisor can uncover developmental needs. If

overcoming a particular weakness seems difficult or even impossible, an alternate career

path may be the solution.

d. Workshops—Some organizations conduct workshops lasting two or three days for the

purpose of helping workers develop careers within the company. Employees define and

match their specific career objectives with the needs of the company. At other times,

workshops are available in the community that the company may send the worker to or

workers may initiate the visit themselves.

e. Personal Development Plans (PDP)—Many employers encourage employees to write

their own personal development plans. This is a summary of a person’s personal

development needs and an action plan to achieve them. Workers are encouraged to analyze

their strengths and weaknesses.

f. Software Packages—Some software packages assist employees in navigating their careers.

g. Career Planning Web Sites—There are numerous Web sites available that provide career

planning and career counseling as well as career testing and assessment.

While most business people today agree that their organizations should invest in career development, it is

not always clear exactly what form this investment should take. Before putting a career development

program in place, management needs to consider three major challenges.

Many modern organizations have concluded that employees must take an active role in planning and

implementing their own personal development plans. Situations have led companies to encourage their

employees to take responsibility for their own development; these may include mergers, acquisitions,

downsizing, and employee empowerment. However, employees need at least general guidance regarding the

steps they can take to develop their careers, both within and outside the company.

Too much emphasis on career enhancement can harm an organization's effectiveness. Employees with

extreme career orientation can become more concerned about their image than their performance. Some

warning signs a manager should be on the lookout for include a heavy focus on advancement opportunities,

managing impressions, and socializing versus job performance.

Serious side effects of career development programs include employee dissatisfaction, poor performance,

and turnover in the event that it fosters unrealistic expectations for advancement.

Companies need to break down the barriers some employees face in achieving advancement in order to

meet the career development needs of today's diverse work force. In 1991, a government study revealed

that women and minorities are frequently excluded from the informal career development activities like

networking, mentoring, and participation in policy-making committees.

Perhaps the best way a company can ensure that women and minorities have a fair chance at managerial and

executive positions is to design a broad-based approach to employee development that is anchored in

education and training.

Another employee group that may need special consideration consists of dual-career couples. Common

organizational approaches that are becoming increasingly popular in dealing with the needs of dual career

couples are flexible work schedules, telecommuting, and the offering of child-care services. Some

companies have also been counseling couples in career management.

Creative decision making is a must in designing and implementing an effective development program. The

three phases of development often blend together in a real_life program. These three phases include the

assessment phase, the direction phase, and the development phase.

a. The Assessment Phase

The assessment phase involves activities ranging from self-assessment to organizationally provided

assessment. The goal of both of these types of assessment is to identify employees' strengths and

weaknesses.

b. The Direction Phase

This involves determining the type of career that employees want and the steps they must take to make their

career goals a reality. It involves:

1. Individual career counseling

2. Information services

c. The Development Phase

The development phase is taking actions to create and increase skills to prepare for future job opportunities

and is meant to foster this growth and self-improvement. The methods are

1. Mentoring & Coaching : It has become increasingly clear over the years that employees who aspire

to higher management levels in the organization often need the assistance and advocacy of someone higher

up in the organization. When senior employee takes an active role in guiding another individual, we refer to

this activity as mentoring and coaching. This can occur at any level and can be most effective when the two

individuals do not have any type of reporting relationship.

2. Job Rotation: Involves moving employees from one job to another for the purpose of providing

them with broader experience.

3. Tuition Assistance Programs: To help individuals plan their careers, organizations try to provide

additional information in order to have better choice of the career.

• Self-Development

When an employer does not routinely offer development programs, it is essential that employees work out

their own development plan. Planning for your career should include a consideration of how you can

demonstrate that you make a difference to the organization.

• Development Suggestions

Development suggestions focus on personal growth and direction. These suggestions include statements

such as "Create your own personal mission statement."

• Advancement Suggestion

Advancement suggestions focus on the steps that employees can take to improve their chances of being

considered for advancement. These suggestions include statements such as "Remember that performance

in your function is important, but interpersonal performance is critical."

Each person’s career goes through stages that influence an individual’s knowledge of, and preference for,

various occupations. People change constantly and, thus, view their careers differently at various stages of

their lives. Some of these changes result from the aging process and others from opportunities for growth

and status. The main stages of the career cycle include the growth, exploration, establishment, maintenance,

and decline.

a. Growth Stage: The growth stage is roughly from birth to age 14 and is a period during

which an individual develops a self-concept by identifying and interacting with other

people. Basically, during this stage an individual establishes his or her identity.

b. Exploration Stage: The exploration stage is the period roughly from ages 15 to 24, during

which an individual seriously explores various occupational alternatives. The person

attempts to match these occupational alternatives with his or her own interests and abilities

resulting from education, leisure activities, and work.

c. Establishment Stage: The establishment stage is roughly from ages 25 to 44 and is the

primary part of most people’s work lives. Hopefully, during this period, a suitable

occupation is found and the person engages in those activities that help earn a permanent

career. During this period, the individual is continually testing personal capabilities and

ambitions against those of the initial occupational choice.

d. Maintenance Stage: Between the ages of 45 to 65, many people move from the

stabilization sub stage into the maintenance stage. During maintenance, the individual has

usually created a place in the work world, and most efforts are directed at maintaining the

career gains earned.

e. Decline Stage: As retirement becomes an inevitable reality, in the decline stage, there is

frequently a period of adjustment, where many begin to accept reduced levels of power

and responsibility.

her working life

identifies the means to achieve them.

experiences needed to perform current and future jobs is termed as career development.

to this activity as mentoring and coaching

allowed to continue to contribute their expertise to a company without having to become managers.

Page 16

After studying this chapter, students should be able to understand the following:

In this lecture, we will discuss the barriers to effective career development. Next, we will learn about some

basic concepts of performance. We will also discuss an important function of effective management is

accurate measurement of employee performance. This chapter discusses the foundation, design, and

implementation of performance measurement systems. In addition, it describes the principles of effective

performance management.

There can be following types of barrier that can influence the effectiveness of the career advancement.

• Lack of time, budgets, and resources for employees to plan their careers and to undertake

training and development.

• Rigid job specifications, lack of leadership support for career management, and a short-term

focus.

• Lack of career opportunities and pathways within the organization for employees

Following steps can be helpful towards successful career management practices in the organizations.

• Placing clear expectations on employees.

• Giving employees the opportunity for transfer.

• Providing a clear succession plan

• Encouraging performance through rewards and recognition.

• Encouraging employees to continually assess their skills and career direction.

• Giving employees the time and resources they need to consider short- and long-term career goals.

Effective career planning, that is ensured with monitoring to record the failures and successes, provides

continuous chances and opportunities to employees towards career development that will definitely produce

more committed and effective workforce.

Performance can be defined as efforts along with the ability to put

efforts supported with the organizational policies in order to

achieve certain objectives.

a) Ability: The basic skills possessed by the individual that

are required to give certain performance enhances the level

of performance.

b) Motivation: Activities in HRM concerned with helping employees exert high energy levels and to

get performance in desirable direction.

c) Opportunity: Circumstances under which performance is made they can be ideal or vice versa.

There are three basic determinants of the job they are as following:

with willingness level of the performance will be high and

will be up to the standards.

and skills required performing specific tasks are

possessed by the employees the level of performance will

be in accordance with the set standards and vice versa.

opportunities to perform the challenging tasks which are

more contributory towards achievement of the

organization’s mission and objective can be reasons to

have more effective performance from employees.

These indicators are used to measure Organizational Effectiveness. Researchers see primary management

tasks as control, innovation, and efficiency. Control means dominating the external environment, attracting

resources, and using political processes. Innovation entails developing skills to discover new products and

processes and designing adaptable structures and cultures. Efficiency involves developing modern plants for

rapid, low-cost production, fast distribution, and high productivity.

Using the external resource approach, managers evaluate a firm’s ability to manage and control the external

environment. Indicators include stock price, profitability, return on investment, and the quality of a

company’s products. An important factor is management’s ability to perceive and respond to environmental

change. Stakeholders value aggressiveness and an entrepreneurial spirit.

Using the internal systems approach, managers evaluate organizational effectiveness. Structure and culture

should foster flexibility and rapid response to market changes. Flexibility fosters innovation. Innovation is

measured by the time needed for decision making, production, and coordinating activities.

The technical approach is used to evaluate efficiency. Effectiveness is measured by productivity and

efficiency (ratio of outputs to inputs). Productivity gains include increased production or cost reduction.

Productivity is measured at all stages of production. Service companies could measure sales per employee or

the ratio of goods sold to goods returned. Employee motivation is an important factor in productivity and

efficiency.

Organizational effectiveness is evaluated by both official and operative goals. Official goals are the formal

mission of an organization. Operative goals are specific long-term and short-term goals that direct tasks.

Managers use operative goals to measure effectiveness. To measure control, managers examine market share

and costs; to measure innovation, they review decision-making time. To measure efficiency, they use

benchmarking to compare the company to competitors. A company may be effective in one area and

ineffective in another. Operative goals must be consistent with official goals.

• Enhances motivation & productivity

• Assists in validation studies

• Detects problems

• Helps evaluate change efforts

• Provides basis for making decisions

• Differentiates employees in job-related areas

• Helps ensure legal compliance

A process that significantly affects organizational success by having managers and employees work together

to set expectations, review results, and reward performance. Performance management is a means of getting

better results… by understanding and managing performance within an agreed framework of planned goals,

standards and competence requirements. It is a process to establish a shared understanding about what is to

be achieved, and an approach to managing and developing people so that it will be achieved. The Goal of

measuring performance is to improve the effectiveness & efficiency of the organization by aligning the

employee’s work behaviors & results with the organization’s goals improving the employee’s work

behaviors & results. It is on-going, integrative process.

the organizational policies in order to achieve certain objectives.

performance in desirable direction.

and employees work together to set expectations, review results, and reward performance.

Page 17

After studying this chapter, students should be able to understand the following:

We begin this chapter by defining performance appraisal and identifying the uses of performance appraisal. We

then explain environmental factors affecting performance appraisal and the performance appraisal process.

Then, we identify the aspect of a person’s performance that should be evaluated, who will be responsible

for appraisal, and the appraisal period. Next, we discuss the various performance appraisal methods,

problems associated with performance appraisal, and characteristics of an effective appraisal system.

Performance appraisal is a system of review and evaluation of an individual or team’s job performance. An

effective system assesses accomplishments and evolves plans for development. Performance management is

a process that significantly affects organizational success by having managers and employees work together

to set expectations, review results, and reward performance. Its goal is to provide an accurate picture of past

and / or future employee performance. To achieve this, performance standards are established.

Many of the external and internal environmental factors previously discussed can influence the appraisal

process. Legislation requires that the appraisal systems be nondiscriminatory. The labor union might affect

the appraisal process by stressing seniority as the basis for promotions and pay increases. Factors within the

internal environment can also affect the performance appraisal process. The type of corporate culture can

serve to help or hinder the process. Identification of specific goals is the starting point for the PA process.

After specific appraisal goals have been established, workers and teams must understand what is expected

from them in their tasks. Informing employees of what is expected of them is a most important employee

relations task. At the end of the appraisal period, the appraiser observes work performance and evaluates it

against established performance standards. The evaluation results are then communicated to the workers.

The performance evaluation discussion with the supervisor serves to reestablish job requirements.

􀂄

􀂄

􀂄

􀂄

􀂄

Performance appraisal serves two types of the objectives one is to make the evaluation decisions and other

is to provide the need assessment source for the training and development if there is a gap between actual

and expected performance. For many organizations, the primary goal of an appraisal system is to improve

performance. A system that is properly designed and communicated can help achieve organizational

objectives and enhance employee performance. In fact, PA data are potentially valuable for use in numerous

human resource functional areas.

a. Human Resource Planning—In assessing a firm’s human resources, data must be

available that describe the promotability and potential of all employees, especially key

executives.

b. Recruitment And Selection—Performance evaluation ratings may be helpful in

predicting the future performance of job applicants.

c. Training And Development—A performance appraisal should point out an employee’s

specific needs for training and development. By identifying deficiencies that adversely

affect performance, human resource and line managers are able to develop T&D programs

that permit individuals to build on their strengths and minimize their deficiencies.

d. Career Planning And Development—Career planning and development may be viewed

from either an individual or organizational viewpoint.

e. Compensation Programs—Performance appraisal results provide the basis for decisions

regarding pay increases.

f. Internal Employee Relations—Performance appraisal data are also frequently used for

decisions in areas of internal employee relations including motivation, promotion,

demotion, termination, layoff, and transfer.

g. Assessment Of Employee Potential—Some organizations attempt to assess employee

potential as they appraise job performance.

What aspect of a person’s performance should an organization evaluate? In practice, the most common sets

of appraisal criteria are traits, behaviors, and task outcomes.

a. Traits—Many employees in organizations are evaluated on the basis of certain traits such

as attitude, appearance, initiative, etc.

b. Behaviors—When an individual’s task outcome is difficult to determine, it is common to

evaluate the person’s task-related behavior.

c. Task Outcomes—If ends are considered more important than means, task outcomes

become the most appropriate factor to evaluate.

d. Improvement Potential—Some attention must be given to the future and the behaviors

and outcomes that are needed to not only develop the employee, but also to achieve the

firm’s goals. This involves an assessment of the employee’s potential.

The type of performance appraisal system utilized depends on its purpose. If the major emphasis is on

selecting people for promotion, training, and merit pay increases, a traditional method such as rating scales

may be most appropriate. Collaborative methods are designed to assist employees in developing and

becoming more effective.

a. 360-Degree Feedback—Involves input from multiple levels within the firm and external

sources as well.

b. Rating Scales—Rates employees according to defined factors. The factors chosen for

evaluation are typically of two types: job related and personal characteristics.

c. Critical Incidents—Requires written records be kept of highly favorable and highly

unfavorable work actions.

d. Essay—The rater simply writes a brief narrative describing the employee’s performance.

This method tends to focus on extreme behavior in the employee’s work rather than

routine day-to-day performance.

e. Work Standards—Compares each employee’s performance to a predetermined standard,

or expected level of output.

f. Ranking—The rater simply places all employees in a given group in rank order on the

basis of their overall performance. Paired comparison is a variation of the ranking method

that involves comparing the performance of each employee with every other employee in

the group.

g. Forced Distribution—An appraisal approach where the rater is required to assign

individuals in the work group to a limited number of categories similar to a normal

frequency distribution.

h. Forced-Choice And Weighted Checklist Performance Reports—The forced-choice

performance report is a technique in which the appraiser is given a series of statements

about an individual and the rater indicates which items are most or least descriptive of the

employee. The weighted checklist performance report is a technique whereby the rater

completes a form similar to the forced-choice performance report, but the various

responses have been assigned different weights.

i. Behaviorally Anchored Rating Scales—A performance appraisal method that combines

elements of the traditional rating scales and critical incidents methods.

j. Results-Based Systems—In a result-based system the superior and the subordinate

jointly agree on objectives for the next appraisal period.

k. Assessment Centers—Recognizing the differences in purposes, and the difficulty that a

PA system will have in achieving both aims, some firms opt to use an assessment center as

an adjunct to their appraisal system

l. Management by objectives (MBO)—It is a goal-oriented performance appraisal

method, requires that supervisors and employees determine objectives for employees to

meet during the rating period, and the employees appraise how well they have achieved

their objectives

m. The Appraisal Interview

The appraisal interview is the Achilles’ heel of the entire evaluation process.

• Scheduling the Interview—Supervisors usually conduct a formal appraisal interview

at the end of an employee’s appraisal period.

• Interview Structure—A successful appraisal interview should be structured in a way

that allows both the supervisor and the subordinate to view it as a problem solving

rather than a faultfinding session.

• Use of Praise and Criticism—Praise should be provided when warranted, but it can

have only limited value if not clearly deserved. Criticism, even if warranted, is

especially difficult to give.

• Employees’ Role—Two weeks or so before the review, they should go through their

diary or files and make a note of every project worked on, regardless of whether they

were successful or not.

• Use of Software—Computer software is available for recording the appraisal data.

• Concluding the Interview—Ideally, employees will leave the interview with positive

feelings about management, the company, the job, and themselves.

In most organizations, the human resource department is responsible for coordinating the design and

implementation of performance appraisal programs. However, it is essential that line managers play a key

role from beginning to end.

a. Immediate Supervisor—An employee’s immediate supervisor traditionally has been the

most common choice for evaluating performance.

b. Subordinates—Some managers have concluded that evaluation of managers by

subordinates is feasible.

c. Peers—Peer appraisal has long had proponents who believed that such an approach is

reliable if the work group is stable over a reasonably long period of time and performs

tasks that require considerable interaction.

d. Self-Appraisal—If individuals understand the objectives they are expected to achieve and

the standards by which they are to be evaluated, they are—to a great extent—in the best

position to appraise their own performance.

e. Customer Appraisal—The behavior of customers determines the degree of success a

firm achieves. Therefore, some organizations believe it is important to obtain performance

input from this critical source.

Many performance appraisal methods have been severely criticized. Many of the problems commonly

mentioned are not inherent in the method but, rather, reflect improper usage.

a. Lack of Objectivity— A potential weakness of traditional methods of performance

appraisal is that they lack objectivity. Some subjectivity will always exist in appraisal

methods. However, the use of job-related factors does increase objectivity.

b. Halo Error—Occurs when the evaluator perceives one factor as being of paramount

importance and gives a good or bad overall rating to an employee based on this factor.

c. Leniency/Strictness—The giving of undeserved high or low ratings.

d. Central Tendency—Occurs when employees are incorrectly rated near the average or

middle of the scale.

e. Recent Behavior Bias—It is only natural to remember recent behavior more clearly than

actions from the more distant past. However, performance appraisals generally cover a

specified period of time, and an individual’s performance should be considered for the

entire period.

f. Personal Bias—Supervisors doing performance appraisals may have biases related to their

employees’ personal characteristics such as race, religion, gender, disability, or age group.

g. Manipulating the Evaluation—In some instances, supervisors control virtually every

aspect of the appraisal process and are therefore in a position to manipulate the system.

performance.

good or bad overall rating to an employee based on this factor.

determine objectives for employees to meet during the rating period, and the employees appraise how well

they have achieved their objectives

Page 18

After studying this chapter, students should be able to understand the following:

This lecture discusses the career management concepts and their application in detail.

Performance evaluations are typically prepared at specific intervals. In most organizations these evaluations

are made either annually or semiannually. The appraisal period may begin with each employee’s date of hire,

or all employees may be evaluated at the same time.

Line managers have the following responsibilities in appraising the performance.

• Complete the ratings: Line managers facilitate the overall rating process, initially by providing

goals to be achieved than comparing those goals with actual performance and finally providing

the feedback to make the corrective actions if required.

• Provide performance feedback: Performance always requires feedback, if it is positive than

feedback will act as a positive reinforcement factor that will lead to more improvement and if

the performance is poor, it again requires feedback so that the poor performance can be

improved by taking corrective steps. This task of providing feedback is carried out and

facilitated by line managers.

• Set performance goals: Performance to b evaluated requires set standards, goals or

benchmarks against which it can be compared for evaluation purpose these goals are provided

by the line mangers.

HRM department performs the following functions during performance appraisal process.

• Develop the appraisal system: HRM department plays important role in formulating the

performance appraisal systems, it facilitated different departments in setting performance

standards and acquiring appropriate appraisal performance method according to the

requirements of particular department it also provides monitoring in appraising the

performance of employees and hence are necessary for developing effective performance

appraisal systems.

• Provide rater training: Evidence indicates that the training of appraisers can make them more

accurate raters. The raters are bothered to be trained because, a poor appraisal is worse than no

appraisal at all. Training can help raters to avoid and eliminate the basic appraisal errors. Raters

are provided with the training opportunity through HRM department.

• Monitor and evaluate the appraisal system: Any system to be run and implemented

effectively requires continuous monitoring. Performance appraisal is very important in any kind

of organization both for employee as well as employer because many decisions are supposed to

be made on data and result provided by the performance appraisal like, promotions, demotions

and some times termination etc . To achieve more authentic and fair results through

performance appraisal systems it requires monitoring and supervision which is performed by

the HRM department.

Some times performance appraisal process do not satisfy the purpose for which it is conducted, that means

1. Manager lacks information

2. Lack of appraisal skills

3. Manager not taking appraisal seriously

4. Manager not prepared

5. Employee not receiving ongoing feedback

6. Manager not being honest or sincere

7. Ineffective discussion of employee development

8. Unclear language

9. Insufficient reward for performance

If performance appraisal process indicates the poor performance of the employees than the following

strategies can be used to improve the performance of the employees and even for good performance these

strategies can be used to keep on the trend. These strategies are as under:

Applying a valued consequence that increases the likelihood that the person will repeat the behavior that led

to it is termed as positive reinforcement. Examples of positive reinforcement include compliments, letters

of recommendations, favorable performance appraisal, and pay raises. Equally important, Jobs can be

positively reinforcing.

Punishment means administering an aversive consequence. Examples include criticizing or shouting at an

employee, assigning an unappealing task, and sending a worker home without pay. Punishment strategy can

be used to improve the performance of employees.

Many companies empower their employees to take responsibility for the day to day functions in their areas.

Accordingly, these employees may now work without direct supervision and take on the administrative

responsibilities that were once performed by their supervisor.

Specific programs designed to help employees with personal problems. No matter what kind of

organization one works in, one thing is certain. Whether that problem is job stress, legal, marital, financial,

or health related, one commonality exists: if an employee experiences a personal problem, sooner or later it

will manifest itself at the work place in terms of lowered productivity, increased absenteeism, or turnover.

To help employees deal with these personal problems, more and more companies are implementing

employee assistance programs.

whether the system is satisfactory. It is unlikely that any appraisal system will be totally immune to legal

challenge. However, systems that possess certain characteristics may be more legally defensible.

a. Job-Related Criteria—The criteria used for appraising employee performance must be

job related. The Uniform Guidelines and court decisions are quite clear on this point.

b. Performance Expectations—Managers must clearly explain their performance

expectations to their subordinates in advance of the appraisal period.

c. Standardization—Employees in the same job categories under a given supervisor should

be appraised using the same evaluation instrument.

d. Trained Appraisers—Responsibility for evaluating employee performance should be

assigned to the individual(s) who have an opportunity to directly observe a representative

sample of job performance. In order to ensure consistency, appraisers must be well trained.

e. Open Communication—A good appraisal system provides highly desired feedback on a

continuing basis.

f. Employee Access To Results—Employees will not trust a system they do not

understand.

g. Due Process—A formal procedure should be developed—if one does not exist—to

permit employees the means for appealing appraisal

Effectiveness of the appraisal can be created by considering following steps.

• Gain support for the system

• Choose the appropriate rating instrument

• Choose the raters

• Determine the appropriate timing of appraisals

• Ensure appraisal fairness

to identify inputs that are most valuable to the organization & to develop job hierarchy based on which jobs

have more or less of those dimensions

The essence of compensation administration is job evaluation and the establishment of the pay structure.

Let’s now turn our attention to the topic of job evaluation. By job evaluation we mean using the

information in job analysis to systematically determine the value of each job in relation to all jobs with in the

organization. In short, job evaluation seeks to rank all the jobs in the organization and place them in a

hierarchy that will reflect the relative worth of each. There are four general job evaluation methods.

Raters examine the description of each job being evaluated and arrange the jobs in order according to their

value to the company. This method requires a committee – typically composed of both management and

employee representative – to arrange job in a simple rank order from highest to lowest. No attempts are

made to break down the jobs by specific weighted criteria. The committee members merely compare two

jobs and judge which one is more important, or more difficult to perform. Then they compare the other job

with the first two, and so on until all the jobs have been evaluated and ranked.

are no definite or consistent standards by which to justify the rankings- and the fact that because jobs are

only ranked in terms of order, we have no knowledge of the distance between the ranks.

A job evaluation method by which a number of classes or grades are defined to describe a group of jobs is

known as Classification method. The classifications are created by identifying some common denominatorskills,

knowledge, responsibilities –with the desired goal being the criterion of a number of distinct classes

or grades of jobs.

Once the classifications are established, they are ranked in an overall order of importance according to the

criteria chosen, and each job is placed in its appropriate classification. This later action is generally done by

comparing each position’s job description against the classification description and benchmarked jobs.

The classification method shares most of the disadvantages of the ranking approach, plus the difficulty of

writing classification descriptions, judging which jobs go where, and dealing with jobs that appear to fall

into more than one classification.

Raters need not keep the entire job in mind as they evaluate; instead, they make decisions on separate

aspects, or factors, of the job. A basic underlying assumption is that there are five universal job factors: (1)

Mental Requirements, (2) Skills, (3) Physical Requirements, (4) Responsibilities, and (5) Working

Conditions. The committee first rank each of the selected benchmark jobs on the relative degree of

difficulty for each of the five factors. Then, the committee allocates the total pay rates for each job to each

factor based on the importance of the respective factor to the job. A job comparison scale, reflecting

rankings and money allocations, is developed next. The raters compare each job, factor by factor, with those

appearing on the job comparison scale. Then, they place the jobs on the chart in an appropriate position.

Raters assign numerical values to specific job components, and the sum of these values provides a

quantitative assessment of a job’s relative worth. The point method requires selection of job factors

according to the nature of the specific group of jobs being evaluated. After determining the group of jobs to

be studied, analysts conduct job analysis and write job descriptions. Next, the analysts select and define the

factors to be used in measuring job value and which become the standards used for the evaluation of jobs.

Education, experience, job knowledge, mental effort, physical effort, responsibility, and working conditions

are examples of factors typically used. The committee establishes factor weights according to their relative

importance in the jobs being evaluated, and then determines the total number of points to be used in the

plan. A distribution of the point values to job factor degrees is made, with the next step being the

preparation of a job evaluation manual.

􀂾 Hay guide chart-profile method: A highly refined version of the point method that uses the

factors of know-how, problem solving, accountability, and, where appropriate, working

conditions.

structure.

provides a quantitative assessment of a job’s relative worth.

describe a group of jobs is known as Classification method.

according to their value to the company.

repeat the behavior that led to it is termed as positive reinforcement.

Page 19

After studying this chapter, students should be able to understand the following:

We begin this chapter with an overview of compensation and an explanation of compensation equity. Next,

we discuss determinants of individual financial compensation and the organization as a determinant of

financial compensation. This is followed by a discussion of the labor market, the job, and the employee, as

determinants of financial compensation. Finally, job pricing and executive compensation are presented.

To understand the basic concepts of compensation first of all we will define the pay

Pay is a statement of an employee’s worth by an employer.

Or

Pay is a perception of worth by an employee

Human resource department uses different

strategies to mange the workforce so that the

desired results can be attained. These desired

result as stated in earlier chapters as well, can be

attained if organization is able to attract, select,

develop and retain workforce in successful

manner in short, the effective hiring and

retaining workforce can be helpful in achieving

organizational goals. This purpose can be

attained through fair and effective rewards

systems in the organization. Rewards are used as

basic motivational tools in the organization so

that performance of the employees can be

influenced in desirable way. So to be more

successful organizations need attractive and fair

compensation and reward systems to be paid to

the workforce.

Job pricing means placing a dollar value on the worth of a job.

I. Pay Grades—The grouping of similar jobs together to simplify the job pricing process. Plotting

jobs on a scatter diagram is often useful in determining the appropriate number of pay grades.

II. Wage Curve—The fitting of plotted points in order to create a smooth progression between pay

grades.

III. Pay Ranges—Includes a minimum and maximum pay rate with enough variance between the

two to allow some significant pay difference.

IV. Broad Banding—A technique that collapses many pay grades (salary grades) into a few wide

bands in order to improve organizational effectiveness.

V. Single-Rate System—Pay ranges are not appropriate for some workplace conditions. When

single rates are used, everyone in the same job receives the same base pay, regardless of seniority

or productivity. This rate may correspond to the midpoint of a range determined by a

compensation survey.

VI. Adjusting Pay Rates—when pay ranges have been determined and jobs assigned to pay grades,

it may become obvious that some jobs are overpaid and others underpaid. Underpaid jobs

normally are brought to the minimum of the pay range as soon as possible.

i. Compensation—The total of all rewards provided employees in return for their services.

ii. Direct Financial Compensation—Consists of the pay that a person receives in the form of

wages, salaries, bonuses, and commissions.

iii. Indirect Financial Compensation—All financial rewards that are not included in direct

compensation.

iv. Non-financial Compensation—Consists of the satisfaction that a person receives from the job

itself or from the psychological and/or physical environment in which the person works. All such

rewards comprise a total compensation program.

Organizations must attract, motivate, and retain competent employees. Because achievement of these goals

is largely accomplished through a firm’s compensation system, organizations must strive for compensation

equity.

a. Equity—Workers’ perceptions that they are being treated fairly. Compensation must be

fair to all parties concerned and be perceived as fair.

b. External Equity—Exists when a firm’s employees are paid comparably to workers who

perform similar jobs in other firms.

c. Internal Equity—Exists when employees are paid according to the relative value of their

jobs within an organization.

d. Employee Equity—Exists when individuals performing similar jobs for the same firm are

paid according to factors unique to the employee, such as performance level or seniority.

e. Team Equity—Achieved when more productive teams are rewarded more than lessproductive

teams.

Compensation theory has never been able to provide a completely satisfactory answer to what an individual

is worth for performing jobs.

• The Organization,

• The Labor Market,

• The Job, and

• The Employee

These all have an impact on job pricing and the ultimate determination of an individual’s financial

compensation.

a. The Organization as a Determinant of Financial Compensation:

• Compensation Policies—An organization often establishes—formally or informally—

compensation policies that determine whether it will be a pay leader, a pay follower, or

strive for an average position in the labor market.

1. Pay Leaders: Those organizations that pay higher wages and salaries than competing firms.

2. Market Rate or Going Rate: The average pay that most employers provide for the same job in a

particular area or industry.

3. Pay Followers: Companies that choose to pay below the market rate because of poor financial

condition or a belief that they simply do not require highly capable employees.

• Organizational Politics—Political considerations may also enter into the equation. A

sound, objective compensation system can be destroyed by organizational politics.

Managers should become aware of this possibility and take appropriate action.

• Ability to Pay—An organization’s assessment of its ability to pay is also an important

factor in determining pay levels. Financially successful firms tend to provide higher-thanaverage

compensation. However, an organization’s financial strength establishes only the

upper limit of what it will pay.

b. The labor market as a determinant of financial compensation:

Potential employees located within the geographical area from which employees are recruited comprise the

labor market

• Compensation Surveys—Large organizations routinely conduct compensation surveys to

determine prevailing pay rates within labor markets.

1. Compensation surveys: Provide information for establishing both direct and indirect compensation.

2. Benchmark job: A job that is well known in the company and industry, one that represents the

entire job structure, and one in which a large percentage of the workforce is employed.

• Cost of Living—A pay increase must be roughly the equivalent to the cost of living

increase if a person is to maintain a previous level of real wages.

• Labor Unions—When a union uses comparable pay as a standard for making

compensation demands, the employer must obtain accurate labor market data. When a

union emphasizes cost of living, management may be pressured to include a cost-of-living

allowance (COLA). This is an escalator clause in the labor agreement that automatically

increases wages as the U.S Bureau of Labor Statistics’ cost-of-living index rises.

• Society—Compensation paid to employees often affects a firm’s pricing of its goods

and/or services. Consumers may also be interested in compensation decisions.

• Economy—In most cases, the cost of living will rise in an expanding economy. Thus, the

economy’s health exerts a major impact on pay decisions.

• Legislation—The amount of compensation a person receives can also be affected by

certain federal and state legislation.

c. The job as a determinant of financial compensation:

Organizations pay for the value they attach to certain duties, responsibilities, and other job-related factors.

Techniques used to determine a job’s relative worth include job analysis, job descriptions, and job

evaluation.

• Job Analysis and Job Descriptions—Before an organization can determine the relative difficulty or

value of its jobs, it must first define their content, which it normally does by analyzing jobs. Job analysis

is the systematic process of determining the skills and knowledge required for performing jobs. The job

description is the primary by-product of job analysis, consisting of a written document that describes

job duties and responsibilities. Job descriptions are used for many different purposes, including job

evaluation.

• Job Evaluation—That part of a compensation system in which a firm determines the relative value of

one job compared with that of another.

d. The employee as a determinant of financial compensation:

In addition to the organization, the labor market, and the job, factors related to the employee are also

essential in determining pay and employee equity.

pay, skill-based pay, and competency-based pay.

1. Merit Pay: A pay increase given to employees based on their level of performance as indicated in

the appraisal.

2. Bonus: The most common type of variable pay for performance and is a one-time award that is

not added to employees’ base pay.

3. Skill-based Pay: A system that compensates employees on the basis of job-related skills and

knowledge they possess, not for their job titles.

4. Competency-Based Pay: A compensation plan that rewards employees for their demonstrated

expertise.

department, or job is referred to as seniority.

on performance than experience.

are given to employees without regard to the particular job they perform or their level of

productivity.

e. Political Influence—Political influence is a factor that obviously should not be used as a determinant

of financial compensation. However, to deny that it exists would be unrealistic.

f. Luck—The expression has often been stated, “It certainly helps to be in the right place at the right

time.” There is more than a little truth in this statement as it relates to the determination of a person’s

compensation.

g. Special Employee Classes—These include pay for executives, which are discussed in a later section,

and pay for professionals and sales employees.

Executive skill largely determines whether a firm will prosper, survive, or fail. Therefore, providing adequate

compensation for these managers is vital. A critical factor in attracting and retaining the best managers is a

company’s program for compensating executives.

typically prefer to relate salary growth for the highest-level managers to overall corporate

performance. In general, the higher the managerial position, the greater the flexibility

managers have in designing their jobs.

elements: (1) Base Salary, (2) Short-Term Incentives or Bonuses, (3) Long-Term Incentives

and Capital Appreciation Plans, (4) Executive Benefits, and (5) Perquisites. The way an

executive compensation package is designed is partially dependent on the ever-changing

tax legislation.

• Base Salary: Salary is obviously important. It is a factor in determining standard

of living. Salary also provides the basis for other forms of compensation.

• Short-Term Incentives or bonuses: Payment of bonuses reflects a managerial

belief in their incentive value. Today, virtually all top executives receive bonuses

that are tied to base salary.

• Long-Term Incentives and Capital Appreciation: The stock option is a

long-term incentive designed to integrate further the interests of management

with those of the organization. The typical stock option plan gives the manager the

option to buy a specified amount of stock in the future at or below the current

market price.

• Executive Benefits: Executive benefits are generally more generous than those

received by other employees because the benefits are tied to their higher salaries.

However, current legislation (ERISA) does restrict the value of executive

benefits to a certain level above those of other workers.

• Perquisites (Perks): Any special benefits provided by a firm to a small group

of key executives that are designed to give the executives something extra. A

“golden parachute”

their firm is acquired by another.

People in professional jobs are initially compensated primarily for the knowledge they bring to the

organization. Because of this, the administration of compensation programs for professionals is somewhat

different than for managers. Many professional employees eventually become managers. For those who do

not desire this form of career progression, some organizations have created a dual track of compensation.

The dual track provides a separate pay structure for professionals, which may overlap a portion of the

managerial pay structure.

Designing compensation programs for sales employees involves unique considerations. For example, job

content, relative job worth, and job market value should be determined. The straight salary approach is at

one extreme in sales compensation. In this method, salespersons receive a fixed salary regardless of their

sales levels. At the other extreme, the person whose pay is totally determined as a percentage of sales is on

straight commission. Between these extremes, there are endless part salary–part commission combinations.

The possibilities increase when various types of bonuses are added to the basic compensation package. In

addition to salary, commissions, and bonuses, salespersons often receive other forms of compensation that

are intended to serve as added incentives.

Line managers perform the function of job evaluation that is base for the compensation systems, according

to the worth of the job negotiation regarding the salaries and other benefits is negotiated with potential

employees through line mangers. Basic compensation packages are mostly recommended by the line

managers in the organizations. All these information is communicated to the employees by HRM

department beside communicating this information HRM department also facilitates the departments in

establishing rates of pay, monitoring in job evaluation process, and Conducting salary surveys in order to

establish procedures for administering pay plans, and to ensure compliance with antidiscrimination laws.

appraisal.

concerned and be perceived as fair

jobs in other firms.

organization.

Page 20

After studying this chapter, students should be able to understand the following:

We begin the chapter with a discussion of benefits, both mandated and voluntary. Then, legislation related

to benefits and the proper communication of information about benefit packages is discussed. Next, we

present various types of incentive compensation and describe non-financial compensation and the job as a

total compensation factor.

Total compensation constitutes of

two types of the rewards which are

direct rewards and indirect rewards.

Direct rewards include the salaries

wages, commis-sion, bonuses and

gain sharing all of these rewards are

directly paid to employees in

monetary or financial terms, second

type of the rewards are benefits

provided by organization. Benefits are

not direct payments in financial terms.

Benefits are all financial rewards that generally are not paid directly to an employee. Benefits absorb social

costs for health care and retirement and can influence employee decisions about employers.

Most organizations recognize that they have a responsibility to provide their employees with insurance and

other programs for their health, safety, security, and general welfare. These benefits include all financial

rewards that generally are not paid directly to the employee.

Although most employee benefits are provided at the employer’s discretion, others are required by law.

Legally required benefits include Social Security, unemployment compensation, and workers’ compensation.

a) Social Security—It is a system of retirement benefits that provides benefits like disability

insurance, survivor’s benefits, and, most recently, Medicare.

b) Unemployment Compensation—An individual laid off by an organization covered by the Social

Security Act may receive unemployment compensation for up to 26 weeks. Although the federal

government provides certain guidelines, unemployment compensation programs are administered

by the states, and the benefits vary state by state.

c) Workers’ Compensation—Workers’ compensation benefits provide a degree of financial

protection for employees who incur expenses resulting from job-related accidents or illnesses.

d) Family And Medical Leave Act Of 1993 (FMLA)—The Family and Medical Leave Act applies

to private employers with 50 or more employees and to all governmental employers regardless of

the number of employees. The act provides for up to 12 workweeks of unpaid leave per year for

absences due to the employee’s own serious health condition or the need to care for a newborn or

newly adopted child or a seriously ill child, parent, or spouse.

Organizations voluntarily provide numerous benefits. These benefits may be classified as (1) payment for

time not worked, (2) health and security benefits, (3) employee services, and (4) premium pay. Generally

speaking, such benefits are not legally required.

recognize that employees need time away from the job for many purposes, such as paid vacations,

payment for holidays not worked, paid sick leave, jury duty, national guard or other military reserve

duty, voting time, and bereavement time. Some payments are provided for time off taken during

work hours, such as rest periods, coffee breaks, lunch periods, cleanup time, and travel time.

• Paid Vacations: Payment for time not worked serves important compensation goals. Paid

vacations provide workers with an opportunity to rest, become rejuvenated, and hopefully,

become more productive.

• Sick Leave: Each year many firms allocate, to each employee, a certain number of days of

sick leave, which they can use when ill.

compensation. Specific areas include health, dental, and vision care.

• Health care: Benefits for health care represent the most expensive and fastest-growing cost in the

area of indirect financial compensation. Many factors have combined to create this situation: an

aging population, a growing demand for medical care, increasingly expensive medical technology, a

lack of price controls, and inefficient administrative processes. In addition to self-insurance and

traditional commercial insurers, employers may utilize one of several options. Health maintenance

organizations (HMOs) are one option in which all services are covered for a fixed fee; however,

employers control which doctors and health facilities may be used. Point-of-service (POS) permits a

member to select a provider within the network, or, for a lower level of benefits, go outside the

network. Preferred provider organizations (PPOs) are a more flexible managed care system. Although

incentives are provided to members to use services within such a system, out-of-network providers

may be utilized at greater cost. Exclusive provider organizations (EPO) offer a smaller PPO provider

network and usually provide little, if any, benefits when an out-of-network provider is used.

• Capitation: Typically, the reimbursement method used by primary care physicians is an approach

to health care where providers negotiate a rate for health care for a covered life over a period of

time. It presumes that doctors have an incentive to keep patients healthy and to avoid costly

procedures when they are paid per patient rather than per service.

• Defined-Contribution health care system: Companies give each employee a set amount of money

annually with which to purchase health care coverage.

• Utilization Review: A process that scrutinizes medical diagnoses, hospitalization, surgery, and

other medical treatment and care prescribed by doctors.

• The Health Insurance Portability and Accountability Act of 1996: Provides new protections

for approximately 25 million Americans who move from one job to another, who are selfemployed,

or who have preexisting medical conditions.

• Dental and Vision Care: Relative newcomers to the list of potential health benefits. Both types of

plans are typically paid for entirely by the employers.

and supplemental unemployment benefits.

• Retirement Plans: Private retirement plans provide income for employees who retire after

reaching a certain age or having served the firm for a specific period of time. In a defined benefit plan,

the employer agrees to provide a specific level of retirement income that is either a fixed dollar

amount or a percentage of earnings. A defined contribution plan is a retirement plan that requires

specific contributions by an employer to a retirement or savings fund established for the employee.

A 401(k) plan is a defined contribution plan in which employees may defer income up to a

maximum amount allowed. An employee stock ownership plan (ESOP) is a defined contribution plan in

which a firm makes a tax-deductible contribution of stock shares or cash to a trust.

• Disability Protection: Workers’ compensation protects employees from job-related accidents and

illnesses. Some firms, however, provide additional protection that is more comprehensive.

• Supplemental Unemployment Benefits (SUB): Supplemental unemployment benefits are

designed to provide additional income for employees receiving unemployment benefits.

• Life Insurance: Group life insurance is a benefit commonly provided to protect the employee’s

family in the event of his or her death. Although the cost of group life insurance is relatively low,

some plans call for the employee to pay part of the premium.

services. These benefits encompass a number of areas including relocation benefits, child care,

educational assistance, food services/ subsidized cafeterias, and financial services.

• Relocation Benefits: Include shipment of household goods and temporary living expenses,

covering all or a portion of the real estate costs associated with buying a new home and selling the

previously occupied home.

• Child Care: Another benefit offered by some firms is subsidized child care. Here, the firm may

provide an on-site child care center, support an off-site center, or subsidize the costs of child care.

• Educational Assistance: According to a recent benefits survey, 81 percent have educational

benefits that reimburse employees for college tuition and books.

• Food Services/ Subsidized Cafeterias: Most firms that offer free or subsidized lunches feel that

they get a high payback in terms of employee relations.

• Financial Services: One financial benefit that is growing in popularity permits employees to

purchase different types of insurance policies through payroll deduction.

• Unique Benefits: A tight labor market gives birth to creativity in providing benefits.

under dangerous or undesirable conditions.

• Hazard pay: Additional pay provided to employees who work under extremely dangerous

conditions.

• Shift differentials: Paid to employees for the inconvenience of working undesirable hours.

group more benefits than ever. Growth in the number of part-timers is due to the aging of the

workforce and also to an increased desire by more employees to balance their lives between work

and home.

a) Employee Retirement Income Security Act Of 1974 (ERISA)—The Employee Retirement

Income Security Act of 1974 (ERISA) was passed to strengthen existing and future retirement

programs. Mismanagement of retirement funds was the primary factor in the need for this

legislation.

b) Older Workers Benefit Protection Act (OWBPA)—The Older Workers Benefit Protection Act

(OWBPA) is a 1990 amendment to the ADEA and extends its coverage to all employee benefits.

The act has an equal benefit or equal cost principle.

Employee benefits can help a firm recruit and retain a quality workforce. Management depends on an

upward flow of information from employees in order to know when benefit changes are needed, and,

because employee awareness of benefits is often severely limited, the program information must be

communicated downward.

Compensation programs that relate pay to productivity.

a) Individual Incentive Plans—A specific form of performance-based pay is an individual incentive

plan called piecework. In such a plan, employees are paid for each unit produced.

b) Team-Based Compensation Plans—Team performance consists of individual efforts. Therefore,

individual employees should be recognized and rewarded for their contributions. However, if the

team is to function effectively, a reward based on the overall team performance should be provided

as well.

c) Companywide Plans—Companywide plans offer a feasible alternative to the incentive plans

previously discussed. They may be based on the organization’s productivity, cost savings, or

profitability.

• Profit Sharing: A compensation plan that results in the distribution of a predetermined

percentage of the firm’s profits to employees. There are several variations, but the three

basic forms are current, deferred, and combination. Current plans provide payment to

employees in cash or stock as soon as profits have been determined. Deferred plans involve

placing company contributions in an irrevocable trust to be credited to the account of

individual employees. The funds are normally invested in securities and become available

to the employee (or his/her survivors) at retirement, termination, or death. Combination

plans permit employees to receive payment of part of their share of profits on a current

basis, whereas payment of part of their share is deferred. Profit sharing tends to tie

employees to the economic success of the firm.

• Employee Stock Option Plan (ESOP): A defined contribution plan in which a firm

contributes stock shares to a trust.

• Gain Sharing: Plans that are designed to bind employees to the firm’s performance by

providing an incentive payment based on improved company performance. The first gain

sharing plan was developed by Joseph Scanlon during the Great Depression, and it

continues to be a successful approach to group incentive, especially in smaller firms.

• Scanlon Plan: Provides a financial reward to employees for savings in labor costs that

result from their suggestions.

Compensation departments in organizations do not normally deal with non-financial factors. However,

non-financial compensation can be a very powerful factor in the compensation equation.

Some jobs can be so exciting that the incumbent can hardly wait to get to work each day.

The job itself is a central issue in many theories of motivation, and it is also a vital component of a total

compensation program.

a) Skill Variety—The extent to which work requires a number of different activities for successful

completion.

b) Task Identity—The extent to which the job includes an identifiable unit of work that is carried

out from start to finish.

c) Task Significance—The impact that the job has on other people.

d) Autonomy—The extents of individual freedom and discretion employees have in performing their

jobs.

e) Feedback—The amount of information employees receive about how well they have performed

the job.

f) Cyber-work—A possibility of a never-ending workday created through the use of technology.

Employees can draw satisfaction from their work through several non-financial factors.

a) Sound Policies—Human resource policies and practices reflecting management’s concern for its

employees can serve as positive rewards.

b) Competent Employees—Successful organizations emphasize continuous development and assure

that competent managers and non-managers are employed.

c) Congenial Coworkers—Although the American culture has historically embraced individualism,

most people possess, in varying degrees, a desire to be accepted by their work group.

d) Appropriate Status Symbols—Organizational rewards that take many forms such as office size

and location, desk size and quality, private secretaries, floor covering, and title.

e) Working Conditions—The definition of working conditions has been broadened considerably during

the past decade.

Flexible work arrangements do more than just assist new mothers’ return to full-time work. They comprise

an aspect of non-financial compensation that allows many families to manage a stressful work/home

juggling act.

a) Flextime—The practice of permitting employees to choose, with certain limitations, their own

working hours.

b) Compressed Workweek—Any arrangement of work hours that permits employees to fulfill their

work obligation in fewer days than the typical five-day workweek.

c) Job Sharing—An approach to work that is attractive to people who want to work fewer than 40

hours per week.

d) Flexible Compensation (Cafeteria Compensation)—Plans that permit employees to choose

from among many alternatives in deciding how their financial compensation will be allocated.

e) Telecommuting—Telecommuting is a work arrangement whereby employees are able to remain

at home, or otherwise away from the office, and perform their work over telephone lines tied to a

computer.

f) Part-Time Work—Use of part-time workers on a regular basis has begun to gain momentum in

the United States. This approach adds many highly qualified individuals to the labor market by

permitting both employment and family needs to be addressed.

g) Modified Retirement—An option that permits older employees to work fewer than regular hours

for a certain period of time proceeding retirement. This option allows an employee to avoid an

abrupt change in lifestyle and more gracefully move into retirement.

Several issues that relate to compensation deserve mention. These issues include comparable worth, pay

secrecy, and pay compression.

a) Severance Pay—Although some firms are trimming the amount of severance pay offered,

typically, one to two weeks of severance pay is given for every year of service, up to some

predetermined maximum. Severance pay is generally shaped according to the organizational level of

the employee.

b) Comparable Worth—Requires the value for dissimilar jobs, such as company nurse and welder, to

be compared under some form of job evaluation and pay rates for both jobs to be assigned

according to their evaluated worth.

c) Pay Secrecy—Organizations tend to keep their pay rates secret for various reasons. If a firm’s

compensation plan is illogical, secrecy may indeed be appropriate because only a well-designed

system can stand careful scrutiny. An open system would almost certainly require managers to

explain the rationale for pay decisions to subordinates.

d) Pay Compression—Occurs when workers perceive that the pay differential between their pay and

that of employees in jobs above or below them is too small.

hours.

care where providers negotiate a rate for health care for a covered life over a period of time.

Some firms, however, provide additional protection that is more comprehensive.

incentive payment based on improved company performance

suggestions

or otherwise away from the office, and perform their work over telephone lines tied to a computer

Page 21

After studying this chapter, students should be able to understand the following:

This chapter focuses on the effective design and implementation of pay-for-performance systems. First, it

addresses the major challenges and pitfalls facing managers in their attempts to link pay and performance.

Second, the chapter offers a set of general recommendations to deal with pay-for-performance challenges.

Third, it describes and analyzes specific types of pay-for-performance programs. Finally, it discusses unique

pay-for-performance plans.

Pay for performance refers to any compensation method that ties pay to the quantity or quality of work the

person produces. Variable pay plans are pay for performance plans that put a portion of the employee’s pay

at risk, in return for the opportunity to earn additional pay. Gainsharing plans are group incentive plans

that engage many or all employees in a common effort to achieve productivity goals. Stock options are

rights to purchase company stock at a discount some time in the future.

A compensation philosophy of higher pays for higher contributions Performance will be calculated on -

corporate performance and personal performance.

This section covers the attitudes that employees have about pay, the difficulties in measuring performance,

the psychological contract, lack of flexibility, the importance of credibility, job satisfaction, stress, and the

potential reduction of intrinsic drives.

i. The “Do Only What You Get Paid For” Syndrome: The closer pay is tied to particular

performance indicators, the more employees tend to focus on those indicators and neglect

other important job components

ii. Negative Effects on the Spirit of Cooperation: Employees may withhold information

from a colleague if they believe that it will help the other person get ahead

iii. Lack of Control: Employees often cannot control all of the factors affecting their

performance

iv. Difficulties in Measuring Performance: Assessing employee performance is one of the

thorniest tasks a manager faces, particularly when the assessments are used to dispense

rewards

v. Psychological Contracts: Once implemented, a pay-for-performance system creates a

psychological contract between the employee and firm, and it is very resistant to change

vi. The Credibility Gap: Employees often do not believe that pay-for-performance programs

are fair or that they truly reward performance

vii. Job Dissatisfaction and Stress: Pay-for-performance systems may lead to greater

productivity but lower job satisfaction

viii. Potential Reduction of Intrinsic Drives: Pay-for-performance systems may push

employees to the point of doing whatever it takes to get the promised monetary reward

and in the process stifle their talents and creativity

Appropriately designed pay-for-performance systems offer managers an excellent opportunity to align

employees' interests with the organizations. Pay for performance programs are not likely to achieve the

desired results unless complementary HRM programs are implemented at the same time.

b) Link Pay and Performance Appropriately: There are few cases in which managers can justify

paying workers according to a pre-established formula or measure.

c) Use Pay for Performance as Part of a Broader HRM System: Pay-for-performance programs

are not likely to achieve the desired results unless complementary HRM programs accompany

them.

d) Build Employee Trust: Even the best conceived pay-for-performance program can fail if

managers have a poor history of labor relations or if the organization has a cutthroat culture

e) Promote the Belief that Performance Makes a Difference: Unless an organization creates an

atmosphere in which performance makes a difference, it may end up with a low-achievement

organizational culture

f) Use Multiple Layers of Rewards: Because all pay-for-performance systems have positive and

negative features, providing different types of pay incentives for different work situations is likely to

produce better results than relying on a single type of pay incentive

g) Increase Employee Involvement: When employees do not view a compensation program as

legitimate, they will usually do whatever they can to subvert the system

h) Use Motivation and Non-financial Incentives: Some people are more interested in the nonfinancial

aspects of their work

When a pay-for-performance system has multiple layers, it can increase the motivation of individual

employees and simultaneously improve cooperation. For example, bonuses given to teams or work units

promote cooperation. Bonuses given to individual employees, however, are more motivating because they

allow employees to see how their personal contributions lead to direct rewards. Since all

pay-for-performance systems have positive and negative features, providing different types of pay incentives

for different work situations is likely to produce better results than relying on a single type of pay incentive.

With a multiple-layers-of-rewards system, the organization can realize the benefits of each incentive plan

while minimizing its negative side effects.

Types of pay-for-performance plans vary in design. Some are designed to reward individuals, teams,

business units, the entire organization, or any combination of these.

a. Individual-Based Plans

Individual-based plans are the most widely used pay-for-performance plans in industry. There are several

plans that can be used: merit pay, bonus programs, and awards. Advantages of individual-based payfor-

performance plans include rewarded performance is likely to be repeated, financial incentives can shape

an individual's goals, they help the firm achieve individual equity, and they fit in with an individualistic

culture. Disadvantages include they may promote single-mindedness; employees do not believe pay and

performance are linked, they may work against achieving quality goals, and they may promote inflexibility.

b. Team-Based Plans

Team-based plans attempt to support other efforts to increase the flexibility of the work force within a firm.

These plans normally reward all team members equally based on group outcomes. The advantages of teambased

pay-for-performance plans include they foster group cohesiveness and they facilitate performance

measurement. Disadvantages include possible lack of fit with individualistic cultural values, the free-riding

effect, social pressures to limit performance, difficulties in identifying meaningful groups, and intergroup

competition leading to a decline in overall performance.

c. Plant wide Plans

These plans reward all workers in a plant or business unit based on the performance of the entire plant or

unit. Plant wide plans are generally referred to as gain sharing programs because they return a portion of

the company's cost savings to the workers, usually in the form of a lump-sum bonus. There are three major

types of gain sharing programs: Scanlon Plan, Rucker Plan, and the Improshare. Advantages include

eliciting active employee input, increasing the level of cooperation, fewer measurement difficulties, and

improving quality. Disadvantages include protection of low performers, problems with the criteria used to

trigger rewards, and management-labor conflict.

d. Corporate wide Plans

This is the most macro type of incentive program and is based on the entire corporation's performance.

The most widely used program of this kind is profit sharing which differs from gain sharing in several

important ways: no attempt is made to reward workers for productivity improvements, they are very

mechanistic, and typically they are used to fund retirement programs. Employee stock ownership plans

are another type of corporate wide plan. Advantages of corporate wide plans are financial flexibility for the

firm, increased employee commitment, and tax advantages. Disadvantages include risk for employees,

limited effect on productivity, and long-run financial difficulties.

Executives and sales personnel are usually treated very differently than other types of workers in

pay-for-performance plans. A number of plans are used to link executives' pay to a firm's performance, but

there is little agreement on which is best. Sales professionals may be paid in the form of straight salary,

straight commission, or a combination plan. The relative proportion of salary versus incentives varies

widely across firms.

Following factors are commonly blamed for the failure of individual-based pay-for-performance systems.

• Performance appraisal is inherently subjective, with supervisor’s evaluating subordinates according

to their own preconceived biases.

• Regardless of the appraisal form used, rating errors are rampant.

• Merit systems emphasize individuals rather than group goals and this may lead to dysfunctional

conflict in the organization.

• The use of a specified time period (normally one year) for the performance evaluation encourages a

short-term orientation at the expense of long-term goals.

• Supervisors and employees seldom agree on the evaluation, leading to interpersonal confrontations.

• Increments in financial rewards are spaced in such a way that their reinforcement value for work

behavior is questionable for example becoming twice as productive now has little perceived effect

on pay when the employee must rat a whole year for a performance review.

• Individual merit pay systems are not appropriate for the service sector.

• Supervisors typically control a rather limited amount of compensation, so merit pay differentials are

normally quite small and therefore of questionable value.

• A number of bureaucratic factors hat influence the size and frequency of merit pay have little to do

with employee performance.

• Performance appraisals are designed for multiple purposes (training and development, selection,

work planning, compensation, and so forth.) When a system is used to accomplish so many

objectives, it is questionable whether it can accomplish any of them well. It is difficult for the

supervisor to play the role of counselor or advisor and evaluator at the same time.

Money can be used as a motivational tool in the organization because it is used as a source to fulfil different

needs. It affects several needs, not just existence needs. Money is used to prove and enhance the identity id

people it influences the self-perceptions.

Effectiveness of the rewards can be improved by considering the following factors.

•

•

•

•

•

According to Maslow and Alderfer, pay should prove especially motivational to people who have strong

lower-level needs. If pay has this capacity to fulfill a variety of needs, then it should have good potential as a

motivator.

Mostly people leave the organizations or organizations have to face high turnover rate due to different

reasons like employees are not satisfied with benefits provided or the recognition is not provided for

extraordinary perfumers these causes should be overcome so that employee loyalty can be increased.

Following ways can be used to avoid the high turnover of employees.

Some employees highly value day-to-day recognition from their supervisors, peers and team members

because it is important for their work to be appreciated by others. Recognition helps satisfy the need people

have to achieve and be recognized for their achievement.

Positive reinforcement programs rely on operant conditioning principles to supply positive reinforcement

and change behavior. Experts claim it is better to focus on improving desirable behaviors rather than on

decreasing undesirable ones. There are a variety of consequences including social consequences (e.g., peer

approval or praise from the boss), intrinsic consequences (e.g., the enjoyment the person gets from

accomplishing challenging tasks), or tangible consequences (e.g., bonuses or merit raises).

Empowerment means giving employees the authority, tools, and information they need to do their jobs

with greater autonomy, as well as the self-confidence to perform new jobs effectively. Empowerment

boosts employees’ feelings of self-efficacy and enables them to use their potential more fully.

Rewards can be used to modify the

behaviors of the employees if people in the

organization are not satisfied with the

reward system or if they think that the

reward system of the organization is not

fair, than the organizations will be facing

problems of low productivity, high

absenteeism and high turnover and vice

versa. When ever some one performs up to

specific standards and some times beyond

that , there us always exists demand and

expectations of rewards and recognitions

that will lead to continuous improvement

but in the absence of recognition

performance instead of improvement will

be facing down fall trends which are

definitely harmful for the organizations. Positive consequences (rewards) of actions (performance) are

always tending actions to be repeated but in case any action (performance) is followed with the negative

consequences (no rewards) than the behavior will jot be repeated as shown in fig.

Page 22

After studying this chapter, students should be able to understand the following:

The focus is on managing motivation and outcomes to boost performance, one of the most important roles

of any manager. This chapter explores the elements of motivation and introduces the expectancy model,

discussing individual, job-related, and organizational influences on motivation. In addition, the chapter

investigates how managers can use opportunities and outcomes to manage employee performance on the

job.

Motivation is the inner drive that directs a person’s behavior toward goals. Motivation can be defined as a

process which energizes, directs and sustains human

behavior. In HRM the term refers to person’s desire

to do the best possible job or to exert the maximum

effort to perform assigned tasks. An important feature

of motivation is that it is behavior directed towards

goal.

Motivation is important in getting and retaining

people. Motivation tools act as the glue that links

individuals to organizational goals, In addition, make

individuals go beyond the job and be creative.

I. The Motivation Process

In its simplest form, the motivation process begins

with a need, an individual’s perception of

a deficiency .For instance, an employee

might feel the need for more challenging

work, for higher pay, for time off, or for

the respect and admiration of colleagues.

These needs lead to thought processes

that guide an employee’s decision to

satisfy them and to follow a particular

course of action. If an employee’s chosen

course of action results in the anticipated

out come and reward, that person is likely

to be motivated by the prospect of a

similar reward to act the same way in the

future. However, if the employee’s action

does not result in the expected reward, he or she is unlikely to repeat the behavior. Thus, the reward acts as

feedback mechanism to help the individual evaluate the consequences of the behavior when considering

futures action.

1.

his/her some unsatisfied need. The motivation process begins with an unsatisfied need, which creates

tension and drives an individual to search for goals that, if attained, will satisfy the need and reduce the

tension.

2.

to satisfy the needs, which were felt in first stage. These needs lead to thought processes that guide an

employee’s decision to satisfy them and to follow a particular course of action

3.

need than next phase is selection of goals to be performed.

4.

satisfy them and to follow a particular course of action in form of performance.

5.

results in the anticipated out come and reward, that person is likely to be motivated by the prospect of a

similar reward to act the same way in the future. However, if the employee’s action does not result in

the expected reward, he or she is unlikely to repeat the behavior

6.

to performance than employee reassesses any deficiencies and entire process is repeated again.

Motivation theories seek to explain why employees are motivated by and satisfied with one type of work

than another. It is essential that mangers have a basic understanding of work motivation because highly

motivated employees are more likely to produce a superior quality product or service than employee who

lack motivation

Abraham Maslow organized five

major types of human needs into

a hierarchy, as shown in Figure.

The need hierarchy illustrates

Maslow’s conception of people

satisfying their needs in a

specified order, from bottom to

top. The needs, in ascending

order, are:

1. Physiological (food, water,

and shelter.)

2. Safety or security

(protection against threat

and deprivation)

3. Social (friendship,

affection, belonging, and

love)

4. Ego (independence,

achievement, freedom, status, recognition, and self-esteem)

5. Self-actualization (realizing one’s full potential; becoming everything one is capable of being.)

According to Maslow, people are motivated to satisfy the lower needs before they try to satisfy the higher

need. Also, once a need is satisfied it is no longer a powerful motivator. Maslow’s hierarchy, however, is a

simplistic and not altogether accurate theory of human motivation. For example, not everyone progresses

through the five needs in hierarchical order. But Maslow makes three important contributions. First, he

identifies important need categories, which can help managers create effective positive rein forcers. Second,

it is helpful to think of two general levels of needs, in which lower-level needs must be satisfied before

higher-level needs become important. Third, Maslow sensitized managers to the importance of personal

growth and self-actualization.

Self-actualization is the best-known concept arising from this theory. According to Maslow, the average person is only 10 percent self-actualized. In other words, most of us are living our lives and working at our

lives and working at our jobs with a large untapped reservoir of potential. The implication is clear: Create a

work environment that provides training, resources, gives people a chance to use their skills and abilities in

creative ways and allows them to use their skills and abilities kin creative ways and allows them to achieve

more of their full potential.

Alderfer focuses on three needs: existence, relatedness, and growth. Existence needs are similar to

Maslow’s physiological needs, and to the physical components of Maslow’s security needs. Relatedness

needs are those that require interpersonal interaction to satisfy the needs for things like prestige and esteem

from others. Growth needs are similar to Maslow’s needs for self-esteem and self-actualization.

McGregor’s Theory-X represented the traditional management view that employees are lazy, was

uninterested in work, and needed to be prodded to perform. In contrast his theory Y viewed employees as

creative, complex, and mature individuals interested in meaningful work. McGregor believed that under the

right circumstances, employees would willingly contribute their ingenuity and their talents for the benefits

of the organization. He suggested that the mangers motivate em-0loyees by giving them the opportunity to

develop their talents more fully and by giving them the freedom to choose the methods they would use to

achieve organizational goals. In McGregor’s view the mangers role was not to manipulate employees but to

align their needs with needs of the organization so that employees would regulate their own actions and

performance. These insights lead researches to investigate the origins and processes of motivation more

closely.

Expectancy theory states that a person’s motivation to exert a certain level of effort is a function of three

things: expectancy (E), instrumentality (I), and valance (V). Motivation = E x I x V. “E” is the person’s

expectancy that his or her effort will lead to performance, “I” represents the perceived relationship between

successful performance and obtaining the reward, and “V” refers to the perceived value the person attaches

to the reward.

In 1911, psychologist Edward Thorndike formulated the law effect: Behavior that is followed by positive

consequences probably will be repeated. This powerful law of behavior laid the foundation for country

investigations into the effects of the positive consequences, called rein forcers that motivate behavior.

Organizational behavior modification attempts to people’s actions.

Four key consequences of behavior either encourage or discourage people’s behavior

1. Positive Reinforcement- applying a valued consequence that increases the likelihood that the

person will repeat the behavior that led to it. Examples of positive reinforcers include

compliments, letters of commendation, favorable performance evaluations, and pay raises. Equally

important, jobs can be positively reinforcing. Performing well on interesting, challenging, or

enriched jobs (discussed later in this chapter) is much more reinforcing, and therefore motivating,

then performing well on jobs that are routine and monotonous.

2. Negative Reinforcement- removing or withholding an undesirable consequence. For example, a

manager takes an employee (or a school takes a student) off probation because of improved

performance. Frequent threatening memos admonished people to achieve every one of their many

performance goals

3. Punishment- administering an aversive consequence. Examples include criticizing or shouting at

an employee, assigning an unappealing task, and sending a worker home without pay. Negative

reinforcement can involve the threat of punishment, but not delivering it when employees

perform satisfactorily. Punishment is the actual delivery of the aversive consequence.

4. Extinction –withdrawing or failing or failing to provide a reinforcing consequence. When this

occurs motivation is reduced and the behavior is extinguished, or eliminated. Examples include

not giving a compliment for a job well done, forgetting to say thanks for a favor, or setting

impossible performance goals so that the person never experiences success. The first two

consequences, positive and negative reinforcement, are positive for the person receiving them:

The person either gains something or avoids something negative. Therefore, the person who

experiences these consequences will be motivated to behave in the ways that led to the

reinforcement. The last two consequences, punishment and extinction, are negative outcomes for

the person receiving them: Motivation to repeat the behavior that led to the undesirable results

will be reduced.

Thus, effective managers give positive reinforcement to their high-performing people and negative

reinforcement to low performance. They also punish or extinguish poor performance and other unwanted

behavior.

Herzberg Two-Factor theory divides Maslow’s Hierarchy into a lower-level and a higher-level set of needs,

and suggests that the best way to provide motivation for an employee is to offer to satisfy the person’s

higher-order needs, ego and self-actualization. Herzberg said that lower-order needs, or hygiene factors, are

different from higher-order needs, or motivators. He maintains that adding more hygiene factors to the job

is a very bad way to motivate because lower-order needs are quickly satisfied.

McClelland agrees with Herzberg that higher-level needs are most important at work. He believes the needs

for affiliation, power, and achievement are most important. He and his associates use the Thematic

Apperception Test to identify a person’s needs for achievement, power, and affiliation. People with a high

need for achievement strive for success, are highly motivated to accomplish a challenging task or goal,

prefer tasks that have a reasonable chance for success, and avoid tasks that are either too easy or too

difficult. People with a high need for power enjoy roles requiring persuasion. People with a strong need for

affiliations are highly motivated to maintain strong, warm relationships.

Adams’s equity theory assumes that people have a need for fairness at work, and therefore, value and seek

it. People are motivated to maintain a balance between what they perceive as their inputs or contributions

and their rewards as compared to others. This theory seems to work when people feel they are underpaid,

but inequity due to overpayment does not seem to have the positive effects on either quantity or quality that

Adams’s equity theory would predict.

for payoffs for their efforts. They expect good job performance to lead to organizational goal

attainment, which in turn leads to

satisfying their individual goals or needs.

Organization, then, use rewards to

motivate people.

b. Challenging Jobs: Job design refers to

the number and nature of activities in a

job. The key issue is whether jobs should

be more specialized or more enriched and

non-routine. Job design has been

implemented in several ways. Job

enlargement assigns workers to additional

same-level tasks to increase the number of

tasks they have to perform. Job rotation systematically moves workers from job to job. Job

enrichment means building motivators like opportunities for achievement into the job by making it

more interesting and challenging. Forming natural work groups, combining tasks, establishing

client relationships, vertically loading the job, and having open feedback channels may implement

Job enrichment.

c. Using Merit Pay: A merit raise is a salary increase, usually permanent, that is based on the

employee’s individual performance. It is a continuing increment rather than a single payment like a

bonus. Relying heavily on merit rewards can be a problem because the reinforcement benefits of

merit pay is usually only determined once per year.

d. Using Spot Awards: A spot award is one given to an employee as soon as the laudable

performance is observed. These awards are consistent with principles of motivation because they

are contingent on good performance and are awarded immediately.

e. Using Skill-Based Pay: With skill-based pay, employees are paid for the range, depth, and types

of skills and knowledge they are capable of using rather than for the job they currently hold. Skillbased

pay is consistent with motivation theory because people have a self-concept in which they

seek to fulfill their potential. The system also appeals to the employee’s sense of self-efficacy

because the reward is a formal and concrete recognition that the person can do the more

challenging job well.

f. Using Recognition: Some employees highly value day-to-day recognition from their supervisors,

peers and team members because it is important for their work to be appreciated by others.

Recognition helps satisfy the need people have to achieve and be recognized for their achievement.

g. Using Job Redesign: Job design refers to the number and nature of activities in a job. The key

issue is whether jobs should be more specialized or more enriched and nonroutine. Job design has

been implemented in several ways. Job enlargement assigns workers to additional same-level tasks

to increase the number of tasks they have to perform. Job rotation systematically moves workers

from job to job. Job enrichment means building motivators like opportunities for achievement into

the job by making it more interesting and challenging. Job enrichment may be implemented by

forming natural work groups, combining tasks, establishing client relationships, vertically loading

the job, and having open feedback channels.

h. Using Empowerment: Empowerment means giving employees the authority, tools, and

information they need to do their jobs with greater autonomy, as well as the self-confidence to

perform new jobs effectively. Empowerment boosts employees’ feelings of self-efficacy and

enables them to use their potential more fully.

i. Using Goal-Setting Methods: People are strongly motivated to achieve goals they consciously

set. Setting goals with employees can be a very effective way of motivating them. Goals should be

clear and specific, measurable and verifiable, challenging but realistic, and set with participation.

j. Using Positive Reinforcement: Positive reinforcement programs rely on operant conditioning

principles to supply positive reinforcement and change behavior. Experts claim it is better to focus

on improving desirable behaviors rather than on decreasing undesirable ones. There are a variety

of consequences including social consequences (e.g., peer approval or praise from the boss),

intrinsic consequences (e.g., the enjoyment the person gets from accomplishing challenging tasks),

or tangible consequences (e.g., bonuses or merit raises).

k. Using Lifelong Learning: Lifelong learning can be used to deal with problems of downsizing

and employee commitment, and to counterbalance their negative effects. It provides extensive

continuing training and education, from basic remedial skills to advanced decision-making

techniques, throughout the employees’ careers, which provide employees the opportunity to boost

their self-efficacy and self- actualization.

Motivation is not a simple subject; no two people respond to precisely the same set of motivators. Mangers

face several pressing issues that complicate the challenges of motivating their employees.

a. Workforce Diversity: the composition of the workforce becoming less homogeneous.

This diversity complicates the task of motivating employees because mangers must

consider so many more motivational variables

b. Organizational Restructuring: The wave of mergers and acquisitions is followed by

massive layoffs that represent another challenge. Employees who have been let go for

reason unrelated to their performance may question whether initiative and creativity are

now less important than political survival skills. Moreover, employees who have seen

colleagues’ loss their jobs may concentrate on keeping their own jobs and may stop taking

risks –risk that might lead to new products, new markets, or other advances.

c. Fewer Entry-level Employees: The labor force is growing at half the rate of the previous

decade; the number of qualified candidates for most entry-level positions is decreasing. In

such a tight labor market, mangers face new challenges in attracting; retaining and

motivating qualified entry-level employees. Managers must also determine how to motivate

under qualified candidates to upgrade their skills and education so that they can handle the

entry-level tasks.

d. An oversupply of managers: In the middle and top ranks of management, quite different

phenomenon is causing organizational headaches. The number of senior management

positions is far fewer than the number of deserving candidates, and the trend toward flatter

organizations only makes matters worse for people who want to climb the hierarchal

ladder.

As managers in organizations come to grips with these increasingly urgent challenges, they must understate

the forces that derive employees' actions, how employees channel their actions towards goals, and how high

performance behavior can be sustained.

person will repeat the behavior that led to it.

Page 23

After studying this chapter, students should be able to understand the following:

We begin this chapter by describing the nature and role of safety and health and provide an overview of the

Occupational Safety and Health Act. Organizations realize the importance of social responsibility and that

safe organizations are more effective organizations. Moreover, the law requires that the workplace be safe

and free of health hazards. Thus, many firms seek to provide a workplace environment that is safe and

healthy. This chapter presents workplace safety and health in detail. First, it deals with the legal issues of

workplace safety and health. Second, it presents a variety of contemporary safety and health issues. Finally,

the chapter evaluates programs designed to maintain employee safety and health.

Safety programs may be designed to accomplish their purposes in two primary ways. The first approach is

to create a psychological environment and attitudes that promote safety. A strong company policy

emphasizing safety and health is crucial. The second approach to safety program design is to develop and

maintain a safe physical working environment.

•

occupational diseases and accidents, such as:

•

•

•

•

organizational stress and low quality of working life. These include:

•

•

Today, it has become clear that optimal health can generally be achieved through environmental safety,

organizational changes, and different lifestyles.

a. Developing Safety Programs—Organizational safety programs require planning for

prevention of workplace accidents. Plans may be relatively simple or more complex and

highly sophisticated in order to fit the organization’s size. Top management’s support is

essential if safety programs are to be effective. Tremendous economic losses can result

from accidents.

1. Job hazard analysis: The main goal of safety and health professionals is to

prevent job-related injuries and illnesses.

2. The Superfund Amendments Reauthorization Act, Title III (SARA): SARA

requires businesses to communicate more openly about the hazards associated with the materials they use

and produce and the wastes they generate.

3. Employee involvement: One way to strengthen a safety program is to include

employee input, which provides workers with a sense of accomplishment.

b. Accident Investigation—Accidents can happen even in the most safety-conscious firms.

Each accident, whether or not it results in an injury, should be carefully evaluated to

determine its cause and to ensure that it doesn’t recur. The safety engineer and the line

manager jointly investigate accidents—why, how, and where they occur and who is

involved. Main causes that can create accidents at workplace are:

•

•

•

•

􀂾 Physical conditions

•

•

•

􀂾 Environmental conditions

•

•

•

•

c. Evaluation of Safety Programs—Perhaps the best indicator that a safety program is

succeeding is a reduction in the frequency and severity of injuries and illnesses.

d. Rationale for Safety and Health Trends—Firms are spending an increasing amount of

money on safety. Reasons include; (1) profitability—employees can produce only while

they are on the job, (2) employee relations—firms with good safety records can attract and

retain good employees, (3) reduced liability—an effective safety program can reduce

corporate and executive liability, (4) marketing—a good safety record may well provide

companies with a competitive edge, and productivity—(5) an effective safety program may

boost morale and productivity while simultaneously reducing rising costs.

To cope with physical hazards and other hazards such as stress, unsafe behavior, and poor health habits,

employers often design comprehensive safety and health programs. Among these are safety programs,

employee assistance programs, and wellness programs.

A safe working environment does not just happen; it has to be created. The organizations with the best

reputations for safety have developed well-planned and thorough safety programs.

EAPs are programs designed to help employees whose job performance is suffering because of physical,

mental, or emotional problems.

As health care costs have skyrocketed over the last two decades, organizations have become more interested

in preventative programs. A complete wellness program has three components:

•

•

poor diet, and stress.

•

nutrition, and health monitoring.

Numerous studies have concluded that workplace smoking not only is hazardous to employees’ health, but

also is detrimental to the firm’s financial health. Increased costs of insurance premiums, higher absenteeism,

and lost productivity cost huge amount a year. These factors, along with rising opposition from nonsmokers

and widespread local and state laws, have spurred many firms into action, and the trend continues.

􀂾 The rewards of good health habits

•

within the company. Employees participate in safety decision and management carefully

considers employee suggestions for improving safety.

•

poster, pamphlets, and computer presentations.

•

•

•

and accident research to identify potentially dangerous situations, and to understand why

accidents occur and how to correct them.

Every organization should have a two-pronged policy in place to (a) prevent workplace violence and (b) to

deal with violent incidents when they occur. An HR manager's major responsibility is to be certain that

selection policies include careful screening and reference checking. Furthermore, the HR manager should

take the lead to enforce policies pertaining to the fair treatment of employees. This may require training

managers to recognize performance problems, refer troubled employees for counseling, and apply

disciplinary procedures consistently.

CTDs are also called repetitive stress (or motion or strain) injuries (or illnesses or syndromes). CTDs do

not refer to only one disorder but to a wide array of maladies ranging from carpal tunnel syndrome to tennis

elbow. The number of workers with CTDs has risen dramatically in recent years.

•

•

•

•

•

HRM department can help organizations and employers by performing tasks like:

•

•

•

•

•

Page 24

After studying this chapter, students should be able to understand the following:

We will discuss the concept of stress in this chapter we will see either stress is positive or negative in nature.

Further we will see different sources that can create stress at workplace and programs that can be used to

manage the stress.

Stress

with stress and its related problems are becoming increasingly popular. Long-term productivity depends

largely on the dedication and commitment of the company’s employees. Employees are increasingly holding

their employers liable for emotional problems they claim are work related. And, stress-related mental

disorders have become the fastest-growing occupational disease. There is increasing evidence indicating that

severe, prolonged stress is related to the diseases that are leading causes of death—coronary heart disease,

stroke, hypertension, cancer, emphysema, diabetes, and cirrhosis; stress may even lead to suicide. Some

signs that may indicate problems include impaired judgment and effectiveness, rigid behavior, medical

problems, increased irritability, excessive absences, emerging addictive behaviors, lowered self-esteem, and

apathetic behavior.

Regardless of its origin, stress possesses the same devastating potential. Some factors are controllable to

varying degrees, whereas others are not.

The person or event that triggers the stress response, it can be organizational, personal or environmental

factor that can become the source of stress.

a. Organizational Factors—Many factors associated with a person’s employment can be

potentially stressful. These include the firm’s culture, the individual’s job, and general

working conditions.

b. Personal Factors—Stress factors outside the job and job environment also may affect job

performance. Factors in this category include the family, financial problems, and living

conditions.

lurks not only in the workplace and the home but also in our general environment. The

three-hour commute in rush traffic, the unrelenting rain, the oppressive heat, or chilling

cold can all create stress. Excessive noise, wherever it is encountered, can drive some

people up the wall.

Stress can express following four types of the symptoms:

a. Short-term physical symptoms: Short-term physical symptoms include; faster

heart beat, increased sweating, cool skin Cold hands and feet Feelings of nausea,

or 'Butterflies in stomach' Rapid Breathing, Tense Muscles, dry Mouth, desire to

urinate, diarrhea

b. Long-term physical symptoms: Change in appetite frequent colds illnesses

(such as asthma Back pain digestive problems headaches aches and pains)

feelings of intense and long-term tiredness, Risk factors (Heart attacks and

strokes Hypertension and headaches Ulcers Allergies)

c. Internal symptoms: Internal symptoms include Worry or anxiety, Confusion,

and an inability to concentrate or make decisions, Feeling ill, Feeling out of

control or overwhelmed by events, Mood changes, Depression, Frustration,

d. Helplessness, Restlessness, Being more lethargic, Difficulty sleeping, drinking

more alcohol and smoking more, Changing eating habits, relying more on

medication.

e. Behavioral symptoms: Behavioral Symptoms include, talking too fast or, too

loud Bad moods being irritable Defensiveness Being critical Aggression,

Irrationality, Overreaction and reacting emotionally Reduced personal

effectiveness Being unreasonably negative Making less realistic judgments Being

unable to concentrate and having difficulty making decisions being more

forgetful Making more mistakes being more accident-prone Changing work

habits Increased absenteeism Neglect of personal appearance

g.

environment results in some problem in organizational operations like poorer

decision-making, decreased creativity, lost work time, Increased turnover and

more sabotage.

Stress can affect the performance in positive as well as negative ways. Stress is a dynamic condition in which

an individual is confronted with an opportunity, constraints or demand related to what he or she desires,

and for which the outcome is perceived to be both uncertain and important. Stress is a complex issue, so

let’s look at it more closely. Stress can manifest itself both in positive and negative way. Stress is said to be

positive when the situation offers an opportunity for one to gain something; for example, the “psychingup”

that an athlete goes through can be stressful, but this can lead to maximum performance. It is when

constraints or demands are placed on us that stress can become negative. Constraints are barriers that keep

us from doing what we desire. Demands, on the other hand, may cause you to give up something. Demands

are desires that are backed by the purchasing power or affordability.

Experts emphasize that some stress is healthy and moderate stress is the key to survival.

a. INDIVIDUAL COPING APPROACHES—There are a number of ways, that

individuals may take to control excessive stress. There are several specific techniques that

individuals can utilize to deal with stress. These methods include hypnosis, biofeedback,

and transcendental meditation.

•

receptiveness to suggestions.

•

pressure or heart beat rate.

•

(mantra) provided by a trained instructor is mentally repeated while an individual is comfortably seated.

effectively prevent or relieve excessive stress. General organizational programs, although

not specifically designed to cope with stress, may nevertheless play a major role.

unrealistic work-related goal.

receptiveness to suggestions.

rate.

mentally repeats a secret word or phrase provided by a trained instructor.

Page 25

After studying this chapter, students should be able to understand the following:

This chapter also presents a model of how communication works. Moreover, it explores specific policies

that give employees access to important company information as well as those which provide feedback to

top managers.

Burnout is a pattern of emotional, physical, and mental exhaustion in response to chronic job stressors. It is

an incapacitating condition in which individuals lose a sense of the basic purpose and fulfillment of their

work

Burnout has been described as a state of fatigue or frustration that stems from devotion to a cause, way of

life, or relationship that did not provide the expected reward. It is often found in a midlife or mid-career

crisis, but it can happen at different times to different people. Individuals in the helping professions such as

teachers and counselors seem to be susceptible to burnout, whereas others may be vulnerable because of

their upbringing, expectations, or their personalities. Burnout is frequently associated with people whose

jobs require close relationships with others under stressful and tension-filled conditions. The dangerous part

of burnout is that it is contagious. A highly cynical and pessimistic burnout victim can quickly transform an

entire group into burnouts. It is important to deal with it quickly; once it has begun, it is difficult to stop.

Following symptoms indicate that a person is suffering through burnout

•

•

•

•

•

Burnout can be avoided by taking the following steps

•

•

•

•

from (family, job, etc.)

•

•

•

•

•

•

•

Social support at home by friends family members and at workplace by supervisor, colleagues subordinates

etc can be used to avoid the burnout in the organizations.

The transmission of information and understanding through the use of common symbols is termed as

communication. Communication is the exchange of information between people; it occurs when one

person understands the meaning of a message sent by another person, and responds to it. Two forms of

information are sent and received in communications: facts and feelings. Facts are pieces of information

that can be objectively measured or described. Examples are the cost of a computer, the daily defect rate in

a manufacturing plant, and the size of the deductible payment of the company-sponsored health insurance

policy. Feelings are employees' emotional responses to the decisions made or actions taken by managers or

other employees. Organizations need to design communication channels that allow employees to

communicate facts and feelings about specific aspects of their jobs.

Communication, a continuous process, is the exchange of information and meaning between people. It

occurs when one person understands and responds to the meaning of a message sent by someone else. The

communication process includes five

main components: the information

source, the signal, the transmission, the

destination or receiver, and the noise.

Communication starts with a sender

who has a message to send to the

receiver. The sender must encode the

message and select a communication

channel that will deliver it to the

receiver. In communicating facts, the

message may be encoded with words,

numbers, or digital symbols; in

communicating feelings, it may be

encoded as body language or tone of

voice.

Communications that provide for

feedback are called two-way

communications because they allow the

sender and receiver to interact with each other. Communications that provide no opportunity for feedback

are one-way. Noise means barriers to effective Communication. Potential barriers include: ambiguous,

muddled messages; semantics; physical barriers; loss of transmission; failing to communicate; competition

barriers; cultural, linguistic, and diversity barriers; and not listening.

Nonverbal communication is the non-spoken aspects of communication, such as a person’s manner of

speaking, facial expressions, or body posture, that express meaning to others. The nonverbal aspects of

communication can especially complicate the task of communicating internationally. Nonverbal

communication is communication that is sent without the use of the written or spoken word. This type of

communication is quite powerful because people can communicate without speaking through the use of

facial expression, body posture, tone of voice, use of space, and touching. Occulesics are facial expressions

and eye contact that people use to communicate. Kinesics is the study of bodies through posture, gesture,

head movements, and similar actions. Use of and reaction to facial expressions and body movement vary

from culture to culture.

The complex factors in the communication pose barriers to effective communication. Individual barriers

include perceptual biases, which function as noise by affecting how the receiver gathers, organizes, and

interprets information. Organizational barriers to effective communication include organizational culture

and structure, status differences, and time.

Active listening is a good way to minimize both individual and organizational barriers to effective

communication. In active listening, the receiver assumes a conscious and dynamic role in the

communication process through a variety of behaviors and actions. Both the sender and the message are

targets for the active listener. Cultural differences can influence active listening.

Feedback is information about some behavior and its effect. Managers need to provide feedback to

employees about their job performance; they also give feedback to suppliers and customers about various

matters. Managers often have difficulty giving negative feedback—just as employees tend to stop actively

listening to negative feedback. Therefore, effective feedback should be fact-based, timely, and focused on

behaviors. Feedback is another part of communication that is affected by cultural differences. Supportive

communication is honest, accurate interpersonal communication that focuses on building and enhancing

relationships. There are number of attributes of supportive communication, which aims to create an

environment in which people can openly exchange information about issues.

A number of interpersonal and intrapersonal barriers effect the decoding of a message.

Filtering refers to manipulating information so that it will be received more favorably.

􀂾 Filtering is most likely to occur where there is emphasis on status differences and among

employees with strong career mobility aspirations.

􀂾 Expect more filtering taking place in large corporations than in small business firms.

With selective perception, receivers see and hear based on their needs, motivations, experience, background,

and other personal characteristics.

Information overload happens when individuals have more information than they can sort out and use; they

tend to select out, ignore, pass over, or forget information, etc.

Emotions. When people feel that they're being threatened, they tend to react in ways that reduce their ability

to achieve mutual understanding.

Language. The meanings of words are not in the words; they are in us.

􀂾 Employees come from diverse backgrounds and have different patterns of speech.

􀂾 Grouping of employees into departments creates specialists who develop their own jargon

or technical language.

While we speak a common language--English-our usage of that language is far from uniform.

􀂾 The problem is that members in an organization usually don't know how others with

whom they interact have modified the language.

An estimated 5 to 20 percent of the population suffer from debilitating communication apprehension or

anxiety.

􀂾 People who suffer from it experience undue tension and anxiety in oral communication,

written communication, or both.

Studies demonstrate that oral-communication apprehensives avoid situations that require them to engage in

oral communication.

Of greater concern is the evidence that high-oral-communication apprehensives distort the communication

demands of their jobs in order to minimize the need for communication.

Working with supervisors and managers, employee relations representatives can facilitate effective

communications by developing and maintaining three types of programs: information dissemination,

employee feedback, and employee assistance.

Information dissemination involves making information available to decision makers, wherever they are

located. The employee handbook is probably the most important source of information the HR

department can provide and sets the tone for the company's overall employee relations philosophy. There

are many other forms of written communication besides the employee handbook that can be used to alert

employees to important information. These include memos and newsletters.

1. The employee handbook

2. Written communications: memos, financial statements, newsletters, and bulletin boards

3. Audiovisual communications

New technologies have made it possible to disseminate information that goes beyond the printed word.

Visual images and audio information are powerful communication tools. A recent technological advance,

teleconferencing, allows people with busy schedules to participate in meetings even when they are a great

distance away from the conference location (or each other). Advances in electronic communications (voice

mail and e-mail) have made interactive communications between sender and receiver possible even when

they are separated by physical distance and busy schedules.

Formal meetings are opportunities for face-to-face communication between two or more employees and are

guided by a specific agenda. Formal meetings facilitate dialogue and promote the nurturing of personal

relationships, particularly among employees who may not interact frequently because they are separated by

organizational or geographic barriers.

􀂾 Retreats

􀂾 Informal communications

To provide upward communications channels between employees and management, many organizations

offer employee feedback programs. These programs are designed to improve management-employee

relations by giving employees a voice in decision making and policy formulation and by making sure that

they receive due process on any complaints they lodge against managers. The most common employee

feedback programs are employee attitude surveys, appeals procedures, and employee assistance programs.

􀂾 Employee attitude surveys

􀂾 Appeals procedures

EAPs help employees cope with personal problems that are interfering with their job performance. These

problems may include alcohol or drug abuse, domestic violence, elder care, AIDS and other diseases, eating

disorders, and compulsive gambling. Confidentiality is an important component of these programs.

structure, charts, or other official documents.

Informal communication flows outside of the firm’s chain of command.

􀂾 How Excellent Companies Foster Informal Communications

The following techniques have been found to encourage informal communication: 1) emphasizing

informality; 2) maintaining an extraordinary level of communication intensity; and 3) giving communication

the physical support. Management by Wandering around: The communication skill here is not in the

wandering around the office, but in the interpersonal communication skills you can bring to bear when

you’re speaking with the employees. These skills include paying attention, making yourself clear, listening

actively, and listening sympathetically.

Upward communication from subordinates to superiors provides management with valuable insight into

how the organization is functioning, and provides superiors with feedback about whether subordinates

understand orders and instructions. It gives employees an opportunity to vent their feelings. Upward

communication can be encouraged by social gatherings, union publications, regular meetings, performance

appraisal meetings, grievances, attitude surveys, a suggestion system, and open door policy, indirect

measures, and email. Formal, comprehensive programs and upward appraisals also encourage upward

communication.

When communicating with a supervisor, avoid phrases that may inadvertently signal a lack of responsibility

on your part. Avoid counterproductive body language and nonverbal mannerisms.

Downward communication is transmitted from superior to subordinate on subjects like corporate vision

and mission, what the job consists of, performance evaluations, job instruction, and organizational policies

and practices. This format can help build commitment by keeping employees informed about what the

organization plans to do. Some firms install open-book management programs that manage without

concealment, and motivate all employees to focus on helping the business grow profitable and increasing

the return on it human capital. Open-book management fosters trust and commitment among employees

by treating them more like partners.

When communicating with subordinates, remember that fairness and the appearance of fairness are key.

Make sure your body language comes across as open and receptive.

Horizontal or lateral communications are messages between departments or people in the same department.

Managers use individuals or committees to bridge departments and improve the flow of communication

between them by using liaison personnel, committees and task forces, and independent integrators.

HRM depends upon the effective communications systems in the organization for its success because all its

functions like staffing , compensating , performance appraisal, training and development , etc require

communication system for their executions basic purposes that are served through communication systems

are keeping employees informed using it a s a tool to bring about positive change and to Influence culture.

Bulletin board, newsletter and gossip are different sources that are used to disseminate information in the

organizations.

Employees are provided with the Employee Handbook which serves many purposes like (1) it helps

employees learn about company at their own pace. (2) Provides references regarding policies, rules, and

benefits. (3) Ensures HRM policies will be consistently applied. (4) Creates sense of security and

commitment for employees. (5) Provides information to recruits. (6) May be interpreted as implied contract.

(7)Should be updated continually but the important thing is that these purposes can be achieved only if the

employee handbook is Well Organized, Clearly Written and legally limited. Employee handbook mainly

includes the information both about the employee and employer for employee it provides information

regarding the job description and for employer it provides information about the rules regulations of the

organization and different compensation benefits etc related information to the employees.

Inside the organization Employee handbook, Bulletin board, Company newsletter, Company-wide

meetings, Digital Media etc are used as source or method to communicate while for the offsite employees

facsimile machine, E-mails, and Internet Phone are used as tools for communication of information,

of their work

meaning of a message sent by another person, and responds to it.

Page 26

After studying this chapter, students should be able to understand the following:

This chapter talks about why workers organize, outlines the basics of labor law, and reviews the procedures

of labor elections, collective bargaining, and contract administration. We will also go through the grievance

procedures.

Organization of workers, acting collectively, seeking to protect and promote their mutual interests through

collective bargaining is termed as union. The most significant impact of a union on the management of

human resources is its influence in shaping HRM policies. In the absence of a union, the company may

develop all HRM policies based on efficiency. But, when a union enters the picture, management must

develop HRM policies that reflect consideration for the preferences of workers who are represented by a

union. A union's strong preferences for high wages, job security, the ability to express dissatisfaction with

administrative actions, and having a voice in the development of work rules that affect their jobs get

injected into the equation along with the employer's preferences.

I. Union Objectives

Several broad objectives characterize the labor movement as a whole. These include:

(1) To secure and, if possible, improve the living standards and economic status of its members.

(2) To enhance and, if possible, guarantee individual security against threats and contingencies that might

result from market fluctuations, technological change, or management decisions. (3) To influence power

relations in the social system in ways that favor and do not threaten union gains and goals. (4) To advance

the welfare of all who work for a living, whether union members or not. (5) To create mechanisms to guard

against the use of arbitrary and capricious policies and practices in the workplace. In order to accomplish

these objectives, most unions recognize that they must strive for continued growth and power.

• Growth—To maximize effectiveness, a union must strive for continual growth, but the percentage

of union members in the workforce is declining. Union leaders are concerned because much of a

union’s ability to accomplish objectives comes from strength in numbers. Unions must continue to

explore new sources of potential members.

• Power—We define power here as the amount of external control that an organization is able to

exert. A union’s power is influenced to a large extent by the size of its membership and the

possibility of future growth. By achieving power, a union is capable of exerting its force in the

political arena.

II. Factors Leading to Employee Unionization

Three types of factors play role in origin of employee unions they are:

a. Working Environment: Inadequate staffing, Mandatory overtime, Poor working conditions

b. Compensation: Non-competitive Pay, Inadequate benefits inequitable pay raises

c. Management Style: Arbitrary Management Decision Making, Use of fear, Lack of recognition

d. Organization Treatment: Job insecurity, unfair discipline and policies, Harassment and abusive

treatments, Not responsive to complaints

III. Why Employees Join Unions

Individuals join unions for many different reasons, and these reasons tend to change over time. They may

involve dissatisfaction with management, need for a social outlet, opportunity for leadership, forced

unionization, and peer pressure.

A union is an organization that represents employees' interests to management on issues such as wages,

hours, and working conditions. Generally, employees seek to join a union when they (1) are dissatisfied

with aspects of their job,

(2) feel a lack of power or influence with management in terms of making changes, and

(3) see unionization as a solution to their problems.

emphasize the advantages of union membership as a means of solving them. Management must

exercise restraint and use its power to foster management and labor cooperation for the benefit of all

concerned. Some reasons for employee dissatisfaction are described:

1. Compensation: If employees are dissatisfied with their wages, they may look to a union

for assistance in improving their standard of living.

2. Job Security: If the firm doesn’t provide its employees with a sense of job security,

workers may turn to a union. Employees are more concerned than ever about job security

due to a decline in employment in such key industries as automobiles, rubber, and steel.

3. Management Attitude: Employees do not like to be subjected to arbitrary and capricious

actions by management. In some firms, management is insensitive to the needs of its

employees. When this situation occurs, employees may perceive that they have little or no

influence in job-related matters, thus becoming prime targets for unionization.

activities, day care centers, and other services can increase the sense of solidarity.

supervisors.

union prior to employment. However, in the 29 states without right-to-work laws, it is legal for an

employer to agree with the union that a new employee must join the union after a certain period of

time (generally 30 days) or be terminated.

members of the work group.

IV. The Impact of Unions on Human Resource Management

Managers are more likely to develop HRM policies based on efficiency. But, when a union is in the picture,

policies must reflect employees' preferences as well. Employees have preferences related to staffing,

employee development, compensation, and employee relations.

organizations. However, there is often a greater amount of worker training.

comparable non-union employees. Unionized firms avoid using merit pay plans and are

likely to give across-the-board pay raises to employees based on market considerations.

through the collective bargaining process, have a voice in the development of work rules

that affect their jobs.

Under a collective bargaining system, union and management negotiate with each other to develop the work

rules.

The performance of the mutual obligation of the employer and the representative of the employees to meet

at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions

of employment, or the negotiation of an agreement, or any question arising there under, and the execution

of a written contract incorporating any agreement reached if requested by either party; such obligation does

not compel either party to agree to a proposal or require the making of a concession.

• Forms of Bargaining Structures AND Union/ Management Relationships—The bargaining

structure can affect the conduct of collective bargaining. The four major structures are one

company dealing with a single union, several companies dealing with a single union, several unions

dealing with a single company, and several companies dealing with several unions. Types of

union/management relations that may exist in an organization are conflict, armed truce, power

bargaining, accommodation, cooperation, and collusion.

• The Collective Bargaining Process—Both external and internal environmental factors can

influence the process. The first step in the collective bargaining process is preparing for

negotiations. This step is often extensive and ongoing for both union and management. After the

issues to be negotiated have been determined, the two sides confer to reach a mutually acceptable

contract. Although breakdowns in negotiations can occur, both labor and management have at

their disposal tools and arguments that can be used to convince the other side to accept their views.

Eventually, however, management and the union usually reach an agreement that defines the rules

of the game for the duration of the contract. The next step is for the union membership to ratify

the agreement. There is a feedback loop from “Administration of the Agreement” to “Preparing

for Negotiation.” Collective bargaining is a continuous and dynamic process, and preparing for the

next round of negotiations often begins the moment a contract is ratified.

• The Psychological Aspects Of Collective Bargaining

Prior to collective bargaining, both the management team and the union team have to prepare positions and

accomplish certain tasks. Vitally important for those involved are the psychological aspects of collective

bargaining. Psychologically, the collective bargaining process is often difficult because it is an adversarial

situation and must be approached as such. It is a situation that is fundamental to law, politics, business, and

government, because out of the clash of ideas, points of view, and interests come agreement, consensus,

and justice.

a. Preparing For Negotiations

Bargaining issues can be divided into three categories: mandatory, permissive, and prohibited.

• Mandatory Bargaining Issues—Fall within the definition of wages, hours, and

other terms and conditions of employment.

• Permissive Bargaining Issues—May be raised, but neither side may insist that

they be bargained over.

• Prohibited Bargaining Issues—Are statutorily outlawed.

b. Bargaining Issues

The document that results from the collective bargaining process is known as a labor agreement or contract.

Certain topics are included in virtually all labor agreements.

• Recognition—Its purpose is to identify the union that is recognized as the bargaining

representative and to describe the bargaining unit.

• Management Rights—A section that is often, but not always, written into the labor agreement

and that spells out the rights of management. If no such section is included, management may

reason that it retains control of all topics not described as bargainable in the contract.

• Union Security— The objective of union security provisions is to ensure that the union continues

to exist and to perform its function.

1. Closed Shop: An arrangement whereby union membership is a prerequisite to

employment.

2. Union Shop: An arrangement that requires that all employees become members of the

union after a specified period of employment (the legal minimum is 30 days) or after a

union shop provision has been negotiated.

3. Maintenance of Membership: Employees who are members of the union at the time the

labor agreement is signed or who later voluntarily joins must continue their memberships

until the termination of the agreement, as a condition of employment. This form of

recognition is also prohibited in most states that have right-to-work laws.

4. Agency Shop: Does not require employees to join the union; however, the labor

agreement requires, as a condition of employment, that each nonunion member of the

bargaining unit “pay the union the equivalent of membership dues as a kind of tax, or

service charge, in return for the union acting as the bargaining agent.” The agency shop is

outlawed in most states that have right-to-work laws.

5. Exclusive Bargaining Shop: The company is bound legally to deal with the union that

has achieved recognition, but employees are not obligated to join or maintain membership

in the union or to financially contribute to it.

6. Open Shop: Employment that has equal terms for union members and nonmembers alike.

7. Dues Checkoff: The Company agrees to withhold union dues from members’ checks and

to forward the money directly to the union.

• Compensation and Benefits—This section typically constitutes a large portion of most labor

agreements. Virtually any item that can affect compensation and benefits may be included.

1. Wage Rate Schedule: The base rates to be paid each year of the contract for each job are

included in this section. At times, unions are able to obtain a cost-of-living allowance (COLA) or

escalator clause in the contract in order to protect the purchasing power of employees’ earnings.

2. Overtime and Premium Pay: Provisions covering hours of work, overtime pay, and

premium pay, such as shift differentials, are included in this section.

3. Jury Pay: Some firms pay an employee’s entire salary when he or she is serving jury duty.

Others pay the difference between jury pay and the compensation that would have been

earned. The procedure covering jury pay is typically stated in the contract.

4. Layoff or Severance Pay: The amount that employees in various jobs and/or seniority

levels will be paid if they are laid off or terminated is presented in this section.

5. Holidays: The holidays to be recognized and the amount of pay that a worker will receive

if he or she has to work on a holiday are specified. In addition, the pay procedure for times

when a holiday falls on a worker’s nominal day off is provided.

6. Vacation: This section spells out the amount of vacation that a person may take, based on

seniority. Any restrictions as to when the vacation may be taken are also stated.

7. Family Care: This is a benefit that has been included in recent collective bargaining

agreements, with child care expected to be a hot bargaining issue in the near future.

• Grievance Procedure—It contains the means by which employees can voice dissatisfaction with

specific management actions. Also included in this section are the procedures for disciplinary action

by management and the termination procedure that must be followed.

• Employee Security—This section of the labor agreement establishes the procedures that cover

job security for individual employees. Seniority and grievance handling procedures are the key

topics related to employee security.

a. Negotiating The Agreement

The negotiating phase of collective bargaining begins with each side presenting its initial demands. The term

negotiating

expectations. Each side does not expect to obtain all the demands presented in its first proposal. Demands

that the union does not expect to receive when they are first made are known as beachhead demands.

b. Breakdowns In Negotiations

At times negotiations break down, even though both labor and management may sincerely want to arrive at

an equitable contract settlement. Several means of removing roadblocks may be used in order to get

negotiations moving again.

• Third-Party Intervention—Often a person from outside both the union and the organization can

intervene to provide assistance when an agreement cannot be reached and a breakdown occurs. At

this point there is an impasse.

1. Mediation: A process whereby a neutral third party enters a labor dispute when a

bargaining impasse has occurred.

2. Arbitration: A process in which a dispute is submitted to an impartial third party to make

a binding decision.

3. Sources of Mediators and Arbitrators: The principle organization involved in mediation

efforts, other than the available state and local agencies, is the Federal Mediation and

Conciliation Service (FMCS). Either or both parties involved in negotiations can seek the

assistance of the FMCS, or the agency can offer help if it feels that the situation warrants

this.

• Union Strategies for Overcoming Negotiations Breakdowns—There are times when a union

believes that it must exert extreme pressure on management to agree to its bargaining demands.

Strikes and boycotts are the primary means that the union may use to overcome breakdowns in

negotiations.

1. Strikes: When union members refuse to work in order to exert pressure on management

in negotiations.

2. Boycotts: An agreement by union members to refuse to use or buy the firm’s products.

The practice of a union attempting to encourage third parties (suppliers and customers) to

stop doing business with the firm is a secondary boycott.

• Management’s Strategies For Overcoming Negotiation Breakdowns—One form of action

that is somewhat analogous to a strike is called a lockout. Management keeps employees out of the

workplace and may run the operation with management personnel and/or temporary replacements.

The employees are unable to work and do not get paid.

a. Ratifying The Agreement

In the vast majority of collective bargaining encounters, the parties reach agreement without experiencing

severe breakdowns in negotiations or resorting to disruptive actions. Typically, this is accomplished before

the current agreement expires. After the negotiators have reached a tentative agreement on all topics

negotiated, they will prepare a written agreement complete with the effective and termination dates.

However, the approval process can be more difficult for the union. Until it has received approval by a

majority of members voting in a ratification election, the proposed agreement is not final. Union members

may reject the proposed agreement, and new negotiations must begin.

b. Administration Of The Agreement

The larger and perhaps more important part of collective bargaining is the administration of the agreement,

which is seldom viewed by the public. The agreement establishes the union-management relationship for

the duration of the contract.

.

II. Grievance Handling Under a Collective Bargaining Agreement

If employees in an organization are represented by a union, workers who believe that they have been

disciplined or dealt with unjustly can appeal through the grievance and arbitration procedures of the

collective bargaining agreement.

a. Grievance Procedure—A grievance can be broadly defined as an employee’s

dissatisfaction or feeling of personal injustice relating to his or her

employment relationship.

b. Arbitration—The process that allows the parties to submit their dispute to an

impartial third party for resolution.

c. Proof that Disciplinary Action was Needed—Any disciplinary action

administered may ultimately be taken to arbitration, when such a remedy is

specified in the labor agreement.

d. Weaknesses Of Arbitration—The reason for the initial filing of the

grievance may actually be forgotten before it is finally settled. Another

problem is the cost of arbitration, which has been rising at an alarming rate.

Although the step-by-step procedure for handling union grievances is common practice, the means of

resolving complaints in union-free firms varies. A well-designed union-free grievance procedure ensures

that the worker has ample opportunity to make complaints without fear of reprisal.

Employers who adhere to certain union-free strategies and tactics can remain or become union free.

• Effective first-line supervision: Extremely important to an organization’s ability to remain union

free is the overall effectiveness of its management, particularly its first-line supervisors. These

supervisors represent the first line of defense against unionization.

• Union-free policy: The fact that the organization’s goal is to remain union free should be clearly

and forcefully communicated to all its members.

• Effective communication: One of the most important actions an organization that wants to

remain union free can take is to establish credible and effective communication. One approach

taken to encourage open communication is the open-door policy. The open-door policy gives

employees the right to take any grievance to the person next in the chain of command if the

immediate supervisor cannot resolve the problem.

• Trust and openness: Openness and trust on the part of managers and employees alike are

important in order to remain union free. The old expression actions speak louder than words is certainly

valid for an organization that desires to remain union free.

• Effective compensation programs: The financial compensation that employees receive is the

most tangible measure they have of their worth to the organization. If an individual’s pay is

substantially below that provided for similar work in the area, the employee will soon become

dissatisfied.

• Healthy and safe work environment: An organization that gains a reputation for failing to

maintain a safe and healthy work environment leaves itself wide open for unionization.

• Effective employee and labor relations: No organization is free from employee disagreements

and dissatisfaction. Therefore, a means of resolving employee complaints, whether actual or

perceived, should be available. The grievance procedure is a formal process that permits employees to

complain about matters affecting them. Most labor-management agreements contain formal

grievance procedures, and union members regard handling grievances as one of the most important

functions of a labor union.

Labor relations

employees within the firm after they have become organizational members and include the actions of

promotion, transfer, demotion, resignation, discharge, layoff, and retirement. Labor relations can be divided

into following three phases:

a. Union organizing: Organization of workers, acting collectively, seeking to protect and promote

their mutual interests through collective bargaining is termed as union. The most significant impact

of a union on the management of human resources is its influence in shaping HRM policies. In the

absence of a union, the company may develop all HRM policies based on efficiency. But, when a

union enters the picture, management must develop HRM policies that reflect consideration for the

preferences of workers who are represented by a union. A union's strong preferences for high

wages, job security, the ability to express dissatisfaction with administrative actions, and having a

voice in the development of work rules that affect their jobs get injected into the equation along

with the employer's preferences.

b. Collective bargaining: The performance of the mutual obligation of the employer and the

representative of the employees to meet at reasonable times and confer in good faith with respect

to wages, hours, and other terms and conditions of employment, or the negotiation of an

agreement, or any question arising there under, and the execution of a written contract

incorporating any agreement reached if requested by either party; such obligation does not compel

either party to agree to a proposal or require the making of a concession.

c. Contract administration: The larger and perhaps more important part of collective bargaining is

the administration of the agreement, which is seldom viewed by the public. The agreement

establishes the union-management relationship for the duration of the contract. The agreement

established the union-management relationship for its effective length. Usually no changes in

contract language can be made until the expiration date except by mutual consent. Administering

the contract is a day-to-day activity. Ideally, the aim of both management and the union is to make

the agreement work to the mutual benefit of all concerned. This is not easy. In the daily stress of

the work environment, terms of the contract are not always uniformly interpreted and applied.

matters affecting them and their work.

meet to negotiate a labor agreement

bargaining impasse has occurred.

products.

third party for resolution.