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.
a. Line Authority
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.
b. Staff Mangers and Staff Authority
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.
c. Functional control
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.”
II. Line versus Staff Authority
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.
52In 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.
53Executives 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.
Authority:
Authority is the right to make decisions, to direct the work of others, and to give orders.Executives:
Executives are top-level managers, who report directly to the corporation’s chief executiveofficer or the head of a major division.
Generalists:
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.
Line Authority:
Line authority entitles a manager to direct the work of an employee.Specialist:
Specialist may be a human resource executive, manager, or non-manager who typically isconcerned 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
Competitive
Advantage
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.
Affirmative Action:
An approach that an organization with government contracts develops todemonstrate that women or minorities are employed in proportion to their representation in the firm’s
relevant labor market
Employment discrimination:
To make an employment decision, not on the basis of legitimate jobrelatedfactors
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?
What is planning?
Plans are methods for achieving a desired result. Goals or objectives are specific resultsyou want to achieve. Planning is thus “the process of establishing objectives and courses of action prior to
taking action.”
What is planning concerned with?
Planning provides a sense of purpose and direction. It is acomprehensive 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).
Is planning really needed?
If… organizations… never faced changes in the environment, there wouldhave been no need for planning. Planning is one of the functional areas of HR.
Strategic planning
: is the process by which top management determines overall organizational purposesand objectives and how they are to be achieved.
Human resource planning (HRP):
is the process of systematically reviewing human resourcerequirements 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.
I.
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.
c. THE GOAL OF HR PLANNING
The goal of forecasting and planning is to keep a stable workforce that meets needs of the organization.
d. STEPS IN HRP PROCESS
• 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
61e. Importance Of Hrp
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
f. Requirements for effective HR planning
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
Linking HR planning practices to competitive advantage
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.
KEY TERMS
Plans
Plans are methods for achieving a desired result.Simulation
A technique for experimenting with a real-world situation through amathematical model representing that situation. A model is an abstraction of
the real world.
Strategic planning
is the process by which top management determines overall organizationalpurposes and objectives and how they are to be achieved.
Layoffs
At times, the firm has no choice but to actually lay off part of its workforce.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
65strategic 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.
66• 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..
C. Relationship of HRIS with overall MIS
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.
Strategic planning
: It is the process by which top management determines overall organizational purposesand objectives and how they are to be achieved.
Human Resource Information System:
HRISs are systems used to collect, record, and store, analyze, andretrieve 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.
A. Job Analysis:
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.
Job Analysis:
Studying and under-standing jobs through the process known as job analysis is a vital part ofany HRM program
Job Specification:
A job specification is a document containing the minimum acceptable qualifications thata person should possess in order to perform a particular job
Job Description:
A job description is a written statement of what the jobholder actually does, how he orshe does it, and under what conditions the job is performed.
Job Evaluation:
It suggests about the relevant importance of a particular job in organization.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
Job Identification
– contains the job title, the FLSA status, date, and possible space to indicate whoapproved the description, the location of the job, the immediate supervisor’s title, salary and/or pay scale.
Job Summary
– should describe the general nature of the job, and includes only its major functions oractivities.
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.
A. Human resource planning (HRP):
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.
B. HUMAN RESOURCE FORECASTING TECHNIQUES
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.
Forecasting Human Resource Requirements
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.
Forecasting Human Resource Availability
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.
SURPLUS OF EMPLOYEES FORECASTED
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.
73• 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.
SHORTAGE OF WORKERS FORECASTED
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.
SUCESSION PLANNING AND DEVELOPMENT
Succession Planning
: The process of ensuring that a qualified person is available to assume a managerialposition once the position is vacant.
Succession Development
: It is the process of determining a comprehensive job profile of the keypositions and then ensuring that key prospects are properly developed to match these qualifications.
C. HR Hiring Process:
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.
74• 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.
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.
a. Goals of Recruitment:
Mainly there are two recruitment goals
b. To attract qualified applicants
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.
c. To discourage non qualified applicants.
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.
D. Constraints of Recruitment Process:
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:
I. Image of the Organization.
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.
II. Attractiveness of the job
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.
III. Government Influence
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.
IV. Labor Market Influence:
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.
75V. Recruiting Costs
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.
E. Philosophy of the Recruitment:
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
F. Ethical Issues in Recruitment:
• 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.
Key Terms
Human resource planning (HRP):
It is the process of systematically reviewing human resourcerequirements to ensure that the required number of employees, with the required skills, is available when
they are needed.
Recruitment:
It is the process of attracting individuals on a timely basis, in sufficient numbers and withappropriate qualifications, and encouraging them to apply for jobs with an organization.
Job Evaluation
It is used to evaluate the importance of job by considering its contribution towardsachievements of the objectives of organization.
Page 8
After studying this chapter, students should be able to understand the following:
LESSON OVERVIEW
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:
B. Source of Recruitment:
Basically organizations are available by the two man sources of recruitment which are:
I. External Recruitment.
II. Internal Recruitment.
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:
I. Internal Recruiting Sources:
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
a. Promotion from within:
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
77potential 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.
b. Job posting
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.
c. Contacts and Referrals:
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.
II. External Recruiting Sources:
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.
EXTERNAL SOURCES OF RECRUITMENT
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.
b. Community Colleges
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.
c. Colleges and Universities
78Colleges 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.
d. Competitors and other Firms
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.
e. Unemployed
Individuals who are unemployed, regardless of the reason, often provide a valuable source of recruitment.
f. Older Individuals
Older workers, including those retired, may also comprise a valuable source of employees.
g. Military Personnel
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.
h. Self-Employed Workers
These individuals may provide a source of applicants to fill any number of jobs requiring technical,
professional, administrative, or entrepreneurial expertise.
III. EXTERNAL RECRUITMENT METHODS
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.
b. Employment Agencies
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.
c. Recruiters
The most common use of recruiters is with technical and vocational schools, community colleges, colleges,
and universities.
d. Special Events
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.
79e. Internships
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.
f. Executive Search Firms
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.
g. Professional Associations
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.
h. Unsolicited Walk-In 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.
i. Open Houses
Firms pair potential hires and managers in a warm, causal environment that encourages on-the-spot job
offers.
j. Event Recruiting
Attend the events that the people you are seeking go to.
k. Virtual Job Fairs
Individuals meet recruiters face-to-face in interviews conducted over special computers that have lenses that
transmit head-and-shoulder images of both parties.
l. Cyber Recruiting
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.
C. ALTERNATIVES TO RECRUITMENT
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.
80I. Outsourcing
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.
II. Contingent Workers
It is also known as part-timers, temporaries, and independent contractors, comprise the fastest-growing
segment of our economy.
III. Professional Employer Organization (Employee Leasing)
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.
IV. Overtime
Perhaps the most commonly used method of meeting short-term fluctuations in work volume is through
the use of overtime.
D. Recruitment - An applicant perspective:
• 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.
E. Evaluating the Recruitment Process:
Recruitment process can be evaluated by the following factors:
1. Quantity of the Applicants
2. Quality of the Applicants
Quantity 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.
Quality of the Applicants
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.
Yield Ratios:
The effectiveness of the recruitment process also depends upon the acceptability of the yield ratio.
Key Terms
Advertising
: A way of communicating the employment needs within the firm to the public through mediasuch as radio, newspaper, television, industry publications, and the Internet.
Yield Ratios
: Yield Ratios help organizations decide how many employees to recruit for each job opening.Internal Recruiting Sources:
When job vacancies exist, the first place that an organization should look forplacement is within itself
Outsourcing:
Outsourcing is the process of transferring responsibility for an area of service and itsobjectives to an external service provider instead of internal employee.
Contingent Workers:
It is also known as part-timers, temporaries, and independent contractors, comprisethe fastest-growing segment of our economy.
Internships:
A special form of recruiting that involves placing a student in a temporary job.Recruitment:
Recruiting refers to the process of attracting potential job applicants from the available laborforce.
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
is the process of choosing from a group of applicants those individuals best suited for a particularposition. 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
B. ENVIRONMENTAL FACTORS AFFECTING THE SELECTION PROCESS
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.
82• 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.
C. STEPS IN THE SELECTION PROCESS
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
1. Initial Screening
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.
Sources utilized in the screening effort
: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:
Screening interviews are used to:
83• To verify information provided on resume or application blank.
• They are usually very short (approximately 30 minutes or so).
Advantages of Successful Screening:
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.
2. APPLICATION BLANK /REVIEW OF APPLICATIONS
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.
Key Terms
Selection Process:
Selection is the process of choosing from a group of applicants those individuals bestsuited for a particular position.
Application Blank:
Application blank is a formal record of an individual’s application for employmentPage 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.
II. Characteristics of Properly Designed Selection Tests
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,
85content 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.
III. Types Of Employment Tests
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.
b. Psychomotor Abilities Tests
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.
c. Job Knowledge Tests
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.
d. Work-Sample Tests (Simulations)
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.
e. Vocational Interest Tests
It indicates the occupation in which a person is most interested and is most likely to receive satisfaction.
f. Personality Tests
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.
g. Drug and Alcohol Testing
Basic purpose of the drug-testing programs contends that it is necessary to ensure workplace safety,
security, and productivity.
h. Genetic Testing
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.
86i. Honest Test/Polygraph Tests
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.
j. Internet Testing
The Internet is increasingly being used to test various skills required by applicants.
B. Job Interviews
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.
I. Interview Planning
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.
II. Content of The Interview
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.
III. Types of Interviews
Interviews may be classified in two types by the degree to which they are structured.
a. The Unstructured (Nondirective) Interview
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.
87b. The Structured (Directive Or Patterned) Interview
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.
c. Behavior Description Interviewing
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.
IV. Methods of Interviewing
Interviews may be conducted in several ways.
a. One-On-One Interview
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.
b. Group Interview
Several applicants interact in the presence of one or more company representatives.
c. Board Interview
One candidate is interviewed by several representatives of the firm.
d. Stress Interview
Intentionally creates anxiety to determine how an applicant will react to stress on the job.
V. Realistic Job Previews
RJP Conveys job information to the applicant in an unbiased manner, including both positive and negative
factors
VI. Legal Implications of Interviewing
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.
VII. How To Avoid Common Interviewing Mistakes
Snap judgments
a. 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.
b. Negative Emphasis:
When an interviewer has received negative information about the candidate, through references or other
88sources, 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.
c. Poor Knowledge of Job:
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.
d. Pressure to Hire:
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.
e. Candidate Order
(Contrast) Error
: When an adequate candidate is preceded by either an outstanding, or a poor candidate,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.
f. Influence of Nonverbal Behavior:
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.
VIII. Guidelines for Conducting an Interview
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.
Key Terms
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.
Objectivity
: Achieved when all individuals scoring a given test obtain the same results.Norms
: Provide a frame of reference for comparing applicants’ performance with that of others. A normreflects 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.
Reliability
: The extent to which a selection test provides consistent results. If a test has low reliability, itsvalidity as a predictor will also be low. To validate reliability, a test must be verified.
Validity
: The extent to which a test measures what it purports to measure. If a test cannot indicate ability toperform the job, it has no value as a predictor.
Snap Judgments:
This is where the interviewer jumps to a conclusion about the candidate during the firstfew 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 and Retention
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.
B. Conditional Job Offer
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.
C. Physical Exam
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.
D. Permanent Job Offer
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.
Notification to Candidates
: The selection process results should be made known to candidates—successful and unsuccessful—as soon as possible. Any delay may result in the firm losing a prime candidate,
90as top prospects often have other employment options. As a matter of courtesy and good public relations,
the unsuccessful candidates should also be promptly notified.
E. Selecting Managers
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:
I. Parent-Country Nationals
Parent country nationals are residents of home country.
Advantages
Better organizational Control and Coordination
Promising managers are given International experience.
PCNs are the best people for the job.
Disadvantages
Adaptation to the host country may take a long time
PCNs may impose an inappropriate headquarter style
Compensation for PCNs and HCNs may differ
II. Host-Country Nationals
Host country national are residents of the host country.
Advantages
Language and other barriers are eliminated
Hiring costs are reduced
No work permit is required
Continuity of management improved
Disadvantages
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.
Advantages
Salary and benefits requirements may be lower than for PCNs
TCNs may be better informed than PCNs about the host country.
Disadvantages
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.
F. Socialization:
Teaching the corporate culture and philosophies about how to do business
Assumptions about Socialization
• Influences performance
• Increases organizational stability
• New members suffer anxiety
• Does not occur in a vacuum
91Socialization
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.
Key Terms
Socialization:
Teaching the corporate culture and philosophies about how to do businessPage 12
After studying this chapter, students should be able to understand the following:
LESSON OVERVIEW
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.
A. Socialization
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.
b. Company Policies and Rules
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.
c. Compensation and Benefits
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.
d. Corporate Culture
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.
e. Team Membership
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.
f. Employee Development
Employees should know exactly what is expected of them and what is required by the firm for advancement
in the job or via promotion.
g. Dealing With Change
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.
h. Socialization
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.
II. Stages in socialization Process:
Socialization can be conceptualized as a process made up of three stages.
a. Pre-arrival Stage:
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.
b. Encounter Stage:
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.
c. Metamorphosis Stage:
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.
III. Many People Socialize new Hires
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
94organization. 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.
IV. Topics covered in employee Orientation program:
Following topics are covered in orientation or socialization process.
a. Introduction:
Regarding the organization, supervisor, trainers, and coworkers and tosystem
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
The Hiring Process
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.
B. Training
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.
95C. Development
All efforts to provide employees with the abilities the organizations will need in the future
D. Training and Development Trends:
• 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
Key Terms
Socialization:
In order to reduce the anxiety that new employees may experience, attempts should be madeto integrate the person into the informal organization.
Training:
Training is a process whereby people acquire capabilities to aid in the achievement oforganizational goals. It involves planned learning activities designed to improve an employee’s performance
at her/his current job.
Corporate Culture:
The firm’s culture reflects, in effect, how we do things around here. This relates toeverything from the way employees dress to the way they talk.
Page 13
After studying this chapter, students should be able to understand the following:
LESSON OVERVIEW
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.
Organizational Analysis:
It is an examination of the kinds of problems that an organization isexperiencing and where they are located within organization.
Task/Operational Analysis
: An operational analysis identifies the kinds of the skills and behaviorsrequired of the incumbents of a given job and the standards of performance that must be met.
Personal Analysis:
The objective of the personnel analysis is to examine how well individual employees areperforming 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.
Determining Training Needs:
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
Establishing Training Objectives
Objectives are desired end results. In human resource, clear and concise objectives must be formulated
b. Phase 2: Delivering the Training
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
c. Phase 3: Training Methods
• 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
98programs. 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
99provided 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:
Why Transfer of Training Fails
• Don’t learn material
• Don’t understand “real life” applications
• Lack of confidence
• Forgetting the material
d. Phase 4:Evaluating Training
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:
Post Training Performance Method:
In this method the participants’ performance is measured after attending a training program to determine if
behavioral changes have been made.
Pre-Post Test approach:
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.
Pre- Post Training Performance with control group Method:
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.
100Key Terms
Training:
The process of teaching new employees the basic skills they need to perform their jobs.Task analysis:
A detailed study of a job to identify the skills required so that an appropriate trainingprogram may be instituted.
Performance analysis
: Careful study of performance to identify a deficiency and then correct it with newequipment, a new employee, a training program, or some other adjustment.
On-the-job training (OJT)
: Training a person to learn a job while working at it.Vestibule or simulated
: Training employees on special off-the-job equipment, as intraining airplane pilot training, whereby training costs and hazards can be reduced.
Coaching/Mentoring
: A method of on-the-job training where an experienced worker, orMethod the trainee’s supervisor trains the employee.
Action Learning
: A training technique by which management trainees are allowed to work full-timeanalyzing and solving problems in other departments.
Case study method
: A development method in which the manager is presented with a written descriptionof an organizational problem to diagnose and solve.
Business games
: A development technique in which teams of managers compete with one another bymaking computerized decisions regarding realistic but simulated companies.
Behavior modeling
: A training technique in which trainees are first shown good management techniquesin a film, are then asked to play roles in a simulated situation, and are then given feedback and praise by
their supervisor.
Learning organization:
An organization skilled at creating, acquiring, and transferring knowledge and atmodifying its behavior to reflect new knowledge and insights.
Page 14
After studying this chapter, students should be able to understand the following:
LESSON OVERVIEW
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.
C. Maximizing Learning:
Learning can be maximized by considering the basic principles of learning. That will be discussed later.
D. Selecting the Stage for Learning
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.
E. Maintaining Performance after Training
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.
G. Learning Principles
These are the basic principles or conditions that facilitate learning.
102I. Participation
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.
II. Repetition
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.
III. Relevance
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.
IV. Transference
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.
V. Feedback
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.
H. Training vs. Development
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
I. Purposes of T & D
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
103training
• Increased emphasis on learning organizations and human performance management
II. Selecting T & D Program
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.
I. Human Resource Development (HRD)
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.
HRD Involves Following Activities;
Training & Development:
Training typicallyfocuses 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.
Organizational Development:
It is an organizationwide application of behavioral science knowledge – to
the planned development and reinforcement of a
firm’s strategies, structures, and processes for
improving its effectiveness.
Career Development:
A formal approach taken by an organization to help people acquire the skills andexperiences 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.
HRD programs are divided into three categories
(1) Training:
Training is the acquisition oftechnology which permits employees to perform
their present job to standards.
(2) Education:
Education is training people to do adifferent job. It is often given to people who have
been identifies as being promotable, being
considered for a new job either lateral or upwards
(3) Development:
Development is training people toacquire 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.
Job Rotation
: It involves moving employees to various positions in organization in an effort to expandtheir 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.
Assistant to Position
: Employees with demonstrated potential are sometimes given the opportunity towork 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.
Committee Assignments
: Committee Assignments can provide an opportunity for the employee to sharein decision making, to learn by watching others, and to investigate specific organizational problems.
Lectures & Seminars
: Traditional forms of instruction revolved around formal lecture course andseminars. These offered opportunity for individuals to acquire knowledge and develop their conceptual and
analytical abilities.
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.
Outdoor Training
: A trend in employee development has been the use of outdoor training. The primaryfocus 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.
Developing a succession planning program:
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.
J. Role of line Managers and Training and Development
• Provide employee orientation training.
• Assess training needs and plan developmental strategies.
• Provide on-the-job training.
• Ensure transfer of training.
K. Role of the HR Department in Training and Development
HRM department helps in Training and development program by performing the following functions.
• Provide employee orientation training.
• Contribute to management development programs.
105• Provide training and development.
• Evaluate training.
Key Terms
Training:
The heart of a continuous effort designed to improve employee competency and organizationalperformance.
Human Resource Development:
A major HRM function that consists not only of T&D but alsoindividual career planning and development activities and performance appraisal.
Learning Organizations:
Firms that recognize the critical importance of continuous performance-relatedtraining and development and take appropriate action.
Job Rotation
: It involves moving employees from one job to another for the purpose of providing themwith broader experience.
Assistant to Position:
Employees with demonstrated potential are sometimes given the opportunity towork under a successful manger.
Job Rotation:
It involves moving employees to various positions in organization in an effort to expandtheir 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.
a. Traditional Career Path
—An employee progresses vertically upward in the organizationfrom 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
107levels 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.
f. Demotion
—Demotions have long been associated with failure, but limited promotionalopportunities 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.
V. Challenges in Career Development
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.
III. Meeting the Challenges of Effective Career Development
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.
Career:
Career can be defined as a general course of action a person chooses to pursue throughout his orher working life
Career planning:
Career planning is an ongoing process through which an individual sets career goals andidentifies the means to achieve them.
Career Paths:
Career paths have historically focused on upward mobility within a particular occupation.Career Development:
A formal approach taken by an organization to help people acquire the skills andexperiences needed to perform current and future jobs is termed as career development.
Mentoring & Coaching
: When senior employee takes an active role in guiding another individual, we referto this activity as mentoring and coaching
Dual-Career Path
: A career-path method, that recognizes that technical specialists can and should beallowed 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.
I. Determinants of Job Performance
There are three basic determinants of the job they are as following:
1) Willingness to perform:
If employee is performing tasks and responsibilities in the organizationwith willingness level of the performance will be high and
will be up to the standards.
2) Capacity to Perform
: If the basic qualifications abilitiesand 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.
3) Opportunity to Perform
: Favorable circumstances andopportunities 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.
Performance:
Performance can be defined as efforts along with the ability to put efforts supported withthe organizational policies in order to achieve certain objectives.
Motivation:
Activities in HRM concerned with helping employees exert high energy levels and to getperformance in desirable direction.
Performance Management:
A process that significantly affects organizational success by having managersand 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.
Identify the specific performance appraisal goals.
Establish job expectations (job analysis).
Examine work performed.
Appraise performance.
Discuss appraisal with employee.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.
V. Responsibility For Appraisal
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.
VI. PROBLEMS IN PERFORMANCE APPRAISAL
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:
Performance appraisal is a system of review and evaluation of an individual or team’s jobperformance.
Halo Error
: Occurs when the evaluator perceives one factor as being of paramount importance and gives agood or bad overall rating to an employee based on this factor.
MBO:
It is a goal-oriented performance appraisal method, requires that supervisors and employeesdetermine objectives for employees to meet during the rating period, and the employees appraise how well
they have achieved their objectives
360-Degree Feedback:
Involves input from multiple levels within the firm and external sources as well.Central Tendency
: Occurs when employees are incorrectly rated near the average or middle of the scale.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
it is faced with some failures
and there are certain reasons, these reasons are as under: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.
Validation studies of an appraisal system
may be the most direct and certain approach to determiningwhether 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
Job evaluation
means systematically determining relative worth of jobs to create job structure. An attemptto 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 a large number of jobs
. Other drawbacks to be considered are the subjectivity of the method- thereare 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.
Job Evaluation:
Job evaluation means systematically determining relative worth of jobs to create jobstructure.
Point Method
: Raters assign numerical values to specific job components, and the sum of these valuesprovides a quantitative assessment of a job’s relative worth.
Classification Method
: A job evaluation method by which a number of classes or grades are defined todescribe a group of jobs is known as Classification method.
Ranking Method
: Raters examine the description of each job being evaluated and arrange the jobs in orderaccording to their value to the company.
EAPs:
Specific programs designed to help employees with personal problems.Positive Reinforcement:
Applying a valued consequence that increases the likelihood that the person willrepeat the behavior that led to it is termed as positive reinforcement.
Punishment:
Punishment means administering an aversive consequence.Page 19
After studying this chapter, students should be able to understand the following:
. Job Pricing & Developing a Base Pay SystemWe 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.
I. Performance Based Pay
—PA data provide the input for such approaches as merit pay, variablepay, 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.
II. Seniority
—The length of time an employee has been associated with the company, division,department, or job is referred to as seniority.
III. Experience
—Regardless of the nature of the task, very few factors has a more significant impacton performance than experience.
IV. Membership in the Organization
—Some components of individual financial compensationare given to employees without regard to the particular job they perform or their level of
productivity.
V. Potential
—Organizations do pay some individuals based on their potential.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.
III. Executive Compensation:
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.
a) Determining Executive Compensation
—In determining executive compensation, firmstypically 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.
b) Types of Executive Compensation
—Executive compensation often has five basicelements: (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”
contract is a perquisite that protects executives in the event thattheir firm is acquired by another.
IV. Compensation for professionals:
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.
Merit Pay:
A pay increase given to employees based on their level of performance as indicated in theappraisal.
Equity:
Workers’ perceptions that they are being treated fairly. Compensation must be fair to all partiesconcerned and be perceived as fair
External Equity:
Exists when a firm’s employees are paid comparably to workers who perform similarjobs in other firms.
Internal Equity:
Exists when employees are paid according to the relative value of their jobs within anorganization.
Compensation
: The total of all rewards provided employees in return for their services.Job Pricing:
Job pricing means placing a dollar value on the worth of a job.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.
a) Payment For Time Not Worked
—In providing payment for time not worked, employersrecognize 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.
b) Health Benefits
—Health benefits are often included as part of an employee’s indirect financialcompensation. 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.
c) Security Benefits
—Security benefits include retirement plans, disability insurance, life insurance,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.
d) Employee Services
—Organizations offer a variety of benefits that can be termed employeeservices. 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.
e) Premium Pay
—Compensation paid to employees for working long periods of time or workingunder 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.
f) Benefits for Part-Time Employees
—Recent studies indicate that employers are offering thisgroup 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.
V. Communicating Information about the Benefits Package
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.
XI. Workplace Flexibility
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.
XII. Other Compensation Issues
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.
Flextime:
The practice of permitting employees to choose, with certain limitations, their own workinghours.
Capitation
: Typically, the reimbursement method used by primary care physicians is an approach to healthcare where providers negotiate a rate for health care for a covered life over a period of time.
Disability protection
: Workers’ compensation protects employees from job-related accidents and illnesses.Some firms, however, provide additional protection that is more comprehensive.
(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 anincentive payment based on improved company performance
Scanlon plan
: Provides a financial reward to employees for savings in labor costs that result from theirsuggestions
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
Autonomy:
The extent of individual freedom and discretion employees has in performing their jobs.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
135II. Meeting the Challenges of Pay for Performance Systems:
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.
•
Link rewards to performance•
Ensure rewards are relevant•
Use team rewards for interdependent jobs•
Ensure rewards are valued•
Beware of unintended consequencesAccording 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.
Use RecognitionSome 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.
Use Positive ReinforcementPositive 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).
Empower EmployeesEmpowerment 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.
Need Identification: First phase of motivation process is need identification where the employee feelshis/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.
Searching Ways to satisfy needs: Second phase is finding the different alternatives that can be usedto 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.
Selecting Goals: Once if the need is assessed and employee is able to find out the way to satisfy theneed than next phase is selection of goals to be performed.
4.
Employee Performance: These needs lead to thought processes that guide an employee’s decision tosatisfy them and to follow a particular course of action in form of performance.
5.
Consequences of performance Reward/punishments: If an employee’s chosen course of actionresults 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.
Reassessment of Need deficiencies: Once felt need is satisfied through certain rewards in responseto 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.
1424. 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.
a. Rewards:
People behave in ways that they believe are in their best interest, they constantly lookfor 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.
Extinction
withdrawing or failing or failing to provide a reinforcing consequence.Punishment
administering an aversive consequence.Positive Reinforcement
applying a valued consequence that increases the likelihood that theperson will repeat the behavior that led to it.
Motivation
Motivation is the inner drive that directs a person’s behavior toward goals.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
: Involves protecting employees from injuries due to work-related accidents.Health
: Refers to the employees’ freedom from physical or emotional illness.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.
•
Physical Conditions: Conditions resulting from the workplace environment that includeoccupational diseases and accidents, such as:
•
Repetitive motion injuries•
Back pain•
Cancer Etc.•
Psychological Conditions: Conditions resulting from the workplace environment that result fromorganizational stress and low quality of working life. These include:
•
Dissatisfaction, withdrawal•
Mistrust in others, irritabilityToday, 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:
•
Chance occurrences•
Unsafe working conditions•
Unsafe acts by employees•
Unsafe conditions Physical conditions
•
Defective Equipment•
Inadequate Machine Guards•
Lack of Protective Equipment Environmental conditions
•
Noise•
Dust, Fumes•
Stress•
Unsafe behaviorsc. 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:
•
It helps employees identify potential health risks through screening and testing.•
It educates employees about health risks such as high blood pressure, smoking,poor diet, and stress.
•
It encourages employees to change their lifestyles through exercise, goodnutrition, 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
•
They include the formation of safety committee and participation by all departmentswithin the company. Employees participate in safety decision and management carefully
considers employee suggestions for improving safety.
•
They communicate safety with a multimedia approach that includes safety lectures, films,poster, pamphlets, and computer presentations.
•
They use incentives, rewards, and positive reinforcement to encourage safe behavior.•
They communicate safety rules and enforce them.•
They use safety directors and/or the safety committee to engage in regular self-inspectionand 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.
•
More productivity•
Increased efficiency and quality•
Reduced medical and insurance costs•
Lower workers’ compensation rates and payments•
Greater workforce flexibilityHRM department can help organizations and employers by performing tasks like:
•
Develop safety and health programs.•
Select safety and health programs.•
Evaluate safety and health programs.•
Ensure legal compliance.•
Incorporate safety and health concerns in HRM practices.Safety
Involves protecting employees from injuries due to work-related accidents.Health
Refers to the employees’ freedom from physical or emotional illness.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
is the body’s nonspecific reaction to any demand made on it. For various reasons, programs dealingwith 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.
c. The General Environment
—Stress is a part of everyone’s everyday life and its potentiallurks 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.
Outcomes of Organization due to stress:Continuous stress in workingenvironment 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.
•
Hypnosis: An altered state of consciousness that is artificially induced and characterized by increasedreceptiveness to suggestions.
•
Biofeedback: A method that can be used to control involuntary bodily processes, such as bloodpressure or heart beat rate.
•
Transcendental meditation (TM): A stress-reduction technique whereby a secret word or phrase(mantra) provided by a trained instructor is mentally repeated while an individual is comfortably seated.
b. Organizational Coping Approaches—
A number of programs and techniques mayeffectively prevent or relieve excessive stress. General organizational programs, although
not specifically designed to cope with stress, may nevertheless play a major role.
Safety
Involves protecting employees from injuries due to work-related accidents.Health
Refers to the employees’ freedom from physical or emotional illness.Stress
: Stress is the body’s nonspecific reaction to any demand made on it.Burnout
The total depletion of physical and mental resources caused by excessive striving to reach anunrealistic work-related goal.
Hypnosis
An altered state of consciousness that is artificially induced and characterized by increasedreceptiveness to suggestions.
Constraints:
Constraints are barriers that keep us from doing what we desire.Demands
desires that are backed by the purchasing power or affordability.Biofeedback
A method of learning to control involuntary bodily processes, such as blood pressure or heartrate.
Transcendental Meditation
A stress-reduction technique in which an individual, comfortably seated,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
•
A feeling of lack-of-control over commitments•
A belief (incorrect) that you are accomplishing less•
A growing tendency to think negatively•
Loss of a sense of purpose and energy•
Increased detachment from relationshipsBurnout can be avoided by taking the following steps
•
Re-evaluate goals•
Reduce unnecessary commitments•
Learn stress management skills•
Find out where the stress is comingfrom (family, job, etc.)
•
Follow a healthy lifestyle•
Get adequate rest•
Eat a balanced diet•
Get regular exercise•
Limit caffeine and alcohol•
Develop other interests (hobbies)•
Acknowledge your humanity--you have a right to pleasure and relaxationSocial 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.
a. Formal communication networks
- Networks that are designated by the organizationalstructure, 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,
Burnout:
An incapacitating condition in which individuals lose a sense of the basic purpose and fulfillmentof their work
Communication
Exchange of information between people; it occurs when one person understands themeaning of a message sent by another person, and responds to it.
Noise
: All factors that interfere with and distort communication.Encoding:
Process by which sender puts a message in a certain format to send to the receiver.Feedback
:: Information about some behavior and its effect.Decoding
: Process by which the receiver translates the sender's message into an understandable form.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
157involve 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.
a. Dissatisfaction With Management—
Unions look for problems in organizations and thenemphasize 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.
b. A Social Outlet—
Many people have strong social needs. Union-sponsored recreational and socialactivities, day care centers, and other services can increase the sense of solidarity.
c. Opportunity For Leadership—
Employers often promote union leaders into managerial ranks assupervisors.
d. Forced Unionization—
It is generally illegal for management to require that an individual join aunion 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.
e. Peer Pressure
—Many individuals will join a union simply because they are urged to do so by othermembers of the work group.
f.
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.
a. Staffing:
The contract can dictate how jobs are filled and on what basis they are filled.b. Employee Development
: Performance evaluations are rarely used in unionizedorganizations. However, there is often a greater amount of worker training.
c. Compensation:
On average, union employees earn 10% to 20% higher wages thancomparable 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.
d. Employee Relations:
The labor contract gives employees specific rights. The employees,through the collective bargaining process, have a voice in the development of work rules
that affect their jobs.
158B. Collective Bargaining
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.
I. Labor Management Relations and Collective Bargaining
• 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.
159• 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.
1606. 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
suggests a certain amount of give and take, the purpose of which is to lower the other side’sexpectations. 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
161workplace 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.
III. Grievance Handling In Union-Free Organizations
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.
C. The HRM Department in a Nonunion Setting
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.
162• 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.
D. Phases of Labor Relations
Labor relations
consist of the human resource management activities associated with the movement ofemployees 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.
163KEY TERMS
Grievance procedure
A formal, systematic process that permits employees to complain aboutmatters affecting them and their work.
Collective bargaining
The process through which representatives of management and the unionmeet to negotiate a labor agreement
Mediation
A process whereby a neutral third party enters a labor dispute when abargaining impasse has occurred.
Boycotts
An agreement by union members to refuse to use or buy the firm’sproducts.
Arbitration
The process that allows the parties to submit their dispute to an impartialthird party for resolution.