Introduction to Human Resource Management

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Introduction to Human Resource Management What is HRM? Scope & Functions of HRM. Characteristics of HRM. Evolution of HRM in India. Challenges of HRM. Difference between HRM & HRD.

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Definitions of HRMA set of systematic and planned activities designed by an organization to provide its Human capital with the necessary skills to meet current and future job demands.The planning, organizing, monitoring and controlling of processes in the Human Capital vertical which include Sourcing, Induction, Compensation management, Performance Appraisals, Training & Development, Career Planning, Job rotation, Transfers & Promotions, Safety & Welfare, Employee Relations, Staff Exits e.t.c constitute HRM.HRM is the effective and efficient management of Talent Acquisition, Talent Development & Talent Retention.

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Scope of HRMManpower or Human Resource Planning.Recruitment & Selection – Sourcing.Induction.Job Analysis, Design & Evaluation.Performance Appraisals.Training & Development.Job Rotation, Transfers & Promotions.Career Planning.Compensation Management.Rewards & Recognition.Health, Safety & Welfare.Industrial Relations/Employee Relations.Statutory compliances of Labour legislations

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Characteristics of HRMDeals with management of people or Human resources.Is an Applied Behavioural science.Draws concepts from Philosophy, Psychology, Sociology, Political science, Economics e.t.c. – A multi-disciplinary approach.Is concerned with Org. Behaviour & Org. Development.Brings people and organizations together and is concerned with evolving a positive and a strong value oriented high performing culture, which would result in Employee development and Organizational growth and excellence.Establishes a framework for managing people better in the organizational context.As HRM deals with people, it needs to be transparent, sensitive, empathetic and having a long term vision.


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Evolution of HRM in IndiaConcept of ‘Jobbers’ during early 20th century.Royal Commission of Labour in 1930 set up the concept of ‘Labour Officers’.Evolved to ‘Welfare Officers’ post independence.Emergence of ‘Personnel & IR Function’. “Human relations” movement in the West promoted the concept of “HRM” in the 80’s.Promotion of Developmental agenda in the HR practice saw ‘HRD’ taking shape in the late 80’s/early 90’s.Is seen as a Strategic Business function today whose contributions can convert an organization into an Institution.Contributions can be quantitatively measured – EVA concept.

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Challenges of HRMTalent Attraction & Retention has become a process which needs to be meticulously structured and creatively managed.Training & Development needs to create a ‘Learning Organization’.Compensation Management needs to be in sink with market trends and should be competitive.Staff burn-out.Need for structured career development.Motivational factors seem to be changing and are getting complex by the day.Loyalty & Commitment – Shorter career spans.HR Out-sourcing.

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CONTEXT OF HRD

It is an integral part of HRM.It aims to create a Learning Organization.It matches the org. need for Human Resource with the individual need for career growth and developmentIt brings about behavioral changes in people for acquiring desired levels of competence and excellence.HRD aims to get the human capital of an enterprise ready to tap on current and future growth opportunities by offering organized Learning & Development experiences.

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CONTEXT OF HRD

It is a system comprising of several inter-related sub-systems.It is a planned process to acquire or sharpen capabilities, develop general capabilities and develop an organizational culture which contributes to individual development as well as organizational excellence.It develops competencies at all levels.

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HRD V/S PERSONNEL MANAGEMENT

HRD is a sub-system of the larger system – the organization.HRD unlike PM is the concern and responsibility of all Managers in an organization.PM is reactive, HRD is pro-active.Morale, job satisfaction determine improved Job performance- belief of HRD; whereas PM is more concerned with making rules for determining performance.

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Job Analysis, Design & Evaluation

Job Analysis is the process of collating detailed information regards a job/role.Data is on the nature of the job & qualities & qualifications required for performing the job.Per Edwin Flippo Job Analysis is the process of studying and collecting information relating to the operations and responsibility of a particular job.

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Process of Job AnalysisSelection of specific job/role for analysis.Data gathering through different techniques.Data processing for arriving at a conclusion on the specific job selected for analysis.Preparation of JD in the format designed for the same.Preparation of the Job Specification in the designed format.

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Importance /Advantages of Job Analysis

Important input for Job Specification.Facilitates HR Planning.Job postings/adverts become more meaningful and realistic.Employment Tests and Selection methods become more appropriate.Facilitates proper Placements and Inductions.Job Analysis data forms a benchmark to assess performance levels of staff in their respective job roles. JA data can be used as a benchmark to determine training and developmental needs of staff.Important input to carry out Job Evaluation.Facilitates planning and introduction of an effective Compensation structure.Facilitates redesigning of jobs.Provides information of all related jobs based on which staff movements can be planned.

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Job Analysis TechniquesQUESTIONNAIRE.

OBSERVATION.

INTERVIEW/PERSONAL MEETINGS.

COMBINATION OF THE ABOVE.

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Job DesignIt involves a systematic attempt to organize tasks/duties and responsibilities into a unit of work to achieve certain objectives.Horizontal scale differentiation – Different tasks across the org. being performed by different people.Vertical scale differentiation – Establishing hierarchy of tasks for supervision of sub-groups.Per Michael Armstrong: Job Design is the process of deciding on the contents of a job role in terms of it’s responsibilities, on the methods to be used in carrying out the job, in terms of techniques, systems and procedures and on the relationships that should exist between the job holder and his superior, team members and subordinates.Job Design incorporates the following 3 steps:

* Specification of individual tasks. * Determining the methods of performing each task. * Combination or grouping of tasks into specific jobs to be assigned

to individuals.Job Design should successfully integrate org. requirements & the individual needs/competencies.Well designed jobs ensure talent attraction & retention.

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Factors affecting Job Design

ORGANIZATIONAL: * Task characteristics. * Work flows. * Ergonomics. * Work practices.

ENVIRONMENTAL: * Skills levels and Talent pool capabilities. * Social & cultural expectations.

BEHAVIOURAL: * Feedback. * Autonomy. * Use of skills/abilities. * Variety/Multi-tasking.

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Techniques of Job DesignWORK / JOB SIMPLIFICATION.

JOB ROTATION.

JOB ENLARGEMENT.

JOB ENRICHMENT.

AUTONOMOUS/ SELF DIRECTED TEAMS.

HIGH PERFORMANCE WORK DESIGN.

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WORK /JOB SIMPLIFICATION

Job divided into smaller sub-parts and each part is assigned to an employee.

Introduced when jobs are not specialized enough.

Used for repetitive work processes like those on the Assembly line.

It involves predetermination of tools and techniques.

Reduces staff interaction.

Oversimplification may result in boredom leading to attrition.

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JOB ENLARGEMENTIt means expanding the scope of the job by aggregating 2 or more job roles into a single one.

Tasks/duties get expanded. Assigning more tasks of a similar nature – Horizontal loading.

Vertical loading – Area of accountability is increased and controls reduced thereby giving staff more autonomy and control over their roles.

Brings about a wholeness in the role by reducing monotony.

It is a branch of Industrial Engineering and it does not increase the depth of a job.

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JOB ENRICHMENTBased on the assumption that jobs should be made interesting and challenging for staff motivation. A branch of Motivational Theories – OB.

Provides opportunities for achievement, recognition, career advancement.

It enriches the job content thereby upgrading the responsibility, scope and challenge.

It leads to staff performing the management function of planning and control.

Job Enrichment involves a VERTICAL loading of the job.

Job Enrichment gives greater autonomy and control.

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CHARACTERISTICS OF JOB ENRICHMENT

VARIETY.

TASK IDENTITY.

TASK SIGNIFICANCE.

AUTONOMY.

FEEDBACK.

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STEPS INVOLVED IN JOB ENRICHMENT

Selecting the jobs for enrichment.

Identifying the changes.

Changing the contents of the job.

Training, guiding, developing & motivating staff.

Integrating into the daily work routine.

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SELF DIRECTED TEAMS & HIGH PERFORMANCE WORK DESIGN

A team of employees who are responsible for the entire work process that delivers a product/service to an internal/external customer.

Positive and demanding goals are set in HPWD which acts as a means of improving performance.

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JOB EVALUATIONIt means determining the relative worth of jobs in an org. by comparing it with other jobs within the org. and with the external job market. It helps in establishing job hierarchy. It indicates the relative importance of one job with reference to the others.

It establishes the Wage/Compensation hierarchy.

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Job Evaluation The aim of job evaluation is to provide a systematic and consistent approach to defining the relative worth of jobs within a workplace.

It helps to bring a balanced wage structure in an organization. This is possible as job hierarchy is established in the organization.

It is the process of analysis and assessment of jobs to reliably ascertain their relative worth, using the assessment as a basis for a balanced wage structure.

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Purpose of Job Purpose of Job EvaluationEvaluation

To establish satisfactory wage and salary differentialsTo select employees more accurately and train, promote or transfer them within the organization.To promote goodwill, strengthen and maintain morale and loyalty and provide an incentive for efficiency.To provide management with a basis of proper controlTo determine the rate of pay for each jobBasis of comparison for salaries

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Principles of Job Principles of Job EvaluationEvaluation

Rate the job role and not the job incumbent.Rating elements should be few, easy to explain and comprehensive.Uniformity in understanding w.r.t definition of the rating elements and consistency in degree of those elements.Rating plan should be made public.

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Methods of Job Evaluation

Ranking or Grading methodClassification method

Factor comparison methodPoint method

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1. Ranking /grading 1. Ranking /grading MethodMethod

Simplest, least formal, non-analytical & inexpensive.Each job is considered as a whole and ranked against the other whole job.Jobs ranked in a ‘felt fair’ rank order to produce a league table which has the most important job at the highest end and the least important one at the lowest end. Jobs are compared to these benchmarks and other jobs then get ranked.Jobs are compared to each other based on the overall worth of the job to the organization. Ranking is done by an expert committee called ‘Job raters’.

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1. Ranking /grading 1. Ranking /grading MethodMethod

It does not indicate the degree of difference between jobs. It merely indicates that one job is more or less important than the other job.In most instances rankings are not based on Job Descriptions, but on the rater’s knowledge of the jobs.It is unsuitable for a large organization with a complex job structure and with multiple job roles, some of which may appear similar but when analyzed have variances which are significant.

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2. Classification Method2. Classification MethodIn job classification the number of grades is decided first and detailed grade definitions produced. Representative (benchmark) jobs are evaluated to validate the definitions. Jobs are classified into an existing grade/category structure or hierarchy. Each job is assigned to the grade/category providing the closest match to the job. The classification of a position is decided by comparing the whole job with the appropriate job grading standard.

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3.3. Factor Comparison Method or Factor Comparison Method or weight in –moneyweight in –money

It is an Analytical method.

A set of common key factors of different jobs are identified first and then monetary values are assigned to determine the worth of the job. These are called as compensable factors. Each job is then compared as a whole with each other job in turn, and points (0, 1 or 2) awarded.

A schedule of Job factors is drawn up by careful analysis of business operations.

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Job factors/elements normally selected are: * Range of responsibilities. * Skill set/Competencies. * Physical effort. * Mental effort. * Working conditions.

Weights are applied to the above elements. Assessment of weights is done by experts. Jobs are ranked as per such weights.

A monetary value is assigned to each factor/element of all jobs.

All these values of individual jobs are weighted and then the total value of each job is arrived at.

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More reliable than the Ranking method as dissimilar jobs also can be rated on the basis of common factors.

Complicated, expensive and difficult to explain to staff.

Application of weightages and monetary values require involvement of experts.

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Point Rating MethodPoint Rating Method Popular and extensively used analytical method giving a quantitative value for each job role.Each job is evaluated separately, appraising each of the factors such as skill, effort, responsibility and working conditions and then combining the separate evaluations into a single point for each job. Job Descriptions form a vital input at this stage.Job occupants are interviewed to understand jobs.A series of rating scales is designed one for each of the factors. A certain number of points are allowed for each scale.This ensures that differences among jobs are reflected in the different values which are assigned to the factors.

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Point Rating MethodPoint Rating Method Each job is reduced to a numerical value so that similarity and differences in work and difficulty are revealed.The straight point system OR the weighted point system is used.The points for each factor are summed to form a total point score for the job.

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Chapter 3: Personnel planning, Chapter 3: Personnel planning, recruitment & inductionrecruitment & induction

Manpower planning or HRP plans for the future manpower needs of an org. It estimates the size and composition of the future work force.It is the process of forecasting an orgs. future demand for and supply of the right type of people in the right number at the right time.Thus HRP is a strategy for the PROCUREMENT, DEVELOPMENT, ALLOCATION & UTILISATION of an orgs. Human resources. HRP involves 2 steps:

* HR Demand forecasting. * HR Supply forecasting.

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4 broad areas of HRP are: * FORECASTING. * ACQUIRING. * DEVELOPING. * MAINTAINING.

HRP can be defined as a strategy for Talent acquisition, utilization, improvement and maintenance of an orgs.

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FEATURES OF HRP: * Manpower costs are controlled. * Facilitates recruitment of the right talent. * Facilitates proper placement. * Facilitates replacements against

vacancies. * Facilitates Manpower development.

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OBJECTIVES OF HRP: * Optimum use of Human Capital. * Meeting future manpower

requirements. * Scientific recruitment. * Availability of adequate manpower. * Development of Manpower.

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NEEDS OF HRP: *To meet current manpower needs. *To arrange for replacement of attritions resulting in vacancies. *To meet growing manpower needs. *To meet the challenges of changing technological environment.

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NEEDS OF HRP: *To adjust and balance staff requirements of departments. *Provides inputs to the Recruitment & Selection of staff. *To arrange for proper placement of staff. *To arrange for staff training.

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LIMITATIONS OF HRP: *Future manpower needs are uncertain. *Surplus manpower in the market makes HRP redundant. *Inadequate attention to environmental changes. *Time consuming and expensive. *Shortage of skilled labour and high attrition.

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STEPS IN HRP: *Deciding the goals and objectives of HRP. *Estimating the overall HR requirements in the context of org. objectives and business plans –HR Needs Forecast. *Taking inventory of the current Human Resource of the org – HR Supply Forecast. *Determining actual HR requirement on the basis of Job requirements & Description.

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STEPS IN HRP: *Preparing a HR recruitment & selection plan – HRP Implementation. *Developing appropriate HR development plan to meet the future needs from within the org. *HR Programming involves conversion of HR plan

into action, which involves RECRUITMENT & SELECTION and PLACEMENT.

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FINAL STEP OF HRP: *Control & Evaluation – This step indicates

whether there is Surplus OR Shortage of Manpower.

*If there is shortage, Recruitment & Selection

will be initiated.

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VOLUNTARY RETIREMENT SCHEME (VRS)

*Also called “Golden Handshake” , separates excess manpower – Control of org. obesity.

*Announces a Separation scheme which compensates separating staff for early retirement.

*Invites application from staff. Authority to accept lies with the Management.

*Is different from Retrenchment, Dismissal & Termination.

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VOLUNTARY RETIREMENT SCHEME (VRS)

*Pension, Gratuity, Loyalty Bonus, Long Service Pay and compensation package designed under VRS is offered to parting staff.

*Reduces surplus staff, thereby reducing financial burden. Also work force rationalization thereby paving way for introducing new technology and good work practices becomes possible.

*Preparing staff for life after VRS both on the social and economic front should be the priority of an org.

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RECRUITMENT *It estimates the available vacancies and takes suitable

steps for selecting and appointing candidates against those vacancies.

*Available vacancies are given wide publicity and suitable candidates are first attracted so that they show their keenness to apply.

*Objective is to create a reservoir of eligible and interested candidates who would be keen to participate in the Selection process.

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RECRUITMENT *Is a POSITIVE function and the first point of contact that

an org. makes with potential staff. *Per Edwin Flippo: It is the process of searching for

prospective staff and stimulating them to apply for jobs in the org.

*Vacancies are created due to transfers, promotions, retirement, termination, permanent disability, attrition e.t.c. OR on account of business growth/expansion/diversification.

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SELECTION *Is the process of selecting the best, hence a NEGATIVE

function as it eliminates those who do not meet the profile.

*Selection process thus needs to be scientific. *Unscientific recruitment & selection process leads to

attrition, low productivity, material wastage, accidents, inefficiency.

* Right man for the right job is the guiding principle. Differentiate between Recruitment & Selection process.

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SOURCES /METHODS OF RECRUITMENT *Broadly categorized as INTERNAL & EXTERNAL.

INTERNAL SOURCES: *Promotions. *Transfers. *Internal Notification –Adverts. *Retirements. *Recalls. *Former staff.

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EXTERNAL SOURCES OF RECRUITMENT *Campus recruitment. *Press Adverts. *Internal Notification –Adverts. *Management consultants. *Staff Deputation. *Management Training schemes. *Walk-ins, Write-ins, Talk-ins. *Miscellaneous External Sources –Govt. employment

exchanges, Staff recco, retired officers.

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STEPS IN THE SELECTION PROCESS *Job Analysis. *Advert. *Collection of filled up Application Blanks. * Scrutiny of Applications. *Job Knowledge/Technical Tests/Cognitive Aptitude Tests/Trade

Tests. *Personality Tests/Psychometric Tests. *Group Discussion &/or Personal Interview/s. *Reference Check. *Pre-Employment Medicals. * Final Selection.

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SELECTION TESTS *Intelligence Test: Simon & Binet, French psychologists

developed these Tests to measure general intellect or IQ. It is the capacity of a person for comprehension and logical reasoning.

*Vocational Aptitude Test: Potential to learn a job, with necessary training been provided.

*Job Analytical Test: Measures job qualities required such as Speed, Dexterity, Observation e.t.c.

* Synthetic Test: Developed when Analytical Test is not possible as jobs are more complex. A complex simulated scenario similar to the job role but on a smaller scale is designed to measure analytics.

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SELECTION TESTS *Trade Test: To see fit for the job role. Administered to

Data Entry operators, Secys, Machine Operators e.t.c. *Personality Test: TAT, FIRO-B/F, MBTI e.t.c

ADVANTAGES OF SELECTION TESTS: *Compatibility ascertained. *Mental qualities get evaluated. *Application of knowledge gets tested. *Selection becomes more accurate and hence reliable.

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INDUCTION/ORIENTATION PROGRAMME *Placement is defined as the determination of the job to which an accepted candidate is to be

assigned and his assignment or fitment to that job role.

*Induction is defined as a process to integrate the new joinee to the org, it’s values, cultures, working e.t.c. It aims at familiarizing the new entrant to the work environ and making him/her feel at home (comfortable) so as to ensure that he is able to understand the new job role and become productive soonest.

Induction Training is thus formal training to newly appointed candidates with a view to enabling them to be an intrinsic part of the new set-up and get acquainted with the new job role. The purpose is to give a ‘BIRD’S EYE VIEW’.

Induction or Orientation is thus defined as planned introduction of staff to their jobs, their team members, seniors and the organization.

Informal Induction is brief, while Formal one is well planned and is designed on the basis of several factors.

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OBJECTIVES /PURPOSE OF AN INDUCTION PROGRAMME *General information on work routine & employment terms and

conditions. *Org. history, products/services, set-up, structure, vision, mission,

values, culture, traditions, brand image.

*Org. policies, rules, staff perks & benefits.

*Details of the job role, it’s importance, contributions to the org. e.t.c.

*To make him comfortable and give him the confidence to perform.

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TECHNIQUES OF INDUCTION TRAINING

*GENERAL ORINETATION BY HR FUNCTION. *INDUCTION BY THE SENIOR/SUPERIOR.

*FOLLOW-UP INDUCTION.

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INDUCTION METHODS

*Maps, Charts, Manuals, Booklets. *AV recordings, CD’s.

*Structured programmes.

*Locational visits.

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ADVANTAGES OF INDUCTION

*Ensures quick integration. *Improves awareness levels and makes staff

productive at the earliest. *Creates a favorable impression of the organization. *Reduces staff attrition. * Improves staff bonding.

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TECHNIQUES OF INDUCTION TRAINING *General HR Orientation. *Induction by the functional Manager – Functional orientation. *Follow-up Induction.

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Chapter 4: Performance AppraisalChapter 4: Performance Appraisal

It is a systematic and orderly evaluation of staff performance by superiors and others using performance appraisal techniques. It is a continuous process for rewards, remuneration, recognition and for overall staff development.It is the backbone of HRM practice and is a powerful vehicle for conversion of staff potential into performance.Performance Appraisal is a part of Performance Management, which is defined as a multi-step process of aligning employee work behaviors with the strategy and goals of the org. It is the process of creating a work environment in which people are enabled to perform to the best of their abilities.A Performance Measurement system is a tool for implementing strategic planning and achieving continuous improvement at all levels of an org.

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It is a process of evaluating an employee’s performance of a job in terms of the job role that has been defined in terms of KPI’s/KRA’s and providing feedback upon which performance adjustments can be made. It is the systematic evaluation of the individual with respect to his performance on the job and his or her potential for development.Performance Management consists of the following stages:

* Performance Planning. * Performance Analysis. * Performance Appraisal. * Performance Development. * Performance Management Audit.

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WHY PERFORMANCE APPRAISAL?

Administrative purposes: * For Promotion and placement of staff. * Transfers & Demotions. * Wage & Salary Payment. * Training & Management Development. * Personnel Research. * Confirm Probationary staff. * Improve internal communication. * Determine effectiveness of HR programmes.

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WHY PERFORMANCE APPRAISAL?

Self Improvement of Staff: *Assess critical attributes of staff in terms of

Strengths/Weaknesses. * Assess effectiveness of placements. * Performance Counseling. * Performance Improvement. * For providing Career opportunities . * Potential Assessment.

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WHO SHOULD EVALUATE PERFORMANCE ?

Employee being rated is called ‘Ratee/Appriasee.Assessors are called ‘Raters/Appraisers’.Immediate Superior is the best person to appraise.Subordinates can also assess their superiors.Peer evaluation.Client evaluation.

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360 DEGREE APPRAISALWhen appraisal is done by superiors, peers, subordinates and clients it is called 360 degree.It is the systematic collection and feedback of performance data on an individual or a group derived from a number of stakeholders, who are briefed regards the Appraisal system/process.Was first developed at General Electric in US in 1962.In addition to performance, certain personality traits and behavioral competencies are also evaluated.This system needs effective communication channels, proper training of all involved and confidentiality to be maintained.

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360 DEGREE APPRAISALThis method is broad based and comprehensive.At times rather than having individuals rate, Rating committees are used to evaluate staff. This makes it objective as more than 1 Rater is involved in the Appraisal process. But it reduces the role of the immediate Superior in the developmental needs identification of the team member. Self Appraisal can also be a part of this process.

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ADVANTAGES OF 360 DEGREE APPRAISALMore objective and unbiased as multiple raters are involved. Also feedback is more powerful and comprehensive.Data collection is systematic and this results in the most appropriate data being gathered from the raters. Multiple perceptions help the Appraisee understand what other stake holders think of him and this can lead to a healthy development of one’s potential.Only formal communication process is used making it more accountable.Certain competencies like Team building, Interpersonal skills, Leadership e.t.c. are identified and measured.

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DISADVANTAGES OF 360 DEGREE APPRAISALEmployees feel insecure as data will be collected from multiple sources.It is time consuming. Due to multiple raters, objectivity and bias increases. Also all raters may not be in a position to evaluate or may not be competent or even biased or simply the result of trade-offs.It to an extent ignores performance in terms of achieving goals, as the ratings are also done by entities who are not in a position to understand and evaluate this aspect.

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UTILITY OF 360 DEGREE APPRAISALSelf development and counseling.Training & Management Development.Org. Development.Team building.Career Development.

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BENEFITS OF PERFORMANCE APPRAISALFor Placements.Self-development.Career Development.Customization of Trainings.Introduction of sound HR Policies.HR Planning.Facilitates staff communication.Establishes Meritocracy & thereby assists in Staff Retention. High Staff commitment & morale .

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PERFORMANCE APPRAISAL PROCESSEstablishing Performance Standards.Communicating these standards to staff.Measuring Actual Performance.Comparing actual performance with the standards set.Appraisal Meeting – Performance Discussion.Offering guidance for Performance Improvement.

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ESSENTIALS OF A GOOD PERFORMANCE APPRAISAL SYSTEMEasy to understand and simple to operate.Should have the buy-in/support from staff in terms of it’s acceptance.Should be in sink with the org’s operations and structure.System should be scientifically designed and reliable.Should correctly define standards of performance.Should be linked to rewards/incentives.Should be periodically reviewed and hence should be flexible.Proper selection and training of Raters.Appraisal frequency – Yearly, Half yearly.Focus should be on developing staff potential.Ratee should be a part of the Appraisal process.

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TRADITIONAL PERFORMANCE APPRAISAL TECHNIQUESConfidential Reports.Ranking Method.Grading Method.Graphic Rating Scales.Checklist method.Forced Choice Rating method.Critical Incident method.Essay method.Group Appraisal.Field Review method.

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MODERN PERFORMANCE APPRAISAL TECHNIQUES

Human Resource Accounting method.

MBO –Management By Objectives.

Assessment Centre.

Behaviorally Anchored Rating Scale - BARS.

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Confidential Report: Narrative method.Ranking Method: Staff performing similar jobs are ranked in a descending order.Grading Method: Grades or classes are first established and well defined. Performance of individual employee is then compared and evaluated against the set standards and then a grade is accordingly assigned. Graphic Rating Scale method: 4 to 12 factors depending on job category are selected. Each of these factors are classified into degrees or a scale (Very Good, Good, Average, Below Average). These factors and their degrees are marked graphically.

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Checklist method: A list containing a number of statements about staff qualities/traits is prepared. Each statement is assigned a value depending on it’s importance. Rater places a + or a – sign or a ? for every question, basis whether or not the description applies to that employee. Average of the scale value is taken as the final rating.It is difficult to construct a good checklist which is exhaustive and covers all job roles.Different checklists are required for different job categories. Rater plays a passive role as he does not know the values assigned to different statements.

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Forced Choice Rating Method: Rater chooses between a number of descriptive statements of apparently equal value. He has to select that statement which is the most characteristic of the employee, as well as the one which is least applicable to him. His evaluation is then checked by a reference to a secret score key. Different checklists are required for different job categories.

Method not useful for self-improvement.

Assumption is that the rater cannot be trusted to make an impartial evaluation.

Effective communication between superior and team member is not possible.

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Critical Incident Appraisal Method: Developed by the US Armed Forces during WWII. It presumes that there are certain key acts of behaviour, which determine the success or failure in a job. These acts arise out of incidents, which occur in the performance of a job.

Superior is required to make a note of all critical incidents.

Significant incidents have to be recorded regularly, lest it fails.

Human bias may also occur while recordings incidents.

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Field Review Method: HRD interviews Line Managers to appraise the subordinates working under them.

Superiors are expected to answer the questions prepared by the interviewer in advance.

Questions pertain to promotion potential, level of performance, work progress and strengths/weaknesses.

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HR Accounting Method: Assesses performance in terms of costs and contributions of employees. Costs include all costs right from Recruitment to HR Planning. Contributions is the monetary value of labour productivity.

Difference between costs and contributions represents performance.

Is at an infant stage with limited usage.

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MBO or Appraisal By Results: Evolved by Peter Drucker in 1954 published in ‘The Practice of Management’.It is also called a Goal setting approach.Subordinates set their own standards of performance along with their superiors. This method is thus a Participative Appraisal method.MBO ensures better team work and facilitates staff development.STEPS IN MBO APPROACH: Establish goals.Setting the performance standard.Comparison of actual goal attainment w.r.t agreed goal.Establishing new goals.

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Disadvantages of MBO or Appraisal By Results: Not suitable/applicable to all jobs in an org. (Assembly Line).Since MBO results will be linked to rewards, staff will be reluctant to accept or establish challenging goals.Allocation of merit pay on half yearly or annual basis may encourage setting up of goals with short term horizons. Time consuming and dominated by superiors while setting goals.

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BEHAVIOURALLY ANCHORED RATING SCALE (BARS): These scales have scale points which are determined by statements of effective and ineffective behaviours.Termed behaviourally anchored because scales represent a large range of descriptive statements of behaviour varying from the least to the most effective.Rater must indicate which behaviour on each scale best describes the performance of an employee.

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MAIN FEATURES OF BARS: Raters identify and define the areas of performance to be evaluated.Scales are anchored by descriptions of actual job behaviours.Performance evaluation is based on observable behaviours related to the job.BARS helps to remove rating errors.

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LIMITATIONS OF PA TECHNIQUES:Halo effect: Consistently high or low ratings basis favourable/unfavourable impression of the rater. Horn effect: Tendency to rate lower than what performance justifies. The recent failure may wipe out good performance of the past.Central Tendency: Averaging work characteristics in the middle grades.Recency effect: Good performance close to the appraisal period influencing appraisal decisions in favour of the appraisee.Primacy effect: Initial impression influencing the appraisal report. First impression = Last impression.

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POST APPRAISAL INTERVIEW:For feedback after the appraisal. As a self developmental tool.To recognize superior performance.To improve performance. 3 types as given below:TELL & SELL……………DIRECTIVE.TELL & LISTEN.PROBLEM SOLVING…..PARTICIPATIVE.

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ASSESSMENT CENTRES:Used for evaluating executive or supervisory performance. It is not a technique of PA by itself.It is a system where assessment of several individuals is done by various experts using different techniques such as Role plays, Case studies, in-basket exercises, business games, Personal Interviews, objective tests e.t.c.Participate in job related exercises evaluated by trained observers.Assessments are done mainly to determine employee potential for promotion.Self appraisal and peer evaluation are also used for final rating.Evaluators prepare a summary report and feedback is given.Intellectual capacity, confidence, assertiveness, stress management, problem solving capabilities, decision making, creativity e.t.c are tested.

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ASSESSMENT CENTRES:Was first used by the German Army in 1930. Were first developed in US & UK around 1943.Assessment Centres provide better forecasts of future staff performance. It also clearly defines the criteria for promotion and selection.They are defined as a central location where managers come together to participate in job related exercises evaluated by trained observers.Assessment centres also help determine training and development needs.They are more accurate than supervisory judgement in predicting staff potential.

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Chapter 5: EMPLOYEE TRAINING & Chapter 5: EMPLOYEE TRAINING & DEVELOPMENTDEVELOPMENT

What is Training?Training is the act of increasing the knowledge and skills of an employee for performing a particular job. The major outcome of training is Learning.It consists of planned programs undertaken to improve employee knowledge, skills and attitudes and social behaviour so that the performance of the org. improves significantly. It bridges the gap between job needs and employee skills, knowledge and behaviours.It concentrates on individual employees; changing what employees know, how they work, their attitudes towards work or their interactions with co-workers/superiors. Expenditure on training is an investment and yields rich dividends to both employees and the org.

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Need for Training:Acts as a good supplement to formal education.To prepare staff for continuous changes that occur in science, technology and different professional fields.Helps raise industrial efficiency and productivity.Prepares existing staff for higher level jobs –Promotions. Necessary when a employee moves from one job to the other - Transfers. To make staff professionally mobile and versatile.For preventing manpower obsolescence, improving org. climate.To create highly skilled manpower.

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Types of Training:INDUCTION TRAINING.SKILLS OR ON THE JOB TRAINING.TRAINING FOR PROMOTION – Next role.REFRESHER TRAINING. CORRECTIVE TRAINING. CROSS FUNCTIONAL TRAINING.

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Advantages of Training:Improves efficiency, quality, and is a source of skilled manpower.Facilitates the introduction of new management techniques.Improves industrial safety and creates confidence amongst staff. Facilitates self management, delegation and team working. Creates empowered employees.Improves employee morale. Creates a cordial working environ and promotes a positive high performing culture.

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Training Methods –On The Job:

Orientation Training.Job Instruction Training – 4 steps: Prepare, Present, Perform & feedback (shadowing), Independent working.Apprentice Training. Internships & Assistantships. Job Rotation.Coaching – Daily training and feedback.Mentoring.

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Training Methods –Off The Job:Vestibule Training – Simulation of work conditions in a Classroom.Lectures.Special Study. Conference/Discussion –AV aids. Case Study.Role Playing.Simulation.Programmed Instruction –Subject matter presented in a series of carefully planned sequential units with increasing complexity/difficulty.Laboratory Training – Behavioural and emotional learning called Sensitivity Training.

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Requirements of Successful Training – Training Principles:Training should be need based.Planned and well structured.Cover both theoretical and practical aspects. Provision of periodical tests. Trainers should be experienced, updated and sensitive to needs.Involvement and motivation of trainees.Periodical updating of training courses, content.Opportunities to be given to trainees to apply new learnings.Effectiveness and efficacy of training should be measured.

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Evaluation Of Training Program:Any attempt to obtain information on the effects of training performance and to assess the value of training is termed as Evaluation. This makes training result oriented, adaptable thereby ensuring better results and facilitating changes when necessitated.5 Levels at which Training can be evaluated:REACTIONS. LEARNING. JOB BEHAVIOUR.ORGANIZATION.ULTIMATE VALUE.

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Steps in Training Program:Training Needs Identification.Setting Training Objectives & Policy.Designing Training Program.Preparation of the Learner. Presentation of Operations & Knowledge. Implementing Training Program.Follow-up & Evaluation.

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Training Needs Identification:Organizational Analysis.Operations Analysis - Focuses on task or job. Manpower Analysis – Reviews ASK of staff.

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Designing the Training Program:Who are the participants?Who are the Trainers?What will be the pedagogy or methodology?What should be the type and level of training? What Learning principles should be applied?What are the deliverables/outcomes from the training?

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Check list to avoid Training Pitfalls:Attempting to teach too quickly.Trying to teach too much.Viewing all trainees as same – One size fits all.Not providing time to practice. Not providing a pat on the back.

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Follow-Up & Evaluation of Training Process:Evaluation is necessary to find out the extent to which training objectives are achieved.Evaluation should be based on objective methods and standards.Evaluation should be specific and continuous.Appropriate methods for evaluation should be used.Follow-up action is needed to ensure implementation of evaluation at every stage of training.

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Methods of Evaluation of Training:Questionnaires.Tests.Interviews.Feedback.Cost Benefit Analysis.

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Management Development:Training is about teaching specific skills and behaviour, while development is generic and is more oriented towards individual needs.Training is short term or immediate, while development is a long term process.Training is mostly skill based or behavioural, while Development is more knowledge based and conceptual.Training focuses on current job needs, while development also caters to future needs.Training is initiated by the Management, while Development by the individual.

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Executive or Management Development is a planned, systematic and continuous process of learning and growth by which Managers develop their conceptual and analytical abilities to manage.It is the result of not just participation in formal courses of instruction but also of actual job experience.It is primarily concerned with improving the performance of Managers by giving them stimulating opportunities for growth and development.It is a long term process as Managers take time to acquire and improve their capabilities.It helps Managers to realize their full potential.The basic purpose of Management Development is to ensure that as and when the need for Managers arises at various levels in the org, there are suitably qualified people to man those positions.

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Objectives of Management Development: To improve the performance of Managers.To plan the career development of Managers.To improve the overall performance of the org.To build a high performance culture geared towards excellence.

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Need of Management Development: Shortage of talented managerial pool.Complexity of managerial jobs.Technological and social changes.Management obsolescence.Complexity of business management.

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On the Job methods of Management Development: Coaching & Counseling.Understudy assignment.Job Rotation.Junior Boards.Delegation.Appointment as ‘Assistant to’.Membership of committees.Project assignment.Promotions & Transfers.

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Off the Job methods of Management Development: University & Colleges.Management Institutions.Sensitivity Training.In-basket exercise.Role Playing.Case Study.Conference & Seminars.Simulation.Management & Business games.

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Chapter 6: JOB ROTATION & Chapter 6: JOB ROTATION & TRANSFERTRANSFER

A job is defined as a group of positions that are similar in kind and level of work.

Job rotation implies moving of staff from one role to the other. The job remains unchanged but staff performing them shift.

BENEFITS:Raises intrinsic reward potential of a job.Multi-tasking benefits staff as well as orgs.Sensitization to other job roles improves inter-dept co-op.Reduces monotony and boredom.Job rotation plays a key role in Management Development.

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LIMITATIONS:Does not improve the jobs per se – Challenge factor.Staff might find it uninteresting as it calls for change.Increases training cost and work flows get affected.

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JOB TRANSFER:Is a change in the job where the new job is substantially equal to the old in terms of pay, status and responsibilities.It is also defined as a lateral shift causing movement of individuals from one position to another usually without involving any marked changes in duties, responsibilities, skills needed or compensation.Transfer is neither a promotion nor a demotion, but merely a horizontal or lateral movement of staff.

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REASONS FOR JOB TRANSFER:Variations in work volume.Rectification of wrong placements.Meeting mutual needs of staff.Meeting org. needs.Punitive at times.Prepare staff for challenging roles.

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Principles of Sound Transfer Policy:Only when necessitated.Basis of transfer should be decided first.Initiating and approving authority should be defined.Should not be punitive or malafide.Request for transfers to be considered sympathetically.Sound transfer policy to be prepared.Appropriate authority to hear appeals.Criteria to be laid down for transfers.Performance to be assessed impartially before the transfer.

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Types of Transfers:

PRODUCTION TRANSFERS – Surplus or shortage.REPLACEMENT TRANSFERS – Replacement of junior employees by senior employees who are surplus, so as to avoid lay-off.VERSATILITY TRANSFERS: For multi skilling and shouldering challenging roles.SHIFT TRANSFERS: Mobility in shift working.REMEDIAL TRANSFERS: For rectification of faulty placements.INTER & INTRA DEPARTMENTAL.

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Chapter 7: PROMOTION POLICIESChapter 7: PROMOTION POLICIES

Concept of Promotions:

Promotion is defined as advancement of an employee to a better job.It can also be defined as vertical scaling of staff leading to movement in the next higher role with a rise in emoluments. A part of the Career planning process – a reward for consistent performance and the potential to shoulder higher responsibilities.Promotion involves a change from one job to another that is better in terms of status and responsibilities.

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Types of Promotions:

HORIZONTAL…..Job category & role does not change.

VERTICAL….Job role changes.

DRY……Only Increments are given.

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Basis of Promotions:Merit based: Promotion due to superior performance in the current job role. Merit denotes an individual’s knowledge, skills, abilities and efficiency. Good motivator helps focus on talented staff who are recognized and rewarded. Also inspires others to come up to speed.Merit standards needs to be defined appropriately and communicated to all.Demotivation comes in when bright young staff go ahead of senior staff.Past performance may not guarantee future success of staff.

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Basis of Promotions:Seniority based: Seniority refers to the relative length of service in the same org. Promotion based on length of service is easy to arrive at and there is no subjectivity or scope for discrimination. This serves as a reward for loyalty. That staff learn more with experience may not necessarily be a valid assumption.Demotivates young and more competent staff.No encouragement to learn and grow.Treats efficient and inefficient workers on par.Kills zeal and interest to develop as it is based purely on length of service.

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Practical Promotion Guidelines:Seniority given preference for shop-floor promotions or for office jobs. For Supervisory or Managerial jobs, Merit alone should be given preference.Merit-cum-seniority: Merit is considered first, but when two employees are equally meritorious, the senior most is considered.Seniority-cum-merit: Seniority is considered first, but when two employees have the same seniority, merit is taken into consideration.Promote the best man available.

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Practical Promotion Guidelines:Companies need to introduce Management development and Career planning programmes in a continuous manner, which will create a favorable background for internal promotion of staff. Company’s Promotion policies need to be linked with Management Development programmes.

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Promotion Policy:

Should give due weightage to seniority and merit.

Should provide equal opportunities in all categories, jobs, functions.

Transparent process which must tell the employees the various avenues for achieving vertical growth through career maps, charts e.t.c.

Norms for judging merit, potential must be established and due weightage should be given to merit and seniority and this should be spelt out clearly.

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Promotion Policy:Mode of acquiring new knowledge, skills e.t.c should be told to staff so that they can prepare themselves for career advancement.Detailed records of service, performance have to be maintained.Should consider alternatives to promotion when deserving candidates cannot be promoted due to lack of vacancies. Grievances related to promotions should be settled properly.Promotions should not be forced.Priority to promotions from within.Frequent promotions to be avoided.

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Benefits/Purpose of Promotion:Recognition of good performance and potential to take on the next role. To provide higher salary and better perks.To attract and retain talent.To demonstrate that Management is keen to promote staff from within as against recruiting from the market.To raise loyalty, morale and a sense of satisfaction.

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Chapter 8: CAREER PLANNINGChapter 8: CAREER PLANNING

What is Career?It is a sequence of position/jobs held by a person during the course of his working life. It is a sequence of separate but related work activities that provide continuity, order and meaning to a persons life.Career planning is a systematic process by which one selects /decides career goals and the path to achieve these goals.A Career path represents various jobs performed by an employee during the course of his working life.It is an important aspect of HRP.Career planning is the responsibility of an individual employee, while the org. provides necessary guidance and counseling in planning and developing their careers as per the org. needs.

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Features of Career PlanningIt is a process of HR development. It is a continuous process due to the ever changing environment.It brings about an integration of individual aspirations and org. needs.Responsibility of every individual, while the org. provides opportunities.

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Scope of Org. Career PlanningHR forecasting & planning. Providing Career information.Career Counseling – An important area.Career Pathing.Skill Assessment Training.Succession Planning.

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Career Counseling:Seniors provide career guidance by helping staff to understand their S/W. so that they can plan their career progress better. Encourages staff to take interest in certain areas where suitable opportunities for Career development are available.Needed when staff to have plan their own careers.Helps in removing unrealistic expectations and selecting career options which can be achieved with confidence.Enables staff to understand the forces and dynamics of the system.

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Benefits of Career Planning:Job satisfaction.Staff motivation & Talent retention.Linking of individual career goals with org. goals.Facilitates managerial succession.Understanding of career opportunities.Strong brand image in the employment market.Facilitates rapid expansion and growth of the market.It is a stable and realistic concept even in a rapidly changing business environment.

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Process of Career Planning: The Steps & Stages:Analysis of the Human Capital element.Projection of Human Capital scenario post career dvlpt. plans.Identification of org. career needs.Selection of priorities w.r.t. org. and individual career needs.Development of career plan –IMP STAGE.Write-up of formulated plan.Monitoring of career development plan.Implementation of career development plan.Review & Evaluation of career plans.Future needs.

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Development of Career Plan: This should address:Objectives to be attained and it’s extent/scope.Staff involved and the function to which the plan will apply. Time span for achieving the career dvlpt. plan.Selection of priorities w.r.t. org. and individual career needs.Introduction of systematic policies and programmes for staff training and career development.Job rotation.Promotions & Transfers.

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Career Stages: Plot of Age v/s PerformanceExploration – Transition from education to work.Establishment. Mid-career stage –Fast for ‘Climbers’. Can show increase or decline in performance. Stabilization and so less of job hopping.Late Career stage.Decline stage.

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How can the org. help in Staff Career Dvlpt:While Career planning is an individual’s responsibility, org. has to take keen interest and play a leading role in staff career planning & dvlptIdentification & understanding of staff needs & aspirations. Analysis of career opportunities & briefing /communicating staff.Career Counseling/Career Workshops.Formation of Career Development Centre (CDC).Motivating staff to participate in CD process.Periodic job rotations/changes.Study Leave.Growth & Expansion of the org.Minimize Career stress.Ensure that Career planning is a continuous activity.

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Chapter 9: COMPENSATION MANAGEMENT – Chapter 9: COMPENSATION MANAGEMENT – PART 1PART 1

WAGE & INCENTIVE PAYMENTWAGE & INCENTIVE PAYMENT

Wage or Salary is a monetary payment/compensation from the employer to the employee for work done or services rendered.

Generally Compensation includes the following 3 components:

BASIC COMPENSATION or BASE PAY.INCENTIVE COMPENSATION – Paid as Incentives.SUPPLEMENTARY COMPENSATION – Paid as Fringe Benefits & Employee Services.

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FACTORS INFLUENCING WAGE RATES:Demand & Supply position in the Employment market.Nature & features of the job.Cost of living.Bargaining power of workers.Efficiency and productivity of work force.State regulations.Ability of the employer to pay.Wage rates in other enterprises in the same locality.Competitors & Industry benchmarks.State of the Economy.Internal factors such as Business strategy, Job Evaluation, PA e.t.c.

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PRINCIPLES OR ESSENTIALS OF A SOUND WAGE SYSTEM:Wage system should be just and reasonable.Guarantee of Living Wage – above the Minimum Wage.Simplicity – It is almost impossible for a wage plan to be purposeful and inspirational if it cannot be thoroughly understood.Flexibility.Promptness.Incentive for extra remuneration.Gradual increase.Attractive to talented workers.Periodical review/scanning.Equal pay for equal work.Speedy and effective resolution of grievances.

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CONTENTS OF STAFF REMUNERATION:WAGE/SALARY.INCENTIVES: Payment by Results: Individual & Group.FRINGE BENEFITS: PF, Gratuity, Hospitalization, Health Insurance, Accident coverage, Subsidized Canteen facility, Recreation e.t.c.PERQUISITES: Company Car, Club membership, Furnished Accommodation, Paid Holidays, ESOP’s.Promptness.Non-monetary benefits: Impartial , Comfortable working environ, e.t.c.

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SYSTEMS OF WAGE PAYMENT(A) TIME RATE SYSTEM/TIME WAGE SYSTEMOldest and simplest method.Wages are paid as per time spent by workers in the factory. The production given by the worker is not taken into consideration.Employer buys the hours of the workers and pays them compensation accordingly.

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Formula for calculation of wage under Time Rate System is

E = RN E means Total Earnings. R means rate per hour or day. N means no. of hours or day work.

Efficiency, sincerity and ability are not given any attention.

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MERITS OF TIME RATE SYSTEM/TIME WAGE SYSTEM

Guarantee of minimum wage.

Maintains quality of production.

Support from trade unions.

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DEMERITS OF TIME RATE SYSTEM/TIME WAGE SYSTEM

Not scientific.Absence of positive encouragement.No initiative to workers.No distinction between workers.Labour cost may increase.Strict supervision on workers necessary.No effect on productivity/efficiency.

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(B) PIECE RATE SYSTEM

Opposite to the time rate system.Also treated as an incentive wage system.Encourages workers to produce more and also to earn more.Wages are paid as per the output or production given by the worker and not as per the time spent by the worker in the factory.

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Payment is by results in terms of output given.

Earnings of worker under the piece rate system can be calculated by

WE = NR WE means worker’s earnings. N means number of pieces produced. R means the rate per piece of production

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MERITS/ADVANTAGES OF PIECE RATE SYSTEM. Linking of wages with production. Distinguishes between efficient and inefficient workers.Encourages workers to take initiative.Fair to employers and employees.Incentive system.Limited supervision adequate.

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DEMERITS/LIMITATIONS OF PIECE RATE SYSTEM.

No guarantee of minimum wage payment.

Workers suffer even when they are not at fault.

Quality of production is adversely affected.

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INCENTIVE SYSTEMS OF WAGE PAYMENT It should encourage workers to take more initiative and interest in the work, produce more and also earn more. Incentives are monetary benefits paid to workmen in recognition of their outstanding performance. Incentives are defined as “variable rewards granted according to variations in the achievement of specific results.”ILO defines incentive as “payment by results.”Incentive wage plans are those plans where workers are encouraged to produce more and are also rewarded accordingly.

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Incentives include monetary as well as non monetary benefits offered DALE YODER says “Incentive wages relate earnings to productivity and may use premiums, bonuses, or a variety of rates to compensate for superior performance.” Piece rate system is the oldest incentive wage plan. In many incentive plans, a combination of time rate and piece rate systems is used.Such combination creates an ideal incentive plan.

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TYPES OF POPULAR INCENTIVE PLANS

(A) Individual Incentive plans

(B) Group Incentive plans

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(A) Individual incentive plan

For individual employee.

Benefit is directly linked with his ability, efficiency and capacity.

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(B) Group incentive plan

Incentive for the group of employees working in one department or section.

Group incentive plans are better as they encourage team spirit and develop co-operation and understanding among the employees.

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(A) Individual incentive plan Taylor’s differential piece rate system

(B) Group incentive plan Profit sharing. Labour co-partnership.

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FEATURES/REQUISITES OF GOOD INCENTIVE PLANSimplicity.Encourage initiative.Definiteness and flexibility.Prompt payment.Properly communicated to employees.Wide coverage and equitable.

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FEATURES/REQUISITES OF GOOD INCENTIVE PLANGuarantee of minimum wage payment.Scientific fixation of standard workload.Justice to employers and employees.Direct efforts-reward relationship.Acceptable to workers.Grievance procedure

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TAYLOR’S DIFFERENTIAL PIECE RATE PLAN/SYSTEMF. M. Taylor (Father of Scientific Management) suggested differential piece rate plan.Alternative to time rate system.It is possible to calculate standard work load for every worker on the basis of time and motion studies.Taylor suggested two piece rates for workers.The lower piece rate to those who are less efficient and give production below the standard workload fixed.The higher piece rate is suggested for those who are efficient and give production over the above the standard workload fixed.

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MERITS OF TAYLOR’S PIECE RATE PLAN/SYSTEMSimple to understand.Makes distinction between efficient and inefficient workers.Encourages workers to be efficient.Helps in removing inefficient workers.Retains efficient employees.Gives more production.

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LIMITATIONS OF TAYLOR’S PIECE RATE PLAN/SYSTEMNo guarantee of minimum wage payment to employees.Harsh to workers.Treats workers not as human beings but as machines.Trade unions oppose such plan.Workers are affected when production is disturbed due to certain reasons which are beyond their control.It kicks out inefficient workers from the organisation.

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PROFIT SHARING AS GROUP INCENTIVE PLAN/CONCEPT OF PROFIT SHARING.Employee profit sharing is an attractive supplement of a wage system. Type of group incentive plan for the benefit of employees.The employer agrees to share a part of the profit with the employees as per the agreement made.The purpose is to secure whole-hearted co-operation from workers in the production activities. Profit sharing arrangement creates cordial labour-management relations and encourages employees to take more interest and initiative to work.

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Profit sharing is an arrangement under which the employer agrees to give a part of the net profit to workers provided they raise the net profit over and above an agreed limit.Profit-sharing is a different from regular wage payment. Profit-sharing is a novel and progressive idea in the industrial world.Major departure from the traditional concept of profit where it was treated as the exclusive monopoly of the employer.Workers are treated as partners in the production process and profit is treated as the outcome of the joint efforts of employer and workers.

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In Western countries, profit-sharing concept is popular since long as a group incentive plan of wage payment.Profit sharing scheme was initiated by South Metropolitan Gas Company,UK,1891. Profit sharing concept is not popular in India.

DEFINITIONS OF PROFIT-SHARING.“Profit sharing is an arrangement freely entered into by which the employee receives a share fixed in advance of the profits.”“Profit-sharing is a method of industrial remuneration under which an employer undertakes to pay to his employees, a share in the net profits of the enterprise in addition to their regular wages.”

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FEATURE OF PROFIT-SHARING.

Method/Technique of extra-paymentPayment out of net profit.Employer and employees are parties for profit sharing.Payment on yearly basis.Agreement possible on different basis.Raises profitability.

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ADVANTAGES OF PROFIT-SHARING.

More initiative and interest by worker.Increase in production and productivity.Fair to employer and employees.Ensures cordial industrial relations.Less supervision required.Promotes social justice.

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LIMITATIONS OF PROFIT-SHARING / ARGUMENTS AGAINST PROFIT-SHARING.

Uncertainty.Unfair to efficient workers.Oppositions from trade unions.Disputes on calculation of net profit.Adverse effects on labour-management relations.Not useful during depression.

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POSITION OF PROFIT-SHARING IN INDIA.

Payment of bonus act,1965 under which payment of minimum 8.33% bonus is compulsory.The profit-sharing concept has lost its importance because of growing popularity of bonus payment.The payment of bonus Act, 1965 formally recognized workers’ to a share in the profit of undertaking.Bonus payment which was originally a voluntary payment has now become a statutory obligation on the employer under the payment of Bonus Act.

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As per the payment of Bonus Act, 1965 payment of minimum bonus(8.33%) is made compulsory.The maximum limit of bonus payment is 20%The system of profit-sharing is more rational and scientific as compared to the system of bonus payment.We have a system of bonus payment which is a cheap substitute for the profit sharing scheme.

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Chapter 10: COMPENSATION MANAGEMENT Chapter 10: COMPENSATION MANAGEMENT – PART 2– PART 2

FRINGE BENEFITS & THEIR RELEVANCEFRINGE BENEFITS & THEIR RELEVANCE

MEANING OF FRINGE BENEFITS/WHAT ARE FRINGE BENEFITS?

Such benefits are always in addition to regular wage payment i.e. direct remuneration.They are also known as fringes, service programmes, employee benefits or hidden payroll. The purpose of fringe benefits is to retain efficient and capable people in the organisation over a long period.

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Fringe benefits may be defined as broad/wide rage of benefits and services that employees receive as an integral part of their total compensation packages.Such benefits include benefits such as provident fund, gratuity, medical care, hospitalisation, accident relief, health and group insurance, canteen, uniform, recreation and the like.Fringe benefits constitute indirect compensation as they are usually extended as a condition of employment and not directly related to performance of concerned employee.

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WHY FRINGE BENEFITS ARE OFFERED?/ OBJECTIVES/ RELEVANCE OF FRINGE BENEFITS

To supplement direct remunerationEmployers prefer fringe benefitsTo retain competent employeesTo develop good corporate imageTo raise employee morale

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TYPES OF FRINGES/FRINGE BENEFITS

(1) Payment for time not worked by the employees.(a) Holidays(b) Vacations(c ) leave with pay and allowances

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(2) Contingent and deferred benefits.(a) Pension payment(b) Group life insurance benefit.(c ) Group health insurance.(d) Sick leave, maternity leave, child care leave, etc.(e) Suggestions/service award(f) Severence pay

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(3) Legally required payments.(a) Old age, disability and health insurance.(b) Unemployment compensation.(c ) Worker’s compensation.

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(4) Misc. benefits.(a) Travel allowances.(b) Company car and membership of clubs, etc.(c ) Moving expenses.(d) Child care facilities.(e) Tool expenses and meal allowances, etc.

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EMPLOYEE SERVICES

Canteen, Cafeteria, Lunch Room.Transport facility.Housing facilities –Staff quarters, Housing Loans.Purchasing services – Company products at discounted rates.Crèche.For purchase and upkeep of uniforms, tools.Educational Services – Children scholarship, Educational Leave, Sponsorships for off duty training courses.Medical Services – Clinics and hospitals, counseling.Recreational Services – Sports facilities, Entertainment programmes, Picnic, Library, Social Club e.t.c.

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FRINGE BENEFITS IN INDIA

Statutory Fringe Benefits –Social security and include Gratuity & Pension, ESI, PF.

Voluntary Fringe Benefits – Medical facilities, Housing, Subsidized meals, Educational facilities, Recreational facilities, Employee Co-operative societies.

Tatas, Reliance, Bajaj, Cadburys, Godrej provide liberal Fringe Benefits.

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Chapter 11: TRENDS IN PARTICIPATIVE Chapter 11: TRENDS IN PARTICIPATIVE MANAGEMENTMANAGEMENT

WHAT IS PARTICIPATIVE MANAGEMENT?

Closely connected with the concept of industrial democracy.It has its roots in the human relations movement in the domain of industrial organisations.Employees participation in management means associating workers with the decision-making process.It is a type of mental and emotional involvement of workers in industrial management.

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Opinions and suggestions of workers are taken into account while framing policies particularly those which are directly connected with them or affect them directly.This progressive concept is radically different from the traditional concept in which workers were treated as merely wage-earners appointed to do whatever is told to them by their superiors or employer.

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Based on one fundamental concept that the ordinary worker invests his labour in, and ties his fate to his place of work and therefore, he has a legitimate right to have a share in influencing the various aspects of company’s management policy.

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Concept developed in Western countries and proved to be successful.Participation is an emotional involvement of employees in the working of their company.It is a process of giving and sharing views, ideas and information in between the employer and employees through certain channels/mechanisms.

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FEATURES OF PARTICIPATIVE MANAGEMENT?

Higher status to employees.Provides psychological satisfaction.Participation is indirect.Brings employees and management closer.Concept has limitations.

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NEED OF PARTICIPATIVE MANAGEMENT?

Giving higher status and psychological satisfaction to workers.Cordial labour - management relations.Raising industrial production.Creating responsible approach among workers.Removing grievances of workers.Creating a feeling of involvement among employees.Raising employee morale.Introducing industrial democracy.

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METHODS / TECHNIQUES OF PARTICIPATIVE MANAGEMENT?

(1) Works Committees.(2) Joint Management Councils.(3) Co-partnership.(4) Employee Directors.(5) Suggestion programme/Scheme.

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METHODS / TECHNIQUES OF PARTICIPATIVE MANAGEMENT?

(6) Workers’ Co-operative.(7) Quality Circles.(8) Collective Bargaining.(9) Empowered Teams.(10) Job Enlargement and Job Enrichment.

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(1) Works Committees.

The Industrial Disputes Act, 1947 provided for the setting up of a Works Committees consisting of representative of management and employees in every undertaking employing 100 or more employees.This joint consultative committee meets frequently for discussion on common problems before workers and the company (management).

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(1) Works Committees.

Joint decisions are taken such decisions are binding on both the parties.Matters like wage payment, bonus, training, discipline, welfare facilities, etc. are discussed in such meetings.

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(2) Joint Management Councils.

Similar to works committees with equal representation to employer and employees.Various problems such as welfare facilities, discipline, training, removal of workers, common grievances, holidays, rationalisation, expansion programmes, etc.JMCs are in addition to works committees which are statutory in nature.Unfortunately, the JMCs are not operating effectively in India due to limited interest and initiative in their functioning by managements and workers.

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(3) Co-partnership (Participation through ownership).

Workers are converted into share holders of the company (by offering equity shares to them) and are allowed to participate in the management like other shareholders.They can elect their representatives on the Board of Directors.Voting rights are also given to employees.Employees participate in the management as co-owners i.e. shareholders.In India, the experiment of co-partnership is not popular.

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(4) Employee Directors.

Two or three representatives of workers are taken on the Board of Directors of the company.The employee directors/workers’ directors are elected by workers and they express the views of workers in the meetings of the Board.Used extensively in the public sector undertakings in India.Workers’ directors are now appointed in companies like Hindustan Antibiotics Ltd., and HMT Ltd., nationalised banks, co-operative banks.

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(4) Employee Directors.

Representation on the Board does not substantially enhance the participation of workers in the management of the company.The worker director may not be able to play a constructive role due to limited knowledge and experience.Workers representative on the Board are in minority.They may not be able to protect the interests of workers as decisions are taken on the basis of majority vote.

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(5) Suggestion programme/Scheme.

Workers are asked to give their suggestions to the management on various administrative and other matters such as machine utilisation, Waste management, energy conservation and safety measures.Suggestions which are suitable are accepted.Workers directly connected with work give creative and practical suggestions which are useful to the management in different ways.

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(6) Workers’ Co-operative/Auto Management.

Workers take over the industrial unit and manage it completely on co-operative basis.The entire management is made by workers themselves.This method is called “Auto-management”.One example in India under this category is that of Kamani Tubes Limited.

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(7) Quality Circles.

Consists of a small number of employees who come together on voluntary basis with one item on the agenda i.e. to improve quality or to raise productivity or to avoid wastages, etc.This form of participation is voluntary.Meetings are held once a week lasting for about an hour.Members of quality circle are given free hand to solve problems relating to quality, if they fail they can request the management to depute an expert to sort out the problem.Quality circle problem is useful for raising efficiency, for cost control, for removing wastages and so on.

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(8) Collective Bargaining.

It is a process in which the representatives of the employer and employees meet together to negotiate a contract governing both the parties.It results into signing an agreement thereby restricting each party that it cannot take unilateral decisions harming the interest of the other party.Collective bargaining is a better alternative to strikes and industrial disputes.

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According to Edwin Flippo, “Collective bargaining is process in which the representatives of labour organisations and the representatives of the business organisation meet and attempt to negotiate a contract or agreement which specifies the nature of employer-employee-union relationship.”For the success of collective bargaining, strong trade union, enlightened and democratic management, constructive approach on the part of both the parties and morale support from the government and society are required.

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Collective bargaining is popular in European countries.Late shri V. V. Giri (Ex-President of India) was a strong supporter of collective bargaining agreements.This “Giri’s Approach” on collective bargaining has relevance even in the present day industrial situation.

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(9) Empowered Teams.

When authority is delegated to the employees its called empowering.Empowerment takes place when employees enjoy power and they experience a sense of ownership and control over their jobs.They set their own goals and inspect their own work.Employees become quality conscious and contribute to quality improvement in products and services.

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(10) Job Enlargement and Job Enrichment.

Job enlargement is the process of increasing the scope of a job by adding more tasks to it.Job enrichment is designing a job in such a way that it provides the employees greater autonomy for planning and controlling his own performance.Job enrichment makes the job more interesting and challenging.

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PRE-REQUISITES OF PARTICIPATIVE MANAGEMENT.

Strong trade unions.Favourable attitude of management.Mutual trust and confidence.Genuine urge for co-operation.Clear understanding of objectives.Meaningful sharing of information.Participation of supervisory staff.Education and training of workers.

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POSITION OF PARTICIPATIVE MANAGEMENT IN INDIA.

Participative management is a constitutional commitment in India.The statement made in Third Five-Year Plan document is worth noting: “For the peaceful evolution of economic system on a democratic basis, it is essential that workers’ participation in management should be accepted as a fundamental principle and an urgent need.”Unfortunately, actual participation is ineffective in India.

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Participative management in India is mainly through joint management councils (JMCs).The joint management councils are expected to be consulted on matters relating to the administration and alteration of standing orders, retrenchment, rationalisation, closure and reduction in operation. All matters relating to wages, bonus, etc. which are subject to collective bargaining are excluded from the scope of such councils.

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Similarly problems relating to individual grievances are outside the scope of such councils.JMCs are expected to serve as an automatic channel of communication between labour and management and help the management in maintaining cordial industrial relations.

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REASONS FOR LIMITED SUCCESS OF JMCs IN INDIA.

Attitude of employees.The trade unions in India are not strong.Internal rivalries among trade unions adversely affect the progress of workers’ participation in management through JMCs.Absence of congenial atmosphere.Adequate training facilities.

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REASONS FOR LIMITED SUCCESS OF JMCs IN INDIA.

Absence of genuine desire to co-operate.Participative management in India is government-sponsored.The present JMCs are neither active nor effective.Their existence is nominal.

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Chapter 12: PERSONNEL MANUALChapter 12: PERSONNEL MANUAL

PERSONNEL POLICY.

A policy is a plan of action.Personnel policies relate to hiring of manpower, terms and conditions of employment, compensation payment, hours of work, training and development, promotions and transfers, facilities (housing, transport, uniforms, etc.) and concessions given to employees and so on.

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MEANING AND DEFINITIONS OF PERSONNEL POLICY.

Personnel policies are the principles and rules of conduct which “formulate, redefine, break into details and decide a number of actions” that govern the relationship with employees in the attainment of the organisation objectives.According to Edwin Flippo, “ A policy is a man-made rule or pre-determined course of action that is established to guide the performance of work toward the organisation objectives. It is a type of standing plan that serves to guide subordinates in the execution of their tasks.”

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MEANING AND DEFINITIONS OF PERSONNEL POLICY.

According to Calhoon, “Personnel policies constitute guides to action. They furnish the general standards or bases on which decisions are reached. Their genesis ties in an organisation’s values, philosophy, concepts and principles.”

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Personnel Policies, Procedures & Programmes

Post objectives, Policies need to be formulated.Policies are general statements that guide thinking and action in decision making.HR Policies serve as a road map for Managers on a number of issues.It serves as a standing plan that can be put to use for decision making.It helps transfer decision making on areas that the policy has detailed to the place where the origins of the issue lie.It helps in standardization, objectivity and better org. co-ordination.


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More on Personnel PoliciesPolicies do not include detailed statements describing specifically how the policy is to be implemented.Policies are implemented by procedures.A procedure prescribes the specific manner in which a piece of work is to be done. They are called ‘action guidelines’.Procedures show a sequence of activities within that area. Procedures spell out clearly the way one has to go about taking action.Personnel rules and programmes help in translating procedures into concrete action. They spell out specific action or non-action allowing no discretion.Personnel programmes are complex set of goals, policies, procedures, rules, steps to be taken, resources to be employed and other elements necessary to carry out a given course of action.

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PRINCIPLES OF PERSONNEL POLICIES.

Principle of scientific selection.Principle of fair work environment.Principle of training.Principle of individual development.Principle of co-ordination and team spirit.Principle of participation.

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PRINCIPLES OF PERSONNEL POLICIES.

Principle of incentive.Principle of planning.Principle of free flow of communication.Principle of fair remuneration.Principle of dignity of labour.Principle of labour-management co-operation

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Types of Personnel Policies

Originated Policies.Appealed Policies.Imposed Policies.General Policies.Specific Policies.Written or implied.

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Advantages of Personnel Policies

Delegation.Uniformity.Better control.Speedy decisions.Coordinating devices.

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Obstacles in administering Personnel Policies

Restrict managerial discretion & curtail executive freedom and hence there is a tendency to bypass and flout norms. Demand constant revision, modification and restructuring and hence inertia which develops has to be shrugged off.Conflicts erupt between implied and expressed policy statements.

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Characteristics of a Sound Personnel Policy

Related to objectives.Easy to understand and precise.Stable yet flexible.Fact based.Appropriate number.Just, fair and equitable.Periodic review.

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NEED OF PERSONNEL POLICIES.

Personnel policies should be made available in written form.Personnel policy manual: All reputed companies with long market standing should publish policy manuals for the convenience of all their managers, supervisors and employees.Even handbooks/ house bulletins/ booklets may be used for this purpose.

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HOW TO PREPAIRE A PERSONNEL POLICY MANUAL?

Lengthy procedure involved: Each policy needs to be placed in a proper manner so that the manager using the manual will understand all aspects (objectives, application, etc.) of the policy easily, quickly and correctly.Giving suitable authority to Incharge, Personnel policy manual.Appointing of small committee for manual preparation.Interviewing supervisors for information collection.

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HOW TO PREPARE A PERSONNEL POLICY MANUAL?

Preparing first draft of policy manual.Circulating first draft for review and recommendations.Final printing of manual.Periodical revision and updating of the manual.

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1 Degree Feedback Feedback By The Superior Alone Self Appraisal

90 Degree Feedback Assessment By Colleagues

180 Degree Feedback Reporting Manager (Immediate Superior)

Provide Feedback270 Degree Feedback

Upward Review/assessment By Subordinates360 Degree Feedback

Assessment By Entire Circle Of Influence450 Degree Feedback

Cumulative Feedback From The Past Years (Self, Superior And Colleague Assessment)

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WHAT IS HRD?HRD means Building…..

Competency in people

Commitment in people

Culture in the organization

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WHAT IS HRD ?

HRD Means….Business Improvement ….Business Excellence

Good People and Good Culture Make Good Organizations

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HRM & HRDHRM

- Deals with optimum utilization of Human Capital.

- It is Integrative and Supportive.

HRD - Deals with development and up gradation

of Human Capital.

- It is Independent.

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HRM & HRDHRM takes stock of Human Capital as given and tries to optimally allot it among different HR processes/activities such that output is maximized.

HRD tires to bring about qualitative changes in this stock of Human Capital in accordance with the needs of the organization and Corporate objectives. It tires to mould the stock as per requirements.

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EMPLOYMENT HR DEVCOMPENSATION

MGTHUMAN RELATIONS

Org design

Job design

Job analysis

Perf. app

Training

Career pl

Job evaluation

Wage

Perks

Motivation

Morale

Job satisfaction

Communication

Grievance

Discp. action

Planning

Recruitment

Selection

Induction

Placement

Quality of life

AN ILLUSTRATION

OBJECTIVES & POLICIES OF HRM

OPERATIVE FUNCTIONS OF HRM

MANAGERIAL FUNCTIONS OF HRM

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Career systemAttraction and retention of human

resources

Manpower planning Recruitment Career planning Succession planning Retention

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Work systemUtilization of human resources Role analysis Role efficacy Performance plan Performance feedback and

guidance Performance appraisal Promotion Job rotation Reward

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Development systemDevelopment of human resources Induction Training Job enrichment Self-learning mechanisms Potential appraisal Succession Development Counselling Mentors system

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UNDERSTANDING THE ROLE OF HR WITH THE “FIVE LEVELS OF HR CONTRIBUTION“MODEL

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Level One –Information Management and Basic Transactions

Processing of new-hire documentation, payroll, separations and benefits enrollment/changes

Providing answers to employee and manager questions pertaining to policy, benefits, employment law

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Level Two – Providing Functional Services

This level incorporates many of the activities that create the standard functional areas within HR including:

staffing, compensation and benefits, employee relations, and training

The formation of standardized processes and policies for requesting more staff, developing staff, compensating staff, and performance management

Basic reporting on the status of talent management efforts

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Level Three – Coordination of Efforts to Improve Productivity

Improving the over-all productivity of the workforce requires that HR develop initiatives to continuously increase the dollar value of employee output while maintaining or reducing the average labor cost per unit.Productivity Defined:

The term productivity means different things to different people; In Terms of HR- a measure of efficiency with regards to the use of human resources within a firm. In either case, productivity is simply the value of the outputs a firm produces divided by the costs of producing those outputs. The formula for productivity is simply: Productivity = Outputs / InputsTo increase productivity, outputs must increase more than costs. There are two basic ways to accomplish this, decrease costs while maintaining output, or increase output while maintaining

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Level Four :Development of Competitive Advantage through Talent

Level four signifies a major transition point as HR work begins to provide a strategic contribution.Increasing competitive advantage is a focused effort to ensure that each key HR program and service is best in class when compared directly to that of competing firms. The goal in level four is to identify and exploit weaknesses found in competing organizations.

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Level Five: Develops Solutions to Strategic Business Problems and Opportunities

Level five represents the pinnacle of work providing strategic contribution in HR They attempt to address strategic business problems in areas such as product development, product/service quality, customer service and corporate position Typical strategic business problem and opportunity efforts include:

HR involvement in turnaround swat teams HR consultation in product design and development efforts Analysis of workforce management impact on time-to-market

and innovation Management of performance culture HR involvement in merger and acquisition planning

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Introduction to Human Resource Management

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