Management of Human Resource

HRM in Context
HUMAN RESOURCE MANAGEMENT Page 1

CHAPTER: I
HRM in Context
Concept
Human resources may be defined as the total knowledge, skills, creative abilities, talents and
aptitudes of an organizations workforce, as well as the values, attitudes, approaches and be-
liefs of the individuals involved in the affairs of the organization. It is the sum total or aggre-
gate of inherent abilities, acquired knowledge and skills represented by the talents and apti-
tudes of the persons employed in the organization.
The human resources are multidimensional in nature. From the national point of view, human
resources may be defined as the knowledge, skills, creative abilities, talents and aptitudes ob-
tained in the population; whereas from the viewpoint of the individual enterprise, they repre-
sent the total of the inherent abilities, acquired knowledge and skills as exemplified in the tal-
ents and aptitudes of its employees.
Human Resource Management: Defined
Resource, in its organizational context, is defined as anything that could be thought of as a
strength or weakness of a given firm including tangible and intangible assets (Wernerfelt,
1984). There are three main organizational resources: human resources, financial resources
and technological resources. The term human resource management has been subject to con-
siderable scrutiny and its philosophy and character has been the focus of continuous debate,
and a widely accepted definition does not exists, however, below are some definitions of
HRM from its early years to date which can be useful in capturing a glimpse of its philosophy
and use.
The purpose of HRM is to ensure that the employees of an organization are used in such a
way that the employer obtains the greatest possible benefit from their abilities and the em-
ployees obtain both material and psychological rewards from their work (Graham, 1978).
HRM is a distinctive approach to employment management which seeks to achieve competi-
tive advantage through the strategic deployment of a highly committed and capable work-
force, using an array of cultural, structural and personnel techniques. (Storey,1995).
HRM is a managerial perspective which argues the need to establish an integrated series of
personnel policies to support organizational strategy. Buchanan and Huczynski, 2004).
HRM is a strategic approach to managing employment relations which emphasizes that lev-
eraging peoples capabilities are critical to achieving competitive advantage, this being
achieved through a distinctive set of integrated employment policies, programmes and prac-
tices. (Bratton and Gold, 2007).
HRM in Context

Definition - Edwin Flippo defies HRM as "planning, organizing, directing, controlling of
procurement, development, compensation, integration, maintenance and separation of human
resources to the end that individual, organizational and social objectives are achieved.
Human Resource Management has come to be recognized as an inherent part of management,
which is concerned with the human resources of an organization. Its objective is the mainte-
nance of better human relations in the organization by the development, application and eval-
uation of policies, procedures and programs relating to human resources to optimize their
contribution towards the realization of organizational objectives.
In other words, HRM is concerned with getting better results with the collaboration of people.
It is an integral but distinctive part of management, concerned with people at work and their
relationships within the enterprise. HRM helps in attaining maximum individual develop-
ment, desirable working relationship between employees and employers, employees and em-
ployees, and effective modeling of human resources as contrasted with physical resources. It
is the recruitment, selection, development, utilization, compensation and motivation of hu-
man resources by the organization.
Human Resource Management: Evolution
The historical background to the management techniques of human resources are in
vogue since ancient times. It's only in the past 100 odd years that the techniques and
study of human behaviour at work has become formal and structured with certain
basic practices established as core and a host of other practices left to each organization to
design and implement as per their individual business driven practices. As per Fisher, Schon-
feldt and Shaw, in their book titled Human Resources Management, they have characterized
the history of HRM as having evolved through four broad phases, the Craft system, the scien-
tific system, the human relations approach and the prevalent organizational science-human
resources approach.
The Craft system refers to early trends noticed in Egypt and Babylon, where skills
based training was provided to people to ensure a steady flow of craftsmen required to
build huge monuments. By the 13th century, subsequently the trend was noticed in Europe
and later craft guilds evolved to ensure not only the skill acquisition but regulate the
conditions of employment, level of skill and improved production techniques. Most rel-
evant in the domestic industry where generations of skilled workers trained and became ex-
perts in a particular skill. The Scientific Management approach was a key part of the
industrial revolution typical of the nineteenth and early twentieth century. It was in-
stilled in the principles of mass production and organization of work -simple work
skills and supervisory/managerial skills. This rapidly emerged as the assembly line ap-
proach to managing workflow, which later Fredrick Taylor (1856-1915) pioneered based
on the philosophy that employees wanted to be used efficiently and money being the pri-
mary motivator. Over a period of time this was proved wrong as employee dissent grew and
union issues surfaced. It was during this phase that employee welfare as a key HR practice
HRM in Context

emerged which redressed employee issues like recreational facilities, medical program and
employee grievance systems.
The Human Relations approach was an outcome of the famous studies undertaken by US so-
cial scientist Elton Mayo and Fritz Roethlisberger at the Western Electric's Hawthorne plant
in Chicago. The Hawthorne Studies: As described in virtually every book written about
management, the human relations or behavioral school of management began in 1927
with a group of studies conducted at the Hawthorne plant of Western Electric, an AT&T
subsidiary. Curiously, these studies were prompted by an experiment carried out by
the company's engineers between 1924 and 1932. Following the scientific management
tradition, these engineers were applying research methods to answer job-related prob-
lems. Two groups were studied to determine the effects of different levels of illumina-
tion on worker performance. One group received increased illumination, while the other
did not. A preliminary finding was that, when illumination was increased, the level of
performance also increased. Surprisingly to the engineers, productivity also increased when
the level of illumination was decreased almost to moonlight levels. One interpretation made
of these results was that the employees involved in the experiment enjoyed being the
centre of attention; they reacted positively because management cared about them. The
reason for the increase in the production was not the physical but the psychological
impact of the employee's attitude towards the job and towards the company. Such a
phenomenon taking place in any research setting is now called the Hawthorne effect.
As a result of these preliminary investigations, a team of researchers headed by Elton
Mayo and F.J. Roethlisberger from Harvard conducted a
lengthy series of experiments extending over a six year period. The conclusions they
reached served as the bedrock of later developments in the human relations approach
to management. Among their key findings were the following:
Economic incentives are less potent than generally believed in influencing employ-
ees to achieve high levels of output.
Leadership practices and work-group pressures profoundly influence employee sat-
isfaction and performance.
Any factor influencing employee behaviour is embedded in a social system. For in-
stance, to understand the impact of pay on performance, you also have to under-
stand the climate that exists in the work group and the leadership style of the
superior. Leadership Style and Practices: As a consequence of the Hawthorne Stud-
ies, worker attitudes, morale, and group influences became a concern of researchers.
A notable development of the nature occurred shortly after World War II at the Uni-
versity of Michigan. A group of social scientists formed an organization, later to
be called the Institute for Social Research, to study those principles of leadership
that were associated with highest productivity.
Based upon work with clerical and production employees, an important conclusion was
that supervisors of high-producing units behaved differently from those of low-producing
HRM in Context

units. Among the differences in style noted were that supervisors of productive groups
in comparison to their lower producing counterparts were:
More emotionally supportive of subordinates.
More likely to pay a differentiated role - plan, regulate, and coordinate the activities
of subordinates, but not become directly involved in work tasks.
More likely to exercise general rather than close or light supervision.
The origin and progress of the human relations movement (particularly in U.S.A.)
has been due to certain social and cultural forces working there, such as
Recognition of the dignity of the individual and his personality. The individual
has a lot of freedom of choice and the idea of decision-making by oneself is deep-
rooted in the national tradition.
A child is brought up to value independence and encouraged to think on his own and
not to be dependent on parents.
Virtual disappearance of owner managers and the growth of professional man-
agers capable of managing according to professional code.
Strong organizations of labour, at all levels, calling for higher skills in com-
munication and participative behaviour on the part of the management.
Shortage of labour led to skilled labour being treated as nearly irreplaceable.
Hence, much greater care in utilizing this scarce and valuable resource had to be
thought of in the form of "Human Relations."
Higher standards of living of American labour. Since their physical and security
needs were generally satisfied, increased participation alone could satisfy their
emerging social and ego needs.
The possible weakening of work ethics, requiring managers to develop new atti-
tudes towards labour.
The changing work environment-greater specialization and a large scope of
operations which require a greater degree of managerial effectiveness with and
through employees.
A significant increase in the general educational level of employees who, as a result,
demanded more from their employers.
Concurrent with the growth of human relations in work organizations, has been the
burgeoning of techniques and programmers to foster human growth off the job. In the last
two decades, millions of people seeking personal growth (or sometimes simply emo-
tional arousal) have participated in program such as encounter groups, marriage en-
richment groups, seminar training, couples groups, and transactional analysis. During the
early 1970's, the human potential (meaning development of one's potential) movement began
to appear in work settings. Management awareness training and assertiveness training
represent two other techniques related to the development of human potential. Both are
designed to deal with the problem of job discrimination against women. In management
awareness training, managers are made more sensitive to their sexist attitudes (such as
thinking of all engineers are male) and in changing their attitudes.
HRM in Context

Assertiveness training has been widely used to help women to be more direct in mak-
ing known their demands for equal opportunity. Career development program in industry are
more prevalent today than at any time in the past. Although varying widely in content, these
entire programs are designed to help the individual make career decisions that will move him
or her toward self-fulfillment. In the process, it is assumed that the person will make a better
contribution to the organization.
Finally the Organizational Sciences approach to human resources management has
brought the focus to the scientific process within organizations that can impact em-
ployee experience, and less on just the individual. Today's organizations focus on build-
ing their processes and policies and compete to emerge as preferred employers (best em-
ployer). It is not uncommon for competing organizations to woo the employees through
advertising more and better employee-friendly initiatives like work from-home jobs, careers
for married couples, global work assignments and internal job postings and world class
workplace infrastructures from in campus cricket grounds to gymnasiums for employee
wellbeing. This is the HR that we now see around us.
The early part of the century saw a concern for improved efficiency through careful design of
work. During the middle part of the century emphasis shifted to the employees productivity.
Recent decades have focused on increased concern for the quality of working life, total quali-
ty management and workers participation in management. These three phases may be termed
as welfare, development and empowerment.
Some areas of HRM

HRM in Context

Nature of HRM
Human Resource Management brings organizations and people together so that the goals of
each are met. The nature of HRM includes:
Broader Function:
Human Resource Management is a comprehensive function because it is about man-
aging people in the organization. It covers all types of people in the organization from
workers till the top level management.
People Oriented:
Human resource is the core of all the processes of human resource management. So
HRM is the process which brings people and organizations together so that their goals
can be achieved.
Action Oriented:
Human resource management believes in taking actions in order to achieve individual
and organizational goals rather than just keeping records and procedures.
Development Oriented:
Development of employees is an essential function of human resource management in
order to get maximum satisfaction from their work so that they give their best to the
organization.
Continuous Function:
As human resource is a living factor among all factors of production therefore it re-
quires continuous improvement and innovations in order to get excellence. So it re-
quires a constant alertness and awareness of human relations and there importance in
every day to day operations.
Future Oriented:
HRM is very important activity which helps organization to achieve its objectives in
future by providing well motivated and competent employees.
Objectives of HRM
To help the organization reach its goals.
To ensure effective utilization and maximum development of human resources.
To ensure respect for human beings. To identify and satisfy the needs of individuals.
HRM in Context

To ensure reconciliation of individual goals with those of the organization.
To achieve and maintain high morale among employees.
To provide the organization with well-trained and well-motivated employees.
To increase to the fullest the employees job satisfaction and self-actualization.
To develop and maintain a quality of work life.
To be ethically and socially responsive to the needs of society.
To develop overall personality of each employee in its multidimensional aspect.
To enhance employees capabilities to perform the present job. To equip the employ-
ees with precision and clarity in transaction of business.
To inculcate the sense of team spirit, team work and inter-team collaboration.
Human Resource Management: Functions
In order to achieve the above objectives, Human Resource Management undertakes the fol-
lowing activities:
Human resource or manpower planning.
Recruitment, selection and placement of personnel.
Training and development of employees.
Appraisal of performance of employees.
Taking corrective steps such as transfer from one job to another.
Remuneration of employees.
Social security and welfare of employees.
Setting general and specific management policy for organizational relationship.
Collective bargaining, contract negotiation and grievance handling.
Staffing the organization.
Aiding in the self-development of employees at all levels.
Developing and maintaining motivation for workers by providing incentives.
Reviewing and auditing manpower management in the organization
Potential Appraisal. Feedback Counseling.
Role Analysis for job occupants.
Job Rotation.
Personal Management Vs Human Resource Management
The major difference between personnel management vs. human resource manage-
ment is that personnel management is the traditional approach and human resource
management the modern approach toward managing people in an enterprise.
Comparing personnel management vs. human resource management, personnel man-
agement is a predominantly administrative record-keeping function that aims to estab-
lish and maintain equitable terms and conditions of employment, whereas human re-
source management integrates the traditional personnel management functions to cor-
HRM in Context

porate goals and strategies, and performs additional people centered organizational
developmental activities.
Significant difference exists between personnel management and human resource
management in terms of scope, approach, and application.
Some of the Differences between Personal Management Vs Human Resource Management
Dimension Personal Management Human Resource Man-
agement
Contract Written contract Beyond contracts

Rules Importance of organizing

Impatience with rule

Behavior norms Customs & practices

Values / mission

Managerial task with re-
spect to labor
Monitoring Sustaining

Key relations Labor Management Customer relations

Speed of Decision slow Fast
Job Design
Division of labor Teamwork
Training & Development
Controlled access Learning organizations
Conflict Handling
Temporary Solutions Manage climate and culture

Human Resource Management (information) System
The Human Resources Information System provides details on administration, payroll, re-
cruitment, and training. This system is expected to deliver valuable results to your human re-
sources division and your organization as a whole. It is an essential tool that aids manage-
ment in making strategic decisions.
History
From 1960 to 1970, major companies were in search of a centralized personnel manage-
ment system. Software programs were then created in large computers to facilitate storage
of data mainly for payroll purposes. The Human Resource Information System, also
known as Human Resource Management System, emerged as the preferred main system
for managing human resource data, using the new client server technology instead of the
old mainframe system. By the 1980's, HRIS was equipped with new tools and capabilities
that assisted the compensation scheme and helped manage manpower. The system became
more sophisticated by 2000 when it became a tool for performance learning management.
HRM in Context

Description
HRIS is usually fused with information technology to focus on human resource manage-
ment. Human resource refers to the companys employees. This system consolidates com-
puterized employee data into one data bank. It also updates prior and future decisions ac-
cording to the companys human resource management plan. HRIS also makes it possible
for online users to view an employees history with the company, personal profile and
benefits.
Types
There are two ways of implementing HRIS. The first is the administrative use. This refers
to the storing and consolidating of employee records that is used for daily operation. Ad-
ministrative HRIS is always integrated with information technology. The second imple-
mentation is called Strategic HRIS which mainly aids the decision-making process. It in-
volves using the administrative information to analyze an employees value to the compa-
ny. This is then important to those involved in the recruitment and retention of people.
Components
HRIS is an umbrella network that covers the crucial components of human resource. These
components are payroll, time and labor management, benefits for the employees and HR
management. HRIS automates the entire payroll process. It records employees attendance.
It also automatically generates pay checks and tax reports and deductions. It does the cal-
culation for you in terms of deductions and taxes. HRIS also tracks the employees pro-
gress. It stores information with regard to the employees time and work efficiency. HRIS
traces the benefits availed by these employees and ensures that such benefits are timely
and effective.
Importance
HRIS as a whole mainly improves information sharing and communication between the
company and the employees. HRIS made it easy for the human resources department to
smoothly operate all components. With the accurate and objective tracking of compensa-
tion and benefits, employees' morale and motivation increases. The Human Resource In-
formation System reduces cost and time spent on manual data consolidation. It allows the
HR management managers to focus more on making decisions and projects rather than pa-
perwork. The system hopes to give the HR management division a more strategic role in
the company, as the information taken from HRIS can be the basis for employee training
schemes and work efficiency projects.

HRM in Context

A Human Resources Management System (HRMS) is a software application that combines
many human resources functions, including benefits administration, payroll, recruiting and
training, and performance analysis and review into one package
Currently human resource management systems encompass
1. Payroll
2. Time and attendance
3. Performance appraisal
4. Benefits administration
5. HR management information system
6. Recruiting/Learning management
7. Performance record
8. Employee self-service
9. Scheduling
10. Absence management
Initially, businesses used computer based information systems to:
produce pay checks and payroll reports;
maintain personnel records;
Pursue talent management.
Talent management systems typically encompass:
analyzing personnel usage within an organization;
identifying potential applicants;
recruiting through company-facing listings;
Recruiting through online recruiting sites or publications that market to both recruiters
and applicants.
HRM in Context

HRIS System

HRM in Context

Significance/Importance of HRM
1. Corporate Level
For an enterprise effective HRM leads to attainment of its goal efficiently and effectively.
HRM helps enterprise in the following ways.
Hiring required skill set and retaining them through effective human resource plan-
ning, recruitment, selection, placement, orientation and promotion policies.
Development of employees by enhancing necessary skills and right attitude among
employees through training, development, performance appraisals etc.
HRM also takes care of optimum utilization of available human resource.
HRM also ensures that organization has a competent team and dedicated employees
in future.

2. Significance at Professional Level
HRM also leads to improved quality of work life, it enables effective team work
among employees by providing healthy working environment. It also contributes to
professional growth in various ways such as
By providing opportunities for personal development of employee Enabling healthy
relationships among teams and allocating work properly to employees as well as
teams.

3. Significance at Social Level
HRM plays important role in the society, it helps labour to live with pride and dignity
by providing employment which in turn gives them social and psychological satisfac-
tion.
HRM also maintains balance between open jobs and job seekers.

4. Significance at National Level
HRM plays a very significant role in the development of nation. Efficient and com-
mitted human resource leads to effective exploitation and utilization of nation's natu-
ral, physical and financial resources. Skilled and developed human resource ensures
the development of that country. If people are underdeveloped then that country will
be underdeveloped.
Effective HRM enhances economic growth which in turn leads to higher standard of
living and maximum employment.

HRM in Context

The changing world of work and the changing role of human Resource
Professionals
The Changing Role of the HR Function
Of all the support functions, the HRM (Human Resource Management) function is a critical
component of any organization. Apart from finance, which serves as the lifeblood of the or-
ganizational support functions, the HRM function more than any other support function, has
the task of ensuring that the organizational policies and procedures are implemented and any
grievances of the employees are taken care of. For instance, it is common for the HRM func-
tion in many organizations to combine hiring, training, providing assistance during apprais-
als, mentoring employees, and deciding on pay structures and grades. This means that the
HRM function has its task cut out wherein it has to take care of the people side of the or-
ganizational processes. Considering the fact that the ascent of the services sector (IT, Finan-
cial Services, BPO) has meant that people are the key assets for organizations, the importance
of the HRM function has grown by leaps and bounds thanks to the preponderance of the ser-
vices sector. This has given impetus to many aspiring HR professionals to try and make a ca-
reer for themselves in the HR field thanks to the burgeoning demand for HR professionals
Change in Conception from Reactive to Proactive
Many people think of the HR manager as someone who attends to complaints from employ-
ees, appears at the time of appraisals, and generally is useful only when there is a genuine
need for him or her. This is the classic old world thinking wherein HR managers were con-
fined to these activities alone. The reason for such conceptions is that most of us are used to
our parents and other older generation people referring to HR managers as labor officers
whose sole function is to take care of payroll and disputes. However, times have changed and
in the recent decades, the HR function has emerged as a key function in itself wherein the
HR professionals are proactive and preemptive in nature. What this means is that HR
managers anticipate the crises and preempt them from happening instead of waiting for the
crisis to appear and then resolve it. Further, unlike in earlier generations where there were
chances of strikes and lockouts of the organizations in the manufacturing sector, the services
sector does not have any place for these and hence, the role of the HR professionals have
evolved to a point where they have moved from reactive mode to proactive mode. This means
that in many multinationals, the HR professionals regularly have what are known as one-on-
ones or individual meetings with the staff to try and understand their grievances, seek feed-
back, and overall focus on how to prevent any kind of crisis from happening.
The HR Professionals and Demand for HR courses
Indeed, apart from hiring, training, and payroll, which still have lot of importance to the
HRM, function, the addition of the activities mentioned above has lent a touch of glamour to
the otherwise staid and dull profession. It is no wonder that in institutes like XLRI have seen
a surge in demand for their courses in HR. Moreover, even in other management institutes,
HRM in Context

there is an increase in the number of graduates who are choosing HR as their specialization.
All these trends point to the conclusion that the HR profession is now well sought after and
something that is not relegated to the sidelines.
HR Professionals Have Fun as Well
The changing role of the HRM function is especially visible in the IT and BPO sector where
they are also engaged in organizing offsite events, which are held in a resort or in a hotel and
which provide the employees with a chance to brainstorm about issues in a relaxed and slow
manner outside of the confines of the office. This trend has made the HRM function very
busy because a lot of planning goes into organizing these events and indeed, in multinationals
like Fidelity, this is now handled by dedicated HR staff apart from the regular staff.
Human Resource Strategic Concept and Perspectives
SHRM refers to the proactive and organized alignment of human resource systems, process-
es, policies and practices as a whole with the mission and strategic objectives of the larger
organization. Primary objective of SHRM is to enhance employee-managerial & organiza-
tional effectiveness and performance. It may be defined as an integration of HRM with the
strategic goals and corporate strategy so as to improve business performance and achieve or-
ganization goals.
Focus of SHRM is to improve organizations competitive performance by utilizing their hu-
man resources more effectively. It is based on belief that human resources are uniquely im-
portant to sustained business success. An organization can gain competitive advantage by
strategically use of its human resources. The aim of SHRM is to ensure that the culture, style
& structure of the organization and quality, commitment & motivation of employees contrib-
ute fully to the achievement of objectives.
Need and importance of SHRM
Strategic Human Resource Management is very important in order to gain competitive per-
formance by utilizing human resource of an organization effectively.
SHRM encourages managers to be proactive which means to think ahead.
Attainment of organization objectives through human capital.
It enhances individual performance by development of commitment at all levels.
It enables development of need based personnel policy/HR policy as a prerequisite for
optimum use of human resources.
Integration of HRM policy with business goals or objectives.
Developing supportive work culture in order to encourage creativity, team work,
TQM as well as innovation and a sense of belonging.
Creation of flexible environment because in flexible environment employees can easi-
ly adapt to changing competitive environment.
HRM in Context

Creation of flexible working hours/ function.
Integration of people related issues with business issues.
The Difference between Strategic & Traditional HR
Traditional and strategic human resources models differ significantly from each other. Many
businesses have moved toward the strategic HR model because of its utility in building a
business. Strategic human resources management is geared toward developing strategic plans
that fit within the larger structure of the company's plans, whereas traditional HR manage-
ment is almost purely administrative in nature. Understanding the difference between tradi-
tional and strategic human resources can be important for the development of your small
business.
The much talked about spine of any industry is its human resource management. The growth
and simultaneous change in industrial practices, has given rise to the debate on traditional
versus Strategic HR. Lets go by the book is the Traditional HR practice while changing the
rulebook with each experience is what the Strategic HR does. There is no hard line on which
one is better, with each one of having its own advantages. The younger breed of managers
naturally believes in the latter while the about to retire lot still goes with traditional format of
HR practices. Lets have an insight marking major differences between the two and trying
hard to bring something substantial to surface.
The focal points of both the practices are different. While Strategic HR focuses on internal
and external relationships, traditional HR focuses on employee relationships. Strategic HR
believes in understanding the factors that affect the people of an industry. Since it is better to
analyze people and not their relationships, traditional HR loses a point here. Systematic ap-
proach suggests that all levels of management must work cooperatively, and when myriad
factors are considered peace is observed at all levels.
Another big difference is that Strategic HR is a leader which brings a change while Tradi-
tional HR is a follower. Former is transformational which initiates changes while latter is
transactional and is a mere respondent to a change. Strategic HR helps employees to adopt
changes and initiate faster learning in pace with the changing technology. Both the above
conditions are fruitful depending upon your situation and the canceling of the argument.
When talking in terms of control, traditional HR practice exercises strict control over the em-
ployees while opposite to it Strategic HR exhibits leniency. Traditional HR goes completely
by the book while Strategic HR makes use of any control mechanism that is helpful in gener-
ating results. Traditional HR is always involved in policy making procedures or bureaucratic
approach while Strategic HR focuses on mingling with the employees for better outputs. Stra-
tegic HR practices emphasize on free flow of work without any bindings. Contrary to this,
Traditional HR has cage like format in which employees are bounded by strict regulations.
HRM in Context

This practice is abandoned in todays competitive era. You need to change every moment and
be flexible enough for better results and productivity.
Talking in terms of job design, Strategic HR loves to cross train people while Traditional HR
believes in specialization. The current format in Strategic HR practices team work against the
individualism promoted by Traditional HR. Strategic HR believes in making each level au-
tonomous reducing the dependency while Traditional HR believes in individual expertise.
Though both the formats are correct pertaining to the time of their origin but undoubtedly,
with growing demand for talent oriented HR, Strategic HR wins the game.
However, it would be wrong to say that Traditional HR does not focus on people. It focuses
on people but definitely does not count them as investments. On the contrary is STRATEGIC
HR, which understands the value of its employees and believes that if company invests on
retention with knowledge base it is bound to hit the rivals hard. Traditional HR focuses on
capital investments made on the employed work force while Strategic HR asks to invest on
employees who can make use of companies resources in order to maximize the returns. Both
the practices are necessary on their part but owing to the current competitive scenario, Strate-
gic HR slightly scores high.
Traditional HR practice suggests that only people who are specialists in human resources are
HR managers while Strategic HR practice believes that anyone who works for the cause of
the people in the organization should be treated as an HR manager. This act provides respect
for the person who is informally awarded for the work, keeping in mind that this act will
work as motivation for other employees. Traditional HR is good till it says that the specialist
should be designated as HR managers but when it comes to only specialists it is bound to
face criticism.
Trying hard for some substance, we can conclude that Traditional HR undoubtedly was good,
but better has now arrived. With flexible policies, emphasis on employee satisfaction and
building better relationships with customers, Strategic HR has overshadowed by traditional
HR
Environmental Scanningan External Perspective
Environmental scanning is the process through which organizations maintain awareness of
the opportunities and threats presented by the surroundingsboth macro and microwithin
which they operate.
For information that is obtained through an environmental scan to be truly valuable, leaders
within the organization must use the data that is collected to modifyas appropriate
organizational objectives or strategies. The ability to demonstrate organizational agility in
response to environmental information is essential; the willingness to act upon that infor-
mation is perhaps even more important.
HRM in Context

Some organizations conduct environmental scans on an ad hoc basis, often in response to cri-
ses or other unexpected events. Other organizations plan to conduct environmental scans on a
more regular basis. Still other organizations choose to conduct scanning on a continuous ba-
sisalways collecting, processing, and analyzing data. While there is no one right answer for
every organization, in todays highly turbulent (and sometimes even volatile) business and
organizational environments, it may be prudent to consider conducting environmental scan-
ning more frequently, as opposed to less frequently.
External TrendsThings to Keep an Eye On
Organizations need to monitor trends of a wide and varying nature, including, but in no way
limited to
Economic trends
Competitive trends
Political trends
Global trends
Business trends
Industry trends
Employment trends
Technological trends
Demographic trends
Environment of HRM in Nepalese Organization
Nepalese organizations are in the age of personnel management. There is least concern with
developing and utilizing HR potentiality.
There is nepotism and favoritism in most of the Nepalese organizations.
Nepalese top managers spend a lot of time in hiring and transferring employees.
There is over supply of human resources. Manpower planning is lacking in Nepal.
HR development has remained an area of least priority in Nepalese organization. Train-
ing is not regarded as an investment in human resources.
Nepalese organizations are not oriented towards productivity improvement. There is no
harmony between individual and organizational goals.
Private enterprises lack systematic performance appraisal systems. Public enterprises
have legally prescribed performance appraisal system, but in practical they are not used.
It can be concluded that the output of HR quality of work life, productivity and readiness to
change has not been achieved.

HRM in Context

Technological Environment of HRM

Human Resource management performs quite a few useful Functions in order to achieve its
objectives. These functions have been categorized by Decenzo and Robins as:
Acquisition: The acquisition function begins with Human Resource Management planning.
Relative to human resource requirements, we need to know where we are going and how we
are going to get there. This includes the estimation of demands and supplied of labor.

Development: The Development function can be viewed along three dimensions and the De-
velopment is one of the most important functions of Human Resource Management (HRM).
The first is employee training, which emphasizes skill development and the changing of atti-
tudes among workers. The second is management development, which concerns itself primar-
ily with knowledge acquisition and the enhancement of an executives conceptual abilities.
POLITICAL SOCIAL
CUSTOMERS

ECONOMIC TECHNOLOGY
HR in country Trade Union

MARKETING PRODUCTION

ORGANIZATIONAL POLITICS

FINANCE ORGANIZA-
TIONAL STRUCTURE
ORGANIZATIONAL OBJECTIVES
HRM
EXTERNAL
INTERNAL
Environmental Scanning of HRM
HRM in Context

The third is career development, which is the continual effort to match long-term individual
and organizational needs.

Motivation: The Motivation function creates an inner urge to perform and begins with the
recognition that individuals are unique and that motivation techniques must reflect the needs
of each individual. Within the motivation function, alienation, job satisfaction, alienation, job
satisfaction, performance appraisal, behavioral and structural techniques for stimulating
worker performance, the importance of linking rewards to performance, compensation and
benefits administration, and how to handle problem employees are reviewed.

Maintenance: The final function is maintenance. It's most important function of of Human
Resource Management (HRM). In contrast to the motivation function, which attempts to
stimulate performance, the conditions that employees believe are necessary in order to main-
tain their commitment to the organization.

Within the confines of the four functions - Acquisition: Development: Motivation: Mainte-
nancemany changes have occurred over the years. What once was merely an activity to
find a warm body to fill a vacancy has become a sophisticated process of finding, developing,
and retaining the best qualified person for the job? But this metamorphosis did not occur
overnight. It is the result of many changes in management thought, society, and the workers
themselves.

Changing Role of HRM in Nepalese Organization
HRM plays a vital role in any organization. However, the changing role of HRM in Nepalese
organization is mentioned below:
1. HR and boosting productivity: Productivity, improvement is crucial at todays globally
competitive environment, and HR plays a pivotal role in lowering labour costs. For many
forms, instituting tough headcount control are the first line of attack on lowering labour cost;
the HR department generally plays the central role in planning and implementing corporate
downsizing and then taking steps to maintain the morale of the remaining employees.

2. HR and responsiveness: Making the enterprise more responsive to product innovations
and technological change is the basic aim of many of the management changes. Thus, down-
sizing, flattening the pyramid, empowering employees, and organizing around teams are
aimed at facilitating communications and making it easier for decisions to be made and for
the company to respond quickly to its customers needs and its competitors challenges. HR
plays a crucial role in accomplishing this.
3. HR and services: Employee behavior is particularly important in service firms like banks
and retail establishments. If a customer is confronted by a salesperson who are tactless or un-
prepared to discuss the pros and cons of the different product or (even Norse) downright dis-
courteous, all the firms other efforts will have been wasted.
HRM in Context

Service organizations have little to sell their good service, and that makes them uniquely de-
pendent on their employees attitudes and motivation and on HR management.

Therefore, HR plays a crucial role in service companies. A recent study of service firms illus-
trates the HR- service link. The researcher found that progressive HR practices such as facili-
tating employee career progress, developing orientation/ training/ socialization programs for
new employees, and eliminating conditions on the job that inhibit task performance appear to
improve employees customer service as well as the overall quality of that service from the
customers point of view.
It is better to use progressive HR practices to build employee commitment and morale; em-
ployee will then provide excellent customer service, which in turn will generate profits.

4. HR and employee commitment: Intense global competition and the need for more re-
sponsiveness put a premium an employee commitment. Building employee commitment and
creating a synthesis of employee and employers goals so that employees what to do their
jobs as if they own the company takes multi-pronged effort, one of which HR plays the cen-
tral role. Two-way communications foster commitment. High commitment firms also tend to
engage in actualizing practices, which aim to ensure their employees have every opportunity
to fully use all their skills and gifts at work and become all they can be.
HR practices are crucial here, for instance, in establishing career-oriented performance ap-
praisal procedures and open job posting and job transfer practices. Convincing employees
that the company and all its managers care about them is important too.

5. HR and corporate strategy: The most striking change in HR role is its growing im-
portance in developing and implementing strategy. Traditionally, strategy the companys plan
for how it will balance its internal strengths and weakness with external opportunities and
threats in order to maintain a competitive advantage was a job primarily for the companys
operating line managers. Then the president would more or less leave the personnel implica-
tions of that plan (i.e. hiring or firing new workers, hiring out placement firms for those fired,
and so on) to be carried out by HR management.

Today things are different. Strategies increasingly depend on strengthening organizational
responsiveness and on building work teams and these put HR in a central role. In a fast
changing world, globally competitive and quality oriented industrial environment. It is often
the firms employees themselves who provide the competitive key. It is thus now increasing
common to involve HR in the earliest stages of developing and implementing the firms stra-
tegic plan, rather than letting HR just react to it
Human Resource Management from an International Perspective
International human resource management (IHRM) involves ascertaining the corporate strat-
egy of the company and assessing the corresponding human resource needs; determining the
HRM in Context

recruitment, staffing and organizational strategy; recruiting, inducting, training and develop-
ing and motivating the personnel; putting in place the performance appraisal and compensa-
tion plans and industrial relations strategy and the effective management of all these. The
strategic role of HRM is complex enough in a purely domestic firm, but it is more complex in
an international business, where staffing, management development, performance evaluation,
and compensation activities are complicated by profound differences between countries in
labor markets, culture, legal systems, economic systems, and the like. It is not enough that
the people recruited fit the skill requirement, but it is equally important that they fit in to the
organizational culture and the demand of the diverse environments in which the organization
functions.
Todays economy has globalized in which geographical boundaries of a country have only
political relevance; the economic relevance has extended these. Today, the world is known as
global village, a term that reflects the state of business in the world. The rise of multinational
and transnational corporations has placed new requirements on HR managers. For instance,
HR managers must ensure that the appropriate mix of employees in terms of knowledge,
skills, and cultural adaptability is available to handle global assignments. A few decades ago,
the concept of globalization was mainly discussed in theory. There was no pressing economic
need to understand and appreciate the human implications of globalization. However, rapid
globalization has compelled management researchers to explore the HRM implications of
globalization. The result is the emergence of international HRM (IHRM) which deals with
how a global company can manage its human resources spread throughout the world.
Understanding of international perspective of HRM is required because of cultural diversity,
workforce diversity, language diversity, and economic diversity.
1. Cultural Diversity
Culture is one of the most important factors affecting HRM practices. However, when we
consider international perspective of HRM, we find cultural diversity across the globe, that is,
culture of two countries is not alike. Cultural diversity exists on following dimensions:
Individualism and Collectivism. Individualism is the extent to which people place
value on themselves; they define themselves by referring themselves as singular per-
sons rather than as part of a group or organization. For them individual tasks are more
important than relationships. Collectivism is the extent to which people emphasis the
good of the group or society: They tend to base their identity on the group or organi-
zation to which they belong. At work, this means that relationships are more im-
portant than individuals or tasks; employer-employee links are more like family rela-
tionships.
Power Orientation. Power orientation, also known as orientation to authority, is the
extent to which less powerful people accept the unequal distribution of power; people
prefer to be in a situation where the authority is clearly understood and lines of au-
thority are never bypassed. On the other hand, in culture with less orientation to pow-
HRM in Context

er, authority is not as highly respected and employees are quite comfortable circum-
venting lines of authority to accomplish jobs.
Uncertainty Avoidance. Uncertainty avoidance also known as preference for stabil-
ity, is the extent to which people feel threatened by unknown situations and prefer to
be in clear and unambiguous situations. In many countries, people prefer unambiguity
while in many other countries, people can tolerate ambiguity.
Masculinity. Masculinity, also known as assertiveness or materialism, is the extent to
which the dominant values in a society emphasize aggressiveness and the acquisition
of money and material goods, rather than concern for people and overall quality of
life.
Time Orientation. Time orientation dimension divides people into two categories:
long-term orientation and short-term orientation. People having long-term orientation
focus on future, prefer to work on projects having a distant payoff, and are persistent
and thrift. People having short-term orientation are more oriented towards past and
present and have respect for traditions and social obligations.
The basic implication of cultural diversity for HRM is that same set of HRM practices is not
suitable for all cultures; consideration has to be given to cultural diversity.
2. Workforce Diversity
Workforce is the building block of any organization but there is workforce diversity in global
companies. Based on their place of origin, employees of a typical global company can be di-
vided into the following groups:
1. Parent-country national permanent resident of the country where the company is
headquartered.
2. Host-country national-permanent resident of the country where the operations of the
company are located.
3. Third-country national permanent resident of a country other than the parent country
and the host country.
Further, workforce diversity can be seen in the context of employee mobility from one coun-
try to another country for performing jobs. On this basis, an employee can be put in one of
the following categories:
1. Expatriate-a parent country national sent on a long-term assignment to the host-
country operations.
2. Impetrate-a host-country national or third-country national assigned to the home
country of the company where it is headquartered.
3. Repatriate-an expatriate coming back to the home country at the end of a foreign as-
signment.
HRM in Context

Workforce diversity implies that various categories of employees not only bring their-skills
and expertise but also their attitudes, motivation to work or not to work, feelings, and other
personal characteristics. Managing such employees with pre-determined HRM practices may
not be effective but contingency approach has to be adopted so that HRM practices become
tailor-made.
3. Language Diversity
Language is a medium of expression but employees coming from different countries have
different languages. Though English is a very common language, it does not serve the pur-
pose adequately as it does not cover the entire world. While employees coming from different
countries may be encouraged to learn the language of the host country for better dissemina-
tion of the information, it does not become feasible in many cases. An alternative to this is to
send multilingual communications. It implies that anything transmitted to employees should
appear in more than one language to help the message get through. While there are no hard-
and-fast rules in sending such messages, it appears safe to say that such a message should be
transmitted in the languages the employees understand to ensure adequate coverage.
4. Economic Diversity
Economic diversity is expressed in terms of per capita income of different countries where a
global company operates. Economic diversity is directly related to compensation manage-
ment that is, paying wages / salaries and other financial compensation to employees located
in different countries. One of the basic principles of paying to employees is that there should
be equity in paying to employees. However, putting this principle in practice is difficult for
a global company because its operations are located in different countries having different
economic status. In such a situation, some kind of parity should be established based on the
cost of living of host countries.
Ethical Issues in HR

Of all the organizational issues or problems, ethical issues are the most difficult ones to han-
dle or deal with. Issues arise in employment, remuneration and benefits, industrial relations
and health and safety.
HRM in Context

Cash and Compensation Plans
There are ethical issues pertaining to the salaries, executive perquisites and the annual
incentive plans etc. The HR manager is often under pressure to raise the band of base
salaries. There is increased pressure upon the HR function to pay out more incentives
to the top management and the justification for the same is put as the need to retain
the latter. Further ethical issues crop in HR when long term compensation and incen-
tive plans are designed in consultation with the CEO or an external consultant. While
deciding upon the payout there is pressure on favoring the interests of the top man-
agement in comparison to that of other employees and stakeholders.
Race, gender and Disability
In many organizations till recently the employees were differentiated on the basis of
their race, gender, origin and their disability. Not anymore ever since the evolution of
laws and a regulatory framework that has standardized employee behaviors towards
each other. In good organizations the only differentiating factor is performance! In
addition the power of filing litigation has made put organizations on the back foot.
Managers are trained for aligning behavior and avoiding discriminatory practices.
Employment Issues
Human resource practitioners face bigger dilemmas in employee hiring. One dilemma
stems from the pressure of hiring someone who has been recommended by a friend,
someone from your family or a top executive.
Yet another dilemma arises when you have already hired someone and he/she is later
found to have presented fake documents. Two cases may arise and both are critical. In
HRM in Context

the first case the person has been trained and the position is critical. In the second case
the person has been highly appreciated for his work during his short stint or he/she
has a unique blend of skills with the right kind of attitude. Both the situations are suf-
ficiently dilemmatic to leave even a seasoned HR campaigner in a fix.
Privacy Issues
Any person working with any organization is an individual and has a personal side to
his existence which he demands should be respected and not intruded. The employee
wants the organization to protect his/her personal life. This personal life may encom-
pass things like his religious, political and social beliefs etc. However certain situa-
tions may arise that mandate snooping behaviors on the part of the employer. For ex-
ample, mail scanning is one of the activities used to track the activities of an employ-
ee who is believed to be engaged in activities that are not in the larger benefit of the
organization.
Similarly there are ethical issues in HR that pertain to health and safety, restructuring
and layoffs and employee responsibilities. There is still a debate going on whether
such activities are ethically permitted or not. Layoffs, for example, are no more con-
sidered as unethical as they were thought of in the past.

HRM in Context

Summary
Management of human resources is the essence of being a manager who has to get
things done through others. And in this activity the manager is supported by the HR
professionals who act as the expert providing the right guidance within the framework
of the organizations policies and practices.
The human resources have also been designated as human factors that need to be managed
at the workplace in order to ensure that the business objectives are met.
According to Julius, the human factor refers to a whole consisting of inter-related,
interdependent and inter-acting physiological, psychological, sociological and ethical com-
ponents.
Majority of the problems in organizational setting are human and social rather than physical,
technical or economic.
The physical resources will not give results unless the human resources are applied to them.
Management of human resources is being regarded as a specialized profession such as that of
medicine and law.
The Human Resources Department is responsible for many varied functions including
employment, safety, training, wage and salary administration and research and develop-
ment.
The Head of the Human Resources Department is associated with top management and
helps it in the formulation of Human Resources policies for the company.
Human Relations in Management is a process that brings employees into contact with and
causes them to be influenced by their leaders, their jobs, and other aspects of the organiza-
tions which they work. It includes everything in the work environment that influences the
behavior of employees:
A human relations program me represents an attempt at improving employee morale and mo-
tivation.
As a consequence of the Hawthorne Studies, worker attitudes, morale, and group influences
became a concern of researchers.
The terms Personnel Management and Human Resources Management' are interchangeably
used by most of the authors, though there are some differences between them.
HRM is a broad concept which covers many personnel aspects and includes social, pro-
fessional and individual enterprise aspects, whereas Personnel Management focuses only
on personnel aspects such as leadership, justice determination, task specialization, staff-
ing, performance appraisal, etc.
HRM is more growth-oriented whereas Personnel Management is slightly narrow.

HRM in Context

Review Questions:

1. Define Human Resource Management. Explain its relation with strategic planning in the
organization.
2. Discuss the changing role of HR in Nepalese organization.
3. "Staffing, training and development, motivation and maintenance are the primary activities
of HRM" Explain.
4. Define HRM and explain how it is different from Personal management.
5. Discuss the importance of HRM in the context of organization.
6. Briefly explain the component of HRM.
7. "Human is valuable resource for any organization on the basis of which organization suc-
cess or failure is determined." In the light of above statement Defines HRM with its func-
tion and objectives.
8. HRM is process consisting of four function-acquisition, development, motivation and
maintenance of human resource." comment on the statement highlighting the importance
of HRM.
9. Why it is correct to conclude that all managers are involved in the HRM function and im-
plementing HRM activities and programs?
10. Why is the human resource department playing a more significant and strategic roles to-
day than it did 15 years ago?
11. What HRM activities and programs can impact employee motivation and productivity?
12. Discuss how technology environment has changed the HRM. Practices.

Meeting HR Requirements

CHAPTER: II
Meeting Human Resource Requirements
Concept
Human resource or manpower planning is 'the process by which a management determines
how an organization should move from its current manpower position to its desired manpow-
er position. Through planning, a management strives to have the right number and the right
kind of people at the right places, at the right time, to do things which result in both the or-
ganization and the individual receiving the maximum long-range benefit". The organizations
business plan to invest in a particular product/market or a service will drive the HRP activity
towards hiring to meet the business need. In the event an organization is divesting or shutting
down a particular business unit or a manufacturing division the HRP activities would focus
on the redeployment of the workforce that will be rendered unemployed as a result of the
business decision. An organization wanting to retain its current market share and revenue
projection at status quo would be supported by HRP activities that are limited to only filling
positions falling vacant due to natural organizational attrition. Hence the HRP focus in an or-
ganization is closely linked to the business plan and acts as a bridge between what an organi-
zation wishes to achieve and how it will go about achieving it w.r.t. the human resources re-
quirements.
According to Eric W, Vetter, manpower planning is a very vital process where the man-
agement determines how the organization should move from its present manpower position to
a desired manpower position.
According to Steiner, manpower planning may be defined as a strategy for the pro-
curement, development, allocation and utilization of an enterprise's human resources.
According to K. F. Turkmen manpower planning can be defined as an attempt to match
the supply of people with the jobs available in an organization. Statistical techniques
have been used to match the supply of people with the jobs available.
Bruce Coleman has defined manpower planning has been defined as the process of deter-
mining manpower requirements and the means for meeting those requirements in order to
carry out the integrated plan of the organization.
The website www.businessdictionary.com defines manpower planning as: Estimating or
projecting the number of personnel with different skills required over time or for a pro-
ject, and detailing how and when they will be acquired.
A business definition according to www.bnet.com for manpower planning is The devel-
opment of strategies to match the supply of workers, and the availability of jobs at or-
ganizational, regional or national level.


According to Geisler, manpower planning is the process- including forecasting, developing
and controlling by which a firm ensures that it has
- The right number of people
- The right kind of people
- At the right pace
- At tight time, doing work for which they are economically most useful.

The scope of HRP is futuristic in nature and usually runs parallel to the annual business plan-
ning exercise. It commences prior to the start of the companys new financial year. For ex-
ample if the business year for a company runs April to March. The business planning and the
HR planning activities for the New Year beginning in April is usually completed and in place
by the 1st week of April. Once the HR plan is in place it is broken up into a quarterly or even
a monthly plan which then is the input for the recruitment team to go and hire accordingly.
Steps/Process in Human Resource Planning:
Five Steps in Manpower Planning

Manpower planning requires that an estimate of the present and future needs of the or-
ganization should be compared with the available manpower and future predicted manpower.
Appropriate steps are then taken to bring demand and supply into balance. The outcome of
Organizational objectives and strategies
Scan external environment for changes
affecting labor supply
Analyze internal inventory of HR capability
Forecasting
Survey of People Available Organizational need for people
HR Strategic and plans
Steps /process of HRP

this planning is a well 'thought out' and logical manpower demand plan for varying
dates in the future which can then be compared with the crude manpower supply
schedules. The comparisons will then indicate what steps should be taken to achieve a bal-
ance. The 5 steps in the manpower planning process are:
1. Evaluate present manpower inventory
2. Manpower forecasting
3. Develop a manpower sourcing plan or retrenchment plan
4. Manpower allocation
5. Building requisite competencies

1. Evaluate Present Manpower Inventory
It is very important to evaluate the present manpower status before making a forecast for fu-
ture manpower planning. To evaluate the present manpower status a department by de-
partment analysis and a job-role by job-role analysis is conducted to arrive at the re-
quired manpower versus the available manpower. This is accumulated across the organi-
zation at different levels and departments. The final report will consolidate and state the re-
quired manpower versus the available manpower in terms of the quantitative analysis.
Another analysis on the qualitative side conducted similarly shows the competencies re-
quired versus competencies available for each of the job roles. This provides the present
manpower inventory. There may be excess or deficit or in extremely few cases just
the right number quantitatively. The report on the qualitative front may rarely have a 100%
match between required competencies versus available competencies.
2. Manpower Forecasting
Manpower planning is done based on the manpower forecasts. The common manpower
forecasting techniques are:
(i) Expert Forecasts: This includes formal expert surveys, informal decisions and the Del-
phi technique.
(ii) Trend Analysis: Manpower needs can be seen through the past practice of the firm or
organization keeping the principle year as a basis and a central tendency of measure
(iii) Work Load Evaluation: This depends on the nature of the work load in a
branch, department, or a division in a firm or organization.
(iv) Work Force Evaluation: As production and the time duration are to be kept in
mind, allotments have to be made for getting the total manpower requirements.


(v) Other Methods: A few mathematical models with the help of computers are also used to
forecast manpower needs. Managerial Judgment Technique, Cost-Benefit Analysis, Markov
Analysis, Statistical Judgment Technique
3. Develop a Manpower Sourcing Plan or Retrenchment Plan
Once the current inventory is compared with the future manpower forecasts then the man-
power sourcing or retrenchment plan is drawn. The sourcing plan includes recruitment, selec-
tion, placement, hiring temporary staff and outsourcing. The retrenchment plan involves
sending show-cause notices to bottom performers called bottom scraping, asking people to
leave the organization by providing the requisite severance allowance, allowing employ-
ees to go on a sabbatical and finally out-placing employees in other organizations to reduce
the manpower. It is harder to retrench manpower. The need for retrenchment could also
be minimized by very objectively approving any additional manpower.
Forecast Demand Consid-
erations
- Product/Service de-
mand
- Economic
- Technology
- Financial resource
- Absenteeism
- Turnover
- Organizational
Growth
- Management Philos-
ophy
Technique
- Trend Analysis
- Managerial estimate
- Delphi Technique
Forecast Supply
Internal
- Staffing tables
- Markov Analysis
- Skills inventories
- Management Inven-
tories
- Succession Planning
External
- Demographic
change
- Education of work
done
- Labor Mobility
- Government Poli-
cies
Balance supply
and demand
Recruitment
(shortage)
- Fulltime
- Part time
- Recalls
HUMAN RESOURCE PLANNING MODEL

4. Manpower Allocation & Retention
Manpower allocation helps in managing the impact of deficits and excess in manpower sup-
ply through promotions, transfers and job-rotations. Enhancing manpower utilization requires
managing the dynamics of leadership and motivation.
Manpower retention would mean taking necessary steps to ensure that the organization pro-
vides a conducive-atmosphere to the employees to perform and keeps each employee en-
gaged.
5. Building Requisite Competencies
Once the future manpower forecasts are compared to the current inventory, there may be
some gaps in competencies amongst the available internal resources for them to quali-
fy for the future manpower forecasts. In such cases organizations may choose to de-
velop resources through training programs. A training calendar is designed to ensure
competencies of existing staff are enhanced to meet the future manpower forecasts.
Additional training programs may be designed when organizations are diversifying or
expanding. Training programs may be designed to train existing resources on the latest
improvements and advancements in technology or the related business subject. Training
is provided to improve the knowledge, skill and capability of the employee.
Successful HRP
The responsibilities of the HR Department with respect to manpower planning can be sum-
marized as:
i. To establish HRP as an integral part of the corporate planning activities.
Therefore ensure that they are aware of the companys corporate and business objec-
tives.
ii. Ensure that the top management supports and recognizes the importance of the HRP
process and drives the senior leaders to participate in it and abide by it.
iii. Set aside funds to provide for technological requirements and other supporting costs
such as the creation and maintenance of the skills inventory, training initiatives etc.
iv. Data collection and analysis to be chosen as best suited to the industry and the econom-
ic environment as well as the organizations own plans.
v. Hold the HR department responsible for coordinating the HRP process and tracking
progress with continuous review.
vi. Review the HRP process year on year to identify if there are any changes to be made to
the HRP process itself to make it relevant and useful towards achieving the business
goals.
It is not uncommon for there to be resistance to the HRP function. Some common barriers
are:
(1) The need to frequently change staffing plans depending on the market situation,

(2) Does HR have sufficient knowledge about the business and its objectives to lead the HRP
initiative to successfully contribute to the achievement of business results?
(3) Financial forecasting tends to take precedence over HRP as it impacts the organizations
profits/losses,
(4) balancing long term vs. short term needs of the business often what HR might recom-
mend might go contrary to achieving immediate business results and vice versa,
(5) the role of statistical quantitative information verse qualitative intuitive information each
has its role to play in the HRP process and this usually is a widely debatable aspect on the
projection for human resources requirements, and
(6) Soliciting the support of all the business managers and leaders to contribute to the plan-
ning process by providing all the necessary information and actively participating in the HRP
process this also ensures that the managers remain committed to the human resource plan
through the year.
Importance of HRP
1. It offsets uncertainty and change.
2. It provides scope for advancement and development of employees through T&D.
3. It facilitates the formulation of budgets in an organization.
4. It helps to plan for the physical facilities & working conditions.
5. It helps to plan for the welfare facilities like canteen, schools, hospitals, transport,
child care centers, staff quarters, company stores etc.
6. It helps to take steps to improve the employee contributions in the form of increased
productivity, sales turnover etc.
7. It helps the top management to get a better view of the HR dimensions of business de-
cisions.
8. It helps to provide sufficient time for locating talents.
9. The personnel costs can be minimized since the management can anticipate imbalanc-
es before they become unmanageable and expensive.
10. It serves as the foundation for other personnel functions such as recruitment, selec-
tion, transfers, promotions, training and development.


Factor Affecting HRP

Recent Trends in HRP
1. Outsourcing to reduce the costs and avoid the difficulties in human resources man-
agement, many organizations outsource the canteen, housekeeping, employee welfare
etc.
2. Contingency clause many companies plan for contingency human resources in order
to ensure that no project is delayed due to human factor. This is observed in software
organizations.
Human Resource Planning in Nepal:

Poor Tradition of Human Resource Planning:
Nepal has a poor tradition of human resource planning. The Nepalese managers trend
to regard human resource planning as an area of low priority because of this, Nepalese
organization lacks right numbers and kinds of people at the right place and at the right
time.
Lack of Assessment of Current Human Resource:
Most Nepalese organizations lack up-to-date human resource inventory which de-
scribes the skills current available. They also lack effective human resource data base
information.
Missing Demand Forecast:
Nepalese organization lack proper demand forecast in terms of number and skills of
people required. Business organizations relate revenue forecast which serve as the ba-
sis for the forecast of human resource demand.


Missing Supply Forecast:
Nepalese organization lack proper supply forecast of human resource from inside and
outside sources. Promotion and transfer are not planned in advance. Given the profes-
sionals and skilled technicians are suffering from unemployment.
Mismatch of Demand and Supply:
Nepalese organizations do not proper attention to matching demand and supply fore-
cast to determine shortage and surplus. Succession planning is not done by Nepalese
manager.
Short-term Horizon:
Human resource planning in Nepal has generally one year horizon strategic planning is
very much lacking. Implementation of human resource planning is not effective.
over Staffing and Under Staffing:
Most government agencies and public enterprises in Nepal suffer from over staffing.
The number one priority of Nepalese politician is not done by Nepalese managers.
Private Sector Performance:
The family owned and managed private sector organizations do not bother about human
resource planning. They prefer to hire relatives, friends and near and dear

Human Resource Information System
It is a system designed to supply information required for effective management of human
resources in an organization. A Computerized HRIS is designed to monitor, control and in-
fluence the movement of people from the time they join the organization till the time they
separate from the organization.
Objectives of HRIS
To make the desired information available in the right form to the right person at the
right time;
To supply the required at the reasonable cost;
To use the most efficient methods of processing data;
To provide necessary security and secrecy for important and/or confidential infor-
mation;
To keep the information up to date.
Its scopes
Recruitment sub system information;
Manpower Planning Sub system information;
Personnel administration sub system information;
Training sub system information;

Maintenance Sub System Information;
Appraisal sub system information system;
Payroll sub system information system;
Personnel Research Sub System Information;
Job Analysis and Design subsystem Information
HRIS Applications
Job Descriptions;
HR Planning;
Staffing;
Succession Planning;
Training and Development;
Performance Appraisal;
Job Evaluation;
Compensation;
Climate Analysis
Human Resources Inventory

Human Resources Inventory is an inventory of skills of human resources currently employed
in the organization. It tells management what individual employees can do. The profile of the
human resource inventory can provide information for identifying current or future threats to
the organization's ability to perform .It is necessary for a firm to identify the current capabil-
ity and skills of their employees
Inventory is a term that is use to count tangible objects like goods and raw materials. The in-
ventory of human resources is also prepared in the same way but it is not simply the counting
of heads that are available at present but cataloguing the present and future potentials. The
human resources of the organization are divided into managerial and non-managerial catego-
ries, the skills inventory is related with non-managerial employees and the management in-
ventory is related with the management personnel. The process of preparing a human re-
source inventory involves the determination of personnel whose inventory is to be made, cat-
aloging the factual information of each employee, systematic and detailed appraisal of these
employees and a thorough study of the individuals who have potential for growth.


A competency mapping or skill inventory evaluates all aspects of the person with respect to
the job role to be performed by the person. It evaluates knowledge, skills, attitude, reflection
of attitude that is behavior and possibly values where as skill mapping is restricted to just that
skill. We are using the terms here interchangeably only so that some companies would like
to start with skill and then increase the scope to evaluate the entire set of competencies. But
in true life these cannot be interchangeably used as their scope varies.
A competency mapping exercise results in a report which contains information on
knowledge, skills, abilities, and experiences of current employees. It aims to identify the
skills an employee has demonstrated or has not demonstrated. If the job role requires the em-
ployee to demonstrate skills which the employee has not demonstrated, then that be-
comes a development area for the employee. Skills can be developed through paid and un-
paid work experiences, volunteerism, hobbies, work experiences, and through everyday expe-
rience in life. A skills inventory report shows an employee which skills he or she possesses
and at what proficiency level.

Competency Mapping System
The four essential components of competency mapping system are:
Classification system
Measurement unit
Process of measurement
Accessible Data, Information and Knowledge

Classification System

For any meaningful competency mapping or skills inventory management program, a
clear, well defined and detailed system of classification is important to have in place.
Without a clear classification system, any inventory management program will tend to
fail. Competency mapping or skills inventory cannot be assigned numbers as easily as
numbers are assigned to any physical products. A soft skill is particularly hard to define and
therefore it is important that a good classification system is in place, so that everyone is re-
ferring to the same behaviors, skills and level of the competency. When it comes to
creating the grading system for building a skills inventory, the problem often arises
from a lack of standardized definitions for skills. There are no defined standards acceptable
worldwide. Internally in the organization we don't want a comparison between apples and
oranges. We want a fair comparison and hence a good classification system is essential.

Measurement unit

While companies have some difficulty tracking their inventory of office supplies or other
physical resources which can be measured by number of units, weight, or volume calcu-
lating employee competencies or skills is a different matter.

Organization A & B have 4 customer service executives and 1 customer service man-
ager respectively. Refer Table and analyze if the team and individuals are equal in terms of
competencies? Of course, they are not at all equal in terms of their competencies.

Process of Measurement

The requirement for an easily-administered measurement procedure is probably the
most neglected need of a skills inventory plan. An organization's ability to evaluate
skills on a regular basis and arrive at a suitable measurement can determine program
success. How can organizations develop a practical skills measurement system one that can
be continued to be used long after implementation?
Ease of use and meaningful feedback are important characteristics of an effective
measurement system.

Accessible Data, Information and Knowledge

The success of any inventory management initiative is based on its ability to deliver constant,
actionable results. Skills inventory management is also no exception. The immediate accessi-
bility of objective metrics helps managers to take action such as what training an em-
ployee needs, provide assignments that leverage existing skills and provide assignments
that develop skills that need to be improved (such assignments require the employee to
be mentored) and identifying the right employees to be part of project teams.
With an online skills inventory management system, exact and relevant data is just easily ac-
cessible. No one needs to manage large amounts of data. If a manager is to manage large
amounts of data, his/her initiative in the exercise declines. But if the data is automati-
cally managed by the online system, then his/her inclination is not dented. Using the
data and information, managers gain more knowledge about their team member's com-
petencies. Over a sustained period of knowledge of the proficiency levels of different
skills, help managers take wise decisions and enable them to demonstrate greater wisdom

in decision making. The need for skills inventory management is the highest today in the
post recessionary period.

Succession Planning

What is Succession Planning and what role does it play in your organization? Succession
planning is nothing more than having a systematic process where managers identify, assess
and develop their staff to make sure they are ready to assume key roles within the company.
Having this process in place is vital to the success of the organization because the individuals
identified in the plan will eventually be responsible for ensuring the company is able to tackle
future challenges.
These "high potential" candidates must be carefully selected and then provided training and
development that gives them skills and competencies needed for tomorrow's business envi-
ronment. Another reason its important is because these high potentials will one day become
the leaders of the Company. This is why their development needs to incorporate a broad
range of learning opportunities in your organization.
The individuals should also be exposed to as much of the working environment as possible so
that they gain a good understanding of what the company requires to remain successful.

Finally, organizations that understand the need to manage the development of their high per-
formers are a step ahead of their competitors! The effort required to establish a development
program for future leaders is worthwhile because it creates a motivated and capable group of
employees that are ready to move forward in the organization when the need arises.

It's clear to see that succession planning and development of future leaders does not exist in
isolation - it needs to reflect the company's strategic objective and strategic goals. For any
organization to implement an effective succession plan there are a number of key issues that
need to be considered:
The succession planning program must have the support and backing of the compa-
ny's senior level management
Succession planning must be part of an integrated HR process that includes training,
development and performance appraisal
Identify what skills the organization will need in 5, 10 or 15 years
Critical positions must be identified and included in the Company's succession plan-
ning program
Identify high-performers that are almost ready to step into those critical positions
Analyze the workforce and identify who will be eligible for retirement within the next
five years.
Managers need to identify the responsibilities, skills and competencies that will be
needed by their replacements.

A system for communicating succession planning information to managers must be
established.
A systematic approach for identifying, nominating and selecting potential successors
must be established.
Background information on potential successors, such as education, experience, skills,
appraisals and potential should be reviewed
The training and development requirements of potential successors needs to be deter-
mined
The skills of potential successors must be developed through work experiences, job
rotation, projects and other challenging assignments
A system for monitoring candidate's development plan progress by senior manage-
ment should be established
Succession planning must include a system for providing feedback and encourage-
ment to potential successors
Succession planning is basically a "numbers game" that requires good organizational
skills and the ability to pay attention to details
Finally, the succession plan must belong "to the organization" and not to the HR de-
partment in order to make sure it has the attention it deserves
Succession planning is not something a well-run company can ignore because the conse-
quences of not being prepared to replace key personnel will have a major impact on an organ-
ization's ability to achieve its goals and strategic targets.
The succession planning process needs to be considered as part of the company's strategic,
planning process because it deals with projecting future changes by anticipating management
vacancies and then determining how to meet these challenges.
In its simplest form succession planning is nothing more than getting managers in a company
to use a systemic process to determine the current training and development requirements of
their subordinates.

Approach to Succession Planning and Monitoring

Identify future service
need
Identify key Position
& Competencies
Selection High Poten-
tial Candidates
Monitoring & Eval-
uation
Implementing Train-
ing & Development
Activities
Select Training &
Development Activ-
ities


Job Analysis, Job Specifications, Job Description
What Is Job Analysis?
Job analysis is the systematic study of jobs to identify the observable work activities, tasks,
and responsibilities associated with a particular job or group of jobs.
What job analysis is?
It is a systematic method for gathering information
It focuses on work behaviors, tasks, and outcomes
It identifies the personal qualifications necessary to perform the job and the conditions
under which work is performed
It reports the job as it exists at the time of analysis; not as it was in the past nor as it
exists in another organization
Job analysis is primary tool in personnel management. In this method, a personnel manager
tries to gather, synthesize and implement the information available regarding the workforce
in the concern. A personnel manager has to undertake job analysis so as to put right man on
right job.
There are two outcomes of job analysis:
1. Job description
2. Job specification
The information collected under job analysis is:
Nature of jobs required in a concern.
Nature/ size of organizational structure.
Type of people required to fit that structure.
The relationship of the job with other jobs in the concern.
Kind of qualifications and academic background required for jobs.
Provision of physical condition to support the activities of the concern. For example-
separate cabins for managers, special cabins for the supervisors, healthy condition for
workers, and adequate store room for store keeper.


Steps/ Process in Job Analysis

Identification of Job Analysis Purpose: Well any process is futile until its purpose
is not identified and defined. Therefore, the first step in the process is to determine its
need and desired output. Spending human efforts, energy as well as money is useless
until HR managers dont know why data is to be collected and what is to be done with
it.
Who Will Conduct Job Analysis: The second most important step in the process of
job analysis is to decide who will conduct it. Some companies prefer getting it done
by their own HR department while some hire job analysis consultants. Job analysis
consultants may prove to be extremely helpful as they offer unbiased advice, guide-
lines and methods. They dont have any personal likes and dislikes when it comes to
analyze a job.
How to Conduct the Process: Deciding the way in which job analysis process needs
to be conducted is surely the next step. A planned approach about how to carry the
whole process is required in order to investigate a specific job.

Strategic Decision Making: Now is the time to make strategic decision. Its about
deciding the extent of employee involvement in the process, the level of details to be
collected and recorded, sources from where data is to be collected, data collection
methods, the processing of information and segregation of collected data.
Training of Job Analyst: Next is to train the job analyst about how to conduct the
process and use the selected methods for collection and recoding of job data.
Preparation of Job Analysis Process: Communicating it within the organization is
the next step. HR managers need to communicate the whole thing properly so that
employees offer their full support to the job analyst. The stage also involves prepara-
tion of documents, questionnaires, interviews and feedback forms.
Data Collection: Next is to collect job-related data including educational qualifica-
tions of employees, skills and abilities required to perform the job, working condi-
tions, job activities, reporting hierarchy, required human traits, job activities, duties
and responsibilities involved and employee behaviour.
Documentation, Verification and Review: Proper documentation is done to verify
the authenticity of collected data and then review it. This is the final information that
is used to describe a specific job.
Developing Job Description and Job Specification: Now is the time to segregate
the collected data in to useful information. Job Description describes the roles, activi-
ties, duties and responsibilities of the job while job specification is a statement of ed-
ucational qualification, experience, personal traits and skills required to perform the
job.
Thus, the process of job analysis helps in identifying the worth of specific job, utilizing the
human talent in the best possible manner, eliminating unneeded jobs and setting realistic per-
formance measurement standards.
Job Analysis Method
Though there are several methods of collecting job analysis information yet choosing the one
or a combination of more than one method depends upon the needs and requirements of or-
ganization and the objectives of the job analysis process. Typically, all the methods focus on
collecting the basic job-related information but when used in combination may bring out the
hidden or overlooked information and prove to be great tools for creating a perfect job-
candidate fit.
Selecting an appropriate job analysis method depends on the structure of the organization,
hierarchical levels, nature of job and responsibilities and duties involved in it. So, before exe-
cuting any method, all advantages and disadvantages should be analyzed because the data
collected through this process serves a great deal and helps organizations cope with current
market trends, organizational changes, high attrition rate and many other day-to-day prob-
lems.

Most Common Methods of Job Analysis
Observation Method: A job analyst observes an employee and records all his per-
formed and non-performed task, fulfilled and un-fulfilled responsibilities and duties,
methods, ways and skills used by him or her to perform various duties and his or her
mental or emotional ability to handle challenges and risks. However, it seems one of
the easiest methods to analyze a specific job but truth is that it is the most difficult
one. Why? Lets Discover.
It is due to the fact that every person has his own way of observing things. Different
people think different and interpret the findings in different ways. Therefore, the pro-
cess may involve personal biasness or likes and dislikes and may not produce genuine
results. This error can be avoided by proper training of job analyst or whoever will be
conducting the job analysis process.
This particular method includes three techniques: direct observation, Work Methods
Analysis and Critical Incident Technique. The first method includes direct observa-
tion and recording of behaviour of an employee in different situations. The second in-
volves the study of time and motion and is specially used for assembly-line or factory
workers. The third one is about identifying the work behaviors that result in perfor-
mance.
Interview Method: In this method, an employee is interviewed so that he or she
comes up with their own working styles, problems faced by them, use of particular
skills and techniques while performing their job and insecurities and fears about their
careers.

This method helps interviewer know what exactly an employee thinks about his or her
own job and responsibilities involved in it. It involves analysis of job by employee
himself. In order to generate honest and true feedback or collect genuine data, ques-
tions asked during the interview should be carefully decided. And to avoid errors, it is
always good to interview more than one individual to get a pool of responses. Then it
can be generalized and used for the whole group.
Questionnaire Method: Another commonly used job analysis method is getting the
questionnaires filled from employees, their superiors and managers. However, this
method also suffers from personal biasness. A great care should be takes while fram-
ing questions for different grades of employees.
In order to get the true job-related info, management should effectively communicate
it to the staff that data collected will be used for their own good. It is very important
to ensure them that it wont be used against them in anyway. If it is not done properly,
it will be a sheer wastage of time, money and human resources.
These are some of the most common methods of job analysis. However, there are several
other specialized methods including task inventory, job element method, competency profil-
ing, technical conference, threshold traits analysis system and a combination of these meth-
ods. While choosing a method, HR managers need to consider time, cost and human efforts
included in conducting the process.
Purpose of Job Analysis
Job Analysis plays an important role in recruitment and selection, job evaluation, job design-
ing, deciding compensation and benefits packages, performance appraisal, analyzing training
and development needs, assessing the worth of a job and increasing personnel as well as or-
ganizational productivity.
Recruitment and Selection: Job Analysis helps in determining what kind of person
is required to perform a particular job. It points out the educational qualifications, lev-
el of experience and technical, physical, emotional and personal skills required to car-
ry out a job in desired fashion. The objective is to fit a right person at a right place.
Performance Analysis: Job analysis is done to check if goals and objectives of a par-
ticular job are met or not. It helps in deciding the performance standards, evaluation
criteria and individuals output. On this basis, the overall performance of an employee
is measured and he or she is appraised accordingly.
Training and Development: Job Analysis can be used to assess the training and de-
velopment needs of employees. The difference between the expected and actual out-
put determines the level of training that need to be imparted to employees. It also
helps in deciding the training content, tools and equipments to be used to conduct
training and methods of training.

Compensation Management: Of course, job analysis plays a vital role in deciding
the pay packages and extra perks and benefits and fixed and variable incentives of
employees. After all, the pay package depends on the position, job title and duties and
responsibilities involved in a job. The process guides HR managers in deciding the
worth of an employee for a particular job opening.
Job designing and Redesigning: The main purpose of job analysis is to streamline
the human efforts and get the best possible output. It helps in designing, redesigning,
enriching, evaluating and also cutting back and adding the extra responsibilities in a
particular job. This is done to enhance the employee satisfaction while increasing the
human output.
Therefore, job analysis is one of the most important functions of an HR manager or depart-
ment. This helps in fitting the right kind of talent at the right place and at the right time.
Advantages of Job Analysis
1. Job analysis helps the personnel manager at the time of recruitment and selection of
right man on right job.
2. It helps him to understand extent and scope of training required in that field.
3. It helps in evaluating the job in which the worth of the job has to be evaluated.
4. In those instances where smooth work force is required in concern.
5. When he has to avoid overlapping of authority- responsibility relationship so that dis-
tortion in chain of command doesnt exist.
6. It also helps to chalk out the compensation plans for the employees.

7. It also helps the personnel manager to undertake performance appraisal effectively in
a concern.
A personnel manger carries analysis in two ways:

a. Job description
b. Job specification
1. JOB DESCRIPTION is an organized factual statement of job contents in the form of
duties and responsibilities of a specific job. The preparation of job description is very
important before a vacancy is advertised. It tells in brief the nature and type of job.
This type of document is descriptive in nature and it constitutes all those facts which
are related to a job such as :
Title/ Designation of job and location in the concern.
The nature of duties and operations to be performed in that job.
The nature of authority- responsibility relationships.
Necessary qualifications those are required for job.
Relationship of that job with other jobs in a concern.
The provision of physical and working condition or the work environment
required in performance of that job.
Advantages of Job Description
1. It helps the supervisors in assigning work to the subordinates so that he can
guide and monitor their performances.
2. It helps in recruitment and selection procedures.

3. It assists in manpower planning.
4. It is also helpful in performance appraisal.
5. It is helpful in job evaluation in order to decide about rate of remuneration for
a specific job.
6. It also helps in chalking out training and development programmes.
2. JOB SPECIFICATION is a statement which tells us minimum acceptable human
qualities which helps to perform a job. Job specification translates the job description
into human qualifications so that a job can be performed in a better manner. Job speci-
fication helps in hiring an appropriate person for an appropriate position. The contents
are :
Job title and designation
Educational qualifications for that title
Physical and other related attributes
Physique and mental health
Special attributes and abilities
Maturity and dependability
Relationship of that job with other jobs in a concern.
Advantages of Job Specification
1. It is helpful in preliminary screening in the selection procedure.
2. It helps in giving due justification to each job.
3. It also helps in designing training and development programmes.
4. It helps the supervisors for counseling and monitoring performance of em-
ployees.
5. It helps in job evaluation.
6. It helps the management to take decisions regarding promotion, transfers and
giving extra benefits to the employees.
From the above advantages, we can justify the importance of job analysis and its related
products. Both job description as well as job specification is important for personnel manager
in personnel management function. Therefore, job analysis is considered to be the primary
tool of personnel management.


Job Design

Job design is defined as the process of deciding on the content of a job in terms of duties and
responsibilities of the job holders, on the methods to be used in carrying out the job, in terms
of techniques, systems and procedures and on the relationships that should exists between the
job holder and his superiors, subordinates and colleagues. Factors affecting job design are
organizational factors, environmental factors and behavioral factors.

Job design specifies the content of job and the method of doing the job. It is the process of
determining specific task to be included in a job and the method of performing those tasks.
Job design integrates job content and method of doing the job in a way that meet the need of
the employer and employees. The key to successful job design lies in balancing the need of
the organization and employees.
>According to Decenzo and Robbins, Job design is the way in which, job tasks are orga-
nized in to a unique of work.

JOB DE-
SIGN

PRIMARY
ACTIVITIES
SECONDARY
ACTIVITIES
JOB DESIGN
OPTIONS
Job Rotation
Job Enlargement
Job Enrichment
JOB ANALYSIS
Methods
Techniques
Relations
Responsibilities
JOB ANALYSIS AND: AREA OF APPLICATION
Job Description
Job Specifica-
tion
Employee Speci-
fication
Application Ar-
eas

Human Re-
source plan
Performance
Analysis
Training
Development
Job Evaluation
Human Rela-
tion
Grievance Re-
dressed
Industrial Re-
lation


Importance of Job Design
Job design is a very important function of staffing. If the jobs are designed properly, then
highly efficient managers will join the organisation. They will be motivated to improve the
productivity and profitability of the organisation. However, if the jobs are designed badly,
then it will result in absenteeism, high labor turnover, conflicts, and other labor problems.
Benefits of Job Design
The following are the benefits of a good job design:
1. Employee Input: A good job design enables a good job feedback. Employees have
the option to vary tasks as per their personal and social needs, habits and circumstanc-
es in the workplace.
2. Employee Training: Training is an integral part of job design. Contrary to the phi-
losophy of leave them alone job design lays due emphasis on training people so that
are well aware of what their job demands and how it is to be done.
3. Work / Rest Schedules: Job design offers good work and rest schedule by clearly de-
fining the number of hours an individual has to spend in his/her job.
4. Adjustments: A good job designs allows for adjustments for physically demanding
jobs by minimizing the energy spent doing the job and by aligning the manpower re-
quirements for the same.
Job design is a continuous and ever evolving process that is aimed at helping employees
make adjustments with the changes in the workplace. The end goal is reducing dissatisfac-
tion, enhancing motivation and employee engagement at the workplace.
Approaches to Job Design
Job design is the next step after job analysis that aims at outlining, and organizing tasks and
responsibilities associated with a certain job. It integrates job responsibilities and qualifica-
tions or skills that are required to perform the same. There are various methods or approaches
to do this. The important ones are discussed below
Human Approach
The human approach of job design laid emphasis on designing a job around the people or
employees and not around the organizational processes. In other words it recognizes the need
of designing jobs that are rewarding (financially and otherwise) and interesting at the same
time.
According to this approach jobs should gratify an individuals need for recognition, respect,
growth and responsibility. Job enrichment as popularized by Herzbergs research is one the

ways in human approach of job design. Herzberg classified these factors into two categories -
the hygiene factors and the motivators.
Motivators include factors like achievement, work nature, responsibility, learning and growth
etc that can motivate an individual to perform better at the work place.
Hygiene factor on the other hand include things like working conditions, organizational poli-
cies, salary etc that may not motivate directly but the absence of which can lead to dissatis-
faction at the work place.
Engineering Approach
The engineering approach was devised by FW Taylors et al. They introduced the idea of the
task that gained prominence in due course of time. According to this approach the work or
task of each employee is planned by the management a day in advance. The instructions for
the same are sent to each employee describing the tasks to e undertaken in detail. The details
include things like what, how and when of the task along with the time deadlines.
The approach is based on the application of scientific principles to job design. Work, accord-
ing to this approach should be scientifically analyzed and fragmented into logical tasks. Due
emphasis is then laid on organizing the tasks so that a certain logical sequence is followed for
efficient execution of the same. The approach also lays due emphasis on compensating em-
ployees appropriately and training them continuously for work efficiency.
The Job Characteristics Approach
The job characteristics approach was popularized by Hickman and Oldham. According to this
approach there is a direct relationship between job satisfaction and rewards. They said that
employees will be their productive best and committed when they are rewarded appropriately
for their work. They laid down five core dimensions that can be used to describe any job -
skill variety, task identity, task significance, autonomy and feedback.
Skill variety: The employees must be able to utilize all their skills and develop new
skills while dealing with a job.
Task Identity: The extent to which an identifiable task or piece or work is required to
be done for completion of the job.
Task Significance: How important is the job to the other people, what impact does it
create on their lives?
Autonomy: Does the job offer freedom and independence to the individual perform-
ing the same.
Feedback: Is feedback necessary for improving performance.
These are different approaches but all of them point to more or less the same factors that need
to be taken into consideration like interest, efficiency, productivity, motivation etc. All these
are crucial to effective job design.

Issue in Job Design

Telecommuting / Work from Home: Telecommuting or work from home is considered as
the best alternative of working from the actual office. The concept of virtual office is gaining
more and more popularity because of ease and convenience associated with it. By using com-
puter networks, fax machines, telephones and internet connection, employees can communi-
cate and perform the job from home. It eliminates the need of coming to office everyday and
offers employees the convenience to work at the comfort of their home.
Though there are lots of advantages associated with this working style but it suffers from
many limitations. It allows employees to stay at home and manage their job tasks and func-
tions without actually being present in the office but it doesnt allow them to communicate
with other employees and establishing relationships with them. They only deal with machines

whole day, thus lose creativity. Moreover, it is a great hindrance in their way as it does not
allow skill up gradation.
Job Sharing: It is the second most preferable alternative of traditional working styles
where two or more individuals share the responsibilities of a full time job. They divide the
tasks, responsibilities and compensation according to their mutual consent. This option is
generally used by women who are on maternity leave or have family and kids to look after
but want to continue their job. These days, organizations are open to this kind of working
style where two or more individuals can share a job.

Flexi-Working Hours: These days, organizations allow their employees to work according
to the timings that suit them best. There are 3-4 working schedules and individuals can
choose any one of them depending upon their availability. Employees can work in early
hours as well as night hours. This is good for those individuals who have colleges or some
other engagements during the day or specific hours of the day. The best part is that unlike tel-
ecommuting, flexi-timings give them chance to communicate with other employees too.

Alternative Work-Patterns: Companies these days allow their employees to work on al-
ternate months or seasons. Though the concept is not that common in India but can be seen in
European and American world of work. They also have the option of working two to three
full days and can relax after that.
According to the latest concept, employees can work for fixed number of hours and then can
attend to their personal needs during the left days.
Techno stress: Techno stress is the latest technology to keep a check on employees per-
formance even when they choose to work from home. Because of the introduction of new
machines, there performance can be electronically monitored even when they are not aware
of it.
Task Revision: Task revision is nothing but modification of existing work design by reduc-
ing or adding the new job duties and responsibilities to a specific job.
Factor Affecting Job Design
Broadly speaking the various factors that affect a job design can classified under three heads.
They are:
1. Organizational Factors
2. Environmental Factors
3. Behavioral Factors


1. Organizational Factors
Organizational factors that affect job design can be work nature or characteristics, work flow,
organizational practices and ergonomics.
Work Nature: There are various elements of a job and job design is required to clas-
sify various tasks into a job or a coherent set of jobs. The various tasks may be plan-
ning, executing, monitoring, controlling etc and all these are to be taken into consid-
eration while designing a job.
Ergonomics: Ergonomics aims at designing jobs in such a way that the physical abili-
ties and individual traits of employees are taken into consideration so as to ensure ef-
ficiency and productivity.
Workflow: Product and service type often determines the sequence of work flow. A
balance is required between various product or service processes and a job design en-
sures this.
Culture: Organizational culture determines the way tasks are carried out at the work
places. Practices are methods or standards laid out for carrying out a certain task. The-
se practices often affect the job design especially when the practices are not aligned to
the interests of the unions.

2. Environmental Factors
Environmental factors affect the job design to a considerable extent. These factors include
both the internal as well as external factors. They include factors like employee skills and
abilities, their availability, and their socio economic and cultural prospects.
Employee availability and abilities: Employee skills, abilities and time of availabil-
ity play a crucial role while designing of the jobs. The above mentioned factors of
employees who will actually perform the job are taken into consideration. Designing a
job that is more demanding and above their skill set will lead to decreased productivi-
ty and employee satisfaction.
Socio economic and cultural expectations: Jobs are nowadays becoming more em-
ployee centered rather than process centered. They are therefore designed keeping the
employees into consideration. In addition the literacy level among the employees is
also on the rise. They now demand jobs that are to their liking and competency and
which they can perform the best.


3. Behavioral Factors
Behavioral factors or human factors are those that pertain to the human need and that
need to be satisfied for ensuring productivity at workplace. They include the elements
like autonomy, diversity, feedback etc. A brief explanation of some is given below:
1. Autonomy: Employees should work in an open environment rather than one
that contains fear. It promotes creativity, independence and leads to increased
efficiency.
2. Feedback: Feedback should be an integral part of work. Each employee
should receive proper feedback about his work performance.
3. Diversity: Repetitive jobs often make work monotonous which leads to bore-
dom. A job should carry sufficient diversity and variety so that it remains as
interesting with every passing day. Job variety / diversity should be given due
importance while designing a job.
4. Use of Skills and abilities: Jobs should be employee rather than process cen-
tered. Though due emphasis needs to be given to the latter but jobs should be
designed in a manner such that an employee is able to make full use of his
abilities and perform the job effectively.

Feedback
Organizational Factor
Environmental Factor
Behavioral Factor
Job Design
Productivity and
Job Satisfaction

Attracting of high performance workforce Recruitment and Selection
Recruitment
Recruitment of applicants is a function that comes before selection. It helps to create a list
of prospective employees for the organization so that the management can choose the
right person for the right job at the right time from this list. The main goal or objective of the
recruitment is to help in the selection process.

Recruitment can be defined as: A process of finding and getting capable applicants or em-
ployees or manpower for employment. This process begins when new people or employees
are sought or found. It ends when applicants matching the job description submit their re-
sume and application.

The result is a list of applications from which new employees are selected or chosen.
Edwin B. Flippo has defined recruitment as, The process of searching the candidates for
employment and stimulating them to apply for jobs in the organization.

Recruitment is a continuous process. The firm attempts to develop a list of qualified candi-
dates for the future manpower resource needs. The vacancies may or may not exist in the
firm. Usually, the recruitment process begins when a manager realizes that there is a possibil-
ity of a vacancy or an anticipated (there may be) vacancy in the organization.

The ability to identify the correct talent for not just the role/job but also from the organiza-
tional values perspective can be summarized as the key recruiting challenge.
While an organization might have established techniques of their own to hire, there is no
easy, fool-proof method for assessing a candidate even if for the simplest job. The time that
today's organizations spend on this activity in not just planning for it but also its execution.
The length and complexity of the modern selection procedure are tangible evidence of this
fact. Recruitment or manpower selection process is the first step in the employment of talent
and the methods through which this talent is brought into a job has much to do with the ulti-
mate success or failure of such employment. It is a strange paradox that on one hand we have
a surplus of educated talent available in the market awaiting employment while on the other
hand organizations struggle to find the right talent. Therefore the employability of the educat-
ed talent is fast emerging as the single largest challenge, for India at least. Therefore recruit-
ment has been regarded as the most important function of human resources administration,
because unless the right type of people are hired; even the best plans, organization charts and
control systems would be rendered ineffective. Careful recruitment of employees is particu-
larly important in India for at least two key reasons: (a) it is not easy to fire a employee. It has
both societal as well as legal implications. Labour Court adjudicating such disputes would
determine whether the termination of service was justified and to order reinstatement if such
order was appropriate. Organizations have to maintain clear documentation of the perfor-
mance of an employee which is objectively and fairly recorded to ensure that the employee
was given adequate opportunity to do the job and was supported by the employer in this ef-
fort. Failure to carry out this procedure undermines the case if it goes to any judicial court.

(b) The chances of mismatching the job and the person are much higher in India. With re-
sume's that carry fictitious information this challenge is compounded. Under these conditions,
the pressure to properly match a candidate to a job is only one-sided, that is, from employer's
side only.

Attracting Candidates
Organizations recruitment strategy plays the most significant role in its task of finding
skilled workforce. Right candidate with the required skills, qualifications and attitude
are essential to achieving an organizations strategic goals and objectives.
Attracting candidates is the initial and most important task in the recruitment process. It is
essential for organization to use the most efficient technique to attract the best candidates.
Apart from traditional methods of recruitment by agencies and advertisements, organizations
are now looking for most competent, innovative and cost effective ways to attract the right
candidate.
Organizations spend major portion of their time and resources in the process of at-
tracting candidates for recruitment purposes. The various methods of attracting candi-

dates are printed adverts, external agencies, internet advertising, education establish-
ments, and referrals from existing members of staff.
In order to catch the attention of the highest quality candidate in current aggressive
market, a planned approach is required which is constantly reviewed to maintain a com-
petitive edge. Successful approach combines a wide range of advertising medium, network-
ing events, walk-in-interviews, outsourcing recruitment and candidate incentive schemes to
encourage the best talent.
Forms of Attracting Candidates
Using Your Network / Word of Mouth
Today most of the people have established their contacts with ex-colleagues, class-
mates, friends, relatives, acquaintances and service providers on social networking web-
sites like face book, LinkedIn, twitter and the likes. Attract candidates via these mediums.
Apart from this you have a network of the above not yet on these social networking or
business networking websites. Even such contacts can be activated.
Remember word-of-mouth can be used in addition to advertising to give maximum
benefits. Using your network without advertising could be seen to be indirectly discrimina-
tory by excluding those groups of people who may not be part of your network.
Internal and external Recruitments
The different sources of recruitment are classified into two categories, viz.
1. Internal: sources of recruitment are from within the organization.
2. External: sources of recruitment are from outside the organization.

Internal Sources of Recruitment
The internal sources of recruitment are:-
1. Promotions: Promotion means to give a higher position, status, salary and responsi-
bility to the employee. So, the vacancy can be filled by promoting a suitable candidate
from the same organization.
2. Transfers: Transfer means a change in the place of employment without any change
in the position, status, salary and responsibility of the employee. So, the vacancy can
be filled by transferring a suitable candidate from the same organization.
3. Internal Advertisements: Here, the vacancy is advertised within the organization.
The existing employees are asked to apply for the vacancy. So, recruitment is done
from within the organization.
4. Retired Managers: Sometimes, retired managers may be recalled for a short period.
This is done when the organization cannot find a suitable candidate.
5. Recall from Long Leave: The organization may recall a manager who has gone on a
long leave. This is done when the organization faces a problem which can only be
solved by that particular manager. After he solves the problem, his leave is extended.

Merits of Internal Sources
The benefits / advantages / merits of using internal sources of recruitment:-
1. It is time saving, economical, simple and reliable.
2. There is no need of induction training because the candidate already knows every-
thing about the organization, the work, the employee, the rules and regulations, etc.
3. It motivates the employees of work hard in order to get higher jobs in the same organ-
ization.
4. It increases the morale of the employees and it improves the relations in the organiza-
tion.
5. It reduce executive turnover.
6. It develops loyalty and a sense of responsibility.
Demerits of Internal Sources
The limitations / demerits of using internal sources of recruitment:-
1. It prevents new blood from entering the organization. New blood brings innovative
ideas, fresh thinking and dynamism into the organization.
2. It has limited scope because it is not possible to fill up all types of vacancies from
within the organization.
3. The position of the person who is promoted or transferred will be vacant.
4. There may be bias or partiality in promoting or transferring persons from within the
organization.
5. Those who are not promoted will be unhappy.
6. The right person may be promoted or transferred only if proper confidential reports of
all employees are maintained. This involves a lot of time, money and energy.
External Sources of Recruitment
The external sources of recruitment are:-
1. Management Consultants: Management consultants are used for selecting higher-
level staff. They act as a representative of the employer. They make all the necessary
arrangements for recruitment and selection. In return for their services, they take a
service charge or commission.
2. Public Advertisements: The Personnel department of a company advertises the va-
cancy in newspapers, the internet, etc. This advertisement gives information about the
company, the job and the required qualities of the candidate. It invites applications
from suitable candidates. This source is the most popular source of recruitment. This
is because it gives a very wide choice. However, it is very costly and time consuming.
3. Campus Recruitment: The organization conducts interviews in the campuses of
Management institutes and Engineering Colleges. Final year students, who're soon to

get graduates, are interviewed. Suitable candidates are selected by the organization
based on their academic record, communication skills, intelligence, etc. This source is
used for recruiting qualified, trained but inexperienced candidates.
4. Recommendations: The organization may also recruit candidates based on the rec-
ommendations received from existing managers or from sister companies.
5. Deputation Personnel: The organization may also recruit candidates who are sent on
deputation by the Government or Financial institutions or by holding or subsidiary
companies.
Advantages of External Sources
The benefits / merits / advantages of using external sources of recruitment:-
1. It encourages young blood with new ideas to enter the organization.
2. It offers wide scope for selection. This is because a large number of suitable candi-
dates will come for the selection process.
3. There are less chances of bias or partiality.
4. Here there is no need to maintain confidential records.
5.
Limitations of External Sources
The demerits / limitations of using external sources of recruitment:-
1. It is very costly. This is because advertisements, test, medical examination etc., has to
be conducted.
2. It is very time consuming. This is because the selection process is very lengthy.
3. It may not develop loyalty among the existing managers.
4. The existing managers may leave the organization if outsiders are given higher post.
1. Fill up all types of vacancies from within the organization.
2. The position of the person who is promoted or transferred will be vacant.
3. There may be bias or partiality in promoting or transferring persons from within the
organization.
4. Those who are not promoted will be unhappy.
5. The right person may be promoted or transferred only if proper confidential reports of
all employees are maintained. This involves a lot of time, money and energy.
Reliability and validity are key concepts in the process of selecting among job ap-
plicants, since the main goal of selection is to make accurate predictions about which in-
dividuals will perform well on the job. No matter which selection method is used (e.g. in-
terviews or work sample tests) the method must be both reliable and valid. Reliability re-
fers to how stable or repeatable a measurement is over a variety of testing conditions.
That is, a test is reliable to the extent that the same person working under the same condi-

tions produces approximately the same test results at different time periods. The reliabil-
ity of a selection measure can be judged in a variety of ways. One common way to assess
reliability, test-retest reliability, involves correlating the scores of applicants given the
same test on two different occasions. Alternative-form reliability (also called parallel
forms) is determined by correlating scores from two alternate forms of the same test.
When a measuring tool relies on the judgments of people, reliability is often determined
by using inter rater reliability. This type of reliability measures the extent to which the as-
sessments of two or more individuals are consistent with each other.
For a selection measure to be useful, it's not enough for it to be repeatable or stable (i.e. relia-
ble). It must also be valid. There are numerous ways of assessing validity, but they all focus
on two basic issues--what a test measures and how well it has measured it. There are three
types of validity that are relevant for human resource management--construct, content, and
criterion-related.
A construct is a trait that is not typically observable (e.g. leadership, verbal ability, perceptual
speed, or motivation). A test has construct validity when it actually measures the unobserva-
ble trait that it claims to measure. Because traits cannot be directly observed, however, con-
struct validity cannot be established by a single study but can be assumed to exist only on the
basis of a large body of empirical work yielding consistent results.
The degree to which a test, interview, or performance evaluation measures the skill,
knowledge, or ability to perform the job is called content validity. That is, a content valid test
provides a representative measure of important aspects of job performance. To establish con-
tent validity, an employer must determine the exact performance requirements of a specific
job and develop a selection procedure or instrument around an actual sample of the work that
is to be performed. Content validity is achieved primarily through a process of expert judg-
ment. Content validity is not appropriate for more abstract job behaviors such as leadership
potential or work ethic. (In those situations construct validity rather than content validity is
appropriate.) It also assumes that the applicant must have the knowledge, skills, or abilities at
the time of hiring. Thus, it is not appropriate to use content validation in settings where the
applicant is expected to learn the job in a formal training program after being hired.
The extent to which a selection technique can accurately predict one or more important ele-
ments of job behavior is referred to as criterion-related validity. Scores on a test (or perfor-
mance on a simulated exercise) are correlated with measures of actual on-the-job perfor-
mance. The test (or simulation) is called a predictor; the performance score is called the crite-
rion. Criteria relevant to personnel selection include measures such as quality or quantity of
output, supervisory ratings, absenteeism, accident rate, sales, or whatever measure is most
relevant to the organization. The organization must carefully choose a measure that best re-
flects the actual contributions of employees to its effectiveness. There are two methods for
establishing criterion-related validity--predictive and concurrent. Predictive validity is deter-
mined by using the scores obtained from a sample of applicants for a job. The procedure in-
cludes (1) administer the test to a large sample of applicants. (2) Select individuals for the
job, preferably without using the test whose validity is being measured in the hiring decision.

(3) Wait an appropriate amount of time and then collect measures of job performance from
those hired. (4) Determine the strength of the relationship between the predictor and criterion,
usually accessed via a correlation coefficient. Predictive validation is used rather infrequently
because it is relatively more costly and time consuming than the concurrent validation meth-
od.
Concurrent validity is also used to determine whether a selection test can predict job perfor-
mance. In the concurrent validation process, the test is administered to present employees
performing the job. At approximately the same time, performance measures for these em-
ployees are also collected. The test scores are then correlated with the performance measures.
If the test is significantly related to performance, it could be used with future applicants in the
selection process.
When testing an applicant the scores of the tests, when given on different days, should remain
consistent or close to the same on any given date. This means the selection is reliable. Valid-
ity is achieved by giving the applicant tests that simulate the work they will be expected to
do. The decision to hire the person or not can be based on the individuals IQ related to some
required trait (construct), or it can be criterion-related measurements of their tests: compared
to other applicants (predictive), compared to current employees (concurrent) (Decenzo &
Robbins, 2006, p. 188-189).
Improving Selection Reliability
For a selection process to be valid, it must also be reliable. That means the process must
measure what it is designed to measure and do so consistently over time. For instance, how
consistently can a Brix refract meter gauge sugar content in table grapes? How reliable is a
scale when measuring the weight of a calf? And how often does an employee selection pro-
cess result in hiring effective workers?
Reliability is measured in terms of both (1) selection scores and (2) on-the-job performance
The Validity & Reliability of Employment Testing

Businesses use employment testing to help make decisions about hiring and promoting em-
ployees. Employers use a variety of tests, including personality, intelligence, job skills,
knowledge, physical ability, situational judgment and language proficiency tests. Title VII of
the Civil Rights Act of 1964 prohibits the use of employment tests "designed, intended or
used to discriminate because of race, gender, religion, age or national origin." Test validity
and reliability are two metrics used to ensure that employment tests are not discriminatory.

Validity
Validity measures the degree to which a test actually measures what it claims to
measure. Validity is determined by research conducted by test publishers, using the
guidelines established by the Equal Employment Opportunity Commission (EEOC)
and professional organizations such as the Society for Industrial Organizational Psy-
chologists. For example, the Five Factor Model of Personality (FFM or Big 5) is con-
sidered a good predictor of overall job performance by human resources profession-
als. Various FFM tests were developed and validated in the early 1990s and under-
went a second round of validity testing in 2003 to ensure that they continue to accu-
rately reflect personality factors related to employment.
Types of Validity
The EEOC has approved three types of validity tests. Content validity relates to job-
function testing, including mathematics, typing and certification tests for professional
organizations, such as registered nurses. Content validity identifies specific behaviors,
knowledge and tasks required for a given job. For a test to be valid, the content must
be directly linked to the job for which a person is applying. Criterion validity deter-
mines whether a test accurately predicts on-the-job performance. The applicant's test
results are compared to subsequent job performance using performance appraisals,
productivity and attendance records. Construct validity identifies which dimensions of
a test relate to one another. For example, honesty and dependability are not the same
but are related as a part of a person's personality and behavior.
Reliability
Reliability means that a test produces consistent results over time. If a person takes a
test today and then takes the same test six months from now, the test would be con-
sidered reliable if the results of both tests are similar but not necessarily identical. For
example, if a person scores highly on honesty on the first test, it is expected that the
honesty score on the second test would also be high.
A Good Employment Test
A good employment test must be valid and reliable. It must measure what it claims to
measure -- it is valid; and do so consistently -- it is reliable. It is directly related to the
job for which a person is being considered, and it measures one or more important job
characteristics. It is presented in a format and style appropriate to the test taker's level
of education. A good test also gives decision makers information not obtained through
other methods, such as applications, resumes, interviews, reference checks and work
samples. Finally, it complies with EEOC requirements and does not discriminate
against people based on age, gender, national origin or religion.

Testing and selecting employees selection tests and tools

There is no shortcut to fair and accurate evaluation of a candidate. As mentioned earlier, the
hiring procedures are therefore, generally long and multiple. Organizations are constantly
evaluating the selections tools they use to hire and keep innovating to ensure they hire quality
candidates.
Steps in Selection Process:
1. Initial or preliminary interview
2. Application blank or blanks.
3. Check of references.
4. Skill / Psychological tests.
5. Employment interview
6. Approval by the manager.
7. Medical examination.
8. Induction or orientation.

Preliminary Interview

The more non-selective the recruitment programme, the more likely it is that a preliminary
interview will be required. This initial interview is usually quite short and has as its object the
elimination of the obviously unqualified. In many instances it is a over-telephone / short face-
to-face interview conducted at a desk. The facts and impressions collected are of the type
generally obtained in an initial interview. Many firms do not bother to initiate any paperwork
at this early stage. If the applicant appears to have some chance of qualifying for existing job
openings, he or she is given the application blank to complete.

Application Blank

An application blank is a traditional, widely accepted template for getting information from a
prospective applicant. This enables the recruiter to qualify the candidate to the next level in
the selection process and is used extensively subsequently during the selection process. The
blank aids in the interview by indicating areas of interest and discussion. It is a good means
of quickly collecting verifiable basic historical data from the candidate. It also is a excellent
document to share with the manager and with the interviewers and is a useful device for stor-
ing information for, later reference. These templates generally carry information on bio-
graphical data, educational attainment, work experience, salary, personal items, and other
items such as names and addresses of previous employers, references etc.


Manual Employees
ENVISION GRAPHICS PVT.LTD.
KATHMANDU-560 080
Date
Name

Address
Date of Birth: Single/Married/Widowed/Divorced
Position Applied for

Details of previous jobs, including present one, if still employed:

Name and ad-
dress of Em-
ployer
Type of work
done
To From Reason for
leaving
1
2

Physical disabilities:
Have you ever worked for this concern before? : Yes/No
Engaged/Not Engaged........ Department
Due to Start.. .................... Interviewer

Check of References

The use of references is common in most selection procedures. It involves minimum of effort
and time/money. The objective is to obtain evaluation of prior employers and professional
colleagues, who have known the candidate in a professional capacity. Checks on references
are made by mail or telephone, and occasionally in person, and by using a reference form.

Skill & Psychological Tests

The next step in the procedures outlined above is that of testing. The use of tests is common
and most popular in the lower levels in an organization. It serves as a excellent qualifying
criteria and in jobs that are dependent on a skill or a specific competency it is very useful.
The objectivity of the test results make it especially popular and a fair assessment of the indi-
vidual. Most organizations do not use psychological tests. However, there is a direct relation-
ship between the size and firm and the use of such tests in hiring. Most of the larger compa-
nies that can afford to have a more detailed and accurate selection procedure do utilize some
form of employment testing. It is the smaller company that frequently does not bother with
tests, but places greater reliance upon the interview.


Interviewing

Interviewing is probably the most widely used single method of selection. A substantial
amount of subjectivity, and therefore, unreliability, is to be expected from interviewing when
used as a tool of evaluation.
The interview consists of interaction between interviewer and applicant. If handled properly,
it can be a powerful technique in achieving accurate information and getting access to materi-
al otherwise unavailable. Organizations aware of the challenges of using interviews have
come up with a variety of ways to overcome the subjectivity. The use of multiple rounds of
interview (even up to 8-10 rounds) and use of panel interviews are some common work-
around.

Four kinds of interviews for selection have been identified. These are:

1. Preliminary interview: These interviews are preliminary screening of applicants to de-
cide whether a more detailed interview will be worthwhile. The applicant is given job de-
tails during the interview to afford him freedom to decide whether the job will suit him.
This method saves the company's time and money.
2. Stress interview: Stress interviews are deliberate attempts to create pressure to observe
how an applicant performs under stress. Methods used to induce stress range from fre-
quent interruptions and criticism of an applicant's opinion, to keeping silent for an ex-
tended period of time. The most important advantage of the stress interview is that helps
to demonstrate important personality characteristics which would be difficult to observe
in tension-free situations. However, stress-inducing must be done carefully by trained and
skilled interviewers.
3. Depth interview: Depth interviews cover the complete life history of the applicant and
include such areas as the candidate's work experience, academic qualifications, health in-
terest, and hobbies. It is an excellent method for executive selection, performed by quali-
fied human resources.
4. Patterned interview: Patterned interviews are a combination of direct and indirect ques-
tioning of the applicant. The interviewer has certain clues and guidelines to areas which
should be probed deeply and the interview also encourages the candidate to express the
relevant information freely. After the patterned interview is complete, the interviewer
should evaluate the candidate on the basis of practical experience. According to R.N.
McCurry and others, certain factors lead to accurate predictions of the candidate's suita-
bility for a particular position. The factors are: (1) basic character traits, (2) motivation,
and (3) emotional maturity. One advantage of a patterned interview is that systematic and
chronological information is obtained, and hence this yields to statistical analysis.
5. Approval by the Manager
Following the outlined procedure, we should now be of the opinion that a candidate who
has successfully completed all steps so far should be hired. In executing the recruitment
unit screening functions, the emphasis tends to be more on formal qualifications and gen-
eral suitability. When the manager takes over, the emphasis tends to switch toward more

specifically job oriented worker characteristics such as training and relevant past experi-
ence.
6. Medical Examination
The medical examination is an employment step found in most businesses. It can vary
from a very comprehensive examination and matching of an applicant's physical capabili-
ties to job requirements to a simple check of general physical appearance and well-being.
In the selection procedure the physical examination has at least three basic objectives.
First, it serves to ascertain the applicant's physical capabilities.
The second objective of the examination is to protect the company against unwarranted
claims under workers' compensation laws, or against lawsuits for damages. And the final
objective is to prevent communicable diseases from entering the organization.
7. Induction
Induction is concerned with introducing or orienting a new employee to the organization.
Organizations could have induction programs of duration of 1-3 days and even up to 1/3/6
months. Common objectives of an Induction program can be listed as covering:
1. Overview of the organization, its history, its hero's and important stories in the life of the
firm so far like mergers, acquisitions, JVs, expansion in new countries etc...
2. Organization Vision / Mission and Objectives statement, its structure, hierarchy of the top
and the senior management, structure of the teams/divisions, focus on the division the
employee/s is/are joining
3. Overview of the HR policies and processes and introduction to the Facilities team, IT team
and other relevant teams per the location of joining.
4. Handover to the manager and induction at a team level on specificities related to the job
and its responsibilities.

Organizations also build processes by which the new employee provides feedback on the on
boarding experience and use this information to improve the Induction process. In as much
as various firms report that over half of their voluntary resignations occur within the first 6
months, proper orientation can do much to reduce this problem and its accompanying costs.
Recruitment & Selection Hiring Process
In order to increase efficiency in hiring and retention and to ensure consistency and compli-
ance in the recruitment and selection process, it is recommended the following steps be fol-
lowed (also refer to Staff Recruitment and Selection Checklist). Details for each step include
the minimum recommended best practice to attract a talented and diverse applicant pool:
1. Identify Vacancy and Evaluate Need
2. Develop Position Description
3. Develop Recruitment Plan
4. Select Search Committee
5. Post Position and Implement Recruitment Plan
6. Review Applicants and Develop Short List
7. Conduct Interviews

8. Select Hire
9. Finalize Recruitment
Types of Employment Tests
Many large companies use employment tests for selecting appropriate employees. These
employment tests help companies to find out the intelligence, maturity, skills, etc., of the
candidates or prospective employees.
The types of employment tests used for selecting employees:
1. Intelligence Test,
2. Interest Test,
3. Performance Test,
4. Personality Test,
5. Projective Test,
6. Aptitude Test,
7. General Knowledge Test, and
8. Perception Test.
Type: 1. Intelligence Test
Intelligence test is conducted to find out the intelligence of the candidate. It helps to measure
their mental ability, numerical ability, presence of mind, memory, communication skills, etc.
This test is used for selecting managers. It is also used for selecting candidates for MBA
courses.
Type: 2. Interest Test
Interest test is conducted to find out whether the candidate is interested in a particular job or
not. It finds out the likes and dislikes of a candidate about his occupation, hobbies, etc. This
test helps the company to provide vocational guidance to their employees.
Type: 3. Performance Test
Performance test is conducted to measure candidate's performance in a particular job. It helps
to find out the candidate's knowledge and skill required for a specific job. For e.g. Typing test
can measure the speed and accuracy of a typist or a data entry operator.
Type: 4. Personality Test
Personality test is conducted to find out the maturity, inter-personal skills, emotional stability,
capacity to get along, behaviors under stress and strain, etc. This test is used for selecting
salesman, public relations staff, etc.

Type: 5. Projective Test
Projective test is conducted to find out how the candidate interprets (explains) the problem or
situation. For e.g. A picture is shown to the candidate, and he is asked to give his views and
opinions about it.
Type: 6. Aptitude Test
Aptitude test is conducted to find out:
1. Whether the candidate has the talent to do a specific job, or
2. Whether he has the ability to learn the job after giving him training.
In short, aptitude test is done to find out whether the candidate will be able to do a specific
job or not. Some candidates have a good talent or aptitude for accounting jobs while others
show smart skills in marketing jobs. Companies give more importance to the candidate's
mental suitability for job.
Type: 7. General Knowledge Test
G.K. test is conducted to find out the general awareness of the candidates. They are asked
questions about politics, work affairs, current affairs, etc.
Type: 8. Perception Test
Perception test is conducted to check the beliefs, attitudes, intelligence, mental sharpness,
wisdom, etc. of the candidate.
Employee Selection Tools
There are many selection tools available to today's human resource management teams. A
supermarket may make use of many of these tools. This paper will discuss the top three tools
that the author has chosen for a supermarket to use in its hiring decisions. The author of this
paper will also share the tool that the author considers the most important and why the author
feels this way.
According to Bohlander and Snell (2007), the primary pre-employment selection tools that
are used in by Fortune 1000 companies are: criminal records checks, employment verifica-
tion, drug screening, education verification, reference checks, verification of professional li-
censes and/or certifications, motor vehicle records checks, credit history, and integrity eval-
uations. A new tool being used in pre- and post-employment selection is something called
behavioral analysis. This is a psychological test that finds the psychological base of the em-
ployee or applicant. This tool can be used to assist a human resources manager in placing ap-
plicants in positions that best suit their psychological base, which sets in around the age of
seven. This item will be discussed more in a later paragraph.

The first tool the author would like to discuss is the criminal records check. This tool is one
that has become standard according to Bohlander and Snell (2007), in order to help prevent
items such as embezzlement, theft, and workplace violence to name a few things. Bohlander
& Snell (2007) also touch on the fact that, "...state courts have ruled that companies can be
held liable for negligent hiring if the fail to do adequate background checks," (p. 254). It is
the belief of the author that if someone has committed a crime in the past such as those men-
tioned above, that they have the ability to commit that same crime again, or possible other
crimes as well. This would be beneficial to a supermarket to curb theft of merchandise and
cash drawer theft. A marked disadvantage to this tool is that a crime may not show up on the
person record at the time of their application for a new position, leaving the new employer
clueless to a crime the applicant may have committed.
The second tool that would help a supermarket's human resources team make their hiring de-
cisions would be the reference check. This allows the human resources team to make sure
the person that is up for hiring consideration has adequate experience to do the job for which
they have applied. Reference checks also give information on items such as wages, if the ap-
plicant was late or missed work a lot, and if they have been honest on their application.
Though this tool is helpful, many states have laws to limit what information can be given to
those calling for reference checks on previous employees. Bohlander & Snell (2007) tell
that previous employers are sometimes reluctant to give much information about former em-
ployees as there have been cases where former employers have been sued for giving a poor
recommendation on the applicant being checked. So, even though this is a good tool, it is lim-
ited by how comfortable the previous employer is about releasing information on previous
employees. This leads one to believe that this would be a good selection tool for an employee
who was astute, but may not be at all helpful when calling on an applicant who may have
been less than par at their previous position.
The third pre-employment selection tool that a supermarket may use is behavioral analytics
or behavioral metrics. This is a tool the author has used in the past when hiring new employ-
ees. This tool gages the psychological base of the applicant and gives the applicant an under-
standing as to how to deal with customers should they be selected for the position for which
they have applied. The psychological bases that set in around the age of seven are reactions,
emotions, reflections, opinions, action, and thought. When a person is under pressure, they
will automatically fall into one of these categories, which would be their base. This is a set
base and the person will fall into their base whenever they are in a stressful situation. This
base does not change throughout a person's life. In some situations where a person deals with
a traumatic experience for 18 or more months they may phase to the category that falls se-
cond to their psychological base for a period of time but will eventually move back to their
set base. This selection tool will help the human resources manager gage how an applicant
will handle stressful situation and allow them to work with and train the applicant in a man-
ner that fits the applicant's psychological base. This selection tool also benefits the applicant
as they will learn to find clues as to what psychological base a customer is and react accord-
ingly to provide the best customer service possible for a particular customer. Every person
has the ability and uses each of these bases on a daily basis, but will always fall to their main

base in stressful situations. When using behavioral analytics in hiring, according to the Ac-
cord Management Systems, Inc. website (2002),

"There is no magic to performing these three tasks successfully. The evidence is overwhelm-
ing, for example, that the best way to hire good employees or promote them into positions of
competence is by using a systematic process, including job analysis and behavioral assess-
ment surveys, in which the prospects and employees are matched to the job at three levels:
appearance/presence, skills/experience, and attitudes/beliefs (personality)."
The Seven Point System
Seven point systems are used for evaluation and selection of candidates.
Physical Profile Health, Appearance, Bearing and Speech
Attainments Education, Qualifications, Experience
General Intelligence Intellectual capacity
Special Aptitudes Mechanical, Manual Dexterity, Language Fluency, Ability
with words, Mathematical Aptitude, IT ability
Interests Intellectual, Practical, Constructional, Physically Active, Social and Ar-
tistic
Disposition Acceptability Influence over others, Steadiness, Dependability and
Self-Reliance
Circumstances Any special demands of the job, such as ability to work unsocial
hours, travel abroad, etc.
References
Interview
Work
History
Physical
ability
tests
Background
and Infor-
mation
Paper and
Pencil
tests
Selection Tools

On the above seven point plan, recruiters can ask questions to candidates to assess them and
evaluate them.
The Five Fold Grading System
The five fold grading system is used for evaluation and selection of candidates.
Impact on others physical make-up -Appearance, speech and manner
Acquired Qualifications Education, vocational training, work experience
Innate abilities Quickness of comprehension and aptitude for learning
Motivation Individual goals, consistency and determination in following them up,
success rate
Adjustment Emotional stability, ability to stand up to stress and ability to get on
with people
Questions are written down before the interview to evaluate and understand the candidates
aptitude, attitude and orientation.
Classification and Differential Placement

When once the candidate reports for duty, the organization has to place him initially in that
job for which he is selected.
- Employees are trained for the job and also in relation to related jobs.
- Employee is placed on the actual position, only when the probation period is over.
- If the performance is satisfactory then only the candidates are regularized.

Person-job Fit
Matching the knowledge, skills and abilities (KSAs) of people to the characteristics of jobs
(tasks, duties and responsibilitiesTDRs).

KSAs = TDRs = Job Success?

As soon as the candidate reports for duty, the organization has to place him initially in that
job for which he is selected. Training is given in related jobs during the period of training /
probation. Final placement decided after the training / probation period is over and consider-
ing the candidates aptitude and performance during that period
Placement is the determination of the job to which an accepted candidate is to be assigned
and his assignment to that job. It is matching what the supervisor thinks he can do with the
job demands and what he offers in the form of pay roll, working environment etc.

The significances of placement are as follows: -

It improves employee morale.
It helps in reducing employee turnover.
It helps in reducing absenteeism.
It helps in reducing accident rates.
It avoids misfit between the candidate and the job.
It helps the candidate to work as per the predetermined objectives of the organization.

Problems in placement

a. Employee expectations if the employee expects high salary, independent and chal-
lenging work and the job offers low salary, dependent and routine work, the employee
feels misfit in the job.
b. Job expectations / description the expectations from the employee sometimes are
more than their abilities and skills.
c. Change in technology the technological changes result in changes in job description
and is the cause for mismatch between the job and employee.
d. Changes in organizational structure mergers and acquisitions, downsizing, deliver-
ing etc. result in changes in structure and changes in the jobs.
e. Social and psychological factors these factors have a bearing in team work and
group formation. Sometimes result in mismatch between the employee and the job

How to make placement effective

a. Job rotation technique of rotating the employee among different jobs in the depart-
ment / organization enables the employee to satisfy his aptitude for challenging work
and finds the match with the job.
b. Teamwork teamwork allows employees to use their skills, knowledge & abilities
more effectively.
c. Training and development continuous employee training and management devel-
opment helps the employee to acquire new skills and knowledge based on the rede-
signed jobs.
d. Job enrichment job enrichment provides the challenge work and decision making
authority to the employees. It gives the opportunities of utilizing the varied skills.

e. Empowerment - makes the employee to exploit his potentials and make use of them
f. Relocation multi location companies place the selected candidate at one location ini-
tially and shift to other location later based on organization as well as employee re-
quirement

Employee Placement Process

1. collect details about the employee
2. construct the employee profile
3. Match between sub-group profile and individual profile
4. Compare sub-group profile to family profile
5. Match between job family profiles and sub - group profiles
6. Assign the individuals to job family
7. Assign the individual to specific job after further counseling and assessment.


Counsel the employee

Help employee develop right frame of mind
Evaluate financial situation
Assess physiologically
Develop resume
Develop job interview skills
Obtain references
Help Network
Explore Opening
Explore contracts
Renew acquaintances
Evaluate prospects
Facilitate choice
Ensure speedy clearance of employ-
ee dues
Help employee weigh merits of al-
ternatives offers
Check placement agencies
Match employee profile to to job
requirement
Shortlist companies where employee
can apply
Locate companies looking for people
HOW TO OUTPLACE AN EMPLOYEE?

Summary

Manpower planning is a very vital process where the management determines how the
organization should move from its present manpower position to a desired manpower
position. Manpower planning may be defined as a strategy for the procurement, devel-
opment, allocation and utilization of an enterprise's human resources. Human beings
alone have the ability to think, grow, feel, show pleasure at achievements, show dis-
pleasure or dissatisfaction etc.
There are five steps in the manpower planning process. They are:
Evaluate present manpower inventory
Manpower forecasting
Develop a manpower sourcing plan or retrenchment plan
Manpower allocation
Building requisite competencies
The main purpose of the manpower planning is to increase the productivity of the organiza-
tion and the total value created by the organization in a given unit of time.

Through planning, a management strives to have the right number and the right kinds of
people at the right places, at the right time, to do things which result in both the organ-
ization and the individual receiving the maximum long-range benefit.
Manpower planning consists in projecting future manpower requirements and developing
manpower plans for the implementation of the projections.
To carry on its work, each organization needs personnel with the necessary quali-
fications, skills, knowledge, work experience and aptitude for work.
Human Resource Planning is essential because of frequent labor turnover.
Manpower planning is also needed in order to identify areas of surplus personnel or are-
as in which there is a shortage of personnel.
The process of Human Resource Planning embraces organization development,
management development, career planning and succession planning".
Recruitment is the process of searching for prospective employees and stimulating them
to apply for jobs in the organization.
Recruitment or manpower selection process is the first step in the employment of
talent
Sources for recruiting should be periodically evaluated. A successful and effective re-
cruitment program me necessitates a well-defined recruitment policy, a proper organiza-
tional structure, and procedures for locating sources of manpower resources, suitable

methods and techniques for utilizing these and a constant assessment and conse-
quent improvement.
Sourcing is a process of identifying labor pools which can be attracted to your organi-
zation by either push or pull recruitment techniques. Post the recruitment effort, prospec-
tive candidates from the labor pool apply for the job of interest and then the selection process
begins. Sourcing for candidates refers to proactively identifying people who are either
a) not actively looking for job opportunities (passive candidates) or b) candidates who
are actively searching for job opportunities (active candidates). The possible third catego-
ry is 'active candidate sourcing' using candidate databases, job boards and the like.
Many organizations use a combination of both internal and external sourcing alternatives to
deliver business support services. Recruitment can be defined as: A process of finding and
getting capable applicants or employees or manpower for employment. This process begins
when new people or employees are sought or found. It ends when applicants matching the
job description submit their resume and application. The result is a list of applications from
which new employees are selected or chosen.
Attracting candidates is the initial and most important task in the recruitment process. It is
essential for organization to use the most efficient technique to attract the best candidates. A
person specification is written by the firm or organization and outlines the type of person re-
quired. E-recruitment is the Evolving face of recruitment.


Review Questions:
8. Describe Job Analysis. What are the outcomes of Job Analysis?
9. Recruitment is a process of creating a pool of candidates from which the organization se-
lects the best candidates. Briefly discuss the statement.
10. Define Human Resource Planning. Why it is necessary in HRM?
11. In which way are Job Analysis and Job Design different? What are the methods of Job
Analysis? Explain.
12. As supervisor of of the branch manager prepare a Job Description for the newly appointed
branch manager for the FY/2070/71.
13. Describe the selection process in details.
14. What are the main objectives of recruitment? Compare and contrast between internal and
external recruitment options with their relative strengthen and weaknesses.
15. What information is generally included in human resource inventory?
16. External source of recruitment is better than internal source? Do you agree or not? Justify
your answer.
17. Discuss the steps involved in the HRP process.
18. What is Job Description? Highlights the significance of Job Description in the selection
process.
19. Explain the various testing and selecting processes for employment.
20. 'An organization should follow a policy of recruitment from within the organization.' Do
you agree or disagree? Explain.
21. What are the relative strengths and weaknesses of promotion from within as recruitment
techniques?
22. What is HRP? What method would you influence your choice of forecasting methods?
23. What core information should be included in most job specifications?
24. Selection is the mechanism that determines the overall quality of an organization human
resource. In the light of this statement discuss briefly the selection process that you would
adopt for the selection of managerial staff in the bank?
25. What do you mean by "reliable and valid" selection process? What are we concerned
about reliability and validity?
26. Write short notes: (a) Succession planning (b) Features of HRP.

Developing HR

CHAPTER: III
Developing Human Resources

Concept
Human Resource Development (HRD) is the integrated use of training, organizational devel-
opment, and career development efforts to improve individual, group, and organizational ef-
fectiveness. Human resources are the assets, which do not find a place for mentioning in the
balance sheet of company. But it is one of the most important assets as human resources are a
resource of production as well as they are utilizing other resources of production like a mate-
rial, machines, money etc.
Any investment made on training and development of people is sure to show the results in the
years to come. The results of any HRD plan or scheme appear in long term.
HRD is neither a concept nor a tool, but is an approach using different personnel systems,
depending upon the needs and priorities of the organization. The basic assumption is the be-
lief in human potential and its development by providing a suitable and congenial environ-
ment.

HRD is a process, not merely a set of mechanisms and techniques. The mechanisms and
techniques such as performance appraisal, counseling, training, and organisation development
interventions are used to initiate, facilitate, and promote this process in a continuous way.
Because the process has no limit, the mechanisms may need to be examined periodically to
see whether they are promoting or hindering the process. Organizations can facilitate this
process of development by planning for it, by allocating organizational resources for the pur-
pose, and by exemplifying an HRD philosophy that values human beings and promotes their
development.
Role of HR in Developing Resource Capability
There are 3 roles of HR in todays business context.
Administrative
Operational
Strategic
The administrative role of HR focuses on the paperwork for hiring, training, compensating
and engaging employees. This resolves transactional requirements. Example: Typing the of-
fer letter or checking if the documents received meet company requirements.
The operational role of HR focuses on the implementation of the processes of hiring, training,
compensating and engaging employees. The operational team only thinks about now and to-
Developing HR

morrow (the immediate future). The focus is execution and improvement. This creates in-
cremental improvements.
Example: Hiring. The strategic role of HR focuses on enabling the organization to go after
the bigger goals of the organization. This creates exponential improvements. This strategy
team tries to visualize the challenges and opportunities in the forthcoming future. And much
before those challenges decrease the ability to serving customers or slow down the
growth of the organization, this strategy team finds a way to either maneuver around
the challenge or surmount the challenge. The idea is to avoid being on a path of collision,
which is unhealthy for most businesses. Example: Lot of employees engaged in distance
learning discontinue to work just prior to the examination. The organization spots this
blip in availability of resources to execute work and finds a solution well in time.
We have studied earlier that manpower planning is the process of matching future organiza-
tional requirements with the supply of properly qualified, committed and experienced staff in
the right place at the right time. And the staff can be drawn from the internal and external la-
bor markets.
The strategy team decides how one determines the future organization requirements; it de-
cides how we can assess properly qualified candidates. It decides how do you assess if a
candidate is committed? It decides if you cannot get people from inside, then how you
plan to attract other candidates. What happens if you cannot find the right people? What if
you start with the wrong people?
Need/ Importance/ Role and Significance of HRD
Growth of organisation: Growth of organisation is associated with the development
of its workforce. In changing situation HRD must be viewed as the total system inter-
related and interacting with other systems at work: production, finance, and market-
ing.
Development of work culture: The need of HRD is felt as it improves the efficiency
of employees, checks monotony at work, better communication, development of mu-
tual cooperation and creativity of all the members comes into limelight.

Developing potentialities: The focus of HRD manager essentially is on enabling
people to self-actualize through a systematic approach by which their existing talents
are further developed.

Growth of employees: HRD is associated with growth of employees. It helps em-
ployees to know their strengths and weaknesses and enable them to improve their per-
formance. The management should provide adequate opportunity for the development
of human resource management for the development of their talents so that their de-
velopment will benefits the organizational growth.

Developing HR

Employee Socialization/Orientation/Induction
New hires and employees brought together by company acquisition or through a merger have
a period of time where they acclimate themselves to the company culture. According to a
2008 study done by the Aberdeen Group, approximately 86 percent of organizations that
were questioned said that new hires take at least six months to determine if they will make a
long-term commitment to an organization. If you don't have policies in place to help those
new hires adjust to your company culture, then your turnover rate may go up.
Definition
Employee socialization is the process by which new employees understand the company's
policies, the internal culture, how the company hierarchy works and the ways to function ef-
fectively in the organization. Developing programs and policies that integrate new employees
into the company helps the company maintain a consistent corporate culture.
Examples
A primary example of employee socialization is new hire orientation. This a time when new
employees develop working relationships with each other, and should be a time when the
company encourages new and existing staff members to become acquainted as well. Other
forms of corporate-sponsored socialization include holiday parties, family nights at sporting
events, social gatherings such as a company bowling night and a company summer picnic.
Significance
Employee socialization not only helps new employees understand corporate culture, it also
encourages the development of teamwork between new hires and current staff members. Al-
lowing employees to become more familiar on a social as well as professional level can de-
velop strong bonds that improve productivity and help to reduce employee turnover.
Warning
While an employee socialization program is essential to integrating new hires into the com-
pany culture, it can be counterproductive if there is too much focus on socialization. Each
new hire requires an effective balance of corporate work policies and socialization programs
to get a comprehensive understanding of productivity in the company culture.
Developing HR

Feldmans Model of Organizational Socialization

Basics of an Induction Welcome the Employee
An organization may take employees joining the organization for granted.
This is not fair. New employees need to feel welcome. Sometimes existing employees give
new employees a distant smile or they may politely say welcome but thereafter leave the new
employee to figure things out on their own. Existing employees and managers forget that the
organization culture may overwhelm new employees joining the organization. New employ-
ees will need all the support and encouragement to start fitting into the organization.
There are three things existing employees need to consider:
Do the work assigned
Reflect the culture of the organization
Reach out to new employees and to make them feel welcome

Developing HR

Here are a few steps to ensure new employees may feel welcome:
An Announcement
This may be done either on the bulletin board or the organization memo informing all
employees of the new person and the job this person is going to have in the organization.
If the organization has a large number of employees, then at least inform those within the de-
partment that the person is going to join them. For senior positions a bit of a write up of the
employee is also shared with all the colleagues that one may be in touch with. This allows
other employees to come up and connect as well. It could be a common school, college, pre-
vious employer, or city of living, or hobbies.
CEO Should Meet New Employees
In a small organization, a five minute call on the CEO or the senior most leaders of the
location would be a good experience and it tells the new employee the value and im-
portance the organization gives to each person. In a big organization, a meeting with the de-
partment head would be great.
Introductions
A manager should introduce new employees to other employees. A list of employees to be
introduced should be identified in advance including the key people of the organiza-
tion in the location. Appointments should be made. Apart from this the new employee
can be introduced to other employees who are around while they walk around.
Educate new employee to survive the First Day
The rest can be learned. The immediate HR manager may schedule a regular time each day
within the first week to continue the orientation. A new employee can only absorb so much at
a certain time, and the schedule will enable the manager to have a sense of how the employee
is adjusting to the work and to the organizational environment.
Help New Employees Settle Into Work
The manager of the new employee will be the best person to show how the work is to be
done, how other departments are connected, what performance standards are expected of
employees in the organization, and what policies and procedures are to be followed in the or-
ganization for tasks to be done.
Give Time to the New Employees
It is often in an organization we see new employees eating alone. None of the other employ-
ees really care. In our firm or organization, we care, is the message other employees should
give.

Developing HR

Be Sensitive to New Employees Needs
While you give the person the space needed to start, watch out when they seem lost and need
some help. Often, they may be embarrassed to ask so when you see this please offer help.
Allow New Employees to Settle in
It can sometimes be overwhelming when so many other employees talk to new employees,
while all they may want is to get to their job.
Be ready to listen
Be there to answer new employees questions or listen when they need to talk about the expe-
rience.
Show New Employees around the Office and Introduce to Friends
As all the employees try to do this, the new employees will find it easy to get into their work
and will soon be doing the same for other new employees. Then, the change will no longer be
difficult and boring but will be enjoyable. And it may result in one making some new friends
also.
Designing an Induction/Orientation Program
Some tips for designing and developing an own induction program are mentioned be-
low.
Why Induction?
Induction provides an opportunity for both employer and new employee to confirm
their decision to continue their professional association.
Employee turnover is seen to be highest within the first 3 months. Induction is
a good opportunity to build stickiness between the employee and the employer. The
idea is to eliminate any chances of turnover.
Induction in certain countries by law requires that new employees be told
about the health and safety procedures to be followed in certain situations.
Welcome
A welcome should enable the new employee to become part of the team and the or-
ganisation. Induction can be said as completed when the probation period of the em-
ployee is completed. During this time the new employee is expected to actively learn
about all the aspects of their new work so that at the end of their probationary period
he/she is in a position to induct a new employee into their team or into the organiza-
tion. If other employees are not going to be approachable to help the new employee
settle into his/her work from a learning perspective, then a buddy may be allocated who
helps the employee settle into his work environment and answer questions from a learn-
ing perspective.
Developing HR

Commitment
An employee's commitment can be built by doing the following things as a manager. A
manager can build a healthy psychological agreement with his/her new team member. A
manager should let the employee bond with new colleagues and find opportunities to es-
tablish a bond with the new employee. E.g.: If a birthday is approaching, surprise the em-
ployee with gifts and get two cakes, one to smash on his/her face as a way of welcoming the
employee to corporate life and one to eat.
The manager should provide tasks to the new employee that he/she must be able to complete
during the first few days. The manager should provide the employee with positive feedback
on his/her performance and rejoice in the new employees progress.
Induction Requirements
As an HR manager or a team lead provide a safe and happy working environment.
Provide and demonstrate the use of all the equipment. If the working environment is office
based ensure that the efficient aspects are understood. Review and check only for definite
performance. This should be a daily ongoing process and needs close attention in the first few
months so that mastery is acquired in all details of new functions. Encourage challenging
topics of discussion and confirm the agreed accountabilities by documenting agreements. Re-
view applicable policies and procedures such as ethical expectations, employee rights and
responsibilities. Provide important written documents and discuss the needs with the new
employee.
Initial Tasks
As a manager, one must prepare initial tasks before hand and ensure all other em-
ployees are informed about the new employee's role and responsibilities. Some tasks are
of a shorter time duration hence provides a sense of mastery and ensures that the knowledge,
skill and competence of the new employees are reviewed. As a manager provide shorter
time duration tasks to the new employee in the beginning and ensure that documenta-
tion for detail tasks is up to date and made accessible to the new employee with proper sup-
port.
Training
The manager must regularly check on skill and knowledge levels to ensure that the compe-
tence required for the current task and future tasks is demonstrated consistently. If a gap
in competence is noted, an off the job training can be conducted. It needs to be a properly
planned training. At the successful completion of the probationary training period, the man-
ager should plan for future competency improvement and agree on challenging performance
standard results.
Remember that the new employee will have a great deal of information to learn and too much
too soon will overload them. It is more effective to pace information, check it has been un-
Developing HR

derstood, repeat important details and be flexible enough to revisit areas of concern to the
new employee.
The socialization of a new employee is a critical part of the induction and can reflect in the
employee's satisfaction in their new working environment. A new employee will not know
what they need to know; you need to guide them. Information will be more readily retained if
it is presented in a logical format. A good time to induct new employees is later in the week
to give them the weekend to adjust before starting their new role and to introduce them when
other employees are more relaxed. Employees who have been placed from within the organi-
sation will also require induction into their new position and work environment.

Developing HR

Company Induction
When a new employee joins a large organization and finds that every week hundreds of other
new employees are joining every week or month it can make the new employee a bit nervous.
This is what a new employee needs to know.
HR Department
The Human Resource department handles all the details of recruitment and gives the official
start date as a new employee of staff. The HR Department also issues the staff identification
card, keeps your record and will issue you with some information when you collect your staff
ID card/number.
Department
The department where new employees will work and the management team will welcome
new employee and ensure that he/she becomes familiar with the work area, colleagues, im-
portant policies and procedures, health and safety issues and most importantly a new
employees immediate work needs.
Finance Department
This will take care of the new employees salary and pension arrangement plans.
Employee Training and Development
HR department co-ordinate the welcome, induction and orientation process information and
formal induction events. Employee training and development will provide details of
training courses, dates and financial assistance for training and development for all new
employees. Information is generally available in hardcopy format or on the company website.
Information Technology
This will provide new employees with IT support, online access login details and e-mail ac-
count etc. As a new employee joining this large organisation it will take time to settle in and
fit in, find out what you need to know. In all cases the HR manager or other experienced em-
ployees should help new employees with any immediate questions you may have. Other key
staff contacts are ready to help and welcome new colleagues.

Developing HR

Employee Orientation Programs
Reduce newcomer stress
Reduce start-up costs
Reduce turnover
Expedite proficiency
Assist in newcomer assimilation
Enhance adjustment to work group and norms
Encourage positive attitude
Orientation Program Content
a. Information about company as a whole
b. Job-specific information
a. Overview of company
Key policies and procedures
Mission statement
Company goals and strategy
Compensation, benefits, safety
Employee relations
Company facilities
b. Job-specific information
Department functions
Job duties and responsibilities
Polices, rules, and procedures
Tour of department
Introduction to departmental employees
Introduction to work group
Orientation and the HRD Staff
HRD staff designs and implements new employee orientation program
HRD schedules participation by various level of management
HRD staff evaluates orientation program and implements needed changes

Developing HR

Steps/ Stages in socialization Process:

Socialization can be conceptualized as a process made up of three stages.

a. Pre-arrival Stage:

This stage explicitly recognizes that each individual arrives with a set of organizational val-
ues, attitudes, and expectations. For instance, in many jobs, particularly high skilled and
managerial jobs, new members will have undergone a considerable degree of prior socializa-
tion in training and in school. Pre-arrival socialization, however, goes beyond the specific
job. The selection process is used in most organizations to inform perspective employees
about the organization as whole. In addition, of course, interviews in the selection process
also act to ensure the inclusion of the "right type" determining those who will fit in.
Indeed, the ability of the individuals to present the appropriate face during the selection pro-
cess determines their ability to move into the organization in the first place. Thus success de-
pends upon the degree to which aspiring members have correctly anticipated the expectations
and desires of those in the organization in charge of selection.

b. Encounter Stage:

Upon entry into the organization, new members enter the encounter stage. Here the individu-
als confront the possible dichotomy between their expectations about their jobs, their
coworkers, their supervisors, and the organization in general and reality. If expectations
prove to have been more or less accurate, the encounter state merely provides a reaffirmation
of the perceptions generated earlier. However, this is often not the case. Where expectation
and reality differ; new employees must undergo socialization that will detach them from their
previous assumption and replace these with the organization's pivotal standards. Socializa-
tion, however, cannot solve all the expectation differences. At the extreme, some new mem-
Developing HR

bers may become totally disillusioned with the actualities of their jobs and resign. It is hoped
that proper selection would significantly reduce this latter occurrence.

c. Metamorphosis Stage:

Finally the new member must work out any problems discovered during the encounter stage.
This may mean going through changes. Hence the last stage is termed as metamorphosis
stage. Metamorphosis is complete as is the socialization process when new members have
become comfortable with the organization and their work teams. In this situation they will
have internalized the norms of the organization and their coworkers; and they understand and
accept these norms. New members will feel accepted by their peers as trusted and valued in-
dividuals. They will have gained an understanding of the organizational system- not only
their own tasks but the rules, procedures and informally accepted practices as well. Finally
they will know how they are going to be evaluated. They will know what is expected of them
and what constitutes a good job. Consequently, successful metamorphosis should have posi-
tive effect on a new employees productivity and the employee's commitment to the organiza-
tion, and should reduce the likelihood that the employee will leave the organization any time
soon

Determining training needs
The term, 'training' indicates any process by which the aptitudes, skills and abilities of em-
ployees to perform specific jobs are increased. Usually training and development initiative in
organizations have the following intentions:
To improve skills,
Developing HR

To add to the existing knowledge so that the employee is better equipped to do
his present job, to innovate,
To prepare him/her for a higher position, growth within the organization.
Help organization cope with / adapt itself to a changing environment.
Training refers to the teaching/learning activities carried on for the primary purpose of help-
ing employees in an organization to acquire and apply the knowledge, skills, abilities and
attitudes needed by that organization. Broadly speaking, training is the act of increasing the
knowledge and skill of an employee for the benefit of both the employee as well as the firm.
Objectives of Training
The chief aim of learning for the manager is to increase his ability to learn from experience.
The second aim is to increase his ability to help his subordinates learn from experience.
According to Douglas McGregor, there are three different purposes of learning.
1. Acquiring Intellectual / job-related Knowledge: An electrical engineer may need more
knowledge than he now possesses about circuit design. A new employee may require
knowledge about company policies. A shop floor employee may need to be made aware of
information about the new performance appraisal or compensation policy or changes to it.
Acquisition of knowledge therefore is a fairly straight-forward process provided the individu-
al wants the new knowledge. However, if he does not want the knowledge, there is little
doubt that training will fail. Creating a self-driven need for knowledge is fundamental to em-
ployee learning.
2. Acquiring Manual Skills: The acquisition of a manual skill requires practice or ex-
perience along with feedback. While learning can happen in a isolated self-learning mode,
it can be significantly speeded up by guidance and theoretical knowledge imparted by
experts. The end objective remains that the employee be able to execute the skill ef-
fectively back on the job. Learning is enhanced when the employee receives clear feed-
back which tells him about the success of his efforts. The necessary effort will be expanded
only if there is a felt-need on the part of the learner.
3. Acquiring Managerial Skills: Much of a manager's work is managing people and solv-
ing problems. These include organizing his own and his team members work activities, and
planning for a wide range of other decision-making responsibilities. These are skills in-
clude diagnosing problems, interpreting relevant data, assessing alternative solutions and
getting feedback concerning the effectiveness of the solution. These skills can be im-
proved through classroom training.
As with any skill, practice and feedback are essential for learning. The most widely used
classroom method for improving the problem-solving skills is the case method. In the hands
of a skilful teacher, it can be highly effective.
Developing HR

Training your employees is important because
1. Rapid technological innovations impacting the workplace have made it necessary for
people to consistently update their knowledge and skills
2. People have to work in multidimensional areas, which usually demand far more from
their area of specialization.
3. Change in the style of management.
4. Due to non-practical college education.
5. Lack of proper and scientific selection procedure.
6. For career advancement.
7. For higher motivation and productivity.
8. To make the job challenging and interesting
9. For self and development
10. For employee motivation and retention
11. To improve organizational climate
12. Prevention of obsolescence
13. To help an organisation to fulfill its future manpower needs.
14. To keep in pace with times
15. To bridge gap between skills requirement and skills availability
16. For survival and growth of organisation and nation
Importance of Induction & Training
Induction & training are important in any organization as it is the only way a new recruit can
become productive as quickly as possible. It can avoid costly mistakes by recruits not
knowing the procedures or techniques of their new jobs. The duration of induction &
training varies from job to job and organization to organization. It also depends on the com-
plexity of the job, the expanse of the business and the level or position of the job within the
business.
Induction & training includes:
Meeting new colleagues
Seeing the layout the premises
Learning about the duties of the job
Developing HR

Learning about the internal workings and policies of the business
Learning the values and aims of the business
Development of competencies
Evaluation of Training Effectiveness
An objective of training evaluation is to determine the payoff from the training in-
vestment. It focuses on the improvement of the participant in the training programmed to per-
form jobs for which they were trained, what was effective and what was not, whether the
trainees required any additional on the job training, and the extent of training not needed for
the participants to meet job requirements.
There are various approaches to training evaluation. To get a valid measure of training effec-
tiveness, the manager should accurately assess trainee's job performance two to four months
after completion of training. However this focus is not easy to establish and track in most organiza-
tions.
Per Kirkpatricks study, training effectiveness of outcomes can be measured:
1. Reaction: Evaluate the trainee's reaction to the programmed. Did he like the pro-
grammed? Did he think it worthwhile?
2. Learning: Did the trainee learn the principles, skills and fact that the supervisor or
the trainer worked them to learn?
3. Behavior: Whether the trainees behavior on the job changed because of the training pro-
grammed.
4. Results: What final results have been achieved? Did he learn how to work on machine?
Did scrap page costs decrease? Was turnover reduced? Are production quotas now being
met? Structured interviews with the immediate supervisor of the trainees are acceptable
methods for obtaining feedback in training. The supervisor is asked to rate the former
trainee on job proficiency directly related to the training objectives. Another approach is
to involve the use of experimental and control groups. Each group is randomly selected, one
to receive training (experimental) and the other not to receive training (control). The random
selection helps to assure the formation of groups quite similar to each other. Measures are
taken of relevant indicators of success (e.g. words typed per minute, units of work produced
per hour etc.) before and after training for both groups. If the results shown by the experi-
mental group are significantly greater than those of the control group, the training can be con-
sidered as successful. Another common method is the longitudinal or time series analysis. A
series of measurements are taken before the programmed begins and continues during
and post completion of the programmed. The results are then plotted on a graph to ascer-
tain changes if any, have occurred and continue to remain as a result of the training in-
vestment that was made. In addition, pre and -post tests are administered to the training
groups. Prior to the training, a test related to the training material is applied, and the results of
Developing HR

this pre-test are compared with results on the same or similar test administered after the pro-
grammed has been completed.
Types of Training and Development Techniques
On the job training: in this method a trainee is placed on the job and then taught the
necessary skills to perform his job. Thus in this method the trainee learns by observ-
ing and handling the job under the guidance method. Techniques like coaching, com-
mittee assignments and job rotation fall under this method. Job instruction training,
(JIT) is also a popular form of the job training. JIT is used for imparting or improving
motor skills with routine and repetitive operations. While on the job training allows a
trainee to learn in the real environment and handled real machines. It is also cost ef-
fective as no extra space equipment personnel or other training facilities are required
for imparting this training. The employees also learn the procedures and rule and reg-
ulations in this training. There are some limitations also in this method. The noise at
the real work places makes it difficult for the new employee to concentrate and there
is danger that the employee under training might cause damage to equipment or other
material. And supervision of instructor or a supervisor. Thus it is also called the learn-
ing by doing.
Vestibule training: In this method a training centre which is known as vestibule is set
up where real job conditions are created and expert trainers train the new employees
with equipment and machines that a identical with the ones that employees will be us-
ing at their work place. This allows the trainees to concentrate on their training be-
cause there is no noise of the real work place. As the same time the interest of the em-
ployee remains quite high as real work place conditions are simulated in this training.
It also saves new employees from a possible injury or any damage to the machines at
the real work place. Vestibule training is beneficial for training a large number of em-
ployees in a similar type of job. But vestibule training involves the lot of expenditure
as experts trainers along with the class room and equipment are required to simulate
the real work place environment which is very difficult to create.
Apprenticeship: It is the oldest and most commonly used method of training in tech-
nical areas and crafts and trades where the skills of the job are learnt over a long peri-
od of time. The industrial training institutes (ITI) provide this kind of training in In-
dia. The apprenticeship act 1962 requires the employers in certain industries to train a
Developing HR

particular number of persons in specific trades. For trades like mechanist, tool makers,
carpenters weaver, Jeweler, Engraver, this type of training is very helpful. Appren-
ticeship helps in maintaining a skilled work force and is a combination of both theory
and practical. It also results in high level of loyalty by the employees and increases
their chances for growth but it is time consuming and extensive method. Many per-
sons leave this training in between because of the long training duration.
Class room training: It is provided in company class rooms or educational institution
through lectures audio visual aids, case studies and group discussion. It is very helpful
and teaching problems solving skills and new concepts. It is also useful in orientations
and safety training programs. For teaching new technologies to software profession-
als, class room training is often used.
Internship: it involves training the colleges or universities pass outs about the practi-
cal aspects of their study. This method of training provides a chance to the students to
implement the theoretical concepts that they have learnt during their study. Thus it
balances the theoretical and practical aspects of the study. Professional likes chartered
accountants, MBAs, company secretaries and doctors are given training through this
method.
Job Instruction Vs Internship
Internships and the economy
The hope of gaining an advantage for future employment has increased both the number and
quality of internship applications.
"Internships have become key in today's economy," says Melissa Benca, director of career
services at Marymount Manhattan College in New York City.
"Graduating students with paid or unpaid internships on their rsum have a much better
chance at landing a full-time position upon graduation. Students are doing internships as un-
dergraduates, and it is now not unusual for recent grads to take an unpaid internship with
hopes of turning it into a permanent position or at least making some contacts and building
their rsum."
The state of the economy also is changing the nature of work given to interns. "In this eco-
nomic downturn, employers are relying increasingly on interns to shore up areas where full-
time hiring has been cut," Benca notes.
Developing HR

Thus, while you still may be making the coffee in the morning, don't be surprised if you're
also given opportunities to contribute substantially at the meeting where that coffee is being
served.
Benefits for you
Besides getting a foot in the door with a potential employer and looking good on a rsum,
internships have other advantages:
The opportunity to "test drive" a career (Would I be happier in marketing or advertising?
Am I more comfortable working with patients or in a lab?)
Chances to network
Establishing relationships with mentors
Possible college credit or certification
An introduction to the field's culture and etiquette (Are clients addressed by their first
name? Are jeans appropriate for Casual Friday?)
Accumulating new skills
Gaining a "real world" perspective on an occupation (How much overtime do employees
really work? How much time is spent behind a desk versus in the field?)
What's in it for employers?
Most job applicants put their best foot forward on paper. Their cover letter and rsum usual-
ly have passed through many hands to make them as appealing and professional as possible,
and nearly every job seeker picks references who will say positive things.
Employers do not create internships just to be nice to students and others interested in a cer-
tain career. While an interview or a company test can add to what an employer knows about a
person, an internship helps an employer evaluate how an individual would fare in the actual
workplace.
Like The McTigue Group, many companies develop an internship pool and hire from that
group. As Benca notes, "Not only are they seeing potential employees with experience, it is
experience within their company."
Companies that devote time and resources to finding, selecting and training interns are look-
ing for a return on their investment. The benefit might be in the present (using the services of
talented individuals without having to make a hiring commitment), or it might be in the future
(the added ability to choose a person who will work out well as an employee).
Developing HR

And remember that internship opportunities are not limited to office settings. From being a
bird-keeping intern at a zoo to a horticulture intern at a theme park, all sorts of opportunities
exist for motivated individuals and interested companies to enter into a mutually beneficial
relationship.
Job Instruction Training
According to Gary Dessler, author of "Human Resource Management" (2005), one
HR training method called job instruction training provides employees with a logical
sequence for learning their jobs. An HR professional, manager or instructional de-
signer maps out the steps required to perform a job. Each step is a task followed by a
few highlights of that task. If employees learn all of the steps provided in a job in-
struction training document, they are prepared to perform their job. This type of train-
ing can be supplemented by sitting with an employee on the job and offering feedback
while she performs a sequence of steps outlined in a training document.

Need Assessment
Training
Development
Class room
instruction
On the job
training
Appren-
ticeships
Class room
instruction
Formal
education
On the job
training
Developing HR

On-the-Job and Off-the-Job Training Methods
The major differences between these two training methodologies have been listed here:
1. On-the-Job training involves imparting training in the real work environment i.e. it
believes in learning by doing; while off-the-job training involves imparting training
outside the real work environment i.e. the principle of learning by acquiring
knowledge is adopted.
2. Under on-the-job training the training and performance goes simultaneously so pro-
duction is not hindered at the time of training; while under off-the-job training meth-
ods first training is imparted and then the real performance follows and therefore does
not add anything to actual production during training.
3. On-the-job training aims at developing the best practices for a specific job and getting
the job done; while off-the-job training methods aim at learning basic facts and skills
and is more general in nature.
4. On-the-job training is usually imparted by experienced workers and first line supervi-
sors at the workplace; while off-the-job training is imparted usually by the academi-
cians and professionals at any place other than the real workplace.
5. On-the-job training methods are suitable when the trainees are limited in numbers and
the job is not hazardous in nature; while off-the-job training methods can be utilized
to train any numbers of employees and for jobs that involve risks.
6. On-the-job training methods are simple and less-expensive because they utilize the
actual workplace and firms supervisors for imparting training; while off-the-job
training methods are quite expensive as they need a complete different set-up. Train-
ing here is imparted in an artificial set-up and outside experts are hired for the pur-
pose.
7. Most popular on-the-job training methods include job rotation and apprenticeship
training; while the popular off-the-job training methods include classroom lectures
and simulation exercises.
8. On-the-job training is generally imparted in case of manufacturing firms for produc-
tion-related jobs; while off-the-job training is mostly imparted for managerial and
non-production related jobs.
Developing HR

However, the kind of training methodology to be adopted depends on several factors includ-
ing the purpose of training, the budget of training, the number of trainees, the level of trainees
in organizational hierarchy, the time available and the nature of job for which the training has
to be imparted.
On the Job Training Off the Job Training
Job Rotation Vestibule Training
Coaching Role Playing
Job instruction Lecture Method
Training through step by step Conference or Discussion
Committee Assignment Programmed Instruction
Management Development
Management Development is best described as the process by which managers learn and im-
prove their skills not only to benefit themselves but also their employing organizations.
In organizational development (OD), the effectiveness of management is recognized as one
of the determinants of organizational success. Therefore, investment in management devel-
opment can have a direct economic benefit to the organization.
Managers are exposed to learning opportunities whilst doing their jobs, if this informal learn-
ing is used as a formal process then it is regarded as management development.
Approaches to management development
Dysfunction analysis
Mentoring
Coaching
Job rotation
Professional development
Business Workflow Analysis
Upward feedback
Executive education
Supervisory training
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Job rotation is a management technique that assigns trainees to various jobs and departments
over a period of a few years. Surveys show that an increasing number of companies are using
job rotation to train employees. There are both positive and negative effects involved with job
rotation that need to be taken into consideration when a company makes the decision to use

this technique. Job rotation is also a control to detect errors and frauds. It reduces the risk of
collusion between individuals. Organizations dealing with sensitive information or system
(e.g. bank) where there is an opportunity for personal gain can benefit by job rotation. Job
rotation also helps in business continuity as multiple people are equally equipped to perform
a job function. If an employee is not available other can handle his/her position with similar
efficiency.
Professional development refers to skills and knowledge attained for both personal devel-
opment and career advancement. Professional development encompasses all types of facili-
tated learning opportunities, ranging from college degrees to formal coursework, conferences
and informal learning opportunities situated in practice. It has been described as intensive and
collaborative, ideally incorporating an evaluative stage. There are a variety of approaches to
professional development, including consultation, coaching and communities of practice, les-
son study, mentoring, reflective supervision and technical assistance.
Executive education refers to academic programs at graduate-level business schools world-
wide for executives, business leaders and functional managers. These programs are generally
non-credit and non-degree-granting, but sometimes lead to certificates. Estimates by Business
Week magazine suggest that executive education in the United States is approximately an
$800 million annual business

with approximately 80 percent provided by university-based
business schools. Key players in university-based executive education span elite

universities,
as well as many regional and mid-sized universities and business schools around the world.

Developing HR

Techniques of Management Development
On the Job Method Off the Job Method
Job Rotation Case Discussion
Under-study Management or Business Games
Coaching and Counseling In basket exercises
Temporary Promotion Transactional analysis
Staff Meetings Role playing
Committees board of Management Incident process
Creation of 'Assistance to' Position Sensitive training

Leadership Development
Leadership Development is leadership qualities, including communication, ability to motivate
others, and management, to an individual who may or may not use the learned skills in a
leadership position.
The success of leadership development efforts has been linked to three variables:
Individual learner characteristics
The quality and nature of the leadership development program
Genuine support for behavioral change from the leader's supervisor
Development is also more likely to occur when the design of the development program:
Integrates a range of developmental experiences over a set period of time (e.g. 612
months). These experiences may include 360 degree feedback, experiential classroom
style programs, business school style coursework, executive coaching, reflective jour-
naling, mentoring and more.
Involve goal setting, following an assessment of key developmental needs and then
evaluate the achievement of goals after a given time period.

Developing HR

Among key concepts in leadership development one may find:
Experiential learning: positioning the individual in the focus of the learning process,
going through the four stages of experiential learning as formulated by David A.
Kolb: 1. concrete experience 2. Observation and reflection 3. Forming abstract con-
cept 4. Testing in new situations.
Self efficacy: The right training and coaching should bring about 'Self efficacy' in the
trainee, as Albert Bandura formulated: A person's belief about his capabilities to pro-
duce effects
Visioning: Developing the ability to formulate a clear image of the aspired future of
an organization unit.
A good personal leadership development program should enable you to develop a plan that
helps you gain essential leadership skills required for roles across a wide spectrum from a
youth environment to the corporate world. These characteristics include:
Taking responsibility
Gaining focus
Developing life purpose
Starting action immediately
Developing effective and achievable goals and dreams.

Developing HR

Mentoring and Career Development
Mentoring is one of the most effective career development programs these days. In India it is
gaining popularity even among SMEs (Small medium enterprises). It is in fact one of the bet-
ter ways to foster relationship within individuals across the organizational hierarchy.
Mentoring is a process of developing formal relationships between junior and senior
members of the organisation, in certain cases mentoring also takes place between peers.
In other words it is a process of developing relationships between more experienced members
of an organisation and the less experienced ones for transfer of knowledge and skills. These
associations are developed with the intent of developing career functions. For example,
coaching, sponsorship, protection to peer, challenging assignments, introduction to important
contacts and resources are certain ways in which mentoring may happen.
Mentoring is also targeted to psychological functions; role modeling, counseling, benchmark-
ing individual practices are various ways in which the latter is achieved. It is no doubt an im-
portant tool that apart from employee development also leads to increased job satisfaction,
organizational dedication and career achievement.
The process of mentoring works both ways i.e. it benefits the parties, the mentor and the
mentee. It increases the job involvement and satisfaction of the mentor. In case of the one
mentored, he feels valuable, the job satisfaction increases and there is essentially a transfer of
knowledge and skills.
Post need identification interventions such as training, deployment on certain types of
jobs or projects may be recommended to build the requisite capabilities. In summary,
Mentoring is one-to-one interaction with the employee.
Mentoring identifies strengths and areas of improvement and eliminates or minimiz-
es areas of improvement.
Mentoring focuses on attitude more than skill.
Mentoring is done by an internal employee.
Mentoring is conducted for management only.

Developing HR

Organizations that have Formal Mentoring Programs
Lots of organizations are using mentoring programs as means of career development. Federal
express, bank of America and Merrill lynch are some organisation that have formal mentor-
ing programs in place. Bank of America for example has developed quad squads which com-
prises of a mentor and three mentees (also called as protg for males and protge for
female). Many organizations have also developed like to like mentoring relationships (for
example Anglo-Indian mentors with Anglo-Indian mentees).
Mentoring Techniques
Mentoring requires an exercise of great wisdom, caution and expertise on the part of the men-
tor. There are many techniques that are used these days, some of which have been briefly ex-
plained below:
1. Mentors are assigned with the responsibility of preparing their mentee for change.
The focus is to prepare the individual mentally before he/she is asked for change, so
that the change is not taken as negative and instead a developmental process. This
mentoring technique s called sowing.
2. The other entering technique is called as accompanying, wherein the mentor is in-
volved in the learning process of mentee side by side explicitly, guiding all the time.
3. Doing is yet another mentoring technique in which the mentor uses his own example
to make something understand. It is also called leading.
4. Harvesting is one technique that is essentially aimed at evaluation of the past learn-
ings and to extract conclusions from the same.
5. Catalyzing is one technique wherein the process of learning or knowledge transfer is
speeded. This is done only when a significant amount of change is achieved.
For mentoring it is important to understand the learning requirements and the style of the
mentee. An inappropriate mentoring methodology can act reverse. As mentioned at the be-
ginning of the write up, you require great deal of expertise for the mentoring process. Handle
with care is the mantra!

Developing HR

Empowerment
What motivates people to work? Money may be the primary reason, but beyond a certain lim-
it it fails to. Organizations have been trying out different things to increase the level of moti-
vation of its employees. Employee empowerment is one of them.
Employee empowerment means that an employee is given a chance to be enterprising, take
risks without compromising with the organizational goals, mission and vision. His say in the
process of decision making in increased. This can be for one particular individual or for the
entire organization. In the latter case it is called participative management.
There are pros and cons to this employee empowerment. Whereas it is said and has been ob-
served that participative management may lead to increased productivity, motivation, job sat-
isfaction and quality enhancement; it may also slow down the process of decision making and
act a potential security threat in terms of ease of access of information it offers to the em-
ployees.
From an organizational perspective the following pros and cons may be associated with em-
ployee empowerment.
Pros of Employee Empowerment
It leads to greater job satisfaction, motivation, increased productivity and reduces the
costs.
It also leads to creativity and innovation since the employees have the authority to act
on their own.
There is increased efficiency in employees because of increased ownership in their
work.
Lesser need of supervision and delegation.
Focus on quality from the level of manufacturing till actual delivery and service of
goods.
Employees when empowered become more entrepreneurial and start taking more
risks. Greater the risk, greater are the chances to succeed.

Developing HR

Cons of Employee Empowerment
At the individual level employee empowerment means you are an integral component of the
organization. This may sprout egotism or arrogance in the workers.
Apart from disadvantages at the organizational level, there are certain challenges that emerge
at the individual level. Supervisors often complain disgust from the empowered workers. The
following points go against employee empowerment:
Egotism / arrogance: Worker arrogance can create a big trouble for the supervisors
and the managers. There can be problems in delegating. Employees avoid reporting
about their work and feedback can be taken negatively.
Security: Since information comes and is shared by all, there are apprehensions about
leakage of critical data.
Risk: Creativity and innovation demands a greater risk bearing capacity and there are
equal chances of success and failure. Workers often lack the expertise to execute are
enterprise, which can cost big.
Industrial Democracy: Labor unions and workers are empowered and they may mis-
use the same. Strikes and lock outs become more frequent. Also, labor unions gain in-
sights into management and their functioning and they leak the same.
Participative management or employee empowerment does not mean relentless transfer of
authority. It has to be in a controlled and regulated manner. Each aspect has to be carefully
studied and levels of participation decided. For example, the level of participation of
knowledge workers is different from that of a floor worker.

Developing HR

Summary
The term, training indicates any process by which the aptitudes, skills and abilities of em-
ployees to perform specific jobs are increased.
According to Douglas McGregor, there are three different purposes of learning.
a. Acquiring Intellectual Knowledge
b. Acquiring Manual Skills
c. Acquiring Problem-Solving Skills
Training increases the employees market value", earning power and job security.
Training needs have to be related both in terms of the organization's demands and that
of the individual's.
In analyzing the organization climate, both direct and indirect methods could be used. Direct
methods are observation, use of questionnaires, and interviews. Reliance or indirect methods
would not give a clear understanding of the attitudes and predispositions of employees.
Task Analysis entails a detailed examination of a job, its components, its various operations
and the conditions under which it has to be performed.
If an employee is asked to perform a job, the exact components of the job and the standard of
performance must be known.
Task analysis entails not merely a simple listing of the various job components, but
also of the relatively critical nature of the various sub-tasks.
Training methods are a means of attaining the desired objective in a learning situation.
The choice of a method would depend on a wide variety of factors, such as competence of
instructors, relevance to the participants, the program me design, i.e., a particular
method the best vehicle to put across the contents, and finally its cost implications.
Structured interviews with the immediate supervisor of the trainees are acceptable methods
for obtaining feedback in training.
The recent trends in manpower development are competency mapping, knowledge
management, E-manpower development. Additionally we have discussed about E-
manpower planning as well.
The competency framework serves as the bedrock for all HR applications. As a result of
competency mapping, all the HR processes like talent induction, management develop-
ment, appraisals and training yield much better results
In knowledge management an enterprise consciously and comprehensively gathers, organiz-
es, shares, and analyzes its knowledge in terms of resources, documents, and people
Developing HR

skills. Advances in technology and the way we access and share information has
changed how knowledge management is done.
E-learning is a cost effective way of developing manpower. It ensures a common learn-
ing experience, common knowledge and competency assessment. It also allows each user
to learn best using their preferred learning style. E-learning can be used for new hire train-
ing and for senior management development to enhance their competencies.
The modern ways of handling and managing employee related information and manpower
planning are here to stay and they are spreading even in small and medium enterprises.
This has provided immense opportunities for the IT professionals. From a learners perspec-
tive, in future industry may require management graduates to have a basic know how
of operating popular HRIS tools or their simulations.

Developing HR

Review Questions

1. What is orientation and socialization? Why are they importance for the new employees
and the organization?
2. You have been asked to train employees to use personal computer. What factors would
you consider in designing the program?
3. Compare Job instruction training with internship.
4. Explain different stages of employee socialization.
5. How do you evaluate the effectiveness of training? What are the common tools of evalu-
ating effectiveness of training?
6. Discuss the role of socialization process in the organization.
7. Describe the different on- the -job and off -the- job training methods?
8. Define training. What factors would you consider while designing the training programs?
9. What is management development? Describe any three on-the -job methods of manage-
ment development.
10. Why is training essential? What barriers exist that hamper the transfer of learning from
the training classroom back to on the job?
11. Discuss the method used in management development.
12. Write short notes on:
a) Mentoring
b) on the job training
c) off the job training

Performance and Effectiveness


CHAPTER: IV
Role of HR in a firm competitiveness
HRM as a support for achieving competitiveness through people literature review HRM in
modern enterprises has two distinguished roles, or two main purposes: (1) to foster the per-
formance of an enterprise, and (2) to act as a support for achieving competitiveness through
people.

How Can HR Become a Competitive Advantage for Any Organization?
Hire Professionals with Experience
Human resource professionals vary in the kinds of skills and experience they bring to a job.
Many are administrators proficient at processing payroll and executing benefits programs, but
have little more leadership status than your clerical workers. You can upgrade your HR de-
partment to include recruitment specialists who also understand your companys strategic
roles and can play an integral part in shaping your business success. Executive-level human
resource professionals can help design job descriptions and training programs, advise you on
where to find the best candidates, and participate in defining salary levels that will result in
the best new hires.
Give HR Leadership Positions
The human resource department often is given job descriptions and told to fill the positions.
Salaries are predetermined and the HR staff has little or no input into the hiring process. To
tap into the HR professionals insights, you should bring your human resource manager into


the hiring process more completely. Allow HR to play a role in determining appropriate re-
cruitment pay and tactics, let you know how much it takes to recruit top talent, and how com-
pany policies can be amended to recruit the best.

Let HR Determine Training Programs
With an HR department that participates in defining and implementing company goals, you
can rely on your human resources team to consider the companys profitability with each de-
cision they make. In addition to defining employee jobs and required qualifications, an ac-
tively participatory HR department can monitor employee activity levels, morale and custom-
er service success to design and implement appropriate training programs with line supervi-
sors and executive management teams.
Provide HR Tools to Monitor Employee Performance
The human resource department can build programs to track those employees who stand out.
When your human resource professionals are involved in designing and providing employee
reviews, they can help you spot talent and advise you on how you can best groom employees
for promotions. They can provide designated employees with specific training and help you
devise opportunities for growth, serving as your eyes and ears for seeking out the best candi-
dates that will push your company into a competitive advantage.


Strategies for Gaining Competitive Advantage

Competitive advantage refers to a company's ability to maintain market share and profitabil-
ity. Any competitive advantage enjoyed by an organization tends to be short-lived because
other companies are likely to imitate it. This is as true for HR advantages as for technological
and marketing advantages. For example, many high-tech firms have "borrowed" reward pro-
grams for key scientists and engineers from other successful high-tech firms. The challenge
from an HR perspective is to develop strategies that offer the firm a sustained competitive
advantage. For instance, a company may develop programs that maximize present employees'
potential through carefully developed career ladders while at the same time rewarding them
generously with company stock with strings attached (for example, a provision that they will
for feit the stock if they quit before a certain date).

a. Cost leadership A cost leadership strategy is a competitive strategy in which a company
aims to become the low-cost leader in the industry by emphasizing the attainment of abso-
lute cost advantages from any and all sources. Requires a balance between low costs and
acceptable quality.

b. Differentiation a differentiation strategy is a competitive strategy in which a company
seeks to be unique in its industry in a way that is valued by the customers. HR strategies that
fit a differentiation strategy emphasize innovation, flexibility, and renewal of the workforce
Easy Access to Capital
COMPETITIVE AD-
VANTAGES
Information Ideas
Knowledge Customer Understanding
Personal Innovation
Service Society
Product Parity
Easy Access to Technology
Easy Access to Information
Skills Intuition


by attracting new talent from other firms, opportunities for mavericks, and reinforcement (ra-
ther than discouragement) of creative flair. The specific HR strategies that are likely to bene-
fit differentiators include the use of broad job classes, loose work planning, external recruit-
ment at all levels, team-based learning, emphasis on what the individual can do (rather than
on the job title held) as a basis for pay, and reliance on performance appraisal as a develop-
mental (rather than a control) device.

Focus Strategy: A focus strategy is a competitive strategy in which a company selects a
market segment and serves the customers in that particular market niche better or cheaper
than its competitors. The focus strategy relies on both a low-cost position and differentiation,
with the objective of serving a narrow target market better than other firms. The firm seeks to
achieve
Concept and Method of Evaluating Employee Performance
A performance appraisal (PA), performance review, performance evaluation, (career)
development discussion or employee appraisal is a method by which the job performance
of an employee is evaluated. Performance appraisals are a part of career development and
consist of regular reviews of employee performance within organizations
The Purpose of a Performance Evaluation
Performance evaluations are a company's way of evaluating the talent, skills and abilities of
the staff. It also provides an opportunity for the employee and manager to have a one-on-one
discussion of where the employee stands and what it takes to get to the next step.
Frequency
Performance evaluations are conducted monthly, quarterly, semi-annually or annually. Newer
employees may have performance appraisals more often than senior employees to check the
newer employee's progress against the job's responsibilities.
Purpose
The purpose of the performance evaluation is to provide feedback on an employee's perfor-
mance, to create a development plan for areas of improvement and to provide rationale for a
merit increase. Taken together, an employee's performance appraisals can provide the basis
for a promotion.
Employee Performance
Employee performance should include positive feedback with examples of the employee's
behavior (for example, the CSR displayed active listening skills by repeating the customer's
problem as he understood it).


Development Plan
The development plan should have SMART goals for the areas of improvement. The goals
should be Specific, Measurable, Actionable, Realistic and Time bound.
Merit Increase
Each company has a rating scale (for example, Satisfactory, Not satisfactory, Meets expecta-
tions) and an associated percentage increase in pay for the ratings.
Input
Both the employee and the manager have input into the performance evaluation. This gives
both parties the opportunity to be heard and to provide honest input and make the perfor-
mance appraisal a joint process.
Method of Evaluating Employee Performance
A comprehensive employee appraisal is often made up of several different methods of per-
formance evaluation. You can choose to use just one evaluation process when judging an
employee's performance, but when you use multiple evaluation methods you are able to get a
broader picture of the areas where the employee needs improvement and what recommenda-
tions you should make to support employee development.
Self-Evaluation
The self-evaluation is often effective when teamed up with a performance review. The
employee is asked to judge his own performance by using a form that requires multi-
ple choice answers, essay-type answers or a combination of the two. One of the bene-
fits of a self-evaluation is that a manager can compare the self-evaluation to the man-
ager's own appraisal and see the areas where there is a discrepancy in an understand-
ing of employee performance. This opens up conversation between the manager and
the employee that can be beneficial to employee development.
360 Evaluation
An employee's development consists of progress made within his own department,
and the effectiveness of his interaction with the rest of the company. A 360 degree
performance evaluation is one that involves input from managers in other departments
that the employee works with on a regular basis, according to the Missouri Small
Business and Technology Development Centers. Employees are evaluated on their ef-
fectiveness within their own department based on their job descriptions, and they are
also evaluated based on how effectively they work with the rest of the company.


Graphic Scale
According to the Food and Agricultural Organization of the United Nations, the
graphic scale of performance evaluation is one of the more common ones used by
managers. The employee's performance in various areas of her job duties is graded on
a scale. The value in a graphic evaluation system is that it allows managers to com-
pare the performance of several employees simultaneously. The system can be done
with numbers or letters, and it usually consists of a range, running from poor to excel-
lent.
Checklists
A checklist evaluation method is simplistic but effective. It consists of a series of per-
formance questions that are traditionally given the option of yes or no, according to
online educational resource Open Learning World. An excessive number of negative
responses indicate developmental training is needed for that employee. The checklist
can be used as a quick way to identify employees that have deficiencies in too many
performance areas.
Critical Incident
A proactive manager keeps an ongoing log throughout the year of an employee's per-
formance, and then uses that information to fuel discussion during the employee per-
formance review. This method of keeping a list of good and bad incidents of employ-
ee performance is known as critical incident evaluation.
Five Steps to a Performance Evaluation System
Performance evaluations, which provide employers with an opportunity to assess their em-
ployees contributions to the organization, are essential to developing a powerful work team.
Yet in some practices, physicians and practice managers put performance evaluations on the
back burner, often because of the time involved and the difficulties of critiquing employees
with whom they work closely. The benefits of performance evaluations outweigh these chal-
lenges, though. When done as part of a performance evaluation system that includes a stand-
ard evaluation form, standard performance measures, guidelines for delivering feedback, and
disciplinary procedures, performance evaluations can enforce the acceptable boundaries of
performance, promote staff recognition and effective communication and motivate individu-
als to do their best for themselves and the practice.
The primary goals of a performance evaluation system are to provide an equitable measure-
ment of an employees contribution to the workforce, produce accurate appraisal documenta-
tion to protect both the employee and employer, and obtain a high level of quality and quanti-
ty in the work produced. To create a performance evaluation system in your practice, follow
these five steps:


1. Develop an evaluation form.
2. Identify performance measures.
3. Set guidelines for feedback.
4. Create disciplinary and termination procedures.
5. Set an evaluation schedule.
It is also advisable to run the finished system by your attorney to identify any potential legal
problems that should be fixed.
A performance evaluation system can motivate staff to do their best for themselves
and the practice by promoting staff recognition and improving communication.
Evaluations should be conducted fairly, consistently and objectively to protect your
employees and your practice.
An effective performance evaluation system has standardized evaluation forms, per-
formance measures, feedback guidelines and disciplinary procedures.
Importance of Employee Performance Evaluations
Employee performance evaluations are important for a variety of reasons. Evaluations are
normally given annually by an employee's immediate supervisor. The employee, supervisor
and the human resource department are given copies of the performance evaluation. An eval-
uation provides an overview of an employee's performance.
Goals and Objectives
An employee performance evaluation is given to make sure an individual is operating and
functioning at a satisfactory level within an organization. These evaluations let employees
know if they are achieving the goals and objectives set by an organization
Corrective Measures
Performance evaluations have recommendations for action plans and corrective measures de-
signed to help employees reach or achieve a level of accomplishment that is acceptable with-
in an organization.
Training/Education Needs
When a performance evaluation is done it helps determine if an employee needs further train-
ing or continuing education.


Objective Criteria
Performance evaluations help identify employees who are next in line for promotion. Evalua-
tions should be as objective as possible with clear measurable criteria. Employees should
know exactly what is required of them.
Legal Action
If there are some legal matters because of a termination a performance appraisal can provide
evidence to support a management decision.

Emerging Concepts and Issues of Performance Appraisal
Performance Appraisal is the systematic evaluation of the performance of employees and to
understand the abilities of a person for further growth and development. Performance ap-
praisal is generally done in systematic ways which are as follows:
1. The supervisors measure the pay of employees and compare it with targets and plans.
2. The supervisor analyses the factors behind work performances of employees.
3. The employers are in position to guide the employees for a better performance.
Objectives of Performance Appraisal
Performance Appraisal can be done with following objectives in mind:
1. To maintain records in order to determine compensation packages, wage structure,
salaries raises, etc.
2. To identify the strengths and weaknesses of employees to place right men on right
job.
3. To maintain and assess the potential present in a person for further growth and devel-
opment.
4. To provide a feedback to employees regarding their performance and related status.
5. It serves as a basis for influencing working habits of the employees.
6. To review and retain the promotional and other training programmes.
Advantages of Performance Appraisal
It is said that performance appraisal is an investment for the company which can be justified
by following advantages:
i. Promotion: Performance Appraisal helps the supervisors to chalk out the promotion
programmes for efficient employees. In this regards, inefficient workers can be dis-
missed or demoted in case.



ii. Compensation: Performance Appraisal helps in chalking out compensation packages
for employees. Merit rating is possible through performance appraisal. Performance
Appraisal tries to give worth to a performance. Compensation packages which include
bonus, high salary rates, extra benefits, allowances and pre-requisites are dependent
on performance appraisal. The criteria should be merit rather than seniority.

iii. Employees Development: The systematic procedure of performance appraisal helps
the supervisors to frame training policies and programmes. It helps to analyses
strengths and weaknesses of employees so that new jobs can be designed for efficient
employees. It also helps in framing future development programmes.

iv. Selection Validation: Performance Appraisal helps the supervisors to understand the
validity and importance of the selection procedure. The supervisors come to know the
validity and thereby the strengths and weaknesses of selection procedure. Future
changes in selection methods can be made in this regard.

v. Communication: For an organization, effective communication between employees
and employers is very important. Through performance appraisal, communication can
be sought for in the following ways:
a. Through performance appraisal, the employers can understand and accept
skills of subordinates.
b. The subordinates can also understand and create a trust and confidence in su-
periors.
c. It also helps in maintaining cordial and congenial labour management relation-
ship.
d. It develops the spirit of work and boosts the morale of employees.
All the above factors ensure effective communication.
vi. Motivation: Performance appraisal serves as a motivation tool. Through evaluating
performance of employees, a persons efficiency can be determined if the targets are
achieved. This very well motivates a person for better job and helps him to improve
his performance in the future.
Techniques of Performance Appraisal
The techniques of appraisal have been divided into two categories: The modern and the tradi-
tional techniques. While the traditional methods base their findings on the personality trades
of an individual like creativity, responsibility, and leadership, the modern techniques laid
more stress on the evaluation of work results. The traditional methods or techniques are:
1. Confidential report: It is used for promotion and transfer of an employee and is prepared
by the immediate superior who describes in detail the strength and weaknesses along with


major achievements and failures of the employee. The personality and behavior of the em-
ployee also find mention in this report.
2. Essay or free form method: As the name suggests the appraiser write a short essay detail-
ing the performance of the employee. It is a very time consuming method and is prone to
buys also as specific performance dimensions are not considered. The quality of appraisal
also depends on the writing skills of the appraiser. It is also difficult to compare two Essay
appraisals as there is no common criterion for the appraiser.
3. Strayed ranking method: This is the old and simplest method of performance appraisal.
In this method ranks are assigned relatively to all the employees working in the same unit and
doing the same job without analyzing their performance. The method biased as the ranking is
not based on the specific performance measures of a job. It can be cumbersome if the number
of employees is very large. The other limitations of this method are that it only tells how an
employee stands in comparison with other employees.
4. Forced distribution method: In this method the evaluator is required to distribute his rat-
ing in the form of normal frequency distribution. Employees are shown in categories that
range from poor to excellent by the evaluator. This method was evolved by Joseph Tiffin but
it also suffers from certain limitations as the performance criteria related to a job are not used
and the reasons for assigning a category to particular employee are not clear.
5. Graphic or linear rating scale: In this method a numerical scale is used which indicates
different degrees to a particular trait. These traits can be initiative dependability creativity
attitude loyalty emotional stability and co-ordination. The evaluator gives a particular ranking
on each trait to every employee. Two types of rating scales are used: Continuous and discon-
tinues. In first type degree of a trait is measure along a continuum like 0 1 2 3. IN discontin-
ues rating scale boxes are used to show the different degrees of the traits like (I) no interest
(II) indifferent (III) Interesting (IV) enthusiastic (V) very enthusiastic.
6. Critical incident method: This method was developed after a research by the armed forc-
es of United States of the 2nd world war. It is based on a principal that there are some signifi-
cant acts in the behavior and performance of every employee which can lead to the success of
failure on the job. The supervisor keeps a record of these events which can be good or bad
and also records the behavior of the employee during such an event. The ratings of the em-
ployee depend on the positive or negative behavior during these events. This method also has
certain limitations like it is cumbersome and time consuming and a lot of important infor-
mation is lost while coating the incident after a considerable gap of time. Continues record
keeping is also not possible as such events keep on happening frequently. The bios by the su-
pervisor in reporting these incidents can also not be ruled out completely.
7. Group appraisal method: Employees are rated by a group of people comprising the im-
mediate supervisor of the employee and other supervisor who have the knowledge of the em-
ployee work along with the concerned head of the department and a personnel expert. This


group determines the standards and then measures the actual performance of the employee. It
suggests creative measures after analyzing the causes of poor performance. Though it is a
time consuming method, it is free from bias.
Modern methods of performance appraisal
1. Assessment centre method: This method was used for the first time in 1930 by the Ger-
man army and then in 1960s by the British army. This method tests a candidate in different
social situations using a number of assessor and procedures. The performance of an employee
an also his potential for a new job is evaluated in this method by assessing his performance
on job related simulations. Characteristics that the concerned managers feel are important for
the success of a particular job are included in these simulations. Techniques like business
games role playing and in basket exercises are used in this method. The employees are evalu-
ated individually as well as collectively on job related characteristics. Personal interview and
projective tests help in assessing the motivation, career orientation and dependence on others
of an employee. To measure the intellectual capacity written tests are used. The evaluators in
this method consist of experienced manager working at different levels who prepare a sum-
mary report for the management as well as for the employees. This technique usually
measures the planning ability interpersonal skills and organizational skills of an employee.
2. Human Resource Accounting Method: Human resources are a valuable asset for any or-
ganization and it can be valued in monetary terms. This method evaluates the performance of
an employee in terms of costs and contributions. HR costs include expenses incurred on HR
planning recruitment selection induction and training. The difference between this costs and
the contribution by an employee reflects the performance of that employee. This method is
still developing hence is not very popular at present.
3. Behaviorally anchored rating scale (BARS): This method combines the graphic rating
scale and the critical incident method. It determines in advance the critical areas of the per-
formance and the most effective behavior to achieve the results. Then the actual job behavior
of an employee is evaluated against the predetermined behavior.
The following steps are used for constructing BARS.
Supervisor and other persons well acquainted with a job are asked to describe specific
critical incidence of effective performance behavior.
Then these persons categorized the incidents into sets of performance dimensions and
each set is then defined.
These people then reallocate the original critical incidents. They are given the cluster
definition and critical incidents and are asked to re-design each incident to the dimen-
sions that describes it the best. A critical incident is retaining only some percentage
that is usually between 50 80 percent of this group assigns the incidents to the same
cluster as was done by the earlier group.


The second group then rates each incident on a 7 9 point scale where the rating is
done on the basis of how well the behavior described in the incidents represented the
performance on the appropriate dimensions.
A sub set of incidents is used as behavior anchors for the performance dimensions.
4 Appraisal through management by objectives (MBO): This concept was introduced by
Peter Ducker in 1954 who named it management by objectives and self control. It is an effec-
tive way it is also known as goal setting approach to appraisal .In this process the supervisor
and subordinate members jointly identify the common goals of the organization and set the
areas of the responsibility of each individual in terms of results expected from that person.
These measures are use for operating the unit as well as for appraising the performance of the
employees.
5 The 360 degree appraisal: The 360 degree method of performance appraisal is used to
make the appraisal process more transparent, objective and participative. It introduced the
concepts of self appraisal subordinates appraisal, peer appraisal and appraisal by customers. It
is called a 360 degree method because it involves the evaluation of an employee by persons
above him, below him and alongside him. Structured questionnaires are used to collect in-
formation from the seniors, subordinates and peers. The employee to be evaluated thus ac-
quires a central position and everyone around him participates in the appraisal process in the
360 degree method. The following four are the main components of 360 degree appraisal
Self appraisal: It allows an employee complete freedom in accessing his or her strengths ob-
jectively and identifying the areas of development. The employees get a chance to share the
development areas with their seniors based on their self appraisal and jointly worked out a
plan in tune with the organizational realities like the availability of resources and time. It also
gives a chance to the employee to express his career plans which is in the interest of the or-
ganization as it knows beforehand the aspirations of its employee.
Appraisal by superiors: An appraisal by superiors involves providing constructive, feed-
back about the performance of any employee as well as his development areas during the re-
view period. It helps in setting goals for the employees that help in achieve the organizational
goals and improve the performance of the employee. The career aspirations of an employee
are also put in proper prospective.
Appraisal by subordinates: This is a unique feature of the 360 degree method of appraisal.
As the subordinates play an important role in the performance of the employee. The feedback
by the subordinates gives firsthand account of how they look at their superior in terms of
working style. The capability of a superior in motivating, delegating the work, building a
team and communicating with them effectively form the basis of appraisal by the subordi-
nates.


Peer appraisal: It also plays an important role in 360 degree appraisal as the role of peers is
quite important in life of an employee. Selecting the right peers is very important and peers
from the departments that are directly related with the department of the employee should
also be included. It mainly focuses on feedback about the style of functioning of the employ-
ee under review and can also include his ability to work as team leader besides his co-
operation and collaboration.
Potential appraisal: It is different from performance appraisal as it refers to the abilities of
the employees that are not being used at the time of appraisal. It searches for the latent abili-
ties of the employee in discharging higher responsibilities in future. The potential of the em-
ployees is judged on the basis of his present performance, personality traits, past experience
and age and qualification. It also looks at the unused skills and knowledge of an employee. It
aims at informing the employee their future prospectus and helps the organization in drawing
your suitable successions plan. It also requires updating the training efforts regularly and ad-
vised the employees on things which they can do to improve their career prospectus.
Methods of Performance appraisal
Trait-based Appraisal: is used to assess personality or personal characteristics,
loyalty, communication skills, level of initiative, decision making etc.. This is
common in companies that are in the business of service, and customer satis-
faction. While it is difficult to define the criteria accurately, rater/manager bias
is high, and as the focus is on personal attributes providing feedback is a challenge.
Behavior-based Appraisal: focuses on the appraisal of what an employee does 'on
the job. It evaluates behavior and measures what an employee should do differently.


This is common in customer facing organizations, like the hospitality / NGO compa-
nies. As the focus is on the assessment of behavior rater/manager bias remains a chal-
lenge here as well.
Results-based Appraisal: measures objective results of work. The focus is on
the outcome/deliverables from the job, and this alone serves as the measure for
success. It may not be possible to use in jobs which depend on team work or where
the job is service / support based.
Most organizations use a combination of trait, behaviour and results in their appraisal systems
as all three are important. It provides for a holistic and fair assessment of the individual.
Six Steps of the Performance Appraisal Process
The performance appraisal process is one that few look forward to. However, understanding
the process can help managers and employees conduct a more fruitful appraisal. At the Uni-
versity of Texas at Dallas, managers are taught that &amp, a chief purpose of any perfor-
mance appraisal program is employee development. This goal is accomplished by helping the
employee to do a better job and by developing in the employee the knowledge and skill to
meet the future needs of the work unit and the institution.
Establish a File
For managers to be effective and help employees develop skills and capabilities, it is essential
to begin the performance management process on the employee amp; first day. Create a file
for each employee and record the accomplishments, areas for improvement and regular feed-
back throughout the year.
Provide Regular Feedback
Regular feedback should occur at least once each quarter and more frequently if an employee
needs encouragement or motivation. According to the American Society for Clinical Labora-
tory Science & amp. The performance management process starts with employee planning
and ends with an evaluation of employee progress. Managers and employees should meet to
discuss planning and goals throughout the year. If possible, formally sitting down with your
supervisor or manager on a quarterly basis is optimal. The process, at its best, is a collabora-
tive one which should add value for both the employee and the employer. & amp; Employees
thrive on feedback because it ensures they are performing job duties and responsibilities ac-
cording to the company& amp; expectations. The feedback can be given in a casual manner,
provided the topic of the feedback is suitable for a casual meeting.
Discipline Issues
Throughout the year, an employee may engage in behavior that warrants disciplinary action.
Your company& amp procedure for addressing discipline should include a requirement to


document every disciplinary action taken. All disciplinary issues and improvements are taken
into account during the annual performance appraisal meeting.
Management by Objectives
Management by objectives, or MBOs, is another step in the performance appraisal process
used for some employees who have defined goals and steps to achieve each goal. These
MBOs really should be reviewed quarterly to track progress or redefine the goal if neither of
you see enough progress. MBOs are also particularly helpful to employees who are on a pro-
fessional career track within your business.
Conduct the Appraisal Meeting
As the time nears for scheduling the appraisal meeting, begin preparing the performance ap-
praisal document. Many companies have lengthy forms that require managers to record rela-
tively detailed information about the employee & amp, performance in all areas of the job.
Performance is rated in areas such as job proficiency, interpersonal relationships, communi-
cation skills and aptitude. Some employers consider employee self-evaluations. In these cas-
es, the employee should prepare her comments about her performance during the past year.
Both the manager and the employee should feel comfortable during the appraisal meeting.
Tension will just make the meeting agenda much more difficult and uncomfortable than it
needs to be.
Follow Up Action
After the performance appraisal meeting, there will likely be follow up matters such as dis-
cussing areas for improvement, establishing goals for the next year and confirming the em-
ployee & amp; salary or wage increase. In addition, the manager and employee may schedule
another time to discuss irresolvable issues that arise during the performance appraisal meet-
ing.
Reasons Employees Dislike Performance Appraisals
Performance appraisal is a yearly rite of passage in organizations that triggers dread and ap-
prehension in the most experienced, battle-hardened manager. Employees on the receiving
end of appraisals do not always look forward to them. In fact, research and practice demon-
strate that employees enjoy performance appraisal about as much as a trip to the dentist, but
at least the dentist gives them something for the pain! Consider the reasons why employees
dislike performance appraisals.
Rating Bias
Employees dislike performance appraisal because managers do not always rate them on ob-
jective criteria. Experts call this problem rater bias. When managers include nonperformance
factors like race, gender, hair color, etc. into an appraisal, the contaminated appraisal ratings


produce fruit of perceived and genuine unfairness in the rating process and its outcomes. Em-
ployees react with reduced job satisfaction and turnover. These various forms of appraisal
bias serve as a major source of EEO complaints and court cases.
Rating bias occurs with the contamination of appraisal ratings by non-performance related
factors. Prime examples include person characteristic bias (race, gender and age), personal
relationship contamination (liking or disliking), and failing to gather a representative sample
of performance.
Recent research suggests other well-known sources of bias include the negative effect of em-
ployee and rater impression management. Managers often feel resentment toward the pander-
ing employee, affecting their ability to rate fairly.
Another factor confirmed by research is the influence of mood on performance appraisal rat-
ings. When the manager or supervisor is in a bad mood, he or she is a much more conscien-
tious performance rater and more attuned to employee mistakes and problems. When in a
good mood, the manager is more likely to overlook poor employee performance. Given that
the managers frame of mind is often beyond the employees control, it adds another frustrat-
ing uncertainty to the appraisal process.
Hypocrisy
When managers do not follow stated policies and procedures when they dont practice what
is preached in the organization the visible contradiction generates disappointment, distrust
and cynicism among their subordinates. It reduces the employee motivation and organiza-
tional citizenship behaviors that contribute to vibrant, productive and healthy work environ-
ments.
Jesus reserved his harshest criticism for hypocritical religious leaders, and for good reason.
Followers must respect and trust the veracity of their leaders. Employees will not go out of
their way to provide the extra effort and creativity needed to solve problems and make neces-
sary changes when they lack trust in the integrity of management.
The most problematic situation occurs when raters manipulate feedback to game the perfor-
mance appraisal process to support their favorite employees (in-group) and punish the least
favored (out-group). As was the case with Olivia, when managers promote employee partici-
pation through self-appraisals, but then ignore that input and instead, adopt the proverbial tell
and sell approach employees rightly perceive that traditional command and control values
dominate. This managerial hypocrisy occurs frequently among least favored employees con-
tributing to higher levels of appraisal unfairness.


Poor Informal Feedback
In general, employees like to receive feedback; they want to know how they are doing! Quali-
ty performance feedback on an ongoing basis is the lifeblood of the performance appraisal
process. Research and practice demonstrate a consistent disconnect between employee and
manager perspectives about the degree and nature of performance feedback. As servant lead-
ers, communication is the building block of trust. Employee surveys consistently show that
employees desire more frequent, specific and timely feedback than the typical manager pro-
vides. Olivia felt misled and betrayed when she did not receive direct feedback regarding her
alleged shortcomings. In fact, research indicates a large number of employees do not believe
that managers have the requisite skills to provide appropriate feedback. More so, employees
can be aggravated when feedback sessions are superficial, rushed or even interrupted. Em-
ployees seek direct feedback, not the sandwich approach managers try to hide the negative
feedback in between a couple of slices of general compliments.
Poor Communication during Formal Feedback Sessions
With competing priorities, managers can be unprepared or insufficiently trained for the inher-
ent challenges to providing candid informal and formal performance feedback. For example,
employees are often victims of the report card syndrome. This occurs when managers save up
examples of poor performance for the performance appraisal interview and surprise employ-
ees with poor ratings. This type of rater behavior diminishes employee satisfaction with the
appraisal process, creating the opposite effect of eroding the appraisal systems intended ben-
efit of motivational and productivity improvement. Conversely, the report card syndrome is


the absence of performance documentation. When this occurs, low performance ratings, un-
supported by clear and specific performance evidence, frustrates the employee and creates a
perception of unfairness, a prime motivation for grievances and lawsuits.

Rater Errors
Employees often realize when managers are not giving them accurate ratings. Many manag-
ers dont want to deal with conflict, so they often give employees undeserved high ratings
(researchers call this leniency tendency). Another mistake managers make is to give employ-
ees average ratings (central tendency). Sometimes managers impose unreasonably high per-
formance standards, which can demoralize and discourage employees. So, while consistently
high ratings rob employees of the intrinsic achievement and satisfaction for a job well done,
harsh ratings reduce motivation by setting impossible performance standards. The major
cause of these rater errors is a lack of training. Untrained raters are more likely to commit
more performance appraisal mistakes, thereby eroding employee confidence in the perfor-
mance appraisal system.
Career Development and Career Planning

Career development is a continuous process where both employees as well as employers have
to put efforts in order to create conducive environment so that they can achieve their objec-
tives at the same time.
"Hope and advancement in one's career is one of the main motivating factors at any level of
management. Some expectations of possible future opportunities of the individual are neces-
sary to keep the manager's motivation high. Career planning does not mean predicting or en-
visaging what higher jobs will be available for each person. It essentially means helping the
employee to plan his career in terms of his capabilities within the context of organizational
needs. Career planning need not imply any specific commitment on the part of the manage-
ment to promote an employee. It only implies that the individual after becoming aware of
some of his capabilities and career opportunities and development opportunities, chooses to
develop himself in direction that improves his chances of being able to handle new responsi-
bilities.
Employees are career conscious and theyll stick to an organization where they feel that they
have an opportunity to showcase their talent, grow to the maximum possible level and
achieve their objectives. When we talk about growth, it can have different meanings to differ-
ent people. Some may look at it as a fat package, some may want to climb up the ladder in the
hierarchy and reach the topmost position while some want to acquire higher skills and com-
petencies along with their growth as a human being. Some people may take it as an oppor-
tunity to avail some exclusive perks and benefits. Depending upon ones own thinking, dif-
ferent people take different actions in order achieve their objectives.


Given the present situations, if employees want their organization to give them an opportuni-
ty to grow and achieve their ambitions, they need to be prepared for the future jobs. The main
focus of organizations is on the employability of their people. Therefore, individuals should
make sure that they have skills and competencies plus willingness to perform a specific job
efficiently. Although the organizations can hire employees from outside but they require
portable competencies in order to get the job done. For this, they will need to impart training
to them and develop skills and competencies according to the job profile. But this is a trou-
blesome process and takes hell lot of time to prepare the employees for a specific job. In or-
der to avoid this situation to the maximum possible extent, organizations take control of the
careers of their already existing employees and foster succession planning to fill the topmost
positions.
Individuals need to develop new and better skills so that they are fit for promotion and reach
to a higher level in the organization. Organizations likewise need to become proactive in de-
Dissatisfies
with internal
career oppor-
tunities
External Mobility
Career Development
Career Planning
Appraising the
individual and the
career and Finding
the suitable career
Develop the Employee
through self Develop-
ment training conducted
by the organizations to
meet the career De-
mands
Matching the
individual and
the career
Providing
Progression
Upgrading
Transferring,
Promotion
Satisfaction,
Dissatisfac-
tion
Demotion
Mismatching
Successful Matching
A Model for Career Planning and Development
Performance in
New Career


signing and implementing career development programs for their employees. It is the best
thing they can do to decrease employee turnover. Although it is employees responsibility to
plan their career but in todays turbulent and terrifically ambiguous world of work it is the
employers responsibility to provide them with opportunities achieve their ambitions. They
need to create that environment and culture for continuous learning and support their em-
ployees by motivating and rewarding them.
What is purpose of career planning?
When you organize or support career planning, you give staff a clear message that you sup-
port their employment advancement within your organisation. By helping people to plan ca-
reer choices that are realistic and suitable, you are offering them the opportunity for future
satisfaction within your business and you significantly lower the risk of them leaving.
In the process of developing a career plan, employees will gain a better idea of:
what type of work they are best suited to within your organisation
what training and education they will need to pursue the work they would most like
within your organisation
The strategy that will help them get where they want to be.
Importance of Career Development
The process of organizational career development is important for both employees and em-
ployers. There may be several unintended and undesired changes as well as consequences
that can change the entire scenario. In such a situation both employees and employers must
be ready to keep with the changing environment and act accordingly. Employees continuous-
ly need to upgrade their skills and competencies to meet the current demands where as organ-
izations must be ready with those employees who can handle the pressure efficiently and
cease the risk of falling prey to the changed scenario. Therefore, understanding the im-
portance of career development is very necessary for both the parties.
Business Environment Factors that can Bring Undesired Changes
Economic Downsizing: The biggest of all the factors that has badly affected the ca-
reers of millions of individuals is economic downsizing. The jobs are cut from the or-
ganizations and the fittest of all employees survive. If employees continuously learn
new and better skills, chances are that economic conditions wont hurt them that badly
as compared to other individuals.

De-layering: De-layering means reclassification of jobs. This is an organizational
change initiative where a company decides to reclassify the jobs more broadly. How-
ever, old reporting lines do exist in order to maintain managerial control but some


jobs may be removed or cut down during the process. Again, those individuals have to
leave the organization that is not competent enough to be shifted to other job with dif-
ferent nature.

Cost Reduction Strategies of the Organization: Cost-reduction strategies of the or-
ganizations are again very dangerous for those individuals who are not prepared to
move on to the next level. If organizations have to cut down their operating costs, the
employment of those individuals is at stake who are not employable or who have not
performed up to the mark in past. Employees continuously need to upgrade them-
selves and show their talent in order to remain in the organizations till long.

IT Innovations: Continuous changes and up gradation in the technology is also one
of the major factors that bring change. Some individuals can keep a pace with the
changing technology and are always ready to learn and adopt new IT applications
while some show immense resistance which is not acceptable to the organizations.
Employees need to keep themselves updated and show willingness to accept changes
as and when they occur and mould themselves accordingly.

Attracting top talent: Although the recently the US has been faced with a tight job
market, in competitive fields employers must focus their efforts on attracting the top
talent. Competitive employment packages that go beyond traditional compensation
and benefits can be key to their success. Research shows that career prospects and
learning opportunities are influencing factors when potential employees are choosing
between job offers (Barbeite & Maurer, 2002). In addition employees who perceive
their employer to provide career growth opportunities show a greater commitment to
their organizations (Mikkelsen, Saksvik, Eriksen, & Ursin, 1999).

Job satisfaction: Employees who participate in required training courses and worked-
based development activity during work time reported higher job satisfaction and or-
ganizational commitment (Birdi, Allan, & Warr 1997). These findings can be ex-
plained by social-exchange theory, which posits that employees will remain with and
work harder for an organization if the organization shows it values the employees by
taking on the responsibility of shaping their career (Aguinis & Kraiger, 2009).

Retaining employees/reducing turnover: Through organizational commitment, ca-
reer development opportunities help to retain employees and thus prevents turnover.
When estimates of the costs involved in replacing a skilled employee have been re-
ported to be as high as 150% of that employees salary retention of quality employees
is a strong business decision.


Productivity and Financial Returns: Employers can also increase productivity and
financial returns by investing in their employees via career development. Perceived
growth opportunities offered by an employer have been linked to higher job perfor-
mance and lower turnover (Kraimer, Seibert, Wayne, Liden, & Bravo, 2011), which,
as discussed above, contributes to higher quality products and prevents monetary loss
due to turnover. Moreover, evidence suggests a positive relationship between finan-
cial performance and organizations that encourage and support continuous knowledge
acquisition and dissemination (Ellinger, Ellinger, Yang, & Howton (2002).
The business changes affect both organizations and employees. The need is to understand
them and find a way to cope with them effectively.
Five Stages of Career Development

Within each stage mastery of certain tasks allows people to function successfully within that
stage while preparing them to move on to the next task. Each stage is loosely affiliated with
a chronological period and is characterized by work attitudes, behaviors, types of relation-
ships, and the aspects of work that are valued.
1. Growth The early years (4 to 13 years old) is a time when the individual first becomes
aware of the future. People start to find ways to develop competencies and to achieve in or-
der to increase control over their life.
2. Exploration From the early teens to mid-twenties, people begin to crystallize, specify
and implement an occupational choice. Different roles are tried and various occupational op-


tions are explored though school, leisure, part-time work and volunteering. Trial jobs may
be tested before more firmly finding a more stable and appropriate fit.
3. Establishment In the mid-twenties through mid-forties, typically a suitable field is se-
lected and efforts are made to secure a long-term place in the chosen career. Young adult-
hood tends to be a time for stabilizing, consolidating, building momentum and moving up.
Obtaining certifications, credentials, and advanced degrees may be the norm.
4. Maintenance - This stage usually happens in the mid-forties to mid-sixties and is charac-
terized by constancy: 1) Holding on (stagnating or plateauing), or 2) Keeping up (updating
or enriching). Continuity, stress, safety and stability tend to be the standard. Sometimes
people feel risk adverse with various career options which may lead to frustration or even de-
pression. In middle adulthood we may ask ourselves, What have I done with my life? Or is
this all there is? Or even what do I truly want? For men, state of health or career accom-
plishment may predominate. Women sometimes perceive this period as an opportunity to
pursue new personal or professional goals now that their nurturing role has peaked.
5. Disengagement The mid-sixties is typically marked by decelerating from formal em-
ployment to finding new roles with a view to retirement. Baby Boomers are teaching us that
this stage should be more appropriately named Re-investment. They are completely rede-
signing the notion of retirement preferring to work in some form while pursuing new or
renewed outside interests. In later adulthood, there may be a need to assist or mentor younger
members of society or seek self-employment.
Career development of employees is organizationally supported, manager facilitated, and
employee driven. The career management process is based on the establishment of specific
goals and objectives. The career management process commences with the formulation of
specific goals and objectives. The goals can be of the following kinds:
Short-term goals: These are goals to be achieved within the next 1 to 2 years. The-
se are more specific and easy to formulate.
Intermediate goals: These are goals to be achieved in the next 3 to 5 years. These
are more difficult to formulate as compared to short-term goals.
Long-term goals: These are goals to be achieved after 5 years. They are more fluid
and very difficult to formulate.


As the nature of the work changes employees may have to modify and update their
goals. Figure shows the employee career development cycle where managers guide,
motivate and provide opportunities to employees in every step towards developing ca-
reer. Organizations exercising good employee relations have an environment in which
employees take control of their own development and maintain their employability.
Such organizations ensure that employees are given fair career advancement opportunities.
Discriminations are not made on the basis of race, gender or ethnic group. The framework of
such organizations enhances employee potential.



Summary
Performance management includes activities to ensure that an organizations goals are con-
sistently being met in an effective and efficient manner. Performance management can focus
on the performance of an Organisation, a department, employee, or even the processes to
build a product or service, as well as many other areas.
The objectives of performance management are identifying the strengths and weakness of
employees, finding ways to overcome the shortcomings evaluating the overall ability of a
company to set and reach goals and identifying and remedying situations that are hindering
company performance. The purpose of performance management can be broadly classified
into driving results, building capability and growing talent.
Driving results is to drive improvement in business results through individual, group and en-
terprise goal alignment, measurement, performance coaching and performance information
sharing. Building capability is to drive organizational and individual capability development
by clarifying role-specific goals and competencies, creating an environment of constructive
feedback, and using formal developmental coaching or mentoring. Growing talent is to moti-
vate and retain high performers by providing career development programs, which includes
motivation and reward strategies, challenging work assignments and other on-the-job learn-
ing initiatives that will lead to career advancement and job satisfaction.
There are various principles of performance management, some which are discussed in this
unit. The various dimensions of performance are output or result dimension that describes the
consequence of inputs in a semi-final, final or summary form, input dimension that deals with
the activities or tasks to be accomplished by the individual, time dimension that deals with
performance measurement based on time and focus dimension that describes the focus of per-
formance. Quality dimension ensures that the outcome of performance is of a good quality
and cost dimension explains the various costs of performance. Performance appraisal is a part
of performance management, Performance appraisal is usually considered to be the process
and time when manager and employee sit down to review the employee's performance over
the last year, or month, or even shorter time spans.
Performance appraisals are necessary for the effective management and evaluation of em-
ployees. Appraisals help develop individuals, improve organizational performance and nur-
ture business planning. Formal performance appraisals are normally conducted annually for
all employees in the organisation. Each employee is appraised by their manager. Directors are
appraised by the CEO, who is in-turn appraised by the chairman or company owners, depend-
ing on the size and structure of the organisation.
Performance appraisals facilitate management and monitoring of standards, agreeing expecta-
tions and objectives, and delegation of responsibilities and tasks. Employee performance ap-
praisals also institute individual training needs and enable organizational training needs anal-
ysis and planning.


It is sometimes trendy in the 'modern age' to dismiss traditional processes such as perfor-
mance appraisals as being irrelevant or unhelpful. It is possible that the critics of the appraisal
process are the people who can't conduct themselves very well. It's a common human re-
sponse to want to get rid of something that one finds difficult. Appraisals in whatever form
have been the mainstay of management for decades, for good reasons.
The HR specialists design the performance evaluation system, train the line managers in the
use of the systems, and maintain the records. The three categories used here will be; individ-
ual evaluation methods; multiple person evaluation methods; and other methods. The follow-
ing methods help to evaluate an employee individually:
a. Graphic rating scale
b. Forced choice
c. Essay evaluation
d. Management by objectives
e. Critical incident technique
f. Checklists and weighted checklists
Three techniques that have been used to evaluate an employee in comparison with oth-
er employees being evaluated are
a. Ranking
b. Paired comparison
c. Forced distribution
Recognition satisfies human need for esteem by others and for self-esteem. This
recognition may be shown in the form of praise, of a pat on the back of the employee
or a recommendation for a pay raise, promotion, or assignment of more interesting tasks.
An incentive or reward can be anything that attracts a worker's attention and stimu-
lates him to work.
The use of incentives assumes that people's actions are related to their skills and abil-
ity to achieve important longer-run goals.
Performance appraisal is limited to a feedback process between employees and Man-
agers.
However, with the increased focus on teamwork, employee development, and cus-
tomer service, the emphasis has shifted to employee feedback from the full circle
of sources. This multiple-input approach to performance feedback is sometimes called
"360-degree assessment" to connote that full circle.



Review Questions
1. What are the purpose of career planning and development for an employee? Also describe
about various stages in career development.
2. Briefly discuss the importance of performance evaluation in an organization.
3. What is the purpose of performance evaluation? Describe the different methods of evaluat-
ing employee performance in an organization.
4. What is performance appraisal? Describe the methods of performance appraisal.
5. What is career? Describe the five stages of career development.
6. What is PA? Describe appraisal process.
7. What are the major reasons for employee complaints about performance appraisal system?
Explain.
8. What are the benefits of PA to the organization in planning employee promotion and mo-
tivation?
9. How is job evaluation related with compensation management? Discuss.
10. What is 360 degree feedback? What advantages might it have over the traditional perfor-
mance appraisal systems that often use only downward feedback?
a) Performance appraisal
b) Career development

Compensation

CHAPTER: V
Compensation
Concept
The terms wage / salary / compensation are often used as synonyms. The term wage is usual-
ly associated with contractual employee whose pay is calculated according to the number of
hours worked/ units produced. The word salary/compensation applies to the remuneration
that is paid for a fixed period and does not depend upon the number of hours worked.
It is associated with the white collar worker. Certain theories were propounded for determi-
nation of wages but these could not stand the test of time.
Compensation refers to all forms of financial returns and tangible services and benefits that
employees of an organisation receive as part of the employment relationship.
The term compensation is used to mean employees gross earnings in the form of financial
rewards and benefits as part of employment relationship.
Money is directly or indirectly related with fulfillment of all human needs and the primary
objective of anybody who takes up an employment is to earn money. Hence, the pay package
or the compensation structure is the most important deciding factor for an employee to either
accept or reject an employment offer.
Likewise, human resource is one of the integral requirements of any business venture, with-
out which it is impossible to carry out the day-to-day operations. Hence, employee compen-
sation accounts for a large proportion of expenditure for any organisation and all organiza-
tions try to achieve an optimum employee compensation structure that is beneficial to both
the employee and the organisation.
Employees sell their skills and ideas in order to fulfill their primary needs, and employers
hire them to achieve their organizational goals. While the employers objective would be
productivity, the employees emphasis may be on higher salaries and benefits to offset the
increasing cost of living.
Importance/Significance of employee compensation:
Compensation is the basic component of an employment agreement, which serves to attract
qualified personnel to the organisation. Other things being equal, an organisation that offers a
higher level of compensation can attract a larger number of qualified people than its competi-
tors.
When it comes to retaining employees, the first and foremost aspect to be looked into is com-
pensation. It helps to retain employees who are considered to be indispensable to the growth
Compensation

of the organisation, by providing attractive pay structures. This also reduces the additional
turnover due to costs incurred on selecting, recruiting and training replacements.
Compensation serves as an incentive to motivate employees to put forth their best efforts. For
example: manufacturing and sales organizations use monetary incentives to achieve higher
level of production or sales without hiring additional employees.
Minimizing the cost of compensation helps to achieve organizational effectiveness, since
compensation forms a large percentage of cost for most employers.
Compensation system should be:
12. Adequate
13. Equitable
14. Incentive providing
15. Cost-effective
16. Secure
17. Balanced
18. Acceptable to the employee
Primary Compensation Packages
Base pay: Base pay is the fixed rate of compensation that an employee receives for perform-
ing the standard duties and assignment of a job.
Employers need to ensure that base-pay programs are designed to reveal market practices
within their identified competitor group. To achieve this, organizations must first identify
their competitive market. This can be achieved by considering different factors, including the
nature of the industry, geographic location, total employment and annual revenue. Next, they
need to conduct an assessment of market pay practices for similar jobs within the recognized
competitor group. This assessment should involve the duties, skills, and impact levels of each
job evaluated that is, each job of similar size and scope.
Then a pay structure for managing the competitive base-pay levels for the jobs throughout the
organisation should be developed. Pay structures typically consist of a series of pay ranges or
bands that reveal competitive rates of pay for specific jobs, as well as allowing room for sala-
ry growth. Jobs of similar value from both the market point of view and an internal point of
view are grouped together. Then a competitive pay range is developed around the market
rates for the particular jobs.
Variable pay: Performance-based variable pay continues to achieve momentum as a more
successful way to identify and reward employee performance. Also known as pay-per-
performance, variable pay is popular in todays corporate world. By including a percentage of
variable pay in the compensation plan, organizations ensure that two people with different
Compensation

efficiency levels do not get the same benefits. By doing this, the company rewards produc-
tivity and hard work and motivates the under-performers to work hard. Once limited to senior
management levels, these incentive or bonus plans are being redesigned to reward the
achievement of specific company or employee performance objectives. In a variable pay
plan, the size of the award varies among employees and from one performance period to an-
other, based on levels of achievement measured, as well as against pre established company
and employee performance targets. Amounts are usually calculated as a percentage of base
pay depending on job category and position. Rewards are normally paid in cash on an annual,
semiannual or quarterly basis depending on the plan design. Plan designs range from sales-
commission types to individual incentive or bonus plans to team awards. The main idea of
these programs is to reward innovation and hard work and to discourage mediocrity in per-
formance.
Skill and competency-based pay: Skill-based pay offers employees extra compensation
when they have new skills specially recognized by the company as essential to achieve a
competitive advantage. Skill-based pay can be particularly useful for employees who like
their current jobs but are looking for new challenges. Competency-based pay is more wide-
spread than skill-based pay because the criteria cover not only measurable skills but also
knowledge, performance behaviors and personal attributes. It helps out employees to grow in
the company and helps them to close the knowledge gaps needed for creative moves.
Long-term incentive compensation: Long-term incentive compensation vehicles, such as
stock-option plans and other deferred-compensation plans, which are not usually used to re-
ward performance, are achieving desirability among employees. These long term incentive
compensation plans appreciate employees based on company performance over a long term
that is typically three to five years. Stock-option plans are a common form of long-term com-
pensation at public organizations. In most private companies, incentives that reflect stock
plans are used for key employees.
Long-term compensation plans can be valuable preservation tools for the success of an organ-
isation. They help to focus on driving and improving the key employees to achieve the finan-
cial performance of the company over a longer term.
Types of Compensation
There are two different types of compensation: direct and indirect. Compensation is the com-
bination of monetary and other benefits provided to an employee in return for his or her time
and skill. The compensation management field provides management with the ideal combina-
tion of the different remuneration types, with the goal of retaining and motivating good em-
ployees.
Direct compensation is typically made up of salary payments and health benefits. The crea-
tion of salary ranges and pay scales for different positions within the company are the central
Compensation

responsibility of compensation management staff. The evaluation of the employee and em-
ployer portions of benefit costs is an important part of a payment package.
Effective compensation plans are routinely compared with other firms in the same industry or
against published benchmarks. Although some jobs are unique within a specific firm, the vast
majority of positions can be compared to similar jobs in other firms or industries. Direct
compensation that is in line with industry standards provides employees with the assurance
that they are getting paid fairly. This process helps the employer avoid the costly loss of
trained staff to a competitor.

Indirect compensation focuses on the personal motivations of each person to work. Although
salary is important, people are most productive in jobs where they share the companys val-
ues and priorities. These benefits can include things like free staff development courses, sub-
sidized day care, the opportunity for promotion or transfer within the company, public recog-
nition, the ability to effect change in the workplace, and service to others.
An effective package has a combination of direct and indirect compensation. Compensation
management programs often include a salary range for each position, with incremental in-
creases and annual reviews. During these review sessions, both types of compensation are
addressed and presented to the employee as part of the total package.
Compensation

Regular evaluation of the total compensation program and continual modifications is neces-
sary to meet the changing needs of employees. Many firms invest time and resources to en-
sure that all employees are aware of all of the types of benefits that are available. This en-
courages employees to provide valuable feedback on the types of programs that are most im-
portant to them.
Human resources departments are responsible for the creation and management of the com-
pensation program. A compensation management professional usually has a degree in human
resources and skills with data management, statistics, and report creation. Creative benefits
packages must be in keeping with the companys vision and identify to be effective.
Methods of Payment/compensate
1. Flat Rate
Single Flat rate are often paid
Seniority and experience do differ
Performance differentials are ignored
2. Payment for Time Worked
Wage pay calculated at an hourly rate
Salary pay calculated at an annual or monthly rate
Wage and salaries are adjusted once a year

Compensation

3. People-Based Pay
Skill based pay
Knowledge based pay
Credential based pay
Feedback pay
Competency based pay
4. Executive Pay
Growing dramatically for the past two decades
Managers use their power over boards to obtain higher Compensation.
5. Variable Pay
Compensation Programmes
For the organisation
Attract and keep the desired quality and mix of employees.
Motivate employees to continually improve their performance and achieve
the organisations strategic business objectives.
Reinforce the organisations key values and the desired organizational culture.
Drive and reinforce desired employee behavior.
Ensure compensation is maintained at the desired competitive level.
Control compensation costs.
Ensure optimum value for each compensation dollar spent.
Comply with legal requirements.
For the employee
Ensure equitable treatment.
Accurately measure and appropriately reward performance and contribution
to the achievement of the organisations strategic business objectives.
Provide appropriate compensation changes based on performance, promo-
tion, transfer or changing conditions.
Provide regular compensation and performance reviews.
Elements of benefits
Company benefits can include a wide range of offerings from standard medical insurance to
more modern benefits like prepaid legal services, and applicants who are comparing job of-
fers often narrow their choices down to those that offer the most generous benefits package.
Applicants and new employees checking their choices of benefit plans often feel confused
Compensation

and overwhelmed as the terminology used can be difficult to recognize and understand.
While the different plans are typically designed to deal with the health and welfare of the em-
ployee population, understanding them can be a difficult task. Further complicating matters,
some companies share the costs of these benefits with the employees, in an effort to help
make up for the significant expenses connected with broad benefit plans. Some of the bene-
fits are discussed below:
Training: For most of the employees, training means more than money. For example, ac-
cording to one survey of HR executives conducted by the American Management Associa-
tion, technical and employability training were rated considerably higher than pay-for-
performance or bonuses. Companies typically answer to this interest by sending workers to
outside conferences and seminars, repaying employees for tuition, offering managerial train-
ing and supporting employees in degree programs.
Health care: The benefits that get the most attention from employers today are health care
benefits because of the high costs involved in getting good healthcare facilities and the in-
creasing concern about staying healthy. In the past, health insurance plans included only
medical, surgical and hospital expenses. However, today employers include prescribed drugs
and dental, optical and mental healthcare benefits in the package they offer their workers.
Typically, an employer offers employees some form of group health insurance or set amount
to spend on healthcare or personal insurance plans each year. Employees may be offered in-
surance after working for a specified period of time, and the level of coverage is usually
linked to employment status, with part time employees receiving fewer benefits. Depending
on the company's plan, employees may have to select the healthcare plan, paying a small fee
while the company pays the remaining amount of the premium or the employer may cover all
insurance-related costs.
In group benefits, employees can have access to different types of healthcare plans, including
insurance plans, under which people pay for services at the time of availing them, and submit
a bill to the insurance company for reimbursement. Managed healthcare plans like providing
services from health maintenance organizations (HMOs) and preferred provider organizations
(PPOs), which offer care through a network of providers, are also getting immensely popular.
Pensions: Employees have ranked retirement or pension plans as second to medical cover-
age. However, many employers offer no pension coverage to their employees. Approximately
half of the private-sector workforce is not covered for pension by the employer.
There are two main types of pension plans: defined benefit and defined contribution.
In defined benefit plans, the benefits are calculated as a percent of the last few or the highest
years of earnings multiplied by years of service. They are then paid in the form of life pen-
sions. These plans are adjusted towards those who are expected to work for the same compa-
ny throughout their career.
Compensation

Defined contribution plans generally apply to younger workers. This type of pension plan
permits workers to save directly from some selected assets of their own choice.
Stock options: Stock options give employees a chance to buy stock in their company at a
predetermined price during a limited time period. In todays strong economy, employers have
found it increasingly essential to provide stock options to attract the most valued workers. For
example, more than 70 percent of technical workers now have stock options and 7 to 12 per-
cent of U.S. companies offer stock option plans to all employees, usually allowing from one
hundred to two hundred option shares annually, or an amount based on a percentage of sala-
ry.
Generally there are two types of stock options:
Discounted stock options: This type of plan permits an employee to buy the companys
stock at a price below the market value.
Index options: Some companies issue stock options with employed prices joined to the
Standard and Poors 500 Index or other peer group stock index. With this method, if the stock
price outperforms the index then the exercise price will be less than the fair market value. If
the index outperforms the market, the exercise price will be more than the fair market value.
Objectives of compensation plans
The Objectives of compensation can be classified under four broad categories equity, effi-
ciency, macro-economic stability and optimum allocation of labor.
Equity: Equity is the first category, which may take several forms. This concept involves in-
come distribution through narrowing of inequalities, increasing the salary of the less paid
employees, protecting real wages and the concept of equal pay for work of equal worth.
Compensation management struggles for internal and external equity.
Efficiency: Efficiency is often closely related to equity, because the two concepts are not op-
posing. The objectives of efficiency are revealed in attempts to link part of wages to produc-
tivity or profit, group or individual performance, purchase and application of skills and so on.
Arrangements to get efficiency may also be seen as being fair.
Macro-economic stability: Macro-economic stability can be achieved through high em-
ployment levels and low inflation. For example, an unwarranted high minimum wage would
have a bad impact on levels of employment, though at what level this result would occur is a
matter of debate.
Efficient allocation of labor: The well-organized allocation of labor in the labor market
means that employees will move to wherever they receive a net gain. Such movement can be
from one location to another or from one job to another. The condition or availability of fi-
nancial incentives causes such movement.
Compensation

For example, workers may move from a low-wage area to a high wage area. Employees may
gain new skills to benefit from the higher wages paid for skills. When an employer offers
wages lesser than the market rates, the employee turnover increases and when they offer the
wages above market rates, the employer attracts job applicants. When employees move from
small to large industries, an efficient allocation of labor due to structural changes takes place.
Objectives of benefit plans
Employers and employees value benefits differently. They will hardly ever agree on the level
of benefits that plans should provide. Employers try to find the employees needs and the cost
to the organisation. Employees wish to increase the value of benefits received and minimize
other expenses.
Employer objectives
The employer objectives for benefit plans are influenced by:
Meeting the organisation and compensation objectives.
Actual salary and percentage of payroll.
Administration complexity and cost.
Tax and accounting issues.
The part benefits play in the total rewards objectives of the organisation.
Employee objectives
Employee objectives for benefit plans involve income protection for:
Cash flow: This refers to the cash outflow with respect to the personal expenses of employ-
ees. This normally occurs when there is an unexpected increase in expenses for example a
sudden occurrence of medical expenses.
Income replacement: Providing replacing income if employee turns out to be disabled.
Income for surviving dependants: Providing income for existing dependents in the event of
death.
Adequate retirement income: Providing sufficient income upon retirement.
To design a benefits program, an organisation should define its program objectives. Further-
more, program objectives need to be adjusted with the organizations and HRs philosophy
and strategy. Since company philosophies and strategies vary, no two companies will share
the same objectives for employee benefit plans.

Compensation

Job Evaluation system-Methods and process
Job evaluation is a technique designed to enable employees to guess the size of a job in rela-
tion to others. Job evaluation will establish the basis for an internal ranking of jobs.
Let us understand how job evaluation relates to compensation design. A well planned job
evaluation scheme provides the HRM with definite systematic and reliable data required for
the determination of wage and salary scales. This implies that logical wage negotiation re-
duces the wage grievances and dissatisfaction with wage differentials, thereby, ensuring a fair
treatment for each of the employees. Most importantly, job evaluation provides a logical ba-
sis for promotion.
Following are some of the most important benefits provided by job evaluation:
Reduced layout turnover.
Increased output.
Improved morale of employees.
Reduced loss of time due to wage negotiation and disputes.
Reduced complaints regarding wages.
Reduced wage and salary anomalies.
The two most common methods of job evaluation that are being followed are:
Job ranking: In this method, jobs are taken as a whole and ranked against each other.
Points rating: In this method, different aspects of the job such as education and expe-
rience required to perform the job are assessed and a points value awarded. The most
well known points scheme was introduced by Hay management consultants in 1951.
This scheme evaluates job responsibilities by considering the three major factors:
Know-how.
Problem solving.
Accountability.
Some principles of job evaluation are as follows:
Only those jobs which can be clearly defined and identified must exist and this should
be described in job description.
All jobs in an organisation should be evaluated using an agreed job evaluation
scheme.
Job evaluators should have a clear knowledge about the job.
Job evaluation is concerned with jobs and not with employees. It is not the employee
who is being evaluated.

Compensation

Job Evaluation process or Steps
Job evaluation is a step by step process which is completed after the successful completion of
following phases:

1. Job Analysis
It is a process through which required information about various aspects of jobs can
be obtained. Job analysis involves two dimensions:

i. Job description
Under job description, a profile of job information is prepared indicating the duties,
responsibilities and working condition of work. It explains about what the job entails.

ii. Job specification
Job specification indicates preparation of a specification statement which explains the
necessary skills, knowledge and abilities required to perform the job.

2. Job Rating
Job rating includes the process of using same methods to study job descriptions and
specifications in order to assign a relative worth for each job. Some of job rating methods
are: ranking, point rating factor comparison, and so on.

3. Money Allocation
After rating the worthiness of each job, a pay structure is determined and the money for
each job is allocated. It means, it is the arrangement of paying rewards/compensation for each
job according to its worth or value.

4. Job Classification
Job classification is the last step of job evaluation which is concerned with the categoriza-
tion of jobs according to their pay scale. For example, high paying jobs are represented at the
top of the hierarchy.
The compensation structure
Salary is structured, fixed, adjusted on the basis of several systems. The importance among
them is: (a) wage theories (b) job evaluation (c) wages and salary survey (d) various factors
affecting wages and salary levels

Compensation

(ii) Wages theories:
Subsistence Theory of Wages:
According to this theory, the wage in the long run tends to be equal to the level of sub-
sistence. By minimum level of subsistence means the amount which is just sufficient to
meet the basic necessities of life of the workers and their family.
It is argued that if wages exceed the subsistence level the labour will marry and will pro-
duce children. The supply of labour will increase then the demand and money wages will
fall to the level of subsistance. If wages remain below the subsistence level, the labour
will not be able to maintain their families.
The death rate will increase due to hunger and supply of labour will fall than its demand.
Again wages will rise to the subsistence level.
The Wages Fund Theory:
This theory is associated with Adam Smith and J.S.Mill. Wage fund is that amount of
floating capital which is set a part by employer for paying wages to the labour. The aver-
age wage rate is determined by dividing the wages fund by the total number of workers
employed. Wage rate = Wage Fund / Total no. of workers.
POLICIES
INTERNAL
CONSISTENCY
EXTERNAL COM-
PETITIVENESS
EMPLOYEE CON-
TRIBUTION
NATURE OF AD-
MINISTRATION
COMPENSATION TECH-
NIQUES
COMPENSATION
OBJECTIVES
Job Analysis, Job Description, Job Evalu-
ation, Job Structure
Market definitions, Market Surveys, Pol-
icy Lines, Pay Structures
Seniority basis, Performance basis, In-
centives Guidelines, Incentive Programs
Planning, Budgeting, Communicating,
Evaluating
Efficiency
Equity
Compliance
Compensation

For example if capital of fund is 10,000 and number of workers are 100 then rate of wag-
es will be 10,000/100 = 100

Residual Claimant Theory:
According to this theory labour receives what remains after the payment of rent, profits,
taxes and interest out of the national income. This theory is offered by American econo-
mist Mr. Walker He says,
"Wages equal the whole product minus rent interest and profit."

Jevon says, "The wages of working man are ultimately coincident with what he produces,
after the deduction of rent, taxes and the interest on capital."
Marginal Productivity Theory:
"Marginal productivity means the net addition or net subtraction caused in the total pro-
duction by employing or withdrawing one unit of production."
A producer always compares the marginal product value with the price of a marginal in-
put unit. This theory states that price of each factor of production tends to be equal to its
marginal productivity.
Demand and Supply Theory:-
In microeconomics, supply and demand is an economic model of price determination in a
market. It concludes that in a competitive market, the unit price for a particular good will
vary until it settles at a point where the quantity demanded by consumers (at current price)
will equal the quantity supplied by producers (at current price), resulting in an economic
equilibrium for price and quantity.
The four basic laws of supply and demand are:
1. If demand increases and supply remains unchanged, a shortage occurs, leading to a
higher equilibrium price.
2. If demand decreases and supply remains unchanged, a surplus occurs, leading to a
lower equilibrium price.
3. If demand remains unchanged and supply increases, a surplus occurs, leading to a
lower equilibrium price.
4. If demand remains unchanged and supply decreases, a shortage occurs, leading to a
higher equilibrium price

Compensation

Supply of labor: - Supply of labour depends upon the following factors.
Size of population: - If the size of population is greater than the supply of labour will
also be greater.
Mobility of labour: - The supply of labour also depends upon the mobility of labour.
Because if any occupation or country supply of labour decreases it can be increased.
Social structure: - Supply of labour also depends upon the social set up of a country.
If any society allows the women to work, then the supply of labour will be greater.

The wages will be determined at the point where demand and supply both are equal to
each other.
(iii) Job Evaluation
An assessment of the relative worth of various jobs on the basis of a consistent set of
job and personal factors, such as qualifications and skills required. The objective of
job evaluation is to determine which jobs should get more pay than others. Several
methods such as job ranking, job grading, and factor comparison are employed in job
evaluation. Research indicates, however, that each method is nearly as accurate and
reliable as the other in ranking and pricing different jobs. Job evaluation forms the ba-
sis for wage and salary negotiations.

Types of Job Evaluation Methods/Techniques

(iii) Factors affecting Wages/Salary Level:
I/ Based on work:
Work is the deciding factor that affects the salary level. Most of the companies pay attention
to the significance of a specific work. There are many methods for evaluating work, but how
to use methods such as job description table to analyze and evaluate work should be in a sci-
entific and effective way. The work factors that need to be analyzed are:
QUANTITATIVE NON-QUANTITATIVE
RANKING METHOD JOB CLASSIFICATION
AND GRADING
METHOD
FACTOR COMPARISON
MTHOD
POINT RATING
METHOD
Compensation

1. Skills and abilities:
a) The demand of mental labor.
b) The complexity level of the work.
c) Individual necessary qualifications.
d) Making decision skill.
e) Management skill.
f) Social knowledge necessary for the work.
g) Harmonization skill.
h) Ability to perform work details.
i) The level of Craftsmanship.
j) Creativity ability.
k) Innate ability.
l) Experience.
2. Responsibility to the following matters:
a) Money.
b) Loyalty.
c) Decision making.
d) Work management.
e) Public relation.
f) The quality of work performance.
g) Operating assets.
h) Information secret.
i) Policy making.
3. Effort in working:
a) Mental work requirement
b) Physical work requirement.
c) The pressure of work.
d) The level of work detail required.
4. Working conditions:
a. Working environment.
b. Risks.
II/ Based on each employee.
1. Their working productivity in working to meet the rate of progress.
2. Experience.
3. Seniority.
4. Ability to get promotion.
Compensation

5. Individual preferences.
6. Other factors
III/ Company organizational environment:
1. The business policy, strategy of the company.
2. Company culture: for example: some companies emphasize on creativity, they are willing
to offer a high salary for creativity work.
3. Company financial status.
4. Company organizational structure: companies with many intermediate department levels
normally have many correlative levels of salary.
IV/ Labor market:
1. Official laws on wage and salary, labor contract, payment time, wage payment delay,
working insurance, and so on.
2. People are standard of living in the areas where the offices of the company are.
3. Peoples living and consuming customary
4. The average wage rate in the labor market of similar work.
EMPLOYEE BENEFITS AND SERVICES
In addition to a salary, employees may receive a range of benefits and services from their
employers. Benefits and services may vary depending on the employee's position or seniority,
but most employees of a company will generally share the same basic benefits package. Ben-
efits and services packages also differ among companies.
Vacation
Most employee benefit packages include vacation time. These days off are usually
paid, though some employers may offer unpaid vacation time as well. The amount of
vacation time varies greatly and depends on the company's policy, but amounts typi-
cally range from five to 20 vacation days per year. Vacation time is usually accrued
on a per month basis. The employee must schedule the use of vacation days in ad-
vance and gain approval from his immediate supervisor or human resources.
Sick Days
Employees may receive paid or unpaid sick days as part of their employee benefit
package. The amount of sick days an employee receives varies depending on compa-
ny policy and seniority. The amount of sick time given to an employee typically rang-
es from five to 10 days, though employers may offer more or less time. Some compa-
nies may require a note from a physician that verifies illness before approving the use
of a sick day.
Compensation

Retirement
An employer may offer pension or 401k savings plans for employees to save for re-
tirement. An employer may set specific amount of money to be contributed to an em-
ployee's 401k on an incremental basis or the employer may offer a matching benefits
program. Typically, this means the employer will match the amount of money an em-
ployee contributes to her 401k up to a certain amount. Some employers may offer a
401k savings account but without employer contributions.
Health Spending Accounts
A health spending account or flexible spending account may be offered by the em-
ployer to help offset the cost of medical care not covered by health insurance. Quali-
fying expenses usually include co-payments for doctor's visits, prescription costs or
over-the-counter medication. These programs may be a reimbursement model, where
employees submit qualifying receipts for reimbursement, or the employee may re-
ceive a debit card that can only be used for medical expenses.
Discounts
As part of the employee's benefit package, a company may offer discounts for in-
house products or services. For example, retail companies often offer an employee
discount for merchandise sold by the company. Other companies may also offer dis-
counts for products and services offered by a network of outside companies. The em-
ployer may have relationships with companies that offer cell phone service, cable tel-
evision, spa services or hotel accommodations and savings may be passed on to the
employee.
Retirement Benefits and their Administration
Retired government officials are provided with retirement and pension benefits in order to
ensure a regular income and a secure future. These financial benefits results in a feeling of
independence and a decent standard of life. Retirement benefits available for Public Sector
Undertaking (PSU) include leave encashment, retirement gratuity and contributory provident
fund.
Leave encashment: Leave encashment that is received at the time of retirement is complete-
ly released in the case of government servants. In the case of non-government employees,
however, releasing the leave encashment would be the least of the following four amounts:
Cash amount of three lakh rupees.
Average salary of ten months.
Cash equivalent of the remaining leave at the time of retirement.
Leave encashment actually received during retirement.
Compensation

In this context, by average salary we mean the salary drawn during the last ten months before
retirement.
Retirement gratuity: Gratuity is a part of salary that an employer gives to an employee in
gratitude to the services offered by the employee in the company. An employee who has
completed 5 or more years of full time service with an employer is eligible for gratuity.
Any death cum retirement gratuity received by Government or Local Authority employees is
exempt from tax. However, for Non-Government Employees the taxability depends on
whether Gratuity is covered under the Gratuity Act.
Gratuity covered under the Gratuity Act: For Gratuity covered under the Gratuity Act, the
total amount of gratuity received by an employee, covered by the Gratuity Act, from various
employers in whole of service is exempt from tax to the extent of least of the following three
amounts:
Retirement administration: Retirement administration provides complete design, reporting,
record keeping and consulting services for all types of retirement plans. It focuses mainly on
effective communication of complex regulations of the retirement plans making it easy to un-
derstand.
Incentive system gain sharing incentives plans
Incentive compensation can be defined as a practice of compensating employees based on
their performance and their ability to meet their organizations performance goals.
The increase in global competition poses a difficult challenge for organizations and HRM
specialists in particular. HRM personnel are working towards improving organizational
productivity and enhance its effectiveness using HRM programs. Organizations are constant-
ly trying to motivate the employees through compensation schemes that match the organiza-
tions objectives and employee performance.
Incentive plans have to be focused on individual people or teams. Employees must have a
clear understanding of the connection between their effort and their incentive compensation.
Additionally, an incentive compensation plan is said to be well-designed, if it makes each de-
partment or individual focus on and administer proper control over its field of activities.
The Purpose and Requirement of Incentive Plans
Once an organisation has determined its goals and objectives, it must strive to reach these
goals and objectives through its employees. Although the employees of an organisation could
have been trained well and the organisation could have chosen the right individuals, it still
remains a challenge to make the employees understand the objectives and work hard to
achieve them. One way of motivating the employees to work according to the organisation
Compensation

strategies towards achieving its goals and objectives is by having an appropriate incentive
plan.
The payment given to employees, apart from their wages and salaries, is termed as incentives.
Usually, incentives are associated with productivity (either higher productivity or cost saving
or both). Employees may receive incentives on individual basis or group basis. An incentive
plan is a scheme used to motivate individual or group performance.
Incentive plans are required in an organisation because the right incentive plan when imple-
mented properly helps in motivating employees, increasing productivity and allows the em-
ployer to differentiate the pay given to high performers.
Incentive plans can be financial or non-financial. The following are the different types of in-
centives.
Types of Incentive Plans
An incentive plan can be made up of many kinds of elements. The most common kind of in-
centive program used by employers is a cash reward, but there are other ways of inspiring
employees to perform beyond the call of duty. This list of six types of incentive pay plans can
help get you started on the road to increased productivity and revenue.

Bonus Pay
In order for a bonus pay plan to work, you need to set goals that employees believe can be
reached. Before creating a bonus pay incentive program, run metrics on the department to
which you are looking to give the incentive. For example, if you want to offer an incentive to
the accounts payable department, analyzes how many invoices are processed in an average
month, and then base the incentive on exceeding that average. According to the Distance
Learning Center, employees must feel the incentive is attainable for it to work. Employees
must also not feel that they will be penalized if they do not reach the incentive marks.
Profit Sharing
A profit sharing incentive plan can encompass many aspects of the company for the entire
year. Make employees aware of the factors that affect profit, such as sales revenue, employee
productivity and conservation of resources to lower overhead costs. When the year is over,
determine a percentage of the profit that can be paid to the employees as a reward for helping
the company achieve a profit.
Compensation

Stock Incentives
You can offer shares in the company as incentives, as opposed to paying out an immediate
cash reward. Make sure you discuss your stock incentive plan with the stock regulatory bod-
ies to keep your plan in line with the law.
Retirement Incentive
Rather than paying an incentive directly to the employee, you can offer to add it to the
employee's 401(k) retirement account instead. According to the Internal Revenue Ser-
vice, a company that sponsors a 401(k) program can claim the cost of doing that as a
deduction on its federal taxes. The employee gets the added benefit of tax-free dollars
in her retirement account, beyond what the employee contributes and what the com-
pany matches.
Vacation Incentive
Unscheduled employee time off can sometimes is a problem for employers. To help reduce
the use of sick days and personal days, offer an additional vacation day for each quarter in
which the employee does not call in to work.
Prizes
Vacations and prizes are often good incentives, because you can work with your vendors to
help pay for those incentives. For example, if one of your vendors is a television manufactur-
er, you can discuss the possibility of offering one of its television sets as a sales incentive.
In general it may be
Financial Incentives: These incentives are also called as pecuniary incentives. They are the
most original of all the incentives. These incentives are given to employees in the form of
cash. Financial incentives prove to be a motivating factor up to a certain limit. Financial in-
centives are a motivating factor because it is with the money that the employees can satisfy
their basic requirements such as food, shelter and clothing. Financial incentives can further be
classified as direct or indirect. Direct incentives include the bonus and incentives directly
given to the employees in the form of cash. Indirect financial incentives include allowances
such as medical allowance, dearness allowance and so on.
Non-financial incentives: Non-financial or non-pecuniary incentives include all benefits
other than those in the form of money provided to employees that encourage further effort
from them. Financial benefits alone do not help in solving all the problems faced by the man-
agement. .

Compensation

The following are a few methods to be followed for a successful incentive plan:
Keep it simple: When the plans are simple, it is easy to implement and follow. The employ-
ees should know what can be done to earn an incentive and what that incentive would be. If a
lot of parameters are considered to evaluate performance, the employees would get confused
and the managers would waste their time in evaluating the employees performance.
Reward performance that exceeds business goals: Incentive plans must begin only after
average performance has exceeded. This can be achieved only when the management has
clear goals and expectations. Employees must understand what is expected for average per-
formance and what actions are to be taken to exceed the basic business goal and thus earn an
incentive.
Reward individual efforts: Identify individuals who perform well or do something extraor-
dinary. Also, ensure that the other employees in the organisation have noticed that the man-
agement has made such recognition. The staff must know that the management appreciates
extra effort and rewards them for it.
Rewards must be noticeable: A good rule of thumb is that the total value of incentive re-
wards that an employee can earn should be approximately 8 to 12 percent of the employees
base compensation. Anything below 8 percent is not acceptable. This does not mean that the
employee should earn incentives of 8 percent and more, but they must be able to earn up to
that amount.
Appreciate team results: A fair amount of teamwork is necessary in service staff and ad-
ministrative employees. In an effective incentive plan, performance results are also tracked
and rewards are given based on departments or unit results. It is easier to reward great indi-
vidual effort and overall team result. For example, the organisation can reward the sales de-
partment for total growth in sales.
Be innovative: Rewards need not always be cash awards. Rewards can be in the form of
recognition and empowerment. Non-cash recognition awards prove to be an effective method
to reinforce the managements values. For example, employees who provide excellent cus-
tomer service receive special awards. Management must think about giving awards that
would make sense to the employees.
Long-term incentives: An incentive plan is said to be well-planned when it has a long-term
reward system as well. Employees would not want to forfeit such an incentive plan. This
makes them stay in an organisation for a longer time.
Types of Employee Benefits
Employee benefits, also called as benefits in kind are various non-wage/salaries offered to
employees. The most common benefits that can be categorized under this section are housing,
Compensation

medical insurance, disability insurance, life insurance, retirement benefits, domestic-partner
benefits, paid time off, and fringe benefits.
We discuss some of the employee benefits here:
Medical insurance
Employee benefits must be such that they are valuable to the employees. Medical insurance
proves to be valuable because of the skyrocketing medical expenses. Since everybody may
not be able to afford such high expenses, employees prefer medical insurance facilities pro-
vided by the company. Medical insurance or health insurance is a form of collective insur-
ance where people benefit by pooling their risks to meet medical expenses. Medical insurance
includes the costs of physician, hospital rooms, surgery fees, and prescription drugs. Dental
and optical care is a part of the overall benefit package, sometimes considered separately, or
not covered at all. Medical insurance can be provided to the members of the employees
family too. Usually, the employers pay all or part of the payment for employee medical in-
surance.
Disability insurance
When an employee is unable to work due to some illness or injury, disability insurance re-
places all or part of the income that is lost during that time. This insurance is not provided for
all types of illnesses. Disability insurance can be categorized as follows:
Short-term disability: This type of disability insurance begins within a few weeks of
an illness, or an accident, or some other disability. For example, an employer who is
suffering from jaundice would be offered a few paid weeks to recover.
Long-term disability: This type of disability insurance is given to employees with a
long-term or permanent illness, inability or disability such that the employee is unable
to perform the regular duties. For example, an employee with spinal injuries would be
paid long-term disability insurance until the age of retirement.
Life insurance
Life insurance is provided to the spouse or children in case of death of the employee. Insur-
ance benefits are paid immediately after such an incident to the beneficiaries of the policy
(spouse or children).
The employer pays the premium for life insurance if they sponsor a group plan. Life insur-
ance provided by companies is standard for almost all employees in medium and large firms
across the country.

Compensation

Retirement benefits
Retired government officials are provided with retirement and pension benefits in order to
ensure a regular income and a secure future. These financial benefits result in a feeling of in-
dependence as they assure a decent standard of life after retirement. Retirement benefits can
be categorized as follows:
Defined benefit plans: It is also called pension plans. In this benefit scheme, the
amount to be paid is pre-defined on the basis of salary and the years of service. The
employer takes up the responsibility of investment. It is usually offered in those sec-
tors, which has highest levels of unionization. It includes public administration, con-
struction, manufacturing, trade, and transportation.
Defined contribution plans: In this type of retirement plan, the employer or employ-
ee contributions are specified. However, the benefit amount depends on investment
returns, which is not guaranteed.
Domestic partner benefits
A domestic partnership is a legal or personal relationship between two individuals who live
together and share a common domestic life, but are neither joined by marriage nor a civil un-
ion.

In some countries like the US and Australia, these kind of relationships are legally recog-
nized, and a few organizations provide benefits to such unmarried partners. The eligibility for
this benefit varies with the organisation. This benefit can be provided with a simple form or
only after showing proof of domestic partnership or financial interdependence.
The most common domestic-partner benefit is access to family health insurance. This benefit
is, in most cases taxable. However, this kind of benefits is not applicable to India, as domestic
partnership is not recognized by the law.
Paid time off
This type of benefit is given to employees while they are in service. It provides the full-time
staff members with the privilege of days away from work with pay. The common types of
paid time off are sick leave, holidays, and vacation. Usually, paid time off must be scheduled
in advance and approved by the manager, except in cases of illness or emergency.
Fringe benefits
Fringe benefits are compensations given to an employee apart from the regular benefit of be-
ing paid for their work (wages/salary). Fringe benefits are paid to all employees depending on
their job engagement in the company they work for.
Let us now discuss the different types of fringe benefits.
Compensation

Organizations offer a variety of fringe benefits to its employees. The fringe benefits can be
categorized as follows:
Employment security: Benefits under this category include insurance; paid leaves, pay for
working overtime, maternity leave, holidays, cost of living bonus, retiring rooms, jobs to sons
or daughters of the employees, and so on.
Health protection: Benefits under this category is targeted towards employees health. It in-
cludes benefits such as accident insurance, disability insurance, health insurance, hospitaliza-
tion expenses, life insurance, medical care, sick benefits, sick leave, and so on.
Personnel identification, participation and stimulation: Benefits under this category in-
clude attendance bonus, membership in cooperative credit societies, educational facilities,
stress counseling, housing, income tax aid, anniversary awards, quality bonus, recreational
programs, safety measures, and so on.
Old age and retirement: Benefits under this category are provided to employees to lead a
standard life after their retirement. It includes deferred income plans, gratuity, provident fund,
pension, old age assistance and counseling, medical benefits for employees after their retire-
ment, travelling concession to retired employees, and so on.
Fringe benefits are exempted from taxation as long as certain conditions are satisfied. Em-
ployees who receive taxable fringe benefits have to include the fair market price of the bene-
fit in their taxable income for each year, which will be subjected to tax withholdings. Fringe
benefit is mostly provided to full-time employees.
The term Retirement plan refers to pension granted upon retirement. The Retirement plans
are set up by any of the below mentioned persons:
The employer himself.
An insurance company.
The government.
Employer associations.
Trade-unions.
Retirement Programmes
Retirement pensions are usually in the form of a guaranteed life annuity, which insures
against the risk of longevity.
A pension is an arrangement to provide an individual with an income when they are no longer
earning a regular income from employment, that is, the payments a person receives upon re-
tirement, usually under pre-determined legal and/or contractual terms. A pension that is cre-
ated by an employer for the benefit of an employee is referred to as an occupational or em-
Compensation

ployer pension. Occupational pension is in the form of a deferred compensation, which is
usually advantageous to both the employee as well as the employer for tax reasons. Many
pensions also contain an additional insurance aspect, as they often will pay benefits to the
survivors or the disabled beneficiaries. The recipient of a retirement pension is known as a
pensioner or retiree. Pensions are paid in regular installments.
The different types of pensions are:
Employment-based pensions (retirement plans).
Social and state pensions.
Disability pensions.
Retirement plans can be broadly classified into two, according to which the benefits are de-
termined. They are:
Defined benefit.
Defined contribution.
A defined benefit plan guarantees a certain amount of pay at retirement, calculated according
to a fixed formula, which generally depends on the employee's salary and the number of years
of membership in the plan.
The defined contribution plan provides a payout at the time of retirement. This is dependent
on both the amount of money contributed as well as the performance of the investment vehi-
cles utilized.
The Hybrid plans are those that combine the features of both the defined benefit as well as
the defined contribution plans. Two such examples of the above-mentioned are: Cash Bal-
ance and Pension Equity Plans.
Retirement plans typically cost organizations 3 per cent of payroll cost. The cost is substan-
tially higher in organizations that offer a pension plan in addition to a defined contribution.
For example, State Bank of India offers pension as a third benefit to its employees.
Executive Compensation
The process of selecting and hiring senior executives capable of motivating people and lead-
ing a company to its goal can be challenging. With concerned investors closely monitoring
company performance, todays businesses are under tremendous pressure to retain qualified
executives once they hire them. Executive Compensation is negotiated between the potential
executive and the employer. In todays business world, executives enjoy more negotiating
power than ever, as they can command a high salary and compensation plan owing to the
tremendous need for capable candidates.

Compensation

Unique features of executive compensation
Following are certain unique features of executive compensation:
Executive compensation cannot be compared to wage and salary schemes of non-
managerial employees of an organisation as the factors and variables are too many
within executive jobs and hence simple comparison of ratings is not possible.
As opposed to the employment agreement of other employees, executives are not al-
lowed the option of having unions and collective bargaining. It is their individual
competence and contributions that are the deciding factors of their compensation
package.
Executive compensation is usually not based on individual performance measure, but
based on the unit or organizational performance.
One needs to be creative when developing executive compensation plans. Including options
like car allowances, life insurance, relocation payments, flexible start dates, signing bonuses,
use of company-owned vacation property, health-club membership, tuition reimbursements,
and other compensation will make the package competitive and attractive. Offering non-
monetary incentives like these will help companies to attract talented candidates and also re-
tain them.
Factors affecting wages or compensation in Nepal
1) Productivity of workers: to get the best results from the employees and to increase the
productivity compensation has to be productivity based.
2) Ability to pay: it depends upon the employers ability to pay wages to the workers. This
depends upon the profitability of the firm. If the firm is marginal and cant afford to pay
higher than the competitors then the employees will go to other firms while if the company is
successful then they can easily pay their employees as they wish.
3) Government: government has also fixed the rules for protecting the interest of the em-
ployees. The organizations are liable to pay as per the government instructions. Wages cannot
be fixed below the level prescribed by the government.
4) Labor union: labor union also helps in paying better wages to the workers. Higher wages
have to be paid by the firm to its workers under the pressure of the trade unions.
5) Cost of living: wages depends upon the cost of living if it is high wages will also hike.
6) Demand and supply of labor: it is one of the important factors affecting wages. If the
demand of labor is more they will be paid high wages otherwise vice versa. If the supply of
the employees is more than they will be paid less and vice versa.
Compensation

7) Prevailing wage rate: wages also depends upon the prevailing wage rate as the organiza-
tions have to pay accordingly to keep the employees with them.
Minimum Wages
Classification of wages: The International Labor Organization (ILO) in one of its publica-
tions, classified wages as under:
1. The amount necessary for mere subsistence;
2. The amount necessary for health and decency; and
3. The amount necessary to provide a standard of comfort.
Wages are classified as below:
a. Minimum wage
b. Fair wage; and
c. Living wage
Minimum wage: A minimum wage has been defined by the Committee as "the wage which
must provide not only for the bare sustenance of life, but for the preservation of the effi-
ciency of the worker. For this purpose, the minimum wage must provide for some
measure of education, medical requirements and amenities". In other words, a mini-
mum wage should provide for the sustenance of the worker's family, for his efficiency, for
the education of his family members, for their medical care and for some amenities. It
is very difficult to determine the minimum wage because conditions vary from place to place,
industry to industry and from worker to worker. However, the principles for determining
minimum wages were evolved by the Government and have been incorporated in the
Minimum Wages Act, 1948, the important principle being that minimum wages should pro-
vide not only for the bare sustenance of life but also for the preservation of the efficiency of
the workers by way of education, medical care and other amenities.
Fair Wage: According to the Committee on Fair Wages, "it is the wage which is
above the minimum wage but below the living wage." The lower limit of the fair wage
is obviously the minimum wage; the upper limit is set by the capacity of the industry to
pay".
Between these two limits, the actual wages should depend on considerations of such factors
as:
i. The productivity of labor;
ii. The prevailing rates of wages in the same or neighboring localities;
iii. The level of the national income and its distribution; and
iv. The place of industry in the economy.
Compensation

Living Wage: This wage was recommended by the Committee as a fair wage and as
ultimate goal in a wage policy. It defined a Living Wage as "one which should enable
the earner to provide for himself and his family not only the bare essentials of food, clothing
and shelter but a measure of frugal comfort, including education for his children, protec-
tion against ill health, requirements of essential social needs and a measure of insurance
against the more important misfortunes including old age". In other words, a living wage was
to provide for a standard of living that would ensure good health for the worker, and his
family as well as a measure of decency, comfort, education for his children, and protec-
tion against misfortunes. Generally, ascertaining wages and deciding who to pay what is
a activity undertaken in the beginning when a organization is set up. Thereon it is an-
nual reviews to make corrections per the countrys economic and market/industry
trends. The management considers the state of the labor market and takes into account of
what he can afford to pay and the value of the worker to him. The workers willingness for
employment at the rate offered implies that they agree to work at that rate, though they have
had no part in fixing it.
1. Collective Bargaining: Collective bargaining is still in the initial stage in India. Although
it is a desirable development in the relations between management and labor, it cannot
be imposed upon either side by compulsion and should evolve naturally from within.
2. Voluntary Arbitration: In voluntary arbitration, both parties agree to refer their dispute
to mutually agreed arbitrator and his award becomes binding on the parties.
3. Wage Legislation: Wages are fixed according to law in some industries. The Central
Government and State Governments may fix minimum wages under the Minimum
Wages Act of 1948 for industries in which workers are exploited or too unorganized to
protect their own interests. In order to advise them in the matter of fixing minimum
wages, the Governments appoint Minimum Wages Committees and the Advisory
Boards. The Committees and the Advisory Boards consist of equal number of workers
and employers representatives and also independent members whose number should not
exceed one- third of the total number of members.

Objectives of Wages and salary administration
To acquire qualified competent personal
To retain the present employees
To secure internal and external Equity
To ensure desired behavior
To keep labor and administrative costs in line with the ability of the organization to
pay.
To protect in public as progressive employees and to comply with the wage legisla-
tions.
Compensation

To pay according to content and difficulties of the job and in turn with the effort and
merits of the employee.
To facilities pay roll administration of budgeting and wage and salary control.
To simplify collective bargaining procedures and negotiations.
To promote organization feasibility.

Social Welfare Factors
The well-being of the entire society. Social welfare is not the same as standard of living but is
more concerned with the quality of life that includes factors such as the quality of the envi-
ronment (air, soil, water), level of crime, extent of drug abuse, availability of essential social
services, as well as religious and spiritual aspects of life.

Dolgoff,R. & D.Feldstein (1980) Understanding Social Welfare, P.91:
In its narrowest sense, social welfare includes those nonprofit functions of society, public or
voluntary, which are clearly aimed at alleviating distress and poverty or at ameliorating the
conditions of the casualties of society.
Dolgoff,R., D.Feldstein & L. Stolnik (1997) Understanding Social Welfare,4th ed. P.5:
All social interventions intended to enhance or maintain the social functioning of human be-
ings.
National Association of Social Workers, Encyclopedia of Social Work Vol.I I . 1971, p.1446:
Social welfare generally denotes the full range of organized activities of voluntary and gov-
ernmental agencies that seek to prevent, alleviate, or contribute to the solution of recognized
social problems, or to improve the well-being of individuals, groups, or communities.
United Nations 1967:
Social welfare as an organized function is regarded as a body of activities designed to enable
individuals, families, groups and communities to cope with the social problems of changing
conditions. But in addition to and extending beyond the range of its responsibilities for spe-
cific services, social welfare has a further function within the broad area of a country's social
development. In this larger sense, social welfare should play a major role in contributing to
the effective mobilization and deployment of human and material resources of the country to
deal successfully with the social requirements of change, thereby participating in nation-
building.

Compensation

It has 4 LEVELS OF FUNCTIONS:
1) Remedial: removing disabling conditions, regaining normal functioning; needy groups,
under-privileged sector in society, minimum standard of service provision, emergency relief,
ad hoc basis, remedy gross hardships and human sufferings, minimum state intervention, pri-
vate and family care, alleviate abnormalities, short-term basis; also related to residual ser-
vices;
2) Preventive: early prevent abnormal behaviour and conditions; creating new conditions;
eliminate causes of problems, research analysis on causes for effective prevention, prevention
is better than cure, screening service, early identification, systematic planning, universal ser-
vices...etc.;
3) Developmental: improving situations, development of individual and society, constructive
planning, social investment, awareness on social responsibility, develop potentials and new
capacities, growth towards mature and responsible citizenship;
4) Supportive: achieving objectives of other sectors in society; mutual benefits among vari-
ous services and clienteles, support services, education and continuous training, community
support; inter-related nature of various social policies; better effectiveness and efficiency,
economy;
functions or emphasis of welfare is largely determined by philosophy and value preferences
of the government, social and political situation and economic affordability, inter-related
functions of services, complementary roles of services at different levels;
Characteristics of social welfare programmes:
1. serve community interests - derived from community need assessment, service design
to satisfy such needs;
2. value-based - e.g. human rights, citizen responsibility, social justice, prosperity, sta-
bility, equity,....etc.;
3. non-market activities - not directly capital generating, not subject to purely market
mechanism/ dynamics (i.e. demand and supply), depends on donation, subsidy, fee
charging; [but more recent theories suggest that welfare can also be operated in a
mixed market mode]
4. accessible to all - citizen right, efficient service delivery system, equal opportunity;
5. accountable to public - effective public and social administration, professional code of
practice;
Wilensky & Lebeaux: 5 features of social welfare:
1. organization - delivered through organizations (govt & NGOs);
2. social sponsorship & accountability - service providers answerable to funding sources
(govt & donations), to provide quality service;
Compensation

3. non-profit motive [ though sometimes fee-charging ];
4. functional generalization: - to meet different aspects of society need;
5. Direct focus on human consumption (e.g. housing, medical service, etc.)
Provisions Relating to Social Welfare
Welfare Fund: The Enterprise shall have to establish a welfare fund for the welfare and ben-
efit of its workers or employees as prescribed.
Compensation: In case any worker or employee of the enterprise sustains physical injury or
seriously hurt or gets impairment due to loss of any part of body or dies in course of his work,
the compensation shall be paid to him or to his family, as prescribed.
Gratuity Provident Fund and Medical Expenses: The gratuity, provident fund and facili-
ties relating to medical expenses to be provided to the workers and employees shall be as pre-
scribed.
Leave: The public holidays, sick leave, annual leave, maternity leave, special leave, and
leave with or without remuneration etc. to be enjoyed by the workers and employees of each
enterprise shall be as prescribed.
Arrangement of Quarters:
(1) The Establishment shall allocate not less than five percent of the gross profit of the enter-
prise each year in order to provide hygienic quarters for the workers and employees and shall
gradually build such quarters.
(2) A separate fund shall have to be maintained to deposit the money allocated pursuant to
sub-section (1).
(3) The operation of the fund as mentioned in sub-section (2) shall be as prescribed.
Provisions Relating to Children:
(1) The Establish of the enterprise where fifty or more female workers and employees are
engaged shall have to make arrangement for a healthy room for the use of children of
such female workers and employees.
(2) Arrangement of a trained nurse including some necessary toys shall also have been ar-
ranged for the children as mentioned in sub-section (1).
(3) Time shall be provided for the female workers and employees as per requirement to
feed their suckling babies.
Compensation

Rest Room: In an enterprise where fifty or more workers or employees are engaged at -
work, the Establishment shall have to make arrangement for rest room with minimum ameni-
ties.
Canteen: Where fifty or more workers and employees are engaged in work at one time, the
Establishment of the enterprise shall have to make arrangement for a canteen.
Incentive Compensation
Definition
The term incentive compensation refers to the portion of an employee's salary that is related
to performance, and not a guaranteed payment. Incentive compensation is additional money,
or other rewards of value such as stock options, that are supplementary to base salary.
Explanation
This form of compensation goes by the term "incentive" because payment is usually contin-
gent upon performance of the company, the employee's department, the employee, or combi-
nations thereof. This means the employee has an incentive to perform at a high level, and be
rewarded for the effort.
Incentive compensation programs aim to motivate individuals to act in a way such that the
money is a reward for the employee's contribution to the success of the business.
The structure of incentive compensation programs is such that employees may have "at risk"
a certain percentage of their salaries. When a "cash" incentive is used, it is typically offered
as a percentage of the employee's base salary. For example, an employee with a base salary
of $100,000, and 10% incentive compensation, is eligible for an additional $10,000 as part of
that program.
The following criteria might be considered when drafting an incentive compensation
plan:
Performance measurements
Eligibility
Plan period
Award size and frequency
Vesting schedule
Formal plan

Compensation

Some of the advantages of incentive compensation may include the following:
Aligns managers incentives with the objectives of the shareholders
Tax deductible to the company
Doesnt dilute shareholder equity
Either nontaxable to the individual or taxable but deductible
Requires no investment by and downside risk to the individual
Some of the disadvantages of incentive compensation may include the following:
Complexity. Many incentive compensation plans include multiple performance meas-
urements as well as award types (e.g., short-term bonuses, long-term incentives,
stock-based incentives, organizational awards) and target levels.
Financial measures might not reflect the changes in the value of the company. For in-
stance, a company with good accounting performance (e.g., earnings-per-share
growth), at the same time, might destroy the value of the company to its shareholders
through negative real returns (i.e., returns minus inflation) or real value losses (i.e.,
dividends minus capital losses).
Create incentives for earnings management. Equity incentives might create a strong
link between firm performance and executives wealth.
Create incentives for excessive risk-taking.
Create incentives for pursuing short-term profits.
Emerging issues in Compensation Management
Compensation and Benefits is that area of Human Resource Management that involves signif-
icant human capital costs. The management of compensation ought to be seen as critical for
the attraction, motivation and retention of talent in an organisation.
In a rapidly changing environment, Compensation and Benefits is now strategically aligned
and integrated with other Human Resource functions. It is now seen as a core business strate-
gy in the attainment of an organizations Vision. This two-day workshop will bring provide
you with an overview of Compensation using the Total Rewards Model. There will be a focus
on the key elements, which, when combined, would aim to achieve optimum motivation.

Compensation

Current Controversies in Executive Compensation: 'Issues of Justice and Fairness'.
The Issue of Comparable Worth
The Issue of Pay Secrecy
The Issue of Cost-of-Living Differentials
Global Issues in HR: The Issue of Compensating Expatriate Employees
Small Business Applications: Developing a Pay Plan
a) Developing a Workable Pay Plan
b) Compensation Policies
c) Legal Issues

Current Trends in Compensation

Skill-Based Pay

1. Competence Testing
2. Effect of Job Change
Compensation

3. Seniority and Other Factors
4. Advancement Opportunities

Broad banding
Information Technology and HR
Why Job Evaluation Plans Are Still Widely Used
The High-Performance Organization: Compensation Management
A Glimpse into the Futurethe New Pay
Market driven compensation
HR Outsourcing
Globalization
The Future of Compensation Management
Compensation management continues to evolve. As we continue to develop new theories
about what motivates employees well continue to see new approaches to compensation.
The key intent of compensation and compensation management is to attract and retain talent.
Of course, money is always considered a primary motivator, but the debate continues over
just how much. Monetary compensation definitely has some effect but according to most
studies, it varies among different types of workers. Some groups thrive on just commissions
such as sales representatives; some prefer a fixed salary such as manufacturing workers,
while others prefer a fixed salary plus an incentive plan, particularly management. There is a
limit, however after which increasing pay doesnt give proportionately increasing returns.
Based on this, tactical compensation programs are created. The plans are designed to deliver
the maximum impact. Compensation packages are developed to include different compensa-
tion programs to entice employees and reward them appropriately. Depending on the envi-
ronment, compensation packages are developed to attract and retain talented employees.
There is no direct way to measure what an individual would like but compensation packages
typically include:
Cash compensation
Short term incentive compensation (Bonus programs)
Long term incentive compensation (Stock programs)
There are other compensation types that we will not cover in this book:
Non-monetary compensation, such as Anniversary awards
Perquisites like Club memberships
Health benefits
Pension schemes
Sales incentives & commissions
Compensation

Compensation is not the only motivation that was previously believed. Motivation also comes
from growth opportunities, acceptance and recognition, opportunity to international travel,
etc With globalization, blending different kinds of compensation packages has become
more art than science. Instead of compensation, many companies are now addressing it as
total rewards and in future it might even become Motivation Packages.
Executive compensation is a field in itself. This population though small is also very critical.
The administration of this small group is critical and sometimes requires a lot of exception
handling. They impact all aspects of compensation and payroll.
The concept of broad banding has been adopted by many large companies to avoid prolifera-
tion to multiple ranges. It also provides managers with the flexibility.

Compensation

Summary
Compensation refers to all forms of financial returns and tangible services and benefits that
employees receive as part of an employment relationship. Employee compensation is one of
the most strategic and important functions of human resource management.
In recent times, employee compensation is getting more and more complicated as it is gaining
wider repercussions due to a number of reasons like increased awareness and increased expo-
sure due to the arrival of different communicating systems like the internet.
The idea of compensation continues to evolve as part of a system of all the combined re-
wards that employers offer to employees. Compensation is coming to be seen as part of a "to-
tal rewards" system which includes salary, bonuses, incentive pay, and commissions, benefits
and perquisites (or perks), and various other tools which help employers link rewards to an
employee's measured performance.
Basic pay, variable pay and long term incentive compensation are some of the components of
a compensation plan, while training, healthcare, and insurance, pensions and training are the
components of a benefits plan.
So far in this unit, we have discussed the purpose and requirement of incentive plans. We
have also discussed the different types of incentive plans. One way of motivating the em-
ployees of an organisation to work towards the achievement of the goals and objectives of the
business is through its compensation system.
Employee incentive programs are effective only when the employees can understand and see
the connection between their performance and their rewards.
An organisation-wide incentive system compensates all employees in the organisation based
on how well the organisation performs as a whole over an extended period of time. Common
organizational incentive systems include profit sharing, stock options, and employee stock
ownership plans.
Employee benefits, also called as benefits in kind are various non-wage/salaries offered to
employees. The most common benefits that can be categorized under this section are housing,
medical insurance, disability insurance, life insurance, retirement benefits, domestic-partner
benefits, paid time off, and fringe benefits.
The term wage is commonly used for those employees whose pay is calculated according to
the number of hours worked. A job is defined as a collection or aggregation of tasks,
duties, and responsibilities that, as a whole, is regarded as the reasonable assignment to
an individual employee. Job satisfaction is determined by a set of personal and job factors.
The word salary is defined in the Oxford Dictionary as fixed periodical payment to a person
doing other than manual or mechanical work. According to Subsistence theory, wages
Compensation

tend to settle at a level just subsistence levels. Francis A. Walker propounded Residual
claimant theory. According to him, there are four factors of production/ business activi-
ty viz., land, labor, capital and entrepreneurship. Purchasing power theory holds that the
prosperity, productivity and progress of industry depend on there being sufficient demand to
ensure the sale of its products and pocketing of reasonable profits.
A minimum wage has been defined by the Committee as "the wage which must pro-
vide not only for the bare sustenance of life, but for the preservation of the efficiency of
the employee. Fair Wage is the wage which is above the minimum wage but below the living
wage". Living Wage is "one which should enable the earner to provide for himself
and his family not only the bare essentials of food, clothing and shelter but a measure of
frugal comfort, including education for his children, protection against ill-health, re-
quirements of essential social needs and a measure of insurance against the more im-
portant misfortunes, including old age".
Job evaluation is concerned with assessing the value of the job in relation to another.
Job analysis is the process of getting information about jobs.
A lot of effort goes into developing compensation programs that helps in achieving the goal
of attracting and retaining people. Various factors impact compensation and managing com-
pensation can be complex based on an organizations philosophy. In any case, compensation
systems needs to effectively and efficiently support the management of these compensation
programs.

Compensation

Review Questions
1. Describes the modes of incentives and compensation.
2. How is compensation structure build by an organization?
3. What factor do you consider while determining the compensation of the employees? Dis-
cuss various types of compensation adopted by Nepalese organization.
4. Describe the factor affecting employee compensation in Nepal?
5. Different compensation method that we adopt in the organization makes employees
whether or not to stay with the organization. What could be those methods that you will
apply as HR manager?
6. What are different types of incentive plans with their advantages and disadvantages?
7. Define compensation. Explain the emerging concepts and issues in compensation.
a) Minimum wages
b) Job evaluation
c) Benefits of reward system
d) Types of incentives schemes

OHAS


CHAPTER: VI
Occupation Health and Safety

Workforce Health and Safety
Statistics show that every twenty seconds of every working minute throughout the
world, someone dies as a result of industrial accident or poor safety conditions at work-
place. Thousands of employees throughout the world lose their limbs, suffer from temporary
or permanent disability or lose their lives due to insufficient arrangements for their health and
safety at workplace. Not only workers but their families also suffer the loss all through their
lives.
December 1984 witnesses the worlds worst chemical disaster in Bhopal, India, when a me-
thylisocyanate gas leaked from the Union Carbide plant in the city. It killed over 4,000 peo-
ple and not hundreds but thousands suffered from permanent health damage. The haunting
memories of this disaster are still fresh in our minds.
Not only insufficient arrangements of workers health and safety at workplace have taken
away their lives but these days stress at workplace is also emerging as a major culprit of
spoiling employees and their families lives. Every now and then we hear of suicide cases of
individuals from the corporate world. Does mental stress not a factor that should be consid-
ered with physical health and safety provisions? Have workers lives become so cheap that
small issues can take away their lives leaving their families wracked, children orphaned and
parents shocked with disbelief?
Does safety at workplace only mean to protect the workers from the danger of accidents or
any other mishaps? Should workplace safety not consider mental stress or emotional trauma
or personal issues of employees? Is the physical presence of an employee enough for an em-
ployer to run the business?
There is no end to these questions. In todays fast-paced life and cut-throat competition, em-
ployers need to rethink about safety provisions at workplace. It not only refers to the absence
of accidents. Rather, the concept expands to both physical and mental safety of the employ-
ees. It is possible to show the external injury but what about something that is suffocating the
employees from inside?
Providing safety to the employees at workplace has a moral dimension as well. Though it is a
legal requirement and fetches monetary compensation in case of failure but it cant bring
back an individuals life. Eliminating the causes of accidents and counseling employees at
workplace play a substantial role in saving the operating costs, increasing productivity and
ensuring reliability and dependability from the employees.
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Employees are the biggest assets of any organization and few well managed and co-
coordinated safety programs can minimize the loss and damage to them as well as to the
organization. With basic safety policies and remedies for accidents, the companies should
also provide systematic training to industrial employees so that they are able to do their jobs
efficiently and safely.
Over a few years, even the mental health of employees, particularly at executive level, has
grabbed the attention of the employers. Mental breakdowns because of stress, tension and
work pressure, depression resulting from failure to meet targets and mental illness taking toll
from alcoholism and poor human relations have consumed many brilliant young executives.
The need is to provide psychiatric counseling, co-operation and consultation. Development
and maintenance of effective human relations can work wonders. Therefore, while making
arrangements for physical health and safety at workplace, employers should also take actions
to improve mental health of their indispensable resource.
Health and Safety Provisions Relating to Health and Safety:
The Establishment shall make the arrangements in the enterprise as mentioned below -
(a) to keep each enterprise clean and tidy by cleaning daily with germicidal medicines also if
so required necessary and arrangements of proper drainage and painting or white-washing
from time to time and preventing from bad odour;
(b) To make arrangement for adequate supply of fresh air and light as well as proper tempera-
ture in the working rooms;
(c) To make arrangement for removal and disposal of solid waste and sewage out coming
from production process;
(d) To make arrangement for prevention of accumulation of dust, fume, vapor and other im-
pure materials in working rooms which might affect the health adversely?
(e) To make arrangement for necessary preventive personal devices for protection of health
from adverse effects of noise emanating during work process or from any other source, and
make provisions which would produce less noise in accordance with the nature of the work
process;
(f) To make arrangement for avoiding any congestion in the work-room or work place lead-
ing to injurious to the health of workers or employees and to make available the working
space to each worker or employee, considering the nature of work generally fifteen cubic me-
ters per person and, however the height above four meters from the floor surface shall not be
considered for such purposes.
(g) To make arrangement for sufficient supply of pure potable water during the working
hours and to make arrangement for sufficient water in the enterprise where chemical sub-
OHAS


stances are used or produced which may cause hazards to the health for the purpose of extin-
guishing fire or washing and cleansing during emergency situations;
(h) To make arrangement for separate modern type toilets for male and female workers or
employees at convenient place;
(i) To declare as non-smoking zone in all or some parts of the enterprise according to the na-
ture of its works; and
(j) To cause to conduct compulsory health check-ups of the workers or employees at least
once a year in the enterprises where the nature of works is likely to affect the health adverse-
ly.
Protection of Eyes:
(1) Necessary protective means shall have to be arranged for the protection of eyes of the
workers and employees from possible injuries likely to be caused by dust or pieces to be ex-
hausted from production process while working in the enterprise where glass, lead, mercury,
magnet, plates, iron, concrete, cement, lime, stone and explosive substances are used.
(2) Necessary protective devices shall have to be in arranged in order to protect the eyes from
harmful rays coming from during the process of welding or gas-cutting or other similar
works.
Protection from Chemical substance:
The Establishment shall have to make arrangement for necessary personal protective devices
for the protection of workers or employees handling chemical substances.
Arrangement for Safety against Fire:
(1) The Establishment shall have to make arrangement for necessary modern equipment for
safety against fire in each enterprise.
(2) Arrangement shall have to be made for easy exit from the enterprise during emergency
time.
(3) Other arrangement to be made by the enterprise in relation to safety from fire including
fire fighting devices shall be as prescribed.
Hazardous Machines to be fenced:
(1) Strong fences or bar shall have to be placed around every part of hazardous machines, in-
struments and equipment to be operated by energy.
OHAS


(2) In case it is required to do inspecting, lubricating or adjusting any part of hazardous ma-
chines during its operation, only experienced and well trained adult worker or employee shall
have to be engaged to perform such works.
Regarding lifting of Heavy-weight:
(1) No worker or employee shall be engaged in the works of lifting, loading or transporting
any load likely to cause physical injury or harm to the health.
(2) The maximum weight of load to be lifted, loaded or transported by an adult, minor, male
or female worker or employees shall be as prescribed.
Pressure Plants:
(1) In case a machine is to be operated at a pressure more than the atmospheric pressure in
course of the production process of any enterprise, necessary effective measures shall have to
be adopted in such a way that such machine might not be operated at a pressure heavier than
safe working pressure.
(2) Provisions in relation to method of testing, certifying and licensing for operation of such
machines as mentioned in sub-section (1) shall be as prescribed.
To give Order to provide for Safety:
(1) In case any arrangement for safety has not been made as required to be done under this
Act in any Enterprise, the Labour Officer may give a written directive against the enterprise
fixing a reasonable time limit in order' to manage and make necessary arrangements thereon
within such period.
(2) In case the directive given pursuant to sub-section (1) has not been complied with the La-
bour Office may give order for the closure of such unsafe portion, plant or machinery of the
enterprise and it shall be the duty of the enterprise to abide by such order.
Information to be given
(1) The enterprise shall have to give information to the Labour Office within three days in
case any worker or employee in course of his duty dies or is injured making him disabled to
work for more than forty eight hours due to an accident occurred in the enterprise or any oth-
er reason, and within seven days from the date of knowledge of the fact, in case such worker
or employee has been caught by any disease resulting from the profession.
(2) The powers, functions, duties of the authority empowered to investigate the accident or
disease mentioned in the information given pursuant to sub-section (1) and the procedures
relating thereto shall be as prescribed.

OHAS


Powers to Determine the Standards:
(1) His Majesty's Government may prescribe the standards of safety required under this chap-
ter as per necessity by a notification published i the Nepal Gazette.
(2) Except those as mentioned in sub-section (1), other provisions relating to health and safe-
ty to be adopted while using machinery, instruments or equipment in the enterprise shall be as
prescribed.
GOVERNMENT OF NEPAL MINISTRY OF LABOR AND EMPLOYMENT
OCCUPATION SAFETY AND HEALTH PROJECT
To develop the culture of Promotion and protection of the physical, mental and social health
and well being and physical safety of the workers in any occupation and for which to develop
the project as a center capable with resources and equipment to enable the industries to utilize
all possible options for potential improvement of their workplace. Further, to develop the pro-
ject as a fully fledged autonomous institution by the end of tenth five year plan.
Mission
To develop policy, institutional tripartite mechanism and operational infrastructure for the
protection and promotion of safety and health of the workers and prevention, control and / or
minimization of two main workplace issues occupational accidents and diseases adversely
affecting production and productivity, directly as well as indirectly and to establish tripartite
cooperation for the protection and promotion, Control and minimization of occupational ac-
cidents and diseases.
Vision/Objective
Legal implementation is one important aspect for the protection and promotion of safety and
health of workers whereas making available the advisory services on workplace improvement
and legal compliance is another important aspect of it. The project has set the following ob-
jectives to develop the protection and promotion of the safety and health of the workers as a
continuous process:
To formulate acts, laws, code of practice, guides, instructions and standards for the
promotion of safety and health at work and workplace.
To facilitate regular and organized workplace inspection and monitoring for effective
implementation of the legal provisions of workplace improvement.
To get established as training center equipped with necessary training resources capa-
ble of providing training facilities to all the stakeholders for the protection and promo-
tion of safety and health of the workers.
To facilitate regular and organized workplace monitoring and advisory services on
options for potential workplace improvement for protection and promotion of the
safety and health of the workers.
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To get established as an information center processing all the information for the pro-
tection and promotion of the safety and health of the workers and to establish appro-
priate mechanism for the dissemination of the information.
Importance of Occupation Health and Safety
Workplace health and safety procedures are necessary for the well-being of both employers
and employees. Violence in the workplace is an ever-growing concern in todays business
community. According to the U.S. Occupational Safety and Health Administration (OSHA),
homicide is the fourth leading cause of fatal occupational injury in the United States. Dis-
eases and other health concerns also affect a worker's ability to effectively perform his job
duties. It is important for employers to take the necessary steps to protect employees from the
health and safety concerns of todays corporate community.
Health and Safety Hazards
Hazards are considered to be potentially dangerous substances or behaviors that can cause
harm or injury to an employee. There are several hazards employees can be exposed to in the
workplace. Health hazards can range from infectious diseases spread from one worker to an-
other to poisonous chemicals that are not properly stored and maintained. For example, some
industries are exposed to dangerous gases such as carbon monoxide. These industries must
follow specific safety procedures in the event of an emergency situation involving the sub-
stance.
Health and Safety Enforcement
The U.S. Occupational Safety and Health Administration is responsible for enforcing laws
regarding safety in the workplace. OSHA is charged with ensuring employers provide a
healthy and safe work environment for their employers by establishing guidelines and safety
standards. They investigate complaints regarding safety violations and ensure that any haz-
ards or dangerous work environments are corrected.
Health Guidelines
The U.S. Occupational Safety and Health Administration has created guidelines to help em-
ployers and office workers understand how certain hazards can negatively impact the work-
place as well as how emergency situations should be handled. These guidelines assist compa-
nies that conduct potentially dangerous job duties or work with dangerous chemicals with
following the proper workplace procedures to prevent illness or injury.
Health and Safety Programs
Health and safety programs are an important part of preventing injury and illness in the
workplace. Health programs help employers and employees understand the potential hazards
they are exposed to on a daily basis. Effective health and safety programs educate workers on
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the benefits of practicing proper workplace behaviors. For example, the Safety Pays pro-
gram helps employers determine the cost workplace injuries and illness have on a companys
profit margin. When companies understand the impact injuries have on their bottom line, they
are more inclined to implement programs to keep their workers healthy and safe.
Employee Awareness
Workplace health and safety practices are important because they help prevent inter-office
violence and raise employee awareness of the potential dangers they face. Violent acts and
behaviors of employees and other individuals within the workplace are cause for concern be-
cause they threaten a companys overall well-being. Companies must take an active approach
in educating workers on the importance of practicing safe habits in order to maintain a
healthy and safe working environment.

Health and safety legislation
Two of the most important pieces of health and safety legislation affecting educational estab-
lishments across the UK are the Health and Safety at Work, etc Act 1974 and the Manage-
ment of Health and Safety at Work Regulations 1999. These set the standards that must be
met to ensure the health and safety of all employees and others who may be affected by any
work activity. Other regulations also exist to cover work activities that carry specific risks,
for example lifting and carrying, computer work and electricity. A summary of the key pieces
of legislation affecting education establishments is provided in this section:
The Health and Safety at Work, etc Act 1974
The Management of Health and Safety at Work Regulations 1999
The Workplace (Health, Safety and Welfare) Regulations 1992
Standards for school premises
The Manual Handling Operations Regulations 1992
The Control of Asbestos at Work Regulations 2012
The Health and Safety (Display Screen Equipment) Regulations 1992
The Electricity at Work Regulations 1989
The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995
The Control of Substances Hazardous to Health Regulations 2002
The Provision and Use of Work Equipment Regulations 1998
The Construction (Design and Management) Regulations 2007
The Equality Act 2010
The Health and Safety (First Aid) Regulations 1981
The Regulatory Reform (Fire Safety) Order 2005
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The Workplace, (Health, Safety and Welfare) Regulations 1992
These regulations deal with physical conditions in the workplace and require employers to
meet minimum standards in relation to a wide range of matters, which include:
Maintenance of buildings and equipment
Lighting
Provision of drinking water
Temperature
Rest facilities (including that for pregnant women and nursing mothers)
Ventilation
Toilet facilities
Room dimensions and space
Cleanliness
Condition of floors and traffic routes.
Trends and practices of OHS in Nepal.
The concept of OHS in Nepal is in its initial stage, as the principle and ideologies underpin-
ning the notion of fish have not gained a foothold in Nepal at all levels. Occupational safety
is considered significant in mechanized industries, while its importance in other sectors still
needs to be justified. The current practice of occupational safety is largely guided by the La-
bor Act of Nepal, which stipulates the provision of workers health care, factory inspection
and labor inspection. The Labor Act of Nepal ensures the provision of first aid in industrial
enterprises with more than 50 employees and an academically trained medical assistant in the
case of industrial enterprises with more than 400 workers. If an industrial enterprise has more
than 1,000 employees, there should be a medical doctor and a medical assistant. The factory
inspection functions to promote occupational safety and health conditions in the establish-
ments and demands for optimum conditions as per the Act. Likewise, labor inspection is car-
ried out to assess information on workers health conditions. The major limiting factors in
these modes of inspections are the significant loopholes in the existing legal provisions and
failure to act as changes emerge. Moreover, the meticulous task of inspection requires human
resources with considerable insight of occupational health and safety, but such resources are
often lacking. Other limiting factors include the uneven distribution of inspecting units, a lack
of necessary training and orientation for surveillance, and incomplete coverage of all indus-
trial establishments.
These conditions have led to a shortage of ample information and statistics on occupational
health and safety practices in the nation. Occupational health and safety measures should not
be motivated by fear of punishment and penalization under the law; they should be cultivated
as a working culture and a prerequisite for work.
The government realized the need for occupational health and safety, and established a sepa-
rate unit aimed at maintaining occupational standards. This effort led to the occupational
safety and health project born more than a decade ago. The project goal was to provide train-
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ing, review legal frameworks and assist in creating primary information on occupational
health conditions. It was also responsible for triggering the momentum of change to establish
the necessary occupational standards at industrial enterprises. The project is still in operation,
but it lacks coordination of the efforts required by various ministries and departments, and the
human resources allocated for the project are often in adequate to perform the assignments.
The lack of adequate working procedures and skilled human resources also limit the project,
and lack of resources always puts constraints on effective achievement of the objectives and
goals of the project.
Most industries and employers are profit-oriented. The obligation of providing safe working
conditions is often overlooked, making work and working conditions hazardous. An easy es-
cape mechanism is provided by loop holes in the legal systems. This tendency has increased
risk and has meant a many-fold rise in work related hazards.
The labor force, on the other hand, has united into federations resembling political institu-
tions rather than organization designed to ease work-related problems. These labor unions are
largely guided by political interests and act according to their political affiliation. A few pru-
dent initiatives have been made by the labor force, but they always lack effective coordina-
tion amongst them; there is also the absence of a voice for the unions. Thus, these efforts
have not led to solutions addressing the much aspired concerns of workers. The labor force at
the bottom rung of the ladder still faces hardship as a deaf ear is often turned to their pleas,
and issues pertaining to healthy working conditions are often overlooked by both the state
and employers. This side of those in need has not been able to advocate for change effective-
ly. The reality of this situation is such that workers are still collectively bargaining for issues
relating to minimum wages, equal remuneration and other basic needs that overshadow issues
pertaining to OHS or safety.
The picture is not bleak everywhere. The onset of foreign direct investment and the emer-
gence of a few multinational companies have been able to depict the best practices of OHS. It
has been observed that these foreign investment settings together with the establishment of an
industrial set-up lead to the importing of working culture. This process has helped to rein-
force the concept of OHS in Nepal. These industries have been involved in surveillance of the
work environment, surveillance of workers health, preventive measures, emergency prepar-
edness and diagnosis of occupational illness at regular intervals. This approach is also shared
by a few international projects ongoing in Nepal. These best practices are yet to spread to a
greater number of industries, production houses and others in the informal labour sector.
The lack of coordinated efforts has led to serious occupational hazards. The most common
hazards in the industries of Nepal are associated with industrial injuries, accidents, mechani-
cal and chemical hazards and psychosocial hazards. A few cases of death have been reported.
The causes of industrial accidents are varied, but major causes are the ignorance of workers
and employers and the negligent efforts of the government. Among other causes, violation of
safety rules is important. Other factors include lack of formal training, worker attitudes, lack
of supervision, use of old or outdated machines or equipment, poor layout, congested work-
places and unsuitable working conditions (5). Industrial enterprises also lack measure to pro-
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vide diagnosis of occupational diseases and treatment facilities. So far, the safety measures
adopted by establishments in order to prevent accidents are limited to supervision, a few ini-
tiatives of repair and maintenance, and a scant use of personal protective equipments.
The occupational hazards in these instances pertain only to the industrial workforce, as very
few studies on agricultural and service industries have been carried out. The larger side of the
picture is absent, as the majority of the workforce are still engaged in both formal/informal
agricultural and service sectors
Emerging issues in Health and Safety
In developed countries, changes in the nature of work and the workforce may necessitate re-
calibrating the vision of occupational safety and health (OSH) researchers, practitioners, and
policymakers to increase the focus on the most important issues. New methods of organizing
the workplace, extensive labor contracting, expansion of service and knowledge sectors, in-
crease in small business, aging and immigrant workers, and the continued existence of tradi-
tional hazards in high-risk sectors such as construction, mining, agriculture, health care, and
transportation support the need to address:
1) Broader consideration of the role and impact of work,
2) Relationship between work and psychological dysfunction,
3) increased surveillance basis for research and intervention,
4) Overcoming barriers to the conduct and use of epidemiologic research,
5) Information and knowledge transfer and application,
6) Economic issues in prevention, and
7) The global interconnectedness of OSH. These issues are offered to sharp thinking as new
national research agendas for OSH are considered for developed countries.
Organizations frame many approaches to ensure health and safety of their employees. But not
all of the approaches focus on contribution of both work design and employee behavior to
safety. An organizational approach to safety is effective only when both the work design and
employee behavior work in coordination towards it. Many organizational and individual is-
sues emerge in management of employee health and safety. They can be summarized as fol-
lows:

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1. Physical Work Settings: The physical settings of work affect the performance of
employees to a great extent. Some of these factors include temperature, noise levels,
and proper lighting affect job performance. Other work setting factors include size of
work area, kinds of materials used, distance between work areas, cubicle arrangement,
et al.

2. Sick Building Syndrome: It is a situation in which employees experience acute
health problems and discomfort due to the time spent in a building (particularly their
workplace). Some factors that lead to sick buildings include poor air quality, inade-
quate ventilation, improper cleanliness, rodents, stench of adhesives and glues, et al.

3. Ergonomics: The term comes from the Greek word ergon, which means work, and
omics which means management of. Ergonomics is the study of physiological, psy-
chological, and engineering design aspects of a job, including such factors as fatigue,
lighting, tools, equipment layout, and placement of controls. It is the interface be-
tween men and machines. Ergonomics is taken into consideration when designing the
workstation for computer operators. Problems of back ache, eye strain and headache
arise due to long working hours spent in front of computers.

4. Engineering of Work Equipments and Materials: Accidents can be prevented in a
way by proper placements of dangerous machines. Moreover design of such machines
and equipments also plays an important role in safety. Providing safety guards and
covers on equipments, emergency stop buttons and other provisions help in reducing
the accidents considerably.

5. Cumulative Trauma and Repetitive Stress: Cumulative trauma disorder occurs
when same muscles are used repetitively to perform some task. This results in injuries
of musculoskeletal and nervous system. Employees encounter high levels of mental
and physical stress also.

6. Accident Rates and Individuals: An individual approach to safe environment helps
in reducing the accident rates. This is generally because more problems are caused by
careless employees than by machines or employer negligence. A positive attitude to-
wards work environment and other practices promotes employee safety

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Summary
Every year, a number of workers get injured or even lose their lives because of accidents at
the workplace caused by the carelessness of the employer or the employee. It is important to
identify the causes of accidents to prevent them from occurring in future. The main causes of
accidents are lack of education and training, human errors, technical errors, psychological
problems, occupational hazards and risks.
After identifying the causes of accidents, organization should take steps to prevent them. Ed-
ucation and training of employees plays an important role in understanding the causes of ac-
cidents and preventing them. Further, frequent inspections by the top management will enable
them to know the practical problems being faced by the employees so that they can be tackled
effectively.
This will also enable employees to air their grievances to the management as and when a
problem arises. Another important aspect of preventing accidents is analyzing and tabulating
the causes for accidents. This analysis will give a clear idea as to the location or situation of a
large number of accidents and the steps that an organization should take to reduce these acci-
dents.
Other measures to reduce accidents include conducting employee wellness programs, design-
ing and conducting a well organized health program. Stress at the workplace is a serious con-
cern in most organizations. A decrease in productivity and increase in absentees results in
huge losses for organizations. It is the responsibility of the employees as well as the organiza-
tion to reduce stress at the workplace.
When stress reaches an alarming level, it results in burnout where an individual experiences
excessive physical or mental exhaustion. It is important to diagnose an individual for stress
before it reaches this alarming stage of burnout. In the present day service sectors like ITES,
there are new health problems cropping up like the muscular-skeletal disorders (MSDs).

These disorders arise because of repeated use of the keyboard and the mouse. In India, com-
panies do not recognize the seriousness of these problems. Hence it is high time that legisla-
tion is passed regarding occupational health in the service industries.

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Related Questions
1. Why health and safety issues are importance in today's workplace?
2. What are the principal features of occupational safety and health mentioned in Labor Act of
Nepal?
3. Discuss the emerging issues of OHS in Nepalese organizations.
4. What is OHS. What are the causes of accidents?
5. What are the different types of health hazard? What provisions has been made in the Labor
Act 1992 in this connection?
6. What are the importance provisions made by the Labor Act 2048 of Nepal regarding OHS?
What new issues have emerging in this regard?

Managing ER, Change & communication

CHAPTER: VII
Managing Employee Relations, Change and Communication

Human Resource Management Communication-concept
Communication is a process of exchange of information between people. Organizational
communication includes the symbols, messages, interactions, discourses, and campaigns
within an organisation. Organizational communication can also include public relations,
advertisements, investor relations and other external communications. Effective Commu-
nication is essential for an organisation to succeed. Let us now consider the different forms of
communication in an organisation.
Understanding communication
Knowledge, information, and their effective use are the key factors which will lead to the
competitive success of commercial organizations in the 1990. Companies have specialists in
information management, technical communications, human resource management, corporate
relations, and all the various line management functions, each determined to communicate.
It is suggested by some of the researchers that managers spend eighty per cent of their time
speaking, listening, and reading various types of communications. These communications are
subject to misunderstanding due to the noise-distortion which is always present when two or
more people attempt to communicate with each other. When two people face each other
across a table, with or without a cracked mug leaking coffee, the possibilities for misunder-
standing are legion. A project leader praises the work of fellow members in the work group.
A new member of the Information Center reads the advisory manual for helping the end-users
to help themselves. A senior computer operator, standing next to a noisy high-speed output
printer, attempts to give instructions to junior operational staff about controlling the equip-
ment. The IT manager produces a written report which makes recommendations for new
hardware and software required for the 1990s, and sends it to his CEO to gain top manage-
ment support. Each of these situations contains some form of interaction the human re-
sources are attempting to communicate with each other.
The process of communicating
There are a number of steps associated with human communications:
A work group or an individual identifies information which has to be communicated
to other work groups or another individual.
The information has to be developed (encoded).

A medium for transferring the information has to be selected. It may be a written re-
port, a face-to-face discussion, or a sophisticated presentation using audiovisual aids.
The receiving work group or individual has the task of converting (decoding) the me-
dium to fit into their own ways of dealing with information.
The receiving work group or individual responds by recognizing the need for agree-
ing or disagreeing with the information.
The answer containing the information has to be developed (encoded).
A decision has to be taken about the medium to be used.
The original work group then has the task of converting (decoding) the medium to fit
into their own ways of dealing with information.

Clearly in all these steps in the communications process there is room for much misunder-
standing, much less hearing the message. In the complex area of information technology
there are many problems to be overcome when attempting to communicate ideas and strate-
gies.
Why are some people better at communicating than others?
People judged to be good communicators are those who recognize the need to keep all infor-
mation short and simple. Information must not exceed the capabilities of the receiving work
group or individual. The abilities of human resources to process new information are not infi-
nite. If a work group or individual receives information containing too many ideas expressed
in words, numbers, and visual aids, there comes a point when their systems for comprehen-
sion break down the information is lost, never mind the message. Work groups and individ-
uals have to monitor their capabilities for communicating information. It is too easy not to be
sensitive to the amount of information other work groups or individuals can accept. Recog-
nizing overload is an essential quality for all those communicating ideas, especially those as-
sociated with change. Good communicators always recognize the limitations of the medium
being used to carry their messages. We ourselves, whilst preparing this publication, have
been acutely aware of the limitations of book format as the medium for communicating the
complex challenges and opportunities associated with managing people in the information

technology environment. There is so much information to be encoded and decoded in the
process of understanding the strategic implications of human resource management and in-
formation technology. In book format we are not able to monitor the transmission rate, or the
level of noise which might develop in the lines of communication between ourselves and
readers. We have no way of influencing the approach used by readers to access the infor-
mation, knowledge and experience. Our only solution is to structure a logical approach to the
topics, pass through a seemingly endless refining process before reaching the final manu-
script, and hope that readers are not overloaded with too many ideas so that our essential
messages are lost.
Communication is influenced by physical factors
Non-verbal communication can influence the utilization and productivity of human resources.
Facial expressions and body movements can have as much impact as the written word. Care-
fully structured plans can be demolished by the manner and tone of voice used in discussions.
We have numerous examples of IT projects which have failed due to the attitudes of project
leaders, IT specialists and end-users. The skills were present, the time and finance allocated
were adequate, the requirements were specified correctly, and yet the projects failed. Team
member attitudes and behavior, expressed in body language and the physical state of their
offices lead to a collapse in the relationships between team members, end-users, and their
managers. Everyone forgets that human resources do not respond always in a rational man-
ner, and this can be passed on as negative communication through physical factors.
Organizational structure influences the quality of communication
When structuring a work group it is essential to consider the requirements for communication
both within the work group and between work groups. To be effective, communications must
be able to flow in many directions the horizontal and vertical needs must be taken into ac-
count. Also it has to be recognized that formal and informal communication flows coexist
within all organization structures.
IT function consists of many sub-units, and there will be formal lines of communication be-
tween the sub-units. Certain sub-units will have close relationships with end-users, and in
turn these will be supported by more formal communications. All these communication links
build up into major networks which sustain the life of the organization.
Performance is linked to the quality and shape of these networks. There are a variety of net-
work types, but most can be classified as either centralized or decentralized. The centralized
networks are dependent upon one point through which all communications must flow, whilst
the decentralized alternatives are based on many people interacting, there being no. single
control point. Simple tasks can be supported by a centralized network; more complex tasks
(involving many more people) require decentralized procedures. Implementing the wrong
form of communications procedure for a work group and the surrounding organization will
lead to poor utilization of human resources and low levels of productivity.

Never forget the power of informal communication
Every organization possesses an informal communication network the grapevine. It is pow-
erful and should not be overlooked. Like the formal communications network, a grapevine
can work to support the objectives of the organization or it can destroy managements best
endeavors.
Research findings suggest that eighty per cent of the information carried in corporate grape-
vines is correct. But like all 80/20 rules, attention should be drawn to the twenty per cent.
These are the communications which may well cause serious trouble most human resource
management specialists will confirm that incorrect rumors of reorganization and redundancy
frequently float around in the grapevines.
Given the existence of the grapevines, positive information has to be put into them through-
out the development and implementation of strategies for human resource management and
information technology.
Types of Communication
Communications in an organisation can be formal or informal. Formal communications fol-
low certain rules and guidelines. Informal communications are unofficial communications
and are influenced by the culture of the organisation. Effective communication has both
transmission and feedback phase. The feedback phase helps in clear understanding of the
communication.
The different forms of communication in an organisation are as follows:
Passive Communication: This is an ineffective form of communication.
People using this form of communication avoid confrontation. They do not communi-
cate their wishes or desires. This style of communication can cause alienation, anger,
frustration and depression.
One-Way Communication: This communication travels only in one predetermined
direction. This is common in formal organizations and in military structures. In this
form of communication, messages are issued by organizations and their managers
without any regard for whom the messages are addressed to. The subordinates
are not given an opportunity to communicate their opinions to their superiors. Exam-
ples of one-way communication are edicts, rules and procedures. One-way communi-
cation enhances feelings of alienation.
Two-Way Communication: This form of communication encourages dialogue
between the employees and their superiors. Consistent communication between
employees and their managers helps in building trust and loyalty. Employees are giv-
en an opportunity to clarify their doubts, seek support, and express their opinions.

Active Communication: In this form of communication, messages which every-
one can understand and respond to are issued. The employees raise issues and re-
spond to any problem without any fear. Misunderstandings are clarified easily.
Non-Verbal Communication: In this form of communication, people communicate
their attitudes without using words. G.W. Porter classifies non-verbal communication
as follows:
Physical: This includes facial expressions, gestures, tone of voice, body motions,
touch and so on.
Aesthetic: This includes creative expressions like playing instrumental music, danc-
ing, painting and sculpturing.
Symbolic: This makes use of religious and organisation
Props and Settings: These are used to put others at ease or to put someone in a posi-
tion of disadvantage. Not providing a seat to a person can make a person uncomfort-
able and feel annoyed.
Signs: This is a mechanical means of communication and includes signaling flags,
gun salutes, horns and sirens.
Importance of Organizational Communication
Communication is essential in an organisation for better co-ordination and for maintaining
good inter-personal relations. Organizations establish good
Communication channels for the following reasons:
Good Working Relations: Effective communication is essential in an organisa-
tion to establish good working relations with peers, subordinates and superiors.
Good working relations ensure a friendly and conflict-free environment.
Problem Solving: Good communication skills help employees convey their problems
and issues in an effective way. This helps in preventing problems from escalating.
Problems can be resolved quickly.
Enhance Production: Effective communication is necessary to keep employees in-
formed about the rules, policies and procedures. This helps employees understand
their duties better and perform their work in a better way. This increases the
productivity and accuracy of the work done.
Engaging Employees: Effective communication makes employees feel that their
opinions and suggestions are being considered. This increases employee involvement
and commitment. Loyalty for the organisation increases and this enhances employee
engagement.
Methods to Improve Organizational Communication
Now that you know why communication is important, let us discuss how to make communi-
cation effective. Certain etiquettes and rules are followed while communicating in the organ-
isation. These help to improve the quality of communication and ensure effective communi-
cation. The following guidelines ensure better communication:

Be clear and transparent: Communication has to be unambiguous, clear and trans-
parent. All rules, policies and procedures need to be communicated clearly so that
the employees have a clear understanding of them.
Be Comprehensive: Ensure that the communication includes all the points to be
communicated. Review to check if additional changes to the matter to be communi-
cated are to be made. Ensure that the communication is accurate.
Be Precise and Concise: Communication needs to be concise and not elaborate.
Simple words are used in order to avoid misunderstandings. Use short sentences.
Be Generic: Ensure that discussions are generic. Successes and failures need to be
discussed in a generic manner. This helps in avoiding conflicts. Use we more than
you in discussions.
Be Assertive: Communication needs to be assertive and positive. This helps in
making decisions and arriving at conclusions.
Be Attentive: Develop listening skills. Verbal communications can only be clearly
understood if the parties involved are attentive.
Encourage Two-Way Communication: Two-way communications help improve
employee relations as this considers the opinions and views of both parties involved.
Managing effective Communication
Effective communication is achieved when both parties have the same concept of the material
being communicated. Always work at the level that other people can understand; for exam-
ple, when speaking to children use a vocabulary that is not too advanced for them. Never as-
sume someone understands simply because she is nodding. Verify that communication has
taken place. Communication is also non-verbal; reading body language and facial cues can
help give context to communication.
Instructions

1. Frame the communication. Before speaking, choose the words that will be used care-
fully. Avoid being too flowery with language and use simple, direct and explicit
wording. If a complex concept is being communicated then break it down in parts.
Start with the simplest part then build on it.

2. Speak clearly, slowly and use your voice to convey the tone of the communication.
For example, something serious would not be communicated with disinterest. Look
for congruity in what is being said in the body language of the person communicating.
For example, avoiding eye contact and facing away from a person indicates that you
are not interested in talking to them.

3. Respond to the listener. Allow natural pauses in conversation for questions. Check the
listener's body language constantly to make sure they are engaged and paying atten-
tion.

1. Ask the listener to repeat back the information that was just received. Ask questions
about content or ask them to explain back what was said in her own words. Do this
covertly by asking questions that require the listener to apply what she just heard in
the conversation. Finally, ask her if she understood what you just said and if she has
any questions.

2. Listen and pay attention when the other person speaks. Show her the same respect she
showed you.
Communication at Workplace

Communication plays an important role in the success and failure of an organi-
zation. The art of expressing ones ideas and thoughts clearly is called as effective
communication. Individuals need to communicate effectively at the workplace for
better transparency and clarity. Not only effective communication helps in correct
transfer of information but also in decision making.

Be very clear as to what you expect from your fellow workers. Mention all the de-
tails and do cross check whether the other person has noted it correctly or not. Do not
expect the other person to understand everything on his own. Dont blame him after-
wards.

Avoid using derogatory sentences or foul words against anyone at the work-
place. One should maintain the decorum of the organization. It is better to avoid peo-
ple rather than fighting with them.

Employees should depend more on written modes of communication. Communi-
cate through Emails as records are available even later on. The mails must be marked
to all the related individuals with a cc to the superiors for them to know what is hap-
pening around. Make sure the mails are self explanatory. Dont write colorful and
casual mails.

Develop the habit of using planners, notepads and organizers. It is practically not
possible for an individual to remember everything. One must note down important
tasks against deadlines to avoid forgetting things. Be organized. Use a desktop calen-
dar and keep it right in front of your eyes.

Never play with words. Dont try to confuse the other person. Pass on the infor-
mation in its desired form.

During meetings, seminars and presentations, dont just speak for the front
benchers. One must be audible even to the person sitting on the last row. Neither
speaks too fast nor too slow. Be confident while you speak. One should be loud and
clear. Make sure you are understood by all.


Never use a fake accent at workplace. Be careful where to use the punctuation
marks.

Employees must not enter meeting room or board room without pen and a note-
pad. Jot down your queries at one place and ask only when the other person has fin-
ished his speech or presentation.

Do not interfere when others are speaking. Let them first finish their conversation.
Wait for your turn to speak.

One should never shout at the workplace. Shouting and conflicts spoil the ambi-
ence at the workplace. Handle the issues intelligently and a little diplomatically.
Avoid arguing with anyone as it leads to no solution. It always pays to be soft-spoken
at workplace.

While interacting over the phone, make sure you spell out the words for better
clarity. Use simple words to denote alphabets like t as in tango, a as in alpha and so
on. Chances of misunderstandings are very less in such cases. Dont chew anything
while you are speaking over the phone. Avoid laughing or giggling.

Be a patient listener. Listen to what the second party has to say. Dont jump to con-
clusions.

Be very careful about the content of your speech. Make sure your words do not hurt
any of your fellow workers.

EMPLOYEE HANDBOOK
An employee handbook, sometimes also known as an employee manual or staff handbook,
is a book given to employees by an employer. Usually, the employee handbook contains in-
formation about company policies and procedures. In the UK it may also form part of an em-
ployees terms and conditions of employment because if you employ five or more people, it
is a requirement of the Health and Safety at Work etc Act to have a written statement of your
health and safety policy.
The employee handbook is an excellent place to bring together employment and job-related
information which employees need to know, such as holiday arrangements, company rules
and disciplinary and grievance procedures. It can also provide useful source of information to
new staff as part of the induction process. A written employee handbook gives clear advice to
employees and creates a culture where issues are dealt with fairly and consistently.
All employers have various employment-related policies and procedures they expect their
employees to follow. While some employers put these policies and procedures in writing,
others fear that putting them in writing will increase their exposure to employment-related
claims. Some federal and state laws require certain employment policies be in writing. How-
ever, there is no law that requires an employer to provide employees with a handbook. Never-
theless, there are many good reasons, both legal and non-legal, to publish a handbook.

Employee handbooks can enhance the employer-employee relationship and help defend
against wrongful termination, discrimination, and harassment claims. Regardless of organiza-
tion size, when properly drafted and legally reviewed, the employee handbook can be the
keystone to good employment practices.
From a non-legal perspective, an employee handbook can introduce a new employee to the
organization in a positive way. A welcome statement and an account of the organization's his-
tory and mission can make a new employee feel more at home. Moreover, a handbook can
promote a sense of fairness and integrity on the part of the organization that can lead to great-
er employee productivity and loyalty.
There are also many sound legal reasons for implementing an employee handbook. Clear
written policies can provide a defense against many employment-related claims brought by
employees. If these policies are merely posted on bulletin boards or conveyed to management
for dissemination to employees, there is no way for the organization to know which employ-
ees actually read them. A handbook is a means of uniform distribution of policies and proce-
dures to all employees.
While employee handbooks may contain policies on everything from employee benefits -
sick leave, vacation, holidays, and insurance - to performance and discipline polices, there are
several essential exposure-limiting policies that should be included.
Organizational Culture
Organizational culture describes the psychology, attitudes, experiences, beliefs and values of
an organisation. It is defined as the specific collection of values and norms that are
shared by people and groups in an organisation and that control the way they interact
with each other and with stakeholders outside the organisation. An organisation is said to
have a strong culture if its employees are aligned with the organizational values. Organiza-
tions that have a strong culture function efficiently. On the other hand, in organizations
that have a weak culture, the employees are not aligned with the organizational val-
ues. Control has to be exercised through extensive procedures and rules. In organizations
with a strong culture, Groupthink can develop. Groupthink is a state wherein people do
not challenge organizational thinking even if they have different ideas. Innovative
thinking gets discouraged in such situations. Innovative organizations need people who are
willing to change the status quo, and to implement new ideas and procedures.
Elements of Organizational Culture
Now that we have defined organizational culture, let us look into the elements that de-
fine organizational culture. They are as follows:
The Paradigm: It defines the mission and values of the organisation. It outlines the
functions of the organisation.
Control systems: It defines the processes and the rules which monitor the organi-
zational activities.

Organizational structures: It outlines the reporting lines, hierarchies and the direc-
tion of work-flows.
Power structures: It specifies the decision makers and their power reach.
Symbols: It includes organizational logos, designs and symbols of power like allo-
cation of parking space.
Rituals and routines: It outlines procedures like meetings and reporting.
Stories and Myths: It conveys the organizational values.

Dimensions of Organizational Culture
National, religious and cultural groupings affect the organizational cultures. The different
dimensions of organizational culture are as follows:
Power distance: This is the degree to which there are differences in levels of
power. A high degree indicates that some individuals have more power than others.
A low score shows that people have more or less equal rights.
Risk avoidance: It reflects how the much organisation is willing to take risks.
Individualism versus Collectivism: Individualism refers to the extent to which
people stand up for themselves. Collectivism refers to the interdependence of in-
dividuals in a group.
Gender differences: It concerns the traditionally accepted male and female values.
For example, male values include competitiveness, assertiveness and ambition.
Long versus Short term orientation: Perseverance is emphasized in long term ori-
entation while immediate profits are emphasized in short term orientation.
Change and Human Resource
Managing changes to human resource management
Changes in Human Resource Management resulting from changes in attitudes, tech-
nology and legislation.
Human resource management: workplace employment conditions
Human resource management: workplace diversity
Human resource management: changes in technology
Human resource management: changes in legislation
Job Stress Factors
Stress has been defined as a physical, mental or emotional response to events which
cause mental or bodily tension. In the modern day life stress is a part and parcel of our lives.
At the same time, it should not exceed the capacity of an individual to handle it. If it exceeds
in proportion to a persons abilities to cope with it, it would cause mental and physical imbal-
ance in the person. Therefore, a major challenge for every one today is to make stress work

for you as a productive force rather than as a deterrent which can cause imbalance in
an individual.
According to J. C Quick and J.D Quick "Stress, or the stress response, is the unconscious
preparation to fight or flee a person experiences when faced with any demand".
According to Mikhail A "Stress refers to a psychological and physiological state that
results when certain features of an individual's environment challenge that person, creat-
ing an actual or perceived imbalance between demand and capability to adjust that results in a
non-specific response".
Stress can manifest itself in a number of ways depending upon the suddenness of an
event to be dealt with and types of stressors to be handled by an individual. It may
manifest itself either physically, emotionally and / mentally, as certain symptoms.
Physical This happens when the body as a whole suffers due to stressful situation. There are
many symptoms like, headaches, tension in the neck, forehead, and shoulder muscles. Long
periods of stress can cause other serious symptoms like digestive problems, ulcers, insom-
nia (sleeplessness), fatigue, high blood pressure, nervousness, excessive sweating, heart
ailments, strokes and hair loss as well.
The General Adaptation Syndrome (GAS)- Hans Selye, the world's foremost authority on
stress was the first to describe systematically the changes through which the body passes
to deal with a perceived threat. He described what he called the General Adaptation Syn-
drome (GAS), an adaptive response that occurs in three phases: A- an alarm reaction. B- The
stage of resistance; and C- the stage of exhaustion.
The figure below shows the course of the General Adaptation Syndrome


The above diagram shows the course of the General Adaptation Syndrome (GAS) and de-
scribes the psychological and physical response to stress that is, the way a person tries to
adapt to a stressor. The syndrome is called "general" because the stress response occurs in
several areas of the body. GAS has 3 stages.
1. Alarm Stage: According to this model, the general adaptation syndrome begins when a
person encounters a stressor and enters the alarm stage. A person in this stage wonders
how to cope and feels anxiety, even panic. The person breathes faster, blood pressure ris-
es, pupils dilate and muscles tense. At this stage, the person is coping ineffectively.
2. Resistance: Assuming the person can summon the resources to cope with the stressor, he
or she begins to feel more confident and to think of how to respond. During the second
stage of the general adaptation syndrome, "resistance", the person channels his or her ener-
gy and uses it to resist the stressor's negative effects. The person tackles the problem,
delegates the challenge, or adjusts to the change. Resistance to the stressor is high, but the
person's resistance to other stressors may be low because the bodys resources are being used
up. Evidence shows that a person's immune system function tends to decline during periods
of stress.

3. Exhaustion: Many stressors are short term - the person manages to solve the problem, or
the situation ends on its own. In such cases, the general adaptation syndrome ends during re-
sistance stage. But occasionally, a stressor persists. In situations where stressors persist,
the person may enter the third stage: exhaustion. In this stage, the symptoms of the
alarm stage return and the person eventually uses up his or her adaptive energy.
Emotional These responses are due to stress affecting the mind and include, anxiety,
anger, depression, irritability, frustration, over -reaction to everyday problems, memory
loss and a lack of concentration for any task. Anxiety is exhibited as a response to loss, fail-
ure, danger or a fear of the unknown. Anger is a response to frustration or social stress
and can become a danger to other individuals, if not kept in check. Depression is fre-
quently seen as an emotional response to upsetting situations, such as, the death of a loved
one, illness and failure.
Psychological Long-term stress can cause psychological problems in some individuals.
Symptoms may include social isolation, phobias, compulsive behaviors, eating disorders and
night terrors.
Stress may be classified into two types:
1) Positive stress (Eustress): Moderate and manageable levels of stress for a reasonable
period of time can be handled by the body through mobilization of resources and
is accompanied by positive emotions, such as, enjoyment, satisfaction, excitement and
so on

Some of the examples of Eustress are:
A) Getting the promotion
B) Excitement of winning a race
C) Accomplishing a challenge
2) Negative stress (Distress)an overload of stress resulting from a situation of either over
arousal or under arousal for long periods of time causes the following: first an unpleasant
feeling, followed by physical damage, fatigue and in extreme cases, even death of an individ-
ual.
Examples of negative personal stressors include:
The death of a spouse
Hospitalization (oneself or a family member)
Being abused or neglected
Conflict in interpersonal relationships
Bankruptcy/Money Problems
Unemployment
Children's problems at school
Legal problems

Selyes 1975 model divided stress into two major components: Eustress and distress. This
model is based on his earlier work on the General Adaptation System (GAS). Persistent, un-
resolved distress may lead to anxiety, withdrawal or depression.


Consequences of Stress
Stress shows itself in three waysphysiological, psychological, and behavioral symp-
toms.
1. Physiological symptoms:
Most of the early concern with stress was directed at physiological symptoms due to the fact
that specialists in the health and medical sciences researched the topic.
Physiological symptoms have the least direct relevance to students of OB.
2. Psychological symptoms:
Job-related stress can cause job-related dissatisfaction.
Job dissatisfaction is the simplest and most obvious psychological effect of stress (Rob-
bins, 2003).
Multiple and conflicting demandslack of clarity as to the incumbents duties, authority, and
responsibilitiesincrease stress and dissatisfaction.
The less control people have over the pace of their work, the greater the stress and dissatis-
faction.
3. Behavioral symptoms:
Behaviorally related stress symptoms include changes in productivity, absence, and
turnover, as well as changes in eating habits, increased smoking or consumption of alco-
hol, rapid speech, fidgeting, and sleep disorders. Individual approaches:

Managing stress
High or low levels of stress sustained over long periods of time, can lead to reduced employ-
ee performance and, thus, require action by management.
1. Individual approaches:
Effective individual strategies include implementing time management techniques,
increasing physical exercise, relaxation training, and expanding the social support
network.
Practicing time management principles also leaves as an important element in manag-
ing stress, such as:
a) Making daily lists of activities to be accomplished.
b) Prioritizing activities by importance and urgency.
c) Scheduling activities according to the priorities set.
d) Knowing your daily cycle and handling the most demanding parts of your job during
the high part of your cycle when you are most alert and productive.
Non-competitive physical exercise has long been recommended as a way to deal with
excessive stress levels.

Individuals can teach themselves to reduce tension through relaxation tech-
niques, such as, meditation, hypnosis, and biofeedback.
Having friends, family, or work colleagues to talk to provides an outlet for ex-
cessive stress.

2. Organizational approaches
Strategies that management might want to consider include:
a) Improved personnel selection and job placement leading to right person-job-fit thereby
reducing chances of non-performance and stress level.
b) Use of realistic goal setting, redesigning of jobs can help in aligning the individuals
and job effectively and reduce stress.
c) Training in stress management techniques can be helpful.
d) Increased employee involvement improves motivation, morale, commitment, and leads to
better role integration and reduction in stress.
e) Improved organizational communication helps in creating transparency in organiza-
tions and reduces confusion, thereby decreasing stress level at work.
f) Establishment of corporate wellness programs is an important component in manag-
ing stress among organizational members by rejuvenating and refreshing them from time to
time leading to increased productivity with renewed energy.

Preventive Stress Management
What is Workplace Spirituality?
A spiritual culture that recognizes that employees have both a mind and a spirit seek to find
meaning and purposes in their work, and desire to connect with other employees and be part
of a community.

What do organizations such as Reckit and Coleman, Wipro, Dabur or Tata Tea have in com-
mon? Among other characteristics they are among a growing number of organizations that
have embraced workplace spirituality.
Workplace spirituality is not about organized practices. Its not about theology of about ones
spiritual leader. Rather, workplace spirituality is about recognizing that takes place in the
context of an organizational community. Organizations that promote a spiritual culture rec-
ognize that employees have both a mind and a spirit, seek to find meaning and purpose in
their work, and desire to connect with other employees and be part of a community.
Why the emphasis on spirituality in todays organizations?
Historical models of management had no room for spirituality. These models typically fo-
cused on organizations that were efficiently run without feelings toward others. Similarly,
concern about an employees inner life had no role in managing organizations. But just as
weve come to realize that the study of emotions improves our understanding of how and
why people act the way they do in organizations, an awareness of spirituality can help one
better understand employee work behavior in the twenty first century organization.
For example, The Indian self is found to have a significant component of spirituality which
has manifest implications for their workplace performances moral decision making or atti-
tudes towards ethical issues.
What does a spiritual organization look alike?
The concept of spirituality draws on the ethics, values, motivation, work/life balance, and
leadership elements of an organization. Spiritual organizations are concerned with helping
employees develop and reach their potentials. They are also concerned with addressing prob-
lems created by work life conflicts.
What differentiates spiritual organizations from their non spiritual counterparts? Although
research is fairly new in this arena, several characteristics tend to be associated with the spir-
itual organization.
Although workplace spirituality has generated some interest in many organizations, it is not
without its critics. Those who argue against spirituality in organizations typically focus on
two issues. First is the question of legitimacy. Specifically, do organizations have the right to
impose spiritual values on their employees? Second is the question of economics. Are spiritu-
ality and profits compatible? Lets briefly look at these issues.
The potential for an emphasis on spirituality to make some employees uneasy is clearly pre-
sent. Critics argue that organizations have no business imposing spiritual values on employ-
ees. This criticism is undoubtedly valid when spirituality is defined as bringing religion and
God into the workplace. However, the criticism appears less stinging whether goal is limited
to helping employees find meaning in their work lives.
The issue of whether spirituality and profits are compatible objectives is certainly relevant for
anyone in business. The evidence, although limited, indicates that the two objectives may be
particularly compatible. Several studies show that in organizations that have introduced spir-

ituality into the workplace have witnessed improved productivity reduced turnover, greater
employee satisfaction and increased organizational commitment.
Characteristics of Spiritual Organizations:
Strong sense of purpose: Organizational members know why the organization exists and what
it values.
Focus on individual development: Employers are valuable and need to be nurtured to help
them grow. These characteristics also include a sense of job security.
Trust and openness: Organizational member relationships are characterized by mutual trust,
honesty and openness.
Employee empowerment: Employees are allowed to a make work related decisions that affect
them, highlighting a strong sense of delegation of authority.
Toleration of employee expression: The organization culture encourages employees to be
themselves and to express their moods and feelings without guilt or fear of reprimand.
HRM and Spirituality:
Ironically, introducing spirituality into the organizations is nothing new for HR. In actuality,
many of the areas that HRM addresses, and has done so for many years. There are many of
the same things that support spirituality, For instance matters such as work / life balances,
proper selection of employees, setting performance goals and rewarding people for the work
they do are all components of making the organization more spiritual. In fact as you review
the characteristics of a spiritual organization, in every case, HRM is either the leader in mak-
ing such things happen, or is the vehicle by which the organization helps employees under-
stand their responsibilities and offers the requisite training to make things happen. In the end,
its HRM that will make the workplace a supportive work environment, where communica-
tion abounds and employees feel free to express themselves

Participation, Partnership and Employee involvement
Introduction
In the complex area of people management paradigms, the terms Empowerment, Participa-
tion and Involvement are frequently used within the literature but often interpreted quite dif-
ferently depending on the perspective of the reader and / or writer. This guide aims to offer an
insight into these terms and to posit them respectively within the context of unitary and plu-
ralist people management perspectives. Firstly it is necessary to distinguish between Partici-
pation and Involvement, and then to examine where Empowerment fits within these perspec-
tives. Employee Participation, Employee Involvement and Empowerment
According to the Chartered Institute of Personnel and Development (CIPD):

Employee involvement is a range of processes designed to engage the support, understand-
ing and optimum contribution of all employees' in an organisation and their commitment to
its objectives.
Employee participations defined as a process of employee involvement designed to pro-
vide employees with the opportunity to influence and where appropriate, take part in deci-
sion making on matters which affect them.
According to Farnham (1997) Employee Participation is one of four policy choices for man-
aging the employment relationship. Citedin Rose (2001, p380) Farnham states:
an employee has the right to question and influence organization decision making 'and
. this may involve representative workplace democracy.
The other policy choices Farnham identifies are worker subordination via managerial prerog-
ative, union incorporation via collective bargaining and finally employee commitment via
employee involvement.
It is clear then that there are differences between employee participation and employee in-
volvement. The literature suggests that employee participation is a pluralist/collective ap-
proach with a continuum from no involvement 'to employee control (Blyton & Turnbull,
1998). As such it may involve processes and mechanisms such as:
Collective bargaining - Employee share schemes
Works councils - Worker directors
Joint Consultative - Committees European Works Councils Employee involvement, in con-
trast, is more individualistic and unitary. It aims to harness commitment to organisational ob-
jectives and relies on the maintenance of management control

Poole (1986) postulates that:

Workers participation and control are reflections of the latent power of particular industrial
classes, parties or groups and the value climate which may or may not be favorable to par-
ticipation experiments. These values thus mediate between certain structural factors associat-
ed with latent power and their realization in the form of workers' participation and control. It
will also be seen that the principal structural factors associated with the latent power of the
main industrial classes, parties or groups are economic factors, such as the levels of employ-
ment, the profit margins of particular companies, the levels of competition, the degree of in-
dustrial concentration and periods of economic disintegration; technological factors, such as
the approximation of the technology of a company to a given point on the technical scale,
the degree of complexity and education involved in any given task and the effects of the mi-
cro-electronic revolution; and finally, various forms of government action such as legislation
on labour issues, its intervention in the workings of the economic system and so on
Definitions of employee involvement
There is an enormous range of employee involvement schemes, varying from those that are
informational mechanisms to full-blown democratic systems where employees have as much
say in the decision-making processes as doe's management. This makes an all encompassing
definition problematic. In addition, different labels have been attached to these processes,
such as employee or worker participation, industrial democracy, organisational communica-
tions, co-determination and employee influence, each of which has its own definitions.
Wall and Lischerson (1977) state that there are three elements central to the concept of partic-
ipation: influence, interaction and information sharing. Marchington et al.(1992) divide defi-
nitions into three categories: those that refer to employees taking part or having a say or
share in decision making, with no attempt to quantify their impact on the process; those that
refer to participation as concerned with the extent to which employees may influence mana-
gerial actions; and those that link together participation and the control over decision mak-
ing (pp. 6, 7).
Marchington et al. (1992) believe that these definitions also need to take into account:
The degree of involvement (the extent to which employees influence the final deci-
sion);
The level of involvement (whether at job, departmental or organisational level);
The forms of involvement (direct, indirect and financial);
The range of the subject matter being considered in the involvement scheme.
For example, quality circles may have a high degree of direct employee involvement and in-
fluence on decisions at workplace level, but be limited in range to matters of teamwork and
job design. Works councils, on the other hand, will involve employee representatives at or-
ganisational level, and may consider a wide range of areas such as business and industrial re-
lations strategies, in joint decision-making with the management. One problem with this tabu-
lar representation is that some EI schemes may pervade many or all levels of the organisation,
for example financial participation.

Others may cascade through many levels, such as team briefings (Ramsay, 1991). Team
briefings could also fall into both the informational and communicational categories. An-
other problem is that the degree of participation with one scheme could differ from one or-
ganisation to another. For example, JCCs could vary in power from merely rubber-stamping
management decisions to forming joint consultation mechanisms covering a rich variety of
organisational topics.
Some types, levels and degree of employee involvement

Marchington et al. (1992: 13) divide EI schemes into four categories:
Downward communications (top down), for example from managers to other em-
ployees. This includes forms of EI such as house journals, company newspapers, em-
ployee reports and regular briefing sessions, often with videos as well.
Upwards, problem-solving forms, which are designed to tap into employees
knowledge and opinion, either at an individual level or through the mechanism of
small groups. This includes practices such as suggestion schemes, attitude surveys,
quality circles and total quality management and customer care programmes.
Financial participation via schemes that attempt to link rewards of individuals to the
performance of the unit or the enterprise as a whole. This includes schemes such as
profit sharing, employee share ownership, and value-added or establishment-wide bo-
nus arrangements.
Representative participation, in which employees are involved through representa-
tives drawn from among their number, often though not always on the basis of un-
ion membership, for example JCCs, advisory councils, works councils, co-
determination and collective bargaining.

In many organisations a combination of these forms of communication and EI schemes
will exist, hopefully supporting and complementing each other.
In a book of this nature it would be impossible to examine all of these approaches but a closer
study of some of the more popular and recent schemes in each category may serve to illus-
trate current trends.
Benefits of empowerment to employees and organization

Partnership Act 1964
A partnership involves two or more people (but no more than 20, with some exceptions) go-
ing into businesses together in order to make a profit. A partnership is in fact a contract (an
agreement) between two or more than two individual. The relation between or among part-
ners are governed by the agreement called a partnership deed. The partnership deed is thus
the main documents to guide and govern the partnership activities.
In Nepal partnership firms are governed by the partnership Act 1964. Under this Act a part-
nership firm is required to the registered with the concerned agency of the government. Nor-
mal fee is charged for the registration and renewal for such firm.
Like the sole trader this form of business organization does not have its own distinct legal
personality and hence the owners-the partner have unlimited personal liability both jointly
and severally.
The partner is equally liable for all their joint liabilities, unless otherwise started in the part-
nership deed. The Act however does not consider the agreement (contract) made by co-
partners of the single family as a partnership agreement.
The elements that give evidence that Partnership for Engagement exists are:
Personal involvement
Participation
Problem solving

Shared goals
Equality
Two way communication
Accountability
Partners share all business assets and liabilities
A partnership is a relationship, not a separate legal entity. Each partner jointly owns all the
business assets and liabilities. It's vital that each partner knows their rights, responsibilities
and obligations.
Seek the help of a qualified professional to prepare a written partnership agreement.
The agreement should also state each partner's role and level of authority, their expected fi-
nancial contribution and a clear procedure for dispute resolution and dissolving the partner-
ship.
This is important because personal liability is unlimited for each and every partner in the
business.
If the business fails and your partner can't afford to pay their share of any debts incurred, you
will be held liable for the shortfall. You are also jointly responsible for any debts your partner
incurs, with or without your knowledge.
Where there is no agreement in place, each partner is deemed to own equal shares of each
asset as prescribed by the Partnership Act 1895 (WA).
The advantages and disadvantages of a partnership
Advantages
Simple and inexpensive to set up.
Minimal reporting requirements.
Shared management/staffing responsibilities.
More opportunities for tax planning (such as income splitting between family mem-
bers) than that of a sole trader.
A partner's share of the business's tax losses may be offset against other personal in-
come, subject to certain conditions.
Combined skills, experience and knowledge can provide a better product/service.
Relatively easy to dissolve or exit and recover your share.
Access to capital.
Partners are not employees. Superannuation contributions and workers' compensation
insurance are not payable on partner's profits or drawings.
Disadvantages
Potential for disputes over profit sharing, administrative control and business direc-
tion.

Joint and several liabilities of partners. This means that each partner is fully responsi-
ble for debts and liabilities incurred by other partners - with or without their
knowledge.
Changes of ownership can be difficult and generally require a new partnership to be
established.


Summary
Effective communication is essential for an organisation to succeed. The different kinds of
communication that exist within an organisation are passive, active, one-way, two-way, ver-
bal and non-verbal communication.
The employee partnership can be developed and systematized to generate a culture of en-
gagement. This must develop if the organisation is to become the flexible fast-moving entity
that customers are expecting and needing and that the competition is promising. Customers
wont wait and increasingly will refuse to give you time to respond and change. They will
merely churn to the competitor. Engagement is now a necessity for business survival and a
very effective tool for competitive success.
Employee involvement is creating an environment in which people have an impact on deci-
sions and actions that affect their jobs.
Employee involvement is not the goal nor is it a tool, as practiced in many organizations.
Rather, it is a management and leadership philosophy about how people are most enabled to
contribute to continuous improvement and the ongoing success of their work organization.
Employee participation is the process whereby employees are involved in decision making
processes, rather than simply acting on orders. Employee participation is part of a process of
empowerment in the workplace.
Empowerment involves decentralizing power within the organisation to individual decision
makers further down the line. Team working is a key part of the empowerment process. Team
members are encouraged to make decisions for themselves in line with guidelines and
frameworks established in self managing teams.
Employee participation is in part a response to the quality movement within organisations.
Individual employees are encouraged to take responsibility for quality in terms of carrying
out activities, which meet the requirements of their customers. The internal customer is
someone within the organisation that receives the 'product of service' provided by their 'sup-
plier' within the organisation. External customers are buyers and users outside of the organi-
sation. Employee participation is also part of the move towards human resource development
in modern organisations. Employees are trusted to make decisions for themselves and the or-
ganisation. This is a key motivational tool.
Stress management refers to the wide spectrum of techniques and psychotherapies aimed at
controlling a person's levels of stress, especially chronic stress, usually for the purpose of im-
proving everyday functioning. In this context, the term 'stress' refers only to a stress with sig-
nificant negative consequences, or distress in the terminology advocated by Hans Selye, ra-
ther than what he calls Eustress, a stress whose consequences are helpful or otherwise posi-
tive.

Review Questions
1 Describe the mechanism of effective communication?
2 Organization nowadays is applying various techniques to offsets the repercussions
made by growing job stress. What are those techniques?
3 What do you think workplace today is stressful than in the past? Identify the sources of
stress in organizations.
4 Explain the organizational factor that causes stress?
5 What are the job stress factors? How can these stress factors be minimized? Explain.
6 Write short notes on:
b) Organizational culture
c) Spirituality in the workplace
d) Job stress factor

Industrial Relation

CHAPTER: VIII
Industrial Relations

Changing nature of employment relationship
The changing nature of employee relations refers to the trend towards gradual increase in
emphasis on manpower control, and a high commitment between personnel management and
employee relations. It entails developing and maintaining agreeable working relationships in
the employment sector.
Changing your company's employee relations strategy has a profound influence in several
areas of workplace satisfaction. Employee relations strategies change throughout the life of
an organization to maintain fresh, timely attention to employees' needs. Beware of how em-
ployee relations strategies can negatively impact your company by tuning in to employee
opinion, observation and workforce patterns to create a positive impact on your workforce
Employee Satisfaction
Developing an employee relations strategy to improve job satisfaction includes poll-
ing employees using opinion surveys, exit interviews and focus groups. However, if
your practice initially focuses on one method, changing the strategy is viewed one of
two ways: your previous method was ineffective or you are striving to improve using
a new employee relations technique. The impact depends on how you use information
gleaned through surveys, interviews and group discussions. If you act on employee
suggestions and feedback from surveys and follow through to address employee con-
cerns, when you change your strategy to utilize small group discussions, it appears
your employee relations specialist is working harder at improving overall job satisfac-
tion. On the other hand, if you fail to make progress using surveys and turn instead to
data from exit interviews, it appears that your employee relations area is fumbling
around to find the right solution to employee concerns.
Employee Morale
Employee relations strategies undeniably affect employee morale. It's not enough to
simply have an employee relations section within the human resources department.
Employee relations specialists' goals include strengthening the employer-employee
relationship. Strengthening working relationships requires frequent interaction with
employees, putting a face on human resources and demonstrating that the company's
employees are human resources' internal customers. Employee relations strategies
pertaining to performance management can have a great impact on employee morale.
Performance management components include employee feedback, corrective action
and development opportunities. An employee relations strategy that neglects con-
Industrial Relation

sistent application of these components throughout the employee base can cause a
downward spiral in employee morale.
Compensation and Benefits
Employee relations strategies can impact the correlation between compensation and
benefits and performance management. In most cases, employees rely on their per-
formance appraisal as an indicator of salary or wage increases. Companies that over-
look performance appraisal deadlines or companies that do not have a well-
constructed performance management system in place convey a message to employ-
ees that evaluating their performance is not a priority. Employees who sense perfor-
mance evaluation is low on the list of priorities might also feel compensation is an
equally low concern. The actual performance appraisal is a task that both managers
and employees often dread. Nevertheless, there must be constructive feedback, recog-
nition and a tie-in to compensation and benefits for your organization's employee rela-
tions strategy to have a positive effect.
Recognition and Reward
Building upon the recognition theme, employee motivators are more than compensa-
tion, bonuses and cash incentives. When an employee relations strategy includes crea-
tive forms of recognition, the surge in employee motivation translates to greater
productivity and employee engagement. Creative forms of recognition range from up-
per-level executives acknowledging diligent work of front-line employees, or giving
more responsibility to employees who demonstrate aptitude, proficiency and initia-
tive. Assigning challenging work and increasing an employee's level of authority and
latitude are human resources best practices for recognizing and rewarding talent.
Combining a system of recognition with employee motivation always have a positive
impact on the workplace.
Industrial Relationship Concept
Industrial relations has become one of the most delicate and complex problems of mod-
ern industrial society. Industrial progress is impossible without cooperation of labors and
harmonious relationships. Therefore, it is in the interest of all to create and maintain good
relations between employees (labor) and employers (management).

The term Industrial Relations comprises of two terms: Industry and Relations. Indus-
try refers to any productive activity in which an individual (or a group of individuals) is
(are) engaged. By relations we mean the relationships that exist within the industry
between the employer and his workmen. The term industrial relations explain the relation-
ship between employees and management which stem directly or indirectly from union-
employer relationship.
Industrial relations are the relationships between employees and employers within the or-
ganizational settings. The field of industrial relations looks at the relationship between
management and workers, particularly groups of workers represented by a union. Industrial
Industrial Relation

relations are basically the interactions between employers, employees and the government,
and the institutions and associations through which such interactions are mediated.
The term industrial relations have a broad as well as a narrow outlook. Originally, industri-
al relations were broadly defined to include the relationships and interactions between em-
ployers and employees. From this perspective, industrial relations cover all aspects of the
employment relationship, including human resource management, employee relations, and
union-management (or labor) relations. Now its meaning has become more specific and
restricted. Accordingly, industrial relations pertains to the study and practice of collective
bargaining, trade unionism, and labor-management relations, while human resource man-
agement is a separate, largely distinct field that deals with nonunion employment relation-
ships and the personnel practices and policies of employers.
The relationships which arise at and out of the workplace generally include the relation-
ships between individual workers, the relationships between workers and their employer,
the relationships between employers, the relationships employers and workers have with
the organizations formed to promote their respective interests, and the relations between
those organizations, at all levels. Industrial relations also includes the processes through
which these relationships are expressed (such as, collective bargaining, workers participa-
tion in decision-making, and grievance and dispute settlement), and the management of
conflict between employers, workers and trade unions, when it arises.
Scope of Industrial Relation:
The concept of industrial relations has a very wide meaning and connotation. In the narrow
sense, it means that the employer, employee relationship confines itself to the relationship
that emerges out of the day to day association of the management and the labor. In its wider
sense, industrial relations include the relationship between an employee and an employer in
the course of the running of an industry and may project it to spheres, which may transgress
to the areas of quality control, marketing, price fixation and disposition of profits among oth-
ers.
The scope or industrial relations are quite vast. The main issues involved here include the fol-
lowing:
Collective bargaining
Machinery for settlement of industrial disputes
Standing orders
Workers participation in management
Unfair labor practices

Industrial Relation

Importance of Industrial Relation
The healthy industrial relations are keys to the progress and success. Their significance
may be discussed as under
Uninterrupted production The most important benefit of industrial relations is that
this ensures continuity of production. This means, continuous employment for all
from manager to workers. The resources are fully utilized, resulting in the maximum
possible production. There is uninterrupted flow of income for all. Smooth running of
an industry is of vital importance for several other industries; to other industries if the
products are intermediaries or inputs; to exporters if these are export goods; to con-
sumers and workers, if these are goods of mass consumption.

Reduction in Industrial Disputes Good industrial relations reduces the industrial
disputes. Disputes are reflections of the failure of basic human urges or motivations to
secure adequate satisfaction or expression which are fully cured by good industrial re-
lations. Strikes, lockouts, go-slow tactics, and grievances are some of the reflections
of industrial unrest which do not spring up in an atmosphere of industrial peace. It
helps promoting co-operation and increasing production.

High morale Good industrial relations improve the morale of the employees. Em-
ployees work with great zeal with the feeling in mind that the interest of employer and
employees is one and the same, i.e. to increase production. Every worker feels that he
is a co-owner of the gains of industry. The employer in his turn must realize that the
gains of industry are not for him along but they should be shared equally and gener-
ously with his workers. In other words, complete unity of thought and action is the
main achievement of industrial peace. It increases the place of workers in the society
and their ego is satisfied. It naturally affects production because mighty co-operative
efforts alone can produce great results.

Mental Revolution The main object of industrial relation is a complete mental revo-
lution of workers and employees. The industrial peace lies ultimately in a transformed
outlook on the part of both. It is the business of leadership in the ranks of workers,
employees and Government to work out a new relationship in consonance with a spir-
it of true democracy. Both should think themselves as partners of the industry and the
role of workers in such a partnership should be recognized. On the other hand, work-
ers must recognize employers authority. It will naturally have impact on production
because they recognize the interest of each other.

Reduced Wastage Good industrial relations are maintained on the basis of coopera-
tion and recognition of each other. It will help increase production. Wastages of man,
material and machines are reduced to the minimum and thus national interest is pro-
tected.
Industrial Relation

Thus, it is evident that good industrial relations are the basis of higher production with
minimum cost and higher profits. It also results in increased efficiency of workers.
New and new projects may be introduced for the welfare of the workers and to pro-
mote the morale of the people at work. An economy organized for planned production
and distribution, aiming at the realization of social justice and welfare of the massage
can function effectively only in an atmosphere of industrial peace. If the twin objec-
tives of rapid national development and increased social justice are to be achieved,
there must be harmonious relationship between management and labor
Objectives of Industrial Relation:
The main objectives of industrial relations system are:-
To safeguard the interest of labor and management by securing the highest level of
mutual understanding and good-will among all those sections in the industry which
participate in the process of production.

To avoid industrial conflict or strife and develop harmonious relations, which are an
essential factor in the productivity of workers and the industrial progress of a country

To raise productivity to a higher level in an era of full employment by lessening the
tendency to high turnover and frequency absenteeism.

To establish and promote the growth of an industrial democracy based on labor part-
nership in the sharing of profits and of managerial decisions, so that ban individuals
personality may grow its full stature for the benefit of the industry and of the country
as well.

To eliminate or minimize the number of strikes, lockouts by providing reasonable
wages, improved living and working conditions, said fringe benefits.

To improve the economic conditions of workers in the existing state of industrial man-
agements and political government.

Socialization of industries by making the state itself a major employer.

Industrial Relation

Dunlop's Contribution to Industrial Relations

One of the significant theories of industrial labor relations was put forth by John Dunlop
in the 1950s. According to Dunlop industrial relations system consists of three agents
management organizations, workers and formal/informal ways they are organized and
government agencies. These actors and their organizations are located within an envi-
ronment defined in terms of technology, labor and product markets, and the distribu-
tion of power in wider society as it impacts upon individuals and workplace. Within this
environment, actors interact with each other, negotiate and use economic/political pow-
er in process of determining rules that constitute the output of the industrial relations
system.

He proposed that three partiesemployers, labor unions, and government-- are the Key
actors in a modern industrial relations system. He also argued that none of these institu-
tions could act in an autonomous or independent fashion. Instead they were shaped, at
least to some extent, by their market, technological and political contexts.

Thus it can be said that industrial relations is a social sub system subject to three envi-
ronmental constraints- the markets, distribution of power in society and technology.

Dunlop's model identifies three key factors to be considered in conducting an analysis of
the management-labor relationship:
1. Environmental or external economic, technological, political, legal and social
forces that impact employment relationships.
2. Characteristics and interaction of the key actors in the employment relationship:
labor, management, and government.
3. Rules that are derived from these interactions that govern the employment rela-
tionship.
Dunlop emphasizes the core idea of systems by saying that the arrangements in the field
of industrial relations may be regarded as a system in the sense that each of them more or
less intimately affects each of the others so that they constitute a group of arrangements
for dealing with certain matters and are collectively responsible for certain results.

In effect - Industrial relations is the system which produces the rules of the workplace.
Such rules are the product of interaction between three key actors workers/unions,
employers and associated organizations and government. The Dunlops model gives great
significance to external or environmental forces. In other words, management, labor, and
the government possess a shared ideology that defines their roles within the relationship
Industrial Relation

and provides stability to the system.

The following are the main actors, who are directly involved in Industrial Rela-
tions:
Employers: Are those who engage a worker and pay the worker a fixed salary on re-
turn for services rendered. Employers have the right to employ and fire employees.
Their decisions like relocation, introduction of new technologies, mergers and acqui-
sitions affects their employees.

Employee: Is an individual who is hired by a person or a business and is remunerat-
ed for the services rendered. Employees need a good working environment. They
have a right to voice their opinions and convey their grievances. Employees general-
ly form a union in order to obtain their rights from the management. Employ-
ees expect the union to support them on all issues.

Government: They influence employee relations by means of laws, rules, regu-
lations, and policies. The government establishes the legal framework for manage-
ment-trade union interaction. The government also helps in settlement of industrial
disputes. They also regulate incomes and establish minimum wages. For example, in
Australia, the Commonwealth has enabled employers under their jurisdiction, to by-
pass unions and negotiate directly with individual employees. But the individual
states have reaffirmed the collective bargaining process and the role of unions.

Industrial Relation

Trade Unions: They promote and protect employee interests. Trade unions help in
making decisions by following the process of collective bargaining and negotia-
tions, with the management. Good trade unions improve communication between the
management and the employees. Trade unions also help in settling of industrial dis-
putes. For example, the United States has low levels of unions compared to the Euro-
pean Union. Hence, the companies in the United States hire and fire employees at
will, while their European counterparts have to consult the trade unions.
Employer Associations: They help in enhancing the performance of enterprises.
Employer Associations represent employers in collective bargaining, depose be-
fore tribunals and courts, and engage in public and media relations. They also
provide a forum for discussions and debates on specialized subjects. Employer
Associations advise, educate, and assist members in industrial disputes. They also
lobby with the government for industrial reforms.

Courts and Tribunals: These help in resolving industrial disputes. Labor courts
examine the legality of orders passed by the employers, the discharge of em-
ployees, withdrawal of concessions or privileges, matters relating to lock-outs
and strikes. Industrial tribunals deal with matters related to wages, compensa-
tions and other allowances, bonuses, rules of discipline, retrenchment, and closure
of organizations. For example, the Australian Industrial Relations give great im-
portance to courts. The courts give quick binding decisions thus, minimizes econom-
ic losses.
The influence of each actor varies in different industrial systems. In some systems, the gov-
ernment dominates the relationships and in some others, it only plays a minor role. Some in-
dustrial systems emphasize employee interests while others emphasize employer interests.
Employees usually interact with their employers through representative unions. Some coun-
tries facilitate these trade unions, whereas some countries discourage them. Hence, the goals
and actions of the trade unions vary from country to country.
Measures for Improving Industrial Relations

The following measures should be taken to achieve good industrial relations:
Strong and Stable Union: A strong and stable union in each industrial enterprise is
essential for good industrial relations. The employers can easily ignore a weak union
on the plea that it hardly represents the workers. The agreement with such a union
will hardly be honored by a large section of workforce. Therefore, there must be
strong and stable unions in every enterprise to represent the majority of workers and
negotiate with the management about the terms and conditions of service.

Mutual Trust: Both management and labor should help in the development of an
atmosphere of mutual cooperation, confidence and respect. Management should
Industrial Relation

adopt a progressive outlook and should recognize the rights of workers. Similarly, la-
bor unions should persuade their members to work for the common objectives of the
organization. Both the management and the unions should have faith in collective
bargaining and other peaceful methods of settling disputes.

Workers Participation in Management: The participation of workers in the man-
agement of the industrial unit should be encouraged by making effective use of works
committees, joint consultation and other methods. This will improve communication
between managers and workers, increase productivity and lead to greater effective-
ness.

Mutual Accommodation. The employers must recognize the right of collective bar-
gaining of the trade unions. In any organization, there must be a great emphasis on
mutual accommodation rather than conflict or uncompromising attitude. One must
clearly understand that conflicting attitude does not lead to amicable labor relations;
it may foster union militancy as the union reacts by engaging in pressure tactics. The
approach must be of mutual give and take rather than take or leave. The manage-
ment should be willing to co-operate rather than blackmail the workers.

Sincere Implementation of Agreements. The management should sincerely imple-
ment the settlements reached with the trade unions. The agreements between the man-
agement and the unions should be enforced both in letter and spirit. If the agreements
are not implemented then both the union and management stop trusting each other. An
environment of uncertainty is created. To avoid this, efforts should be made at both
ends to ensure the follow up of the agreements.

Sound Personnel Policies: The following points should be noted regarding the per-
sonnel policies. The policies should be:

- Formulated in consultation with the workers and their representatives if they are
to be implemented effectively.
- Clearly stated so that there is no confusion in the mind of anybody.
- Implementation of the policies should be uniform throughout the organization to
ensure fair treatment to each worker.
Governments Role: The Government should play an active role for promoting in-
dustrial peace. It should make law for the compulsory recognition of a representative
union in each industrial unit. It should intervene to settle disputes if the management
and the workers are unable to settle their disputes. This will restore industrial harmo-
ny.

Progressive Outlook: There should be progressive outlook of the management of
each industrial enterprise. It should be conscious of its obligations and responsibilities
Industrial Relation

to the owners of the business, the employees, the consumers and the nation. The man-
agement must recognize the rights of workers to organize unions to protect their eco-
nomic and social interests.

Trade Union
A trade union or labor union is an administration of workforce grouped to get her to attain
common goals such as enhanced operational circumstances. The Trade Union Act of India
1926 defines a trade union as an organisation, whether temporary or permanent,
formed primarily for the purpose of regulating the relations between workmen and
employers or between workmen and workmen, or between employers and employers, or
for imposing restrictive condition on the conduct of any trade or business, and includes any
federation of two or more trade unions. Trade unions are created with the key goal of
protecting the rights of the labor force.
The objectives of trade unions are the following:
To improve the economic conditions of employees by securing better wages for
them.
To provide better working environment for the employees.
To secure employee bonuses from the profit of the organisation.
To resist schemes of the management which reduce employment, such as rationaliza-
tion and automation?
To secure social welfare of employees through group schemes which benefit
every employee.
To protect the interests of employees by actively participating in the organiza-
tional management.
To provide organizational stability, growth, and leadership.
The following the activities that unions generally engage in:
Representation
Negotiation
Member Benefits
Collective Bargaining
Industrial Action
Political Activity
Trade union is an organisation formed by and for employees and there are a number of
the factors that make workers join unions. Some of the reasons are as follows:
Greater Bargaining Power
Employees have very little bargaining authority with the employer. If employees are not
satisfied with their salary or some other issue of their employment, the options em-
Industrial Relation

ployees have is to quit their jobs. It is not realistic to frequently change job when
employees are dissatisfied. It imposes great monetary and emotional problems on workers.
It is better to join a union that can take precise action against the employer. The threat or real-
ity of a strike by a union is an influential tool that often causes the employer to ac-
cept the demands of the workers for better conditions of employment.
Minimal Discrimination

Decisions regarding pay, work, transfer, and promotion are highly subjective in nature.
There are chances of prejudice and discriminations as managers can be partial or discrimi-
nate against few employees. Trade unions compel managements to set up workforce poli-
cies that propose equal treatment and fair chances for all workers. All labor-related deci-
sions made by the management are closely inspected by the labor union. This helps
minimizing partiality and discrimination within the organisation.

Sense of Security
Trade unions secure retirement reimbursement of workers and compel the management to
invest in welfare services for the benefit of workers. Employees join unions as they be-
lieve trade unions ensure compensation for various types of occupational and personal haz-
ards such as accidents, injury, illness and unemployment.
Sense of Participation
Employees can take part in discussing issues affecting their security only if they join trade
unions. Trade unions influence employee related decisions of the management through col-
lective bargaining and negotiation.
Sense of Belonging
Many workers join unions because their friends or co-workers are members. At times, they
join unions under group pressure, that is, if workers do not join union, they may face difficul-
ties at work. On the other hand, workers who join unions feel that they gain more respect
from their co-workers.
Platform for Self-Expression
Workers can voice their problems with union leaders. Trade unions provide a medium for
workers to express, discuss and broadcast their work related issues. These issues are then
given due consideration when the management decides on workforce policies.
Betterment of relationships
Employees feel that unions fulfill their needs for a proper balance of employer-
employee relations. Unions help in enhancing industrial relations between management and
workers by solving the issues peacefully.
Industrial Relation

Causes of industrial Disputes
The causes of industrial disputes can be broadly classified into two categories: economic and
non-economic causes. The economic causes will include issues relating to compensation like
wages, bonus, allowances, and conditions for work, working hours, leave and holidays with-
out pay, unjust layoffs and retrenchments. The non economic factors will include victimiza-
tion of workers, ill treatment by staff members, sympathetic strikes, political factors, indisci-
pline etc.
Wages and allowances: Since the cost of living index is increasing, workers general-
ly bargain for higher wages to meet the rising cost of living index and to increase their
standards of living. In 2002, 21.4% of disputes were caused by demand of higher
wages and allowances. This percentage was 20.4% during 2003 and during 2004 in-
creased up to 26.2%. In 2005, wages and allowances accounted for 21.8% of disputes.

Personnel and retrenchment: The personnel and retrenchment have also been an
important factor which accounted for disputes. During the year 2002, disputes caused
by personnel were 14.1% while those caused by retrenchment and layoffs were 2.2%
and 0.4% respectively. In 2003, a similar trend could be seen, wherein 11.2% of the
disputes were caused by personnel, while 2.4% and 0.6% of disputes were caused by
retrenchment and layoffs. In year 2005, only 9.6% of the disputes were caused by per-
sonnel, and only 0.4% was caused by retrenchment.

Indiscipline and violence: From the given table, it is evident that the number of
disputes caused by indiscipline has shown an increasing trend. In 2002, 29.9% of dis-
putes were caused because of indiscipline, which rose up to 36.9% in 2003. Similarly
in 2004 and 2005, 40.4% and 41.6% of disputes were caused due to indiscipline re-
spectively. During the year 2003, indiscipline accounted for the highest percentage
(36.9%) of the total time-loss of all disputes, followed by cause-groups wage and al-
lowance and personnel with 20.4% and 11.2% respectively. A similar trend was ob-
served in 2004 where indiscipline accounted for 40.4% of disputes.

Bonus: Bonus has always been an important factor in industrial disputes. 6.7% of the
disputes were because of bonus in 2002 and 2003 as compared to 3.5% and 3.6% in
2004 and 2005 respectively.

Leave and working hours: Leaves and working hours have not been so important
causes of industrial disputes. During 2002, 0.5% of the disputes were because of leave
and hours of work while this percentage increased to 1% in 2003. During 2004, only
0.4% of the disputes were because of leaves and working hours.

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Miscellaneous: The miscellaneous factors include

- Inter/Intra Union Rivalry
- Charter of Demands
- Work Load
- Standing orders/rules/service conditions/safety measures
- Non-implementation of agreements and awards etc.
Advantages and Disadvantages of Trade Unions
Advantages
Increased Wages: Organizations that have trade unions tend to offer higher wages
compared to non-unionized industries.
Counterbalance Monopolistic: In the case of monopolistic employers, trades
unions can bargain to raise wages and increase employment. Monopolistic em-
ployers are those who have market authority in fixing salary and employing staff. An
example of monophony is an organisation that is the only buyer of labor in an isolat-
ed town. Such an organisation would be able to pay lower wages than it would if
other firms were present.
Represent Workers: Trades Unions defend employees from exploitation by their
employers. They also help to support fitness and safety legislation. Trades unions
also represent workers facing legal action.
Productivity Deals: Trades unions discuss with employers about wages for efficien-
cy deals. This means they help the organisation enhance employee productivity by
which it enables the organisation to pay higher wages to its employees. Trades un-
ions play a significant role in setting up new operational practices that improve
productivity.
Disadvantages
Unemployment: It is an irony to consider that trade unions cause unemployment. In
their quest to achieve their goals, unions bargain and fight for higher wages, quality
work conditions and so on. Such demands are either not accepted by the manage-
ment of organizations or does not help sustain the organisation. Organizations that
do not accept union demands could then opt for cheaper labor from elsewhere.
Organizations that accept these demands could end up being bankrupt. Either way re-
sults in employees losing their jobs.
Ignore non-Members: More often than not, unions tend to consider only the needs
of its members. They often overlook the issues of those who are members of other
unions or people who are associated with any unions. This is one of the reasons
workers are forced to join unions.
Lost Productivity: In the rare circumstances where unions go on strikes or organize
a work-slowdown the production of the organisation is affected. It can in turn result
in low or no sales.
Industrial Relation

Wage Inflation: If unions become too influential, they can negotiate for higher sala-
ry. This can cause in price rise of essential goods and services. For example, union
workers of the oil industry of India wanted a rise in their wages. So they decided to
boycott work and stop functioning in every aspect of oil and gas refining and produc-
tion. Once their demand was accepted by their employers, the rise of fuel in-
creased. This in turn led to an increase in the price o f essential commodities.
Employer associations

Employers join what are called employer associations/employer federations/trade associa-
tions. Like trade unions, employer associations are made up of businesses and employers and
who all pay annual fees for their benefits.

Features
Employer associations generally charge each of their member's annual dues. In exchange,
members receive information designed to help them improve the functioning of their busi-
ness, particularly in the area of labor relations. Employer associations may also distribute in-
formation to outside parties as a way of helping the employers' position be better understood.
Types
The interests of employer associations vary depending on their organization and membership.
Many advocate on behalf of interests innate to a particular industry or location. For example,
the San Diego Employers Association advocates on behalf of San Diego businesses, while the
Construction Employers' Association works on behalf of contractors.
Function
Employer association function as a counterbalance to labor unions, helping businesses organ-
izes their resources and promotes their interests. Many employer associations, including the
nation's largest, the U.S. Chamber of Commerce, engage in political lobbying designed to
promote the passage of legislation favorable to employers.

Advantages of joining an employer association:
They negotiate with trade unions on behalf of their members.
They give advice on employment laws, health and safety, taxation laws etc
Strength in numbers, they want to influence government decisions.
They can share ideas and research facilities.
They can organize bulk buying for members and get discounts.

Industrial Relation

Employer associations and the Government.

Employer associations represent similar wants of businesses, and will try to influence the
governments to give better conditions for businesses to prosper:
They want the government to control things such as inflation, law and order, health
and safety, and education for the workforce.
Lower taxes.
More freedom for businesses.
Fair competition.
Good transport infrastructure.
Access to overseas markets.
Reliable source of power.
National Legislation and Policies against Child Labor in Nepal Legislation
The Constitution of Nepal, 1990, seeks to protect the interests of children by conferring on
them certain fundamental rights and imposing for their benefit certain 'directive principles
and policies of the State'. The State shall make necessary arrangements to safeguard the rights
and interests of children, ensure that they are not exploited, and make gradual arrangements
for free education.
Apart from the Constitution, the following four laws contain important provisions for the pro-
tection and advancement of the interests of children and child laborers:
The Children's Act, 1992: This Act was enacted to protect the rights and interests of
Nepalese children and to ensure their physical, mental, and intellectual development.
It also contains a number of provisions on child labor, and it has recently been
amended to make the Act more abuse-specific, especially in relation to sexual abuse.
The Act defines a child as a person below the age of 16 years and states that a child
who has not attained the age of 14 shall not be employed in any work as a laborer;
The Labor Act, 1992, and Labor Rules, 1993, contain specific provisions for the
prohibition of employment of children below the age of 14 years and prohibits admis-
sion to hazardous work for minors (aged between 14 and 18 years);
The Child Labor (Prohibition and Regulation) Act, 1999, followed Nepal's ratifi-
cation of the ILO Minimum Age Convention (No. 138), and has made important
amendments in the Labor Act, 1992. The Child Labor Act enlists specific occupations
as hazardous work and prohibits the use of children below 16 years of age in such ac-
tivities. The Act regulates hours of work for children aged 14 - 16 and provides that
no child shall be engaged to work during a period from 6 p.m. to 6 a.m. Further, it
prohibits the engagement of children below 14 in any kind of employment.
Kamaiya Labor Prohibition Act, 2001, Prohibits bonded labor; frees bonded labor-
ers and extinguishes debt flowing from such arrangements. As a result of the Kamaiya
Industrial Relation

Act, many bonded girls in domestic servitude have been withdrawn and reintegrated
with their families.
Other legal provisions restricting child labor and trafficking in the country include: the Citi-
zen Rights Act, 1955; the Begging Prohibition Act, 1962; the Prison Act, 1962; the Common
Law Code, 1963; the Public Offence and Punishment Act, 1970; the Foreign Employment
Act, 1985; the Trafficking Control Act, 1986, and the Drug Trafficking (Control) Act.
Finally, the Self-Governance Act, 1997, makes important provisions for decentralized action
for children and against child labor. For instance, much of the power for protecting girl chil-
dren has devolved on the Village Development Committees (VDCs), which are obliged to
give priority to development projects that directly benefit children.
Nepal is a signatory to the:
ILO Worst Forms of Child Labour Convention (No. 182);
ILO Minimum Age Convention (No. 138);
ILO Forced Labour Convention (No. 29);
UN Convention on the Rights of the Child (CRC).
Government policies and programmes
There have been major political changes in Nepal since 1990. The country's monarch, King
Gyanendra's direct rule came to an end in 2006 following civil war. Following this there was
a nation-wide election in April 2008 and the newly formed Constituent Assembly abolished
the monarchy and declared Nepal to be a democratic republic.
Some positive steps have however, been taken recently with regard to child labor policy de-
velopment. Nepal has prepared a core Education for All (EFA) document for the period of
2004/09. The EFA envisages that by 2015, there should be universal access to quality basic
education. A key measure to be implemented under the proposed EFA 2002/09 is providing
60 per cent of the education budget directly to schools. This will increase the net enrolment
rate from the current 81 per cent to 96 per cent, and the literacy rate of those above 15 years
of age from the current 48 per cent to 60 per cent by 2009. Also under the EFA is an initiative
for five donors to provide financial assistance that will be spent in bringing 2.6 million new
students to pre-primary schools. These various initiatives are expected to improve the access
to and quality of schooling and will hopefully also benefit children in the worst forms of child
labor. Among other important efforts figures the decision taken in July 2000 to outlaw the
Kamaiya system of bonded labor, under which debt-ridden rural farmers and their children
work as bonded laborers to pay off debts incurred by their ancestors. From the perspective of
child development, the Ministry of Women, Children and Social Welfare and its Central
Child Welfare Committee assume the responsibility for children and their right to develop-
ment and protection. The Ministry also leads the efforts to combat trafficking and, with the
Industrial Relation

assistance of IPEC, has revised the National Plan of Action to include combating trafficking
in women and children for sexual exploitation.
The Importance of Employment Laws and Compliance with Intentions
of the Laws
Protection of Employee
In the United States, most employees and employers operate under what is known as a mas-
ter-servant relationship. The employee, the servant, is expected to perform his duties under
the supervision and for the good of the employer, the master, under this type of work rela-
tionship. However, employers, if left unchecked, sometimes abuse their power. Employment
laws such as the Fair Labor Standards Act (FLSA) and the Age Discrimination in Employ-
ment Act are designed to balance out the master-servant relationship so that the employer
cannot abuse or discriminate against the employee. Under these and additional labor laws,
workers have the right to fair compensation, an equal opportunity for hire and a safe work
environment.
Protection of Employer
The purpose of most labor laws in the United States is not to abolish the master-servant rela-
tionship, but rather to make it more equal and ensure that all individuals have the same op-
portunity to enter into such a relationship. Additionally, a key principle of capitalism is that
businesspeople should have the opportunity to engage in commerce that could result in prof-
its. Thus, some labor laws seek to protect the rights of the employer. For instance, employers
don't have to hire someone they don't feel is qualified, and it is within the employer's rights to
expect that employees show up on time and perform the duties for which they were hired.
These laws ultimately protect the employer's productivity and, therefore, profits, as well as
the ability to remain competitive in the marketplace.
Dual Protections
Labor laws offer some dual protections to both employers and employees. For instance, labor
regulations dictate to some degree how employees should interact with other employees, as
well as how employees and employers should interact. This can eliminate conflicts that prove
stressful to everyone involved. Compliance with labor laws also is financially beneficial to
both employees and employers. If an employer is compliant, for instance, he avoids fines
stemming from not following the law, as well as potential lawsuits. Similarly, adherence to
labor laws means that employees are properly compensated for the work they do and, in
many instances, receive benefits such as reduced medical expenses.
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Value Recognition
Labor laws, similar to any other laws, reflect the dominant values of the society in which
people create them. For example, antidiscrimination laws are based on the underlying belief
of human equality, while child labor laws reflect the belief that children should not work un-
der certain conditions and may not have the mental capacity to understand the contracts and
tasks which many jobs require. Compliance with labor laws is important because it indirectly
preserves these underlying concepts, thereby stabilizing the overall value system of the socie-
ty. Periods of change in labor laws reflect less stable social norms and a shift in dominant be-
lief systems.
Economic Stability
Because labor laws preserve the right of the employer to profit and the right of the employee
to compensation that can be spent and invested, labor laws are crucial to a healthy economy.
Periods of economic growth reflect healthy businesses with employees who are earning
enough to participate as consumers. Changes in employment laws, as well as laws on operat-
ing procedures in each industry, often happen during periods of economic recession.
The Legislations
The legislations governing Industrial Relations vary from country to country. Differences can
be found in the kind of protection granted to employers and employees, the freedom to form
associations, the right to bargain collectively, and the concepts of fairness in legislations.
Some laws, which are not directly connected to Industrial Relations, can also impact it. In
some cases, government intervention is required for settling disputes between the manage-
ment and the employees.
For example, the Indian government has the following legislations to govern Industrial Rela-
tions. The Industrial Disputes Act of 1947 has provisions for settlement of industrial disputes
and protection of the rights of the workers. Amendments were made to the Trade Unions Act
in 2001, which regulates the functioning of the trade unions. Schemes were also introduced
for the participation of workers in public sector companies.
The 1980s labor laws of the British government led to the decrease in the influence of the
trade unions. The Canadian government has Industrial Relations legislations for govern-
ing the functioning of trade unions, employment standards, employee health and safety,
workers compensation, equality in the workplace, and globalization.

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IR important to ensure good Industrial
Relations for the following reasons:
Uninterrupted Production: Good Industrial Relations ensures continuity of pro-
duction. Resources are fully utilized and production is maximized. All employees of
the organisation are assured continuous work. Uninterrupted production is very im-
portant for organizations as some products act as inputs for other organizations; some
products are exported, and some products are very essential for consumers
Reduction in Industrial Disputes: Good Industrial Relations help in reduction
of industrial disputes. Resolution of disputes promotes harmony and co-operation
within the organisation.
Enhancement of Morale: Good Industrial Relations improve the morale of the em-
ployees. It increases employee involvement and commitment. Workers display more
interest in achieving the organizational goals.
Transformation of Attitudes: Good Industrial Relations enable employers and
employees to view themselves as partners in the industry. Employees and em-
ployers recognize the rights and interests of the other.
Reduces Wastage: Good Industrial Relations enhances co-operation. Wastages of
time, resources, and materials are minimized. This in turn increases production.
Increases Profit: Good Industrial Relations maintains competitive labor costs, in-
creases production and thus increases profits.
Thus, we see that good Industrial Relations is very important for the success of an organisa-
tion.
LABOR ACT 1992 (2048)
Whereas it is expedient to make timely provisions relating to labor by making provisions for
the rights, interests, facilities and safety of workers and employees working in enterprises of
various sectors.
Now, therefore, the Parliament has made this Act on the twenty first year 0 the reign of His
Majesty King Birendra Bir Bikram Shah Dev.
Preliminary
1. Short Title and Commencement:
(1) This Act may be called the "Labor Act, 2048 (1991)"
(2) It shall come into force at once.

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2. Definitions
Unless the subject or context otherwise requires, in this Act;
(a) "Production Process means the following process -
i. Works relating to manufacturing, transforming, repairing, engraving, finishing, pack-
ing, oiling, washing, cleaning, breaking-up, dismantling or other kinds of act article or
substance with a view to bringing it to use, sale, distribution, transportation or dispos-
al; or
ii. Works relating to pumping oil, water or sewage; or
iii. Works relating to generating, transforming or transmitting energy; or
iv. Works relating to printing lithography, photography, book-binding or similar other
works.
* (b) "Enterprise's means any factory, company, organization, association, firm or a group
thereof established under the prevalent law for the purpose of operating any industry, profes-
sion or service whereon ten or more workers or employees are engaged and this word shall
also denote: -
i. Tea estates established under the law for commercial purpose;
ii. Enterprise operating within the industrial estate established by His Majesty's Gov-
ernment whereon less than ten workers or employees are engaged.
(c) "Employee" means a person engaged in administrative functions of the enterprise.
* (d) "Worker" means a person employed on the basis of obtaining remuneration to work in
connection with production process or providing service or to work in any building, premises,
machinery or any part thereof used for the purpose of same works or any act relating to such
works or any work incidental to such works and this works shall also include any workers
working at piece-rate, contract or agreement.
(e) "Manager" means a person appointed for performing the business of the enterprise.
* (f) "Establishment" means the person having final authority on the activities of the enter-
prise and this word shall also include any person designated as the chief of any branch or unit
of the enterprise with powers to exercise final responsibility or authority in respect thereof.
(g) "Factory Inspector" means the Factory Inspector appointed by His Majesty's Government
under this Act and this word shall also include the Senior Factory Inspector.
(h) "Child" means a person who has not attained the age of fourteen years.
(i) "Minor" means a person who has attained the age of fourteen years but has not completed
the age of eighteen years.
(j) "Adult" means a person who has completed the age of eighteen years.
(k) "Energy means electrical or mechanical energy.
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Provided that this word shall not denote any energy generated from human or animal sources.
(l) "Seasonal Enterprise" means an enterprise which cannot be operated or which is not feasi-
ble to operate in any other seasons except the specific season and this word shall also denote
a seasonal enterprise which cannot be operated more than one hundred and eighty days in a
year.
(m) "Day" means a period of twenty four hours beginning from any midnight and ending at
another midnight.
(n) "Week" means a period of seven days starting from midnight of Saturday or from mid-
night of such other day as prescribed by the Department of Labour.
(o) "Welfare Officer" means the welfare officer appointed under this Act.
(p) "Labour Officer" means the Labour Officer appointed under this Act and the word shall
also denote the Senior Labour Officer also.
(q) "Labour Court" means the Labour Court established under this Act.
(r) "Remuneration" means the remuneration or wage to be received in cash or kind from the
enterprise by the worker or employee for the works done in the enterprise and this word shall
also denote any amount to be received in cash or kind for the works done under piece-rate or
contract.
Provided that, this word shall not include any kind of allowances or facilities.
(s) "Prescribed" or "as prescribed" means prescribed or as prescribed in the rules made under
this Act.

Collective Bargaining Concept and process
International Labour Organisation (ILO) defines collective bargaining as negotiating regard-
ing various terms and conditions of employment between employer and employees to arrive
at an agreement. Collective bargaining serves a dual purpose, that is, it provides an approach
of determining the wages and conditions of work for a group of workers covered by the
agreement through free and voluntary negotiations between the two independent parties con-
cerned in the organisation. It also facilitates the employers and workers to define by agree-
ment the rules governing their relationship.
According to Boone and Kurtz, collective bargaining is a process of negotiation between
management and union representatives for the purpose of arriving at mutually acceptable
wages and working conditions for employees. Collective bargaining can be beneficial to
both the workers and the employers. For workers, collective bargaining ensures that employ-
ees are provided with adequate wages and good working conditions. It helps employers stabi-
lize industrial relations by maintaining industrial peace that otherwise may be disrupted by
unrest of the labour.
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Collective bargaining is a discussion process between employers and employees. It is termed
collective because both the employer as well as the employees behaves as a group rather than
individuals. It is known as bargaining because it involves methods of arriving at an agree-
ment that involves various proposals and offers.
Collective Bargaining Process
The process includes negotiations between an employer and a group of employees to deter-
mine the conditions of the employment. The result of the collective bargaining process is
called the Collective Bargaining Agreement (CBA). It is a type of negotiation that is used by
the employees to work with their employers. During the process, the employees representa-
tives approach the employer and then attempt to negotiate a contract that both sides can agree
upon. Once both the parties have reached a contract that they find agreeable, it is signed and
kept in place for a specified period of time. This final contract is called the collective bargain-
ing agreement.
The process comprises of the following steps:
9. Prepare: This phase facilitates the formation of a negotiation team. The team is se-
lected in such a way that the representatives of both the parties have necessary
skills that are required for negotiation. It is essential that the representatives of both
the employers and the union examine the situation in order to prepare a basis on
which the negotiation takes place. It is also vital to analyze whether there is actual-
ly any reason to negotiate at all. It is important to intimate information regarding
various operations, working conditions and other relevant norms to the members
participating in the process of bargaining and negotiation.

Collective Bargaining Process

10. Discuss: Both the parties are responsible for deciding the rules that support the negotia-
tions. It is important to create an environment of trust and understanding. This ensures
that the discussion progresses towards reaching an agreement.
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11. Propose: This phase can also be termed as Brain Storming. It is a technique to solve
any queries in a creative manner. It facilitates in opening up of various and options to re-
solve any issues. This ensures that the opinions of both the parties are sought.
12. Bargain: The process of negotiation becomes easy if a problem solving attitude is adopt-
ed. This stage comprises the time when what ifs and supposes are set forth and the
drafting of agreements take place.
13. Settlement: Once both the parties agree on all the issues discussed, an agreement is
reached.
The process of negotiating a union contract may take long a time. Once the management and
the members of the union of the negotiation team arrive upon an agreement, the members of
the union then accept or reject the agreement by a majority vote. If the agreement is accepted,
the contract is approved and sanctioned. On the other hand, if the agreement is rejected by the
members of the union, the labour and management negotiation teams continue bargaining and
negotiating.
Collective Bargaining Issues
From the previous sections you have learned that labor issues are negotiated during the col-
lective bargaining process. Some

The scope of the issues discussed includes the following:
Union and Management Cooperation and Communication: It is very essential to
have cooperation and effective communication between the union organisation that
represents the workforce and the management. This includes various activities such
as the responsibilities of the employers in making decisions by cooperating with the
union. This also considers the extent of support given by the employer to the activi-
ties of trade unions.
Employment and Working Conditions: This includes various factors such as con-
tracts of the employees, employee termination, redundancy principles, working time
and schedules of the employees, holiday and paid leaves of the employees.
Wages and Remuneration: This includes various activities such as wages, mini-
mum wage tariffs, overtime payment, extra payment for risky working conditions and
payment for working on holidays.
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Occupational Safety and Health: This includes safety and health measures for
employees. This ensures that preventive and corrective measures are taken that facili-
tates improved working conditions in the organisation. This allows reduction of risks
at work place.
Human Resource Development: This includes various activities such as training
and human resources development activities, creation and utilization of various social
funds in the organisation for employees.
Management and Union Conflict Resolution: This includes various procedures
like mediation and arbitration that can be applied in situation such as serious disa-
greements between the management and the unions that represent the employees of
the organisation. Thus, Collective bargaining ensures an effective means for the em-
ployees to attain their objectives such as wages, hours and working conditions and
for the employers to maintain a peaceful work environment.

Eight Phases for collective bargaining and negotiation
It is termed as an Eight Approach to Collective Bargaining or Negotiation. They are the
following phases:
1. Preparing: It is important to examine various factors that are concerned with the negotia-
tions that are both internal and external to the organisation.
Examining internal factors: It is very essential to examine the performance of the
organisation. It is critical for the unions to be aware of the various profits and loss
statements, notes, balance sheets and other information that is concerned with the fi-
nancial reports of the organisation. It is also important that the union negotiating
team knows about the organisation budgets and strategic plans. Factors such as prof-
itability, liquidity, leverage and activity ratios help in examining the performance of
the organisation.
This information along with the intelligence provided by the workforce ensures that the ex-
pansions, purchases, investments and other details about the organisation are clearly ana-
lyzed.
Examining External Factors: It is very essential to examine various factors that are
external to the organisation. The factors include various levels of management, rate
of inflation, investments, rate of interests and growth in economy.
2. Arguing: It is important for the negotiators to argue effectively. However, it is necessary
to negotiate rationally and reasonably. The negotiation process involves diplomacy and nego-
tiators are expected to use a blend of logic as well as emotional appeal while negotiating.
When arguments become heated, it is important for a negotiator to take a break from the dis-
cussion.
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3. Signaling: Since negotiation is an interactive and dynamic process, it is important for ne-
gotiators to develop active listening skills. It is necessary for the negotiators to convey appro-
priate body signals along with the words that they speak. These signals help negotiators as-
sess the following cases:
Proposals that will meet with little resistance
Proposals that can be accepted with some modification
Proposals that have low chances of success in the current round of negotiations.
4. Proposing (Exploring): Once, the negotiator is a clear with the signals received, the
team is able to priorities the proposals that are considered.
5. Packaging: The proposals are then presented in an appealing manner where strong pro-
posals are clubbed with the ones that have lower chances of acceptance. This ensures that an
agreement is ready that contains all the elements that are crucial for the settlement between
the negotiating parties

6. Bargaining: This is the actual process of meeting demands. Both parties present their
demands and discuss which of them can be approved. This is a painstaking and lengthy pro-
cess. It finally results in a collective agreement of the proposals and disputes.
7. Closing: This is a critical step in the process of bargaining. Closing of the process too
early or too late results in various disputes. Thus, it is necessary to assess the best time to
close by considering various factors such as mood of the negotiating parties and the economic
factors. All ambiguities have to be cleared in this stage. The participants are briefed about the
decisions taken and issues that are withdrawn.
8. Agreeing: This is the final stage of the bargaining and negotiation process. This phase en-
sures that the negotiators draft an agreement and produce it in a formal form. Decisions are
then taken regarding various issues such as the date for the payment of the revised wages,
timing of introduction of new benefits in the organisation and so on.

Industrial Relation

Perspectives on Industrial Relations
1. Unitary Perspective:
In unitary, the organization is perceived as an integrated and harmonious system, viewed as
one happy family. A core assumption of unitary approach is that management and staff, and
all members of the organization share the same objectives, interests and purposes; thus work-
ing together, hand-in-hand, towards the shared mutual goals. Furthermore, unitary has a pa-
ternalistic approach where it demands loyalty of all employees. Trade unions are deemed as
unnecessary and conflict is perceived as disruptive.
From employee point of view, unitary approach means that:
Working practices should be flexible. Individuals should be business process im-
provement oriented, multi-skilled and ready to tackle with efficiency whatever tasks
are required.
If a union is recognized, its role is that of a further means of communication between
groups of staff and the company.
The emphasis is on good relationships and sound terms and conditions of employ-
ment.
Employee participation in workplace decisions is enabled. This helps in empowering
individuals in their roles and emphasizes team work, innovation, creativity, discretion
in problem-solving, quality and improvement groups etc.
Employees should feel that the skills and expertise of managers supports their en-
deavors.
From employer point of view, unitary approach means that:
Staffing policies should try to unify effort, inspire and motivate employees.
The organizations wider objectives should be properly communicated and discussed
with staff.
Reward systems should be so designed as to foster to secure loyalty and commitment.
Line managers should take ownership of their team/staffing responsibilities.
Staff-management conflicts from the perspective of the unitary framework are
seen as arising from lack of information, inadequate presentation of managements
policies.
The personal objectives of every individual employed in the business should be dis-
cussed with them and integrated with the organizations needs

Industrial Relation

Strengths of unitary perspective

A major strength of the unitary perspective is that it explicitly wants to integrate employer
and employee interests, so that it can enhance employee commitment and loyalty (Guest and
Peccei 2001:209). This can be used as a basis for stakeholder management, wherein employ-
ees are seen as important stakeholders of the organisation, and so their well-being is carefully
considered in ensuring the welfare of the organisation (Ackers and Payne 1998: 540).

The unitarist perspective also emphasizes the role of managers in attaining win-win situations
for employees and organisations, wherein their interests can be properly aligned with each
other (Giles 1989: 131). Managers are compelled to go beyond their managerial styles of
managing ER and emphasise also their leadership capabilities (Ackers and Payne 1998: 539).
If they can be convincing and influential leaders in the organisation, there will be no strong
demand for trade unions.

Furthermore, the unitarist perspective assumes that all stakeholders are rational members,
who will consider finding common interests. This belief provides a steady rationale for stress-
ing common goals, so that a stable ER system can be achieved (Giles 1989: 131).

Finally, the unitarist perspective is essentially individualist in its ER approach, which works
best for individualist IR systems (Giles 1989: 131). Many IR systems all over the world has
shifted from the collectivist (trade-union-led) IR paradigms to individualist paradigms, in-
cluding in the UK, and so the unitarist perspective will be particularly useful for this kind of
IR perspective.

Industrial Relation

Weaknesses of unitarist perspective

A major weakness of this theory is the lack of realization that there are power inequalities
between employers and employees which will generate diverse kinds of conflicts (Kessler
and Purcell 2003: 315). Managers often exert greater power over their employees in deter-
mining work conditions, especially for blue-collar jobs, and instead of the workers acting as
owners of power too, they will tend to accept decisions of the management and submit to the
formers power.

Furthermore, conflict is treated too negatively, and not seen as a force that reflects inequali-
ties and which can be used as opportunities to regain work harmony (Dzimbiri 2008: 2, and
Kitay & Marchington 1996: 1267). Although there are different kinds of conflicts, some au-
thors say that there are certain kinds of conflicts that are good for organisational develop-
ment. For instance, there are two kinds of conflict- one that is unhelpful to team effective-
ness, also called A-conflict, and the other that is helpful to the team, termed as C-conflict
(Esquivel and Kleiner 1996: 43). Task conflict, an example of task conflict, arises when team
members have disparities in how tasks are defined and divided among the group, such as ma-
jor decision areas and processes (Chuang et al. 2004: 28). Studies showed that task conflict
can improve positive outcomes for the group (Chuang et al. 2004: 28, and Choudrie 2005:
65). Simons and Peterson (2000) asserted from their study that intragroup trust affected the
relationship between tasked-related conflict and relationship conflict (cited in Chuang et al.
2004: 28). Hence, by demonising conflict, the unitary perspective delimits how task con-
flicts can also be used to enhance performance.

In addition, it is unclear how individual worker sentiments can be adequately integrated into
the organisational objectives, because the unitary perspective is very normative and lacks de-
scription of how common interests can be identified and shared across organisations (Ackers
and Payne 1998: 539). For instance, it does not provide any guidelines for HR, so that it can
pursue unitarism effectively (Storey 2000: 12). The unitarist perspective only assumes that
members are rational enough to reach solid decisions on how personal and organisational in-
terests are to be combined.
2. Pluralistic-Perspective:
In pluralism the organization is perceived as being made up of powerful and divergent sub-
groups management and trade unions. This approach sees conflicts of interest and disa-
greements between managers and workers over the distribution of profits as normal and ines-
capable. Consequently, the role of management would lean less towards enforcing and con-
trolling and more toward persuasion and co-ordination. Trade unions are deemed as legiti-
mate representatives of employees. Conflict is dealt by collective bargaining and is viewed
not necessarily as a bad thing and if managed could in fact be channeled towards evolution
and positive change. Realistic managers should accept conflict to occur. There is a greater
propensity for conflict rather than harmony. They should anticipate and resolve this by secur-
ing agreed procedures for settling disputes.
Industrial Relation

The implications of this approach include:
The firm should have industrial relations and personnel specialists who advise man-
agers and provide specialist services in respect of staffing and matters relating to un-
ion consultation and negotiation.
Independent external arbitrators should be used to assist in the resolution of disputes.
Union recognition should be encouraged and union representatives given scope to car-
ry out their representative duties
Comprehensive collective agreements should be negotiated with unions
Strengths of the pluralist perspective
Unlike the unitarist, the pluralist theory emphasises that effective IR interventions can resolve
conflicts (Dzimbiri 2008: 3). A consultative approach can be used by the management in re-
sponding to conflicts. Furthermore, it also considers other alternative decision-making pro-
cesses (Dzimbiri 2008: 3 and Giles 1989: 131).

Conflict is not overlooked, but managed effectively through stakeholder participation (Hunter
1998: 560). Conflict can then be used to understand underlying tensions, so that they can be
identified and properly addressed (Kessler and Purcell 2003: 315, and Bacon and Blyton
2007). The pluralist perspective makes use of conflict management strategies to engage
groups that are in conflict, so that resolutions can be discussed and implemented (Kessler and
Purcell 2003: 315).

The pluralist perspective embraces a wider array of employee relations policies (Gennard,
and Judge 2002: 56). Some companies can adopt no-union policies, as long as there are em-
ployee organisations, while other companies can motivate the use of trade unions. The girth
of employee relations policies can make pluralism specifically beneficial for diverse organi-
sational and national cultures (Gennard, and Judge 2002: 56). For instance, trade unions can
be effective allies also in aligning individual and organisational interests compared to the uni-
tarist approach to ER (Badigannavar and Kelly 2005). The pluralist perspective is also suita-
ble for collective IR systems, because it does not disregard the role of trade unions in manag-
ing employee-employer conflicts (Badigannavar and Kelly 2005).

Weaknesses of the pluralist perspective

The weakness of the pluralist theory is the inclination to dwell on on rules and procedures
and disregard the processes that also contribute to the resolution of conflicts. For instance,
through IR, laws can be made that impose certain ways of resolving workplace conflicts.
These rules, however, cannot adapt to emerging and different workplace conditions (Gen-
nard, and Judge 2002: 56).

In addition, the pluralist perspective is incapable of realising that the state also represents
commercial interests and not just public interests (Kitay & Marchington 1996: 1267). The
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pluralist perspective may focus too much on worker interest, which can lead to the inefficien-
cies of collective bargaining processes.
3. Marxist Perspective:
This view of industrial relations is a byproduct of a theory of capitalist society and social
change. Marx argued that:
Weakness and contradiction inherent in the capitalist system would result in revolu-
tion and the ascendancy of socialism over capitalism.
Capitalism would foster monopolies.
Wages (costs to the capitalist) would be minimized to a subsistence level.
Capitalists and workers would compete/be in contention to win ground and establish
their constant win-lose struggles would be evident.
This perspective focuses on the fundamental division of interest between capital and labor,
and sees workplace relations against this background. It is concerned with the structure and
nature of society and assumes that the conflict in employment relationship is reflective of the
structure of the society. Conflict is therefore seen as inevitable and trade unions are a natural
response of workers to their exploitation by capital
Advantages of collective bargaining
It facilitates settlement of any disputes without any conflict
It ensures that there is peace between both the parties through dialogues
It facilitates participation from both the parties.
It ensures mutual trust and understanding between both the trade union and the man-
agement of the organisation.
It facilitates stabilized union membership in societies that have multiple unions.
It ensures healthy industrial relations.
It makes the employees feel more involved and wanted in the organisation
It ensures that individual stress and employee insecurities are discussed
It establishes the employee and the management rights in the organisation.
It develops a sense of responsibility among the employees
It ensures that the strength of workforce is increased. It in turn increases the overall
bargaining capacity of the workforce
It ensures that the morale and productivity of the employees is increased.
Effective collective bargaining ensures that the trade unions movement is efficient
It facilitates in securing a prompt and fair settlement of grievances.
It provides a flexible means for the adjustment of the wages and employment
conditions .
It facilitates the management to resolve issues at the bargaining level rather than
taking up complaints of the individual workers.
Industrial Relation

It ensures a sense of job security among the employees
It ensures that a channel of communication is open between the workers and the
management. This further increases worker participation in decision making.
It plays an essential role in settling and preventing industrial disputes
It ensures that a harmonious industrial climate is established. This helps the pace of
nations efforts towards economic and social development.
It encompasses fluidity and ample scope for a compromise, for a mutual give-and-
take before the final agreement is arrived at.

Disciplinary actions
Discipline is best defined as the observation of principles, rules or any other laid down proce-
dures, practices, written or otherwise in the organization by the employees or group of em-
ployees, to whom these apply, for smooth and effective functioning of the organization. Per
Dr. Spriegal, "discipline is the force that prompts an individual or a group to observe the
rules, regulations and procedures which are deemed to be necessary to the attainment of an
objective; it is force or fear of force which restrains an individual or a group from doing
things which are deemed to be destructive of group objectives. It is also the exercise of re-
straint or the enforcement of penalties for the violation of group regulations". Bremblett,
Earl R says that, "discipline in the broad sense means orderliness-the opposite of con-
fusion...". According to Calhoon. Richard. D, "discipline may be considered as a force that
prompts individuals or groups to observe the rules, regulations and procedures which are
deemed to be necessary for the effective functioning of an organization.
Webster's Dictionary gives the meanings of the word discipline as follows:"First, it is the
training that corrects moulds, strengthens or perfects. Second, it is the control gained by
enforcing obedience. The third meaning is punishment or chastisement".
In its most practical form employee misconduct does not mean strict and technical ob-
servance of rigid rules and regulations. It simply means working, co-operating, and behav-
ing in a normal and orderly way, as responsible adults.
The 5 key objectives of employee misconduct can be summarized as:
1. Effective attainment of organizational goals by having employees accepts rules, policies
and procedures of the organization.
2. To create an atmosphere of total and absolute respects for one and all at the workplace,
with customers and vendors/clients.
3. To develop among the employees a spirit of tolerance and a desire to comply with estab-
lished policies established for the benefit of all
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4. To increase the working efficiency and moral of the employees, so that their productivity
is stepped up, the cost of production brought down and the quality of production improved.
Discipline is therefore a measure to not only protect the interests of the organization
but also its employees. A good example is that of the recently implemented Sexual Harass-
ment Guideline provided for through a Supreme Court ruling wherein all organizations must
have a policy and a committee that will look into the gender related harassments at the work-
place. Today all organizations have clearly laid down guidelines that detail un-acceptable be-
haviour amongst male-female employees that can merit disciplinary action.
Since, disciplinary measures have serious implications for employees; they often are based
on the principles of being fair, just and acceptable to employees and, where applicable,
the union as well. It cannot be enforced or imposed on employees, as history has proved, it
never benefits anyone.
So one of the most significant transformations that has impacted the workplace in the
past few years is the reinstatement of discipline in a positive and employee-supported
environment. The way it is practiced in today's organizations is extremely well com-
municated and adopts a discretionary approach.
The most important principles to be observed in the maintenance of discipline have
been outlined by Yoder. Heneman, Turnball and Harold Stone are:
a) As far as possible, all the rules should be framed in co-operation and collaboration with
the representatives of employees. If the latter have a share in formulating them, will be much
more likely to observe them.
b) All the rules should be appraised at frequent and regular intervals to ensure that
they are, and continue to be, appropriate sensible and useful.
c) Rules should vary with changes in the working conditions of employees. Those framed for
office employees, for example, may very well be different from those that are formulated
for workers in an industrial concern.
d) Rules should be uniformly enforced if they are to be effective. They must be ap-
plied without exception and without bending them or ignoring them in favor of any one
worker.
e) Penalties for any violation of any rule should be clearly stated in advance. Employ-
ees have the right to know what to expect in the event of any infringement of a rule or regula-
tion. For this purpose, it is better to publish them in the employees' handbook.
f) A disciplinary policy should have as its objective the prevention of any infringement ra-
ther than the simple administration of penalties, however just: it should be preventive rather
than punitive.
g) Extreme caution should be exercised to ensure that infringements are not encouraged.
This should be done as a matter of policy.
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h) If violations of a particular rule are fairly frequent, the circumstances surrounding
them should be carefully investigated and studied in order to discover the cause or causes of
such violations.
i) Recidivism must be expected. Some offenders would almost certainly violate rules more
often than others. These cases should be carefully considered so that their causes may be dis-
covered.
j) Definite and precise provisions for appeal and review of all disciplinary actions should be
expressly mentioned in the employees' handbook for collective agreements.
Basic Guidelines of a Disciplinary Policy
Location of responsibility
Proper formulation and communication of rules
Rules and regulations should be reasonable
Equal treatment
Disciplinary action should be taken in private
Importance of promptness in taking disciplinary action
Innocence is presumed
Get the facts
Action should be taken in non-threatening atmosphere
After a disciplinary action has been taken by the manager, he should treat his team
member in a normal manner
Negative motivation should be handled in a positive manner
Types of Disciplinary Problems
Discipline is essential for organisations to regulate employee behaviour and to channel em-
ployee efforts in realizing organisational goals. Management deals with all acts of indisci-
pline or misconduct according to the organisational rules and policies and the nature of the
indiscipline.
Minor acts of indiscipline include absenteeism, late coming, negligence at work, failure to be
present when required, inefficiency and acts of omission. Management corrects minor indis-
cipline with written or oral warnings.
Major acts of indiscipline have to be dealt seriously and they include theft, fraud, breach of
contract, accepting or giving bribes or gifts, drunkenness, violent or disorderly behaviour,
insubordination, sleeping while on duty, disclosing confidential information, sabotage or
misuse of company equipment, inciting other employees to act against the interests of the
company, absence without leave for a period of more than a month, and committing any of-
fence punishable by the law of the land.
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Let us now analyze these disciplinary problems that managers have to deal with in their line
of work. The main types of disciplinary problems are explained as follows:
Excessive Absenteeism: Absenteeism occurs when an employee does not report to
work due to time off, illness or any other reason. Excessive absenteeism results in loss
of productivity. Absenteeism is corrected by employing progressive discipline. Em-
ployees need to be aware of the absenteeism policy of the company. They also have to
be aware of the fact that the company monitors employee absence. Employees need to
take responsibility for their absenteeism and substantiate their absenteeism with valid
records like medical certificates in case of health related absences.

Poor Timekeeping: Reporting late to work, leaving early, indulging in extended tea
or lunch breaks, doing personal work during office hours, and other time-wasting
practices reduce the time spent doing productive work. Poor timekeeping disrupts
business and creates a bad atmosphere. These habits have to be curbed and employees
need to know that it is mandatory for them to spend certain fixed hours at their work-
stations or premises doing productive tasks.

Improper Personal Appearance: Dress codes are enforced in organisations to pro-
ject a professional appearance or for safety reasons. Employees are to be made aware
of the consequences of their inappropriate attire. For example, synthetic clothes can
catch fire easily. Company policy also needs to describe situations where the employ-
ee has to dress formally.

Substance Abuse: Alcohol and drug abuse can lower employee concentration and
decrease performance. Substance abuse also results in absenteeism, accidents at
workplace and inappropriate behaviour. Organisational policies on substance abuse
need to be communicated with the staff. Employees who are addicted to alcohol or
drugs have to be counseled or helped in other ways like therapy and detoxification
programmes.

Defective Performance: Defective performance results when a task is not completed
on time, or is of sub-standard quality, or the task is not done according to require-
ments. An employee may perform poorly either due to lack of interest or due to lack
of capability. Managers need to assess poor performances individually, determine the
constraints and take corrective actions.

Poor Attitudes: Sleeping on the job, being careless while working, fighting with co-
workers, gambling in the work place, insulting supervisors, being rude to customers
and colleagues, and such practices reflect poor attitudes. These actions can adversely
affect other employees. Thus, these attitudes have to be corrected to maintain a good
and productive work atmosphere.

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Violation of Health and Safety Rules: Smoking in unauthorized places, failure to
use safety devices, not following safety rules regarding fire safety, dealing with haz-
ardous chemicals, electrical and mechanical equipment and radiation protection are
serious violations and have to be dealt with immediately and effectively.

Insubordination: Insubordination can take the form of refusing to perform a legiti-
mate task that has been assigned, ignoring the instructions of managers, criticizing or
challenging the orders of a superior, using abusive language or making disrespectful
gestures like rolling the eyes. Insubordination can affect the morale of the entire team.
Organisations need to spell out their policies on insubordination. Managers have to be
equipped with proper procedures to deal with insubordination.

Workplace Violence: Companies need to have training programmes to its security
personnel so that they recognize warning signs and know how to deal with violent be-
havior of employees. Employee handbooks need to clearly state that violent behavior
will not be tolerated and will result in termination.

Harassment: This behavior causes discomfort to the co-workers and reduces em-
ployee morale. Making crude and sexual remarks or forcing another co-worker to do
certain non-legitimate tasks constitutes harassment. For example, a manager may re-
peatedly ask an unwilling subordinate for a date. Companies need to have in place a
clear sexual harassment policy and employees have to be trained on what constitutes
harassment.

Theft and Sabotage: Sometimes employees steal money, equipment, supplies or con-
fidential information belonging to the company. Some aggressive employees may
damage or destroy organizational equipment and facilities. Some employees may fal-
sify records and accept bribes and indulge in actions that are detrimental to the organ-
isation. Organizations have to strictly deal with such problems.

Ways to minimize Disciplinary Problems
Identify the problem

Problem employees comprise a very small portion of the workforce yet manage to consume a
disproportionate amount of HR and managements time and attention. Very few employees
set out to be a problem for their employers and those that do usually reveal themselves quick-
ly. They tend to be disgruntled, suspicious, and apathetic employees and, generally, they have
chronic attendance issues, performance issues, and disciplinary issues. And, thanks to the
proliferation of employment and labor law information available via the Internet, they know
just enough to effectively work the system to their advantage particularly when it comes to
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state or federally mandated benefits such as workers compensation and the Family and Med-
ical Leave Act (FMLA).

Manage the risk

Employee lawsuits have reached an all-time high and are still rising. Managing problem em-
ployees in the face of our increasingly litigious society is one of human resources most seri-
ous challenges. Avoiding litigation is a powerful motivator but retaining an underperformer
for fear of litigation isnt the answer. More often than not, your best bet is to tackle the prob-
lem of problem employees, head on. The following four steps will help you face the chal-
lenge.
Establish a strong attendance policy with levels of disciplinary measures that address increas-
ing absenteeism and tardiness appropriately.
Implement a performance management and review system that rewards excellence and uses
strategies to improve employee performance.
Set up a three-step disciplinary process that includes formal notices such as: verbal warning,
first report in writing, and second/final report in writing.
Train your supervisors to deal effectively with problems that do arise and not wait until it gets
out of hand.
Additionally, effective hiring and interviewing techniques and valid job descriptions provide
the foundation for preventing problem employees from infecting your workplace. They help
the management team know what to look for in new employees and provide applicants, as
well as current employees, with information regarding the requirements of the position.

Be proactive

One of the best ways to neutralize problem employees is to take an objective look at your
employee handbook, policies, and practices. Amend any policies that are outdated, unfair, or
open the door to litigation. While youre at it, ask yourself these questions:
Do we comply with all legally mandated employee benefits and requirements?
Do we clearly communicate expectations for employee behavior and job perfor-
mance?
Do we provide a safe and secure work environment?
Are we respectful and considerate of our employees?
Do we listen to our employees concerns and address them in a responsible and effec-
tive manner?
Do we have a formal complaint process?
Do we conduct thorough investigations into issues as they arise?
Are our pay practices for each position in line with the position, the community, and
our industry?
Do we reward excellence?

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Document, document, document

When these strategies fail and firing is the only option, the accuracy of your documentation
can mean the difference between time in the courtroom and a good, clean break from a poor
employee. Especially important are your performance evaluations and any disciplinary mem-
os. If youre in doubt about your documentation, conduct an audit of your personnel files to
make sure only appropriate information is included.

Disciplinary Action Penalties
There are varying penalties for first, second, and third offences of the same rule. Following
are the commonly practiced actions in business Organization:
1. Oral reprimand
2. Written reprimand
3. Loss of privileges
4. Fines
5. Lay off
6. Demotion
7. Discharge

Procedure for Disciplinary Action
Though there is no specific procedure to be followed. Different organizations use a variety of
formal and informal methods to resolve these matters. The following steps are recommended
a) An accurate statement of the disciplinary problem.
b) Collection of data or facts supporting the report of the offence.
c) Review policy and past similar incidents.
d) Identify corrective action to implement; take legal counsel to ensure that the local laws of
the land are not in conflict
e) Apply the action
f) Follow-up on the disciplinary action.

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Dismissal and Discharge of an Employee
The following steps are followed for dismissal of an employee:
a) Charge Sheet is Framed and Issued
b) Explanation Receipt
c) Issue of Notice of Enquiry
d) Conducting the Enquiry
e) Sharing Findings
In terminating the employment of an employee the following conditions must necessari-
ly be complied with for misconduct.
a) The misconduct of the employee is of such a nature as to indicate that his discharge or
dismissal would be an appropriate punishment and that this kind of punishment has
been provided in the companies policies or per statute
b) A fair and open enquiry must be held by the employer into the misconduct which
an employee has been charged with.
c) The enquiry should be held in such a manner as to ensure that it would be fair and prop-
er and in conformity with the principles of natural justice. The employee must be given
an adequate opportunity to defend himself and to present witness in support of his contention
or case.
d) The person holding the enquiry should not be someone who's known to be biased has
personal/vested interest or was in anyway associated with the misconduct.
e) The order must be sensitively communicated to the employee against who it has been
passed.
Grievance Handling
Grievance may be defined as a complaint or resentment against any unjust or unfair act.
Grievance is any issue associated with an organisation or its management like employee dis-
crimination or harassment by managers. Grievance may also be any alleged violation of em-
ployee contracts or settlements or violation of any laws, or on race, age or sex discrimination.
The International Labor Organisation (ILO) defines a grievance as a complaint of one or
more workers with respect to wages and allowances, conditions of work and interpretation of
service, condition covering such areas as overtime, leave, transfer, promotion, seniority, job
assignment and termination of service.

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Reasons for Grievances
Employees often feel that they earn less than what they deserve.
Working Environment: Issues related to the employees work environment like poor
working conditions, defective equipment and machinery, tools, materials.
Supervision: Issues like behaviour of the boss towards the employee, perceived ideas
of partiality, discrimination, preferential treatment, prejudice.
Work Group: Issues with co-workers like stressed peer relations or inaptness with
peers.
Work Organisation: Issues related to the organisation like rigid and unfair rules and
lack of recognition.
Needs for Grievance Redressed
Organisations have to create a favorable work environment for employees where grievances
are handled promptly and appropriately. Improper or lack of proper grievance handling leads
to the following:
Employees losing interest in work and consequently lacking morale
Lack of commitment from the employees
Poor quality of work
Lowered productivity
Increase in resource wastage leading to increasing company costs
Pilots of Jet Airways went on a nation-wide strike resulting in air-travelers throughout the
country suffering as most of the flights had to be cancelled. One of the major reasons for the
strike was the ineffective grievance redressed system employed in Jet Airways. Pilots faced
problems ranging from pay and allowances to hectic work schedules. Since the issues of the
pilots were never resolved, the problem escalated and led to the nation-wide strike. This led
to a loss of millions of rupees for Jet Airways.
From the above example it is evident that effective grievance handling is an essential in
maintaining good employee relations and in keeping with the goals of an organisation. Or-
ganisations may consider the grievances procedures as mentioned below:
It should
Be in writing
Be made known to all
Ensure a speedy and fairly resolution of the problem
The aggrieved employee approaches the supervisor to find resolution. If the organisation is
unionized, the employee also addresses the union steward. If the issue is not resolved at this
stage, the matter is forwarded to higher authorities in the organisation and the union. To un-
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derstand better how to handle grievances, let us look at the various types of grievances that
need to be addressed.

Types of Grievance
Displeasure or disappointment is not a grievance. They initially find expression in the form of
a complaint. When a complaint remains unattended to and the employee concerned feels a
sense of lack of justice and fair play, the dissatisfaction grows and assumes the status of
grievance.
The grievance procedure can be categorized are formal grievance and informal grievance
procedure. Formal grievance procedure follows a formal method involving application forms.
Informal grievance procedure, on the other hand, is more informal and simpler in dealing
with resolving grievances.
Formal Grievance Redressed
There are three formal stages to redress any grievance. Each stage has a form which is num-
bered according to the stage it belongs. First, it has to be noted that the grievances have to fall
under one of the following categories to be considered as one:
Amenities
Compensation
Conditions of work
Continuity of service
Disciplinary action
ARBITRATION
TOP MANAGEMENT
MIDDLE MANAGEMENT
SUPERVISOR
UNION STEWARD
COMPANY UNION GRIEVANCE
COMMITTEE
TOP UNION LEADERSHIP
AGGRIEVED EMPLOYEE
Grievance Handling Procedure
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Stage I of Grievance Redressed
An employee who has a grievance meets the shift-in-charge and discusses it. If necessary, the
employee obtains a copy of grievance form 1. It is done within a week of occurrence of the
aggrieving incident or when the employee became aware of the situation. In case of promo-
tion, a time limit of six weeks from the date of the promotion is permitted.
The employee fills up the particulars and hands it over to the shift-in-charge and obtains an
acknowledgement receipt in return. The shift-in-charge makes the necessary enquiries and
returns the form to the employee with remarks filled in the form within two working days
from the date of receipt of the form. In cases where reference to higher authorities or to an-
other department is necessary, more time is provided.
Stage II of Grievance Redressed
If the matter is not resolved at Stage 1, the employee obtains grievance form 2 and submits it
to the next senior manager. The senior manager arranges a meeting within three working
days. The department head discusses the issue with the concerned supervisor and the employ-
ee and returns the grievance form to the employee with remarks. A unionized member may
assist the employee at this stage of grievance redressed.
Stage III of Grievance Redressed
If the employee is not satisfied with the reply of the departmental head, the employee appeals
to the Chairman of his Unit Grievance Redress Committee within seven working days of the
receipt of reply at Stage II. The employee obtains a copy of grievance form 3 from the shift-
in-charge.
The recommendations of the Unit Grievance Redress Committee are considered unani-
mous and binding on the employee, if no objections are raised by either the management or
the union. If objections are raised, the matter is sent for further consideration to the resident
director who discusses it over with the president or the deputy president before arriving at a
definite conclusion.
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Fig: Grievance Handling Procedure within an Organization
Informal Grievance Redressed
In the informal method, the aggrieved employee directly approaches the shift-in-charge or
section head (in case of a major grievance). They engage in a direct consultation and resolve
the grievance amicably in stage I itself. This way, the employee saves a lot of time and also
avoids going through the psychological tension and pressure that comes with a long and for-
mal procedure.
Most employees agree that the informal method of resolving grievances directly approaching
the supervisor is a much better and less complicated method to redress grievances. Most em-
ployees feel that the formal system was too tiresome and time consuming.
Types of Grievance Policy
Grievance procedure is a communication between an employee and the management intended
to resolve a grievance. Grievance procedures are different in different organisations. It de-
pends on the policy adopted in the organisation. In the previous section, you learned the two
different policies followed by organisations:
Open Door Policy
In this policy, the distressed employee is free to meet the top executives of the administra-
tion and get his grievances redressed. This policy normally works well only in small firms
where the management is more transparent and approachable to all employees.
In larger organisations, top management executives are usually very busy and have no time to
spare on individual employee grievances. In addition, it is believed that open door policy is
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suitable for executives as operation employees may be hesitant to approach the top manage-
ment.
Step Ladder Policy
In this policy, the distressed employee has to follow a step by step method to get the griev-
ance redressed. In this process, whenever an employee has a grievance, the problem is pre-
sented to the employees immediate supervisor. If the employee is not happy with resolution
stated by the superior, then the grievance is discussed with the departmental head. The crisis
is generally discussed with a joint grievance committee.

Conflict Management- unilateral, joint and third party decisions
Conflict management refers to the manner in which mangers handle grievances and
disputes. According to Gennard and Judge, Employee Relations aims to resolve dif-
ference between the various interest groups regardless of whether these groups com-
prise different categories of managers or employees.
Workplace conflicts arise due to differences in perceptions, culture, employee biases, gaps in
communication, and so on. A win-win approach is used to resolve conflicts. Mediation and
counseling are adopted for resolving conflicts rather than using formal discipline measures.
Managers are trained both to avoid and to resolve disputes. External mediators can also be
called in if necessary. Large organizations like public sector companies prefer to use internal
mediators to resolve conflicts. Unresolved work place conflicts can have a negative im-
pact on the organisation. For example, if the production manager and the quality control
manager have differences about implementation of quality procedures, then the work of both
the divisions is affected.
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Some causes of workplace conflicts

Conflict management skills help employees get along with the other employees, their manag-
ers and the customers. These skills help managers identify conflicts, respond to them, get
better co-operation from the employees, and avoid conflicts from spreading to other
parts of the organisation.
The following skill set help managers deal with conflicts:
Conceptual skills: Managers need to first understand the causes of conflicts and the
different strategies and tactics they can use to resolve the conflict.
Communication skills: Managers require good listening skills and the ability
to ask the right questions to ascertain the cause of the conflict.
They must avoid harmful statements and remain rational.
Negotiation skills: Managers need to know the policy of give and take required to
resolve conflicts.
Conflicts are resolved by adopting the following strategies:
Counseling: Only a few organizations have professional counselors on their staff.
Many organizations train their managers to counsel their subordinates. Often, just
by employing nondirective counseling (listening and understanding), managers can
help frustrated employees.
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Discussions and Debates: Task conflicts are resolved by discussing or debating the
options. Consensual decision is made after considering every option.
Compromise: This method tries to resolve conflicts by arriving at a solution
which satisfies at least part of the requirement of each party involved.
Using third parties: As serious conflicts have a negative impact on organiza-
tions, third parties with specialized skills are used as arbitrators, mediators or om-
budsmen to resolve them

Brief definitions for each phase of the continuum are listed below.
Avoidance: A deliberate approach to dealing with conflict, which involves not ad-
dressing the contentious issue. Avoidance can be a temporary measure or a permanent
means of disposing of a matter.
Negotiation: Back-and-forth communication designed to reach an agreement between
two or more parties with some interests that are shared and others that may conflict or
simply be different. Negotiation is an intrinsic part of any kind of joint action, prob-
lem solving, and dispute resolution, and may be verbal, nonverbal, explicit, implicit,
direct, or through intermediaries.
Mediation: A negotiation between two or more parties facilitated by an agreed-upon
third party. Skilled third-party mediators can lower the emotional temperature in a ne-
gotiation, foster more effective communication, help uncover less obvious interests,
offer face-saving possibilities for movement, and suggest solutions that the parties
might have overlooked.
Arbitration: Arbitration is a method of resolving a dispute in which the disputants
present their case to an impartial third party, who then makes a decision for them
which resolves the conflict. This decision is usually binding. Arbitration differs from
mediation in which third party simply helps the disputants develop a solution on their
own.
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Litigation: A case, controversy, or lawsuit. A contest authorized by law, in a court of
justice, for the purpose of enforcing a right. Participants (plaintiffs and defendants) in
lawsuits are called litigants.
Self Help: Unilateral action by one of the parties designed to affect change.
Industrial Disputes Act 1947
Industrial Dispute is defined as any dispute or difference between employers and employers,
or employers and workmen, or workmen and workmen, which is connected with the em-
ployment or non-employment, or the terms of employment, or with the conditions of labor of
any person.
The main aim of this act is to settle industrial disputes and maintain peace in the indus-
trial sector. The following provisions are made for settling disputes under this act:
Works Committee: If the establishment has employed more than 100 workers in the
preceding 12 months, then a works committee consisting of the representatives of the
employers and the employees is formed. The number of employee representatives will
not be lesser than that of the employers.
Conciliation Officers: The duty of the conciliation officer is to settle disputes
amicably and fairly. The function of the conciliation officer is mostly administra-
tive.
Board of Conciliation: This is constituted to settle complex and important disputes.
It is usually formed if the works committee is unable to settle the disputes. It has
equal representations of the employer and the employees.
Arbitration: Any dispute can be referred to arbitration with the consent of the par-
ties involved. The consent has to be obtained before the dispute is referred to a
tribunal or a court. The Board of Arbitration needs to have equal representa-
tions of the parties involved and if the parties decide so, one person can be elected
to be the arbitrator to settle the dispute.
Labor court
Industrial Tribunal
National Tribunal
Dismissal redundancy and outplacement
What is Dismissal?
Dismissal means when a worker is told to leave the job because of his behavior is unsatisfac-
tory or he has repeatedly failed to carry out his duties.
A dismissal occurs when the employer terminates the employment contract. The employer
should ensure they have a valid reason for dismissing the employee and take steps to ensure
procedural fairness. This will minimize the risk of the employee bringing a successful unfair
dismissal claim against the employer. A claim can be made by an employee that they have
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been harshly, oppressively or unfairly dismissed from employment, and this can only be de-
termined on a case by case basis.
What is meant by Redundancy?
Redundancy happens when a person is told to leave the job because his skills are of no more
use to the organisation. This may happen due to many reason, for example,
A merger between two firms results in surplus job.
A business is losing sales and wants to cut the production level or cost and may lay
off employees
The product is taken out of production altogether
Maybe new machinery is introduced and it requires different skills and qualifications
to operate it.
It is also known as retrenchment.
Outplacement
The process of a company assisting recently terminated employees with searching for other
employment opportunities. Some of these companies work with particular outplacement
agencies that locate news jobs for the laid off employees. Outplacement services are typically
only provided for a certain amount of time and are not required to be offered by the company.
Outplacements services are paid for by the downsizing company.

The Positive Effects of Outplacement Services and Your Employment Branding Efforts
Outplacement is often looked at as the simple act of helping your laid-off employees find a
new job. However, outplacement services have the capability to be so much more than a sim-
ple service, and should instead be considered part of your overall employment brand.
The downturn in the economy has forced employers who truly care about their workers to
decide whether or not they should reduce the size of their workforce, who they should keep
on board and who they should let go. Those are not easy decisions for any employer.
Outplacement services have been talked about on a more regular basis due to the shift in the
economy the last couple of years. Outplacement services have proven to help soften the blow
to those employees affected by layoffs and have been a crucial act for many companies.
Eventually, however, the economy will recover. Companies will be in a position to make new
hires or rehire previously laid-off workers. Does that mean employers should stop using out-
placement services for their workers?
The obvious answer to that question is no. While it may seem like you only need to use an
outplacement firm when times are rough and youre in danger of having to make unwanted
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layoffs, any company will easily be able to see how using outplacement services, regardless
of the economy, can be a great benefit. What I mean by this is considering using outplace-
ment services for employees within your organization who just are not a good fit. I recently
had an opportunity to speak with an HR Professional and current President of the Staffing
Management Association of Phoenix. Julie Armstrong. Julies previous organization utilized
outplacement services for that reason. I asked Julie why they chose to provide outplacement
services.
We selected outplacement services as a way to assist employees that may not have been a
match in our environment but had skills and abilities for a successful career. We as a corpo-
ration did not want to leave people with no options and nowhere to turn, we wanted to do the
right thing for transitioning employees. Through the outplacement process we actually re-
tained 3 employees in other areas/departments of the company where their skill set was
found to be more valuable and a better fit. The overall process enabled us to transition em-
ployees and ensures they were able to retain new employment opportunities. In most cases
the transitioning employees found better opportunities that aligned with their overall career
goals. We were able to learn from the outplacement process, improving our recruiting prac-
tices and retention tools and at the end of the day it helped with our overall image.
Just as every successful company regards its interviewing process, hiring process and culture
as part of its employment brand, outplacement can easily fit into that overall picture. For in-
stance, just as companies dont only use an HR team when interviewing and hiring, you
shouldnt only use an outplacement firm when layoffs are inevitable.
There are many instances throughout a normal year when having a good relationship with an
outplacement company can be extremely beneficial. Fortunately, many companies have the
ability to more easily intertwine outplacement services with their employment brand.
Current Situation of Industrial Relation in Nepal
The situation of trade unions since June 2002
After the declaration of the state of emergency in November 2001, the law and order
situation of the country sharply deteriorated, causing the shutdown of industries and
business and, consequently, accelerating the process of layoffs of workers. This process has
badly affected enterprise level trade unions. Trade Union Acts require compulsory renewal of
all the enterprise level registered trade unions in every two years. Those duly renewed and
registered ones are called "active unions." Based on the data provided by
10 Labor Departments of the country until June 2002, the analysis below explains the situa-
tion of trade unions in Nepal. The year 1999 can be regarded as the most favorable period for
union registration. The year 2000 marks a declining trend owing to the growth of
Maoist attacks on industries and the closing of many ailing factories by the government.
This brings the union registration trend back to 1993, pointing a disturbing trend in
Nepal's labor market. Owing to a lack of a systematic record-keeping system about the re-
Industrial Relation

newal and registration system in the Labor Department, it is very difficult to present an accu-
rate picture. Official records show that there were 1,491 enterprise level unions until
June2002. Out of those the registration of 731 unions has been abrogated. All the federations
are badly affected in terms of cancellation of the registration of unions.
The Labor Court has announced the cancellation of registration of five trade unions,
which were registered with fake names and signatures. They are:
Nepal National Independent Shopkeepers Workers' Union
Nepal National Independent Grill Workers' Union
Nepal Electric, Electronics Technicians' Union
Nepal Independent Trekking Workers' Association
Nepal Independent Construction Workers' Organization
General Focus of Trade Union Activities
Trade Union education/ training/ workshop/exposure
Networking/solidarity building
Democratization of Workplace
Policy Intervention at various levels
Occupational Health and Safety measures
Social security
Elimination of child labor/ bonded labor/ forced labor and caste discrimination over
Dalit community
Campaign and education on gender equality at workplace
Collective bargaining agreements
Lobbying and collective action

Promulgation and Implementation of Labor Laws in Nepal
After the promulgation of the Constitution of the Kingdom of Nepal in 1990, many
progressive acts are formulated to promote labor welfare, such as
Labor Act 1992 (amended in 1998),
Child Labor Act 1992,
Transportation and Vehicles Management Act 1993,
Tea Plantation Workers' Regulation, 1993
Foreign Employment Act 1985 (revised in 1993)
Trade Union Act 1993 (amended in 1999),
Working Journalist Act 1994,
Labor Court Regulation Act 1995,
Establishment of a Labor Court 1996,
Formation of a Central Labor Advisory Board 1998
Industrial Relation

Child Labor (Prohibition and Regulation) Act 1999
Revision of Bonus Act, 1973 in 2000, and
Creation of National Welfare Fund 2000

Some Researcher has concluded:
Industrial relation situation in Nepalese industries has undergone a lot of change owing to the
internal and external factors within and outside the industries. In the initial phase, the under-
standing of industrial relation was relatively low; but, the latter phase saw a gradual im-
provement in the industrial relations scenario. However, the current political instability in the
nation has driven the industrial relation to a state of uncertainty.
The finding of the study reveals that the number of the industries under private ownership
having indigenous capital investment is significantly higher than the number of indus-
tries with foreign investment.
The majority of the industries in the study employ less than 200 workers; while there
are very few industries that employ more than 200 workers. This shows the prevalence
and dominance of medium scale industries which relatively have limited accessibility to mar-
ket, productivity and technological advantage.
The concept of collective bargaining has not been able to institutionalize itself. This is
evident from the fact that there are only around 17 percent of the industries, which practice
collective bargaining. On the other hand, there are also many of the industries which have
initiated this process recently.
Recruitment of workers through personal contact and connection is the most common mode
of recruitment process in majority of the industries. Recruitment through public advertise-
ment is relatively low. The practice of recruiting workers through personal contact is very
common in most of the industries irrespective of their sizes. However, public and gov-
ernment owned industries are found to have followed the recruitment process through adver-
tisement in the newspaper.
The survey report also shows that more than half of the workers employed in the industries
surveyed have the required skills to perform their work; while less than half of the workers do
not possess the required skills. The mode of hiring workers through personal contact may be
one of the primary reasons for the unavailability of the skilled workforce. Also the lack of
training institutes and facilities for providing skill-based trainings as per the need of
industries is also responsible for this. With the growing competition in the national and the
international market, the industries are under pressure to increase their capacities. Despite
majority of the industries are willing to expand their existing capacity, the transitional
socio-political situation and unstable security have hampered this.
New recruitment was not reported in most of the industries during the period of the survey.
This has in fact aggravated the existing unemployment scenario. Economic recession may be
Industrial Relation

one of the primary reasons for less recruitment and retrenchment of the workers in some of
the industries. The industries are also found to have given preference to merit, skills and ex-
perience and not other factors like caste, gender etc. Ability to work efficiently is given more
importance than preferential treatment to the marginalized group in the recruitment process.
Around 44 percent of the workers in the industries surveyed are employed as perma-
nent workers while others are employed in different modes of employment - like contract,
piece rate and daily wages.
Majority of the industries have complied with the provisions of labor law concerning leave
facilities, provident fund and Dashain bonus. Industries are also found to have provided dif-
ferent kinds of benefits besides the regular salary.
Majority of the dismissal cases in the companies have occurred due to the misconduct of the
workers. Over all labor-management relationship at the enterprise level is found to be satis-
factory.
The survey report also shows that the industries surveyed have experienced almost all
industrial actions like strike, slow down, refusal to work overtime, interruption in
work, gherao/picketing, lockout.
The trend of unionization and formation of trade unions in the industries is gradually
increasing. The existence of multiple trade unions in the industries is a common feature in the
industrial sector of Nepal.
Emerging concepts in industrial relations
What are Industrial Relations?
The concept of Industrial relations has been defined using various terminologies, but in the
strictest sense, it is essentially the relationship between management and labor. The full con-
cept of industrial relations is the organization and practice of multi-pronged relationships be-
tween labor and management, unions and labor, unions and management in an industry. Dale
Yoder defines it as a "whole field of relationships that exists because of the necessary collab-
oration of men and women in the employment process of an industry."
Role of Industrial Relations:
Industrial relations are associated with labor, management, labor unions, and the state. The
scene of industrial relations has grown tremendously, and cannot be represented merely by
relations between management and labor. It has become a comprehensive and total concept
embracing the sum total of relationship that exists at various levels of the organizational
structure. Additionally, it connotes relationships between workers themselves within the labor
class, and relations among the management within the managerial class. In an open sense,
industrial relations denote all types of relations within a group and outside a group - both
formal and informal relations.
Industrial Relation

Objectives of Industrial Relations:
Protect management and labor interests by securing mutual relations between the two
groups.
Avoid disputes between management and labor, and create a harmonizing relation-
ship between the groups so productivity can be increased.
Ensure full employment and reduce absenteeism, hence, increasing productivity and
profits.
Emphasize labor employer partnership to establish and maintain industrial democra-
cy. This is done to ensure the sharing of profit gains, and personal developmental of
all employees.
Provide better wages and living conditions to labor, so misunderstandings between
management and labor are reduced to a minimum.
To bring about government control over plants where losses are running high, or
where products are produced in the public interest.
To bridge a gap between various public factions and reshape the complex social rela-
tionships emerging out of technological advances by controlling and disciplining
members, and adjusting their conflicts of interests.
Definition and Evolution of Industrial Relations
What are Industrial Relations?
Industrial relations define relationships between employers and employees toward each other
in terms of supervision, direction, planning and coordination of organizational activities, with
minimal human effort and functions; all this done with an enthusiastic spirit taking into con-
sideration the safety of all employees. Industrial relations may also be defined as relations
between employees and management.
Evolution of Industrial Relations:
The evolution of industrial relations in India began a long time ago. The caste system greatly
influenced the ancient industries and their development. Due to successive foreign invasions
in India, the living conditions of slave and artesian couldn't be differentiated. Furthermore,
under the autocratic regime of Muslim rulers, the conditions of employees worsened. Wages
were not guaranteed, the living conditions of workers were harsh, and there was no proper
management. The coming of the British didn't improve the working conditions. After some
time, however, most Indian industries were modeled after the British system of business, and
this led to growth in various sectors.
Industrial Relations under British Rule:
During British rule, India was expected to be a colonial market for British goods up until a
cotton mill was established in Mumbai in 1853 and a jute mill was established in Kolkatta in
Industrial Relation

1955. The working conditions of workers, however, were still very harsh with low pay, and
this gave rise to various disputes involving the management and employees. On the other
hand, Tata Iron and Steel industry was also established in Jamshedpur in 1911. While there
was great demand of iron and steel before and during the First World War, the working con-
ditions of workers hadn't improved. Hence, the Factories Act of 1881 was established, and it
granted workers certain rights.
Industrial Relations in First World War:
The First World War was an opportunity in disguise for local factories in India. Prices of vir-
tually all products went up and profits soared, however, wages of lower employees were still
the same. There were various strikes and disputes between management and employees. Dur-
ing this time, the Workmen's Compensation Act (1923), the Trade Union Act (1926), and the
Trade Disputes Act (1917) were established. While the wages of employees remained the
same, they were given a certain share of profits made by their hiring industry. Strikes, how-
ever, were sometimes prohibited under the Emergency Rules. The years following World
War II involved the most workers' upheaval, and saw the establishment of Industrial Em-
ployment Act (1946) and Industrial Disputes Act (1947).
Post-Independence Industrial Relations:
The post-independence era saw a developing relation between industry and labor. A confer-
ence called the Industrial Truce Resolution took place in 1947, and foresaw the establishment
of the Minimum Wages Act, Factories Act, and Employees State Insurance Act in 1948. This
ensured peace between labor and industry. While industrial relations in India have evolved a
long way, some features of the early system still exist today. Modern industrial relations are
dynamic, and may integrate industrial policies of American and British businesses.
Role of State Intervention:
State intervention in business is necessary in a developing country because of the following
reasons:
1. Developing countries lack powerful labor unions, enabling organizations to exploit work-
ers and even ignore their demands. This is why governments have to step in and play a role in
delineating certain parameters of industrial relations.
2. When the conditions of laborers worsen, and/or disputations arise, the government cannot
be a silent bystander. It has to intervene in the situation and try to satisfy both sides by being
a preceptor or an intermediary, and establish peace.
3. The federal nature of the constitution has made it imperative for the state to intervene in
matters of labor to ensure a smooth and continuous operation. The state and the central gov-
ernments have established certain laws that have to be followed by businesses. These are: the
Plantations Act of 1952, the Minimum Wages Act of 1948, the Industrial Disputes Act, the
Industrial Relation

Payment of Bonus Act of 1965, the Contract Labor Act of 1970, the Payment of Gratuity Act
of 1972, the Bonded Labor System Act and the Remuneration Act of 1978.
4. The Directive Principals of the Constitution enjoin upon the state to establish a welfare
state and to look after the interests of the weaker sections of the society, for example, the
physically disabled.
Conceptual Model for understanding Industrial Relations

Industrial Relation

Industrial Dispute
Causes of Industrial Dispute:
Disputes may result from various causes: psychological, potential, and economic. The most
common cause of strikes has been economic reasons; other reasons have been influenced by
nationalist, communist, and commercial ends. The Labor Bureau of Simla has observed caus-
es such as: wages and allowances, bonus, personnel, vacation and work timings, violence
(added in 1971), etc. An analysis has revealed the following facts:
During 1921-1931:
15.2% of demands were related to wages.
4.6% of demands were related to bonus.
4.4% of demands were related to vacation days and work-timings.
18.5% of demands were related to others.
During 1939-1947:
15.6% of demands were related to personal matters.
5% of demands were related to vacation and work-timings.
During 1948-1957:
30.9% of demands were related to personal matters.
7.2% of demands were related to vacation days and work-timings.
What is Industrial Peace?
Industrial peace has, at a certain extent, worsened in the past few years. The social gap be-
tween management and labor has increased, resulting in increased disparities and frustration.
Industrial peace has to be developed with mutually understanding the issues of labor, and it is
imperative to have proper communication between management and labor union. Three ways
to establish industrial have been suggested by the Royal Commission on Labor:
Industrial Relation

Appoint a labor officer who ensures labor welfare and serves as a representative to
management.
Constitution of Works Communities for different industries, and
Development of stable and responsible trade unions.
Types of Industrial Strikes
Types of Strikes:
Hunger strike: Workers gather near the factory owner's residence and refuse to eat.
Pen down: Workers come to work on regular hours but refuse to do any work.
Rule strike: This type of strike is done by strictly abiding by company rules to the extreme,
and there is no space for flexibility.
Support strike: Supporting workers from another factory also go on strike to support their
fellow workers from a related factory.
Gate strike: Workers gather near the company gates and launch a strike.
Production strike: Workers produce more industrial items but now in harmony.
Go-slow: Workers work their usual hours but their productivity is greatly reduced. They de-
liberately work slower than usual, causing heavy losses and production delays.
Picketing and boycott: This is the act of surrounding and picketing the owner's residence,
and not allowing anyone to enter the premises. Violent picketing is illegal. Boycott is disturb-
ing the normal functioning of the business.
Sympathetic strike: This is an illegal strike done by workmen, who are fully satisfied by
their employment, but support the cause of their fellow unsatisfied workmen etc.

Industrial Relation

Summary
Collective bargaining is a discussion process between employers and employees to attain cer-
tain conditions. It allows taking joint decisions. This ensures a democratic way of work in
the organisation. It allows representatives of both the management as well as the employees
participate in the affairs of the organisation. It ensures building stable relationships among the
parties involved. It facilitates in achieving discipline in the organisation. It allows understand-
ing between two parties to arrive at a common approach. Collective Bargaining is a method
of negotiation in which employees use authorized union representatives to assist them.
Collective bargaining process starts with choosing a representative of the employees followed
by submitting a proposal to the management of the organisation and selecting the negotiating
team. The negotiator of the team recognizes the eight phases of negotiation, namely, prepar-
ing, arguing, signaling, proposing, packaging, bargaining, closing and agreeing.
Negotiation is a process by which involved parties resolve matters of dispute by holding dis-
cussions and coming to an agreement which can be mutually agreed by them. Many different
negotiation styles can be used when different parties sit down for negotiations. The common
approaches adopted are traditional, partnership, advocacy and creative approach. There are
many variations of each style.
Grievance is any discontent or dissatisfaction or violation of employee contracts or settle-
ments or violation of any laws, or on race, age or sex discrimination. Reasons for grievances
include unsatisfactory wages, poor work conditions or issues with the supervisor or manage-
ment.
Aggrieved employees in an organisation result in lowered productivity, lack of commitment
and loss of interest to work. This in turn affects the organisations in terms of increased costs
and wasted resources. Thus, organisations adopt suitable grievance redressed procedures.
The grievance policy adopted by an organisation can either be open door policy which is
more effective in smaller organisations, and step ladder policy mostly for larger organisations
where grievance handling is a step by step process.
Grievance redressed can be formal or informal in the way it is tackled. It is considered formal
if an employee approaches the management by filling up and submitting grievance forms. If
the issue is directly taken up verbally by the supervisor of the employee it is considered as an
informal procedure.
Grievance procedure has set pre-requisites binding with the legislature of the region, the
process has to be clear, simple and prompt in its response. These pre-requisites are to ensure
effective grievance redressed. Grievance interviews have to be thorough examination of the
situation. The case is probed by essentially asking the five Ws who, when, what, where
and why. The people involved in the grievance handling procedure have to deal with the case
sensitively, following certain guidelines.
Industrial Relation

Collective bargaining is a form of collective grievance redressed of the issues of a large num-
ber of employees. It is normally taken up by unions whose primary interest is to protect em-
ployee rights.
Conflict resolution is the method of reaching an agreement between disputing parties when a
conflict arises within an organisation. Three types of conflict resolutions are discussed in this
unit. Mediation is a method where a mediator assists the disputing parties reach an agree-
ment.
Arbitration involves an arbitrator whose decision is followed by the disputing parties. Com-
promise involves a voluntary negotiation between the two conflicting parties, both desiring to
settle the conflict in an amicable way.
Good employee conduct might be described as orderly behaviour based on definite standards
catalyzed by effective leadership. Disciplinary measures have serious repercussions on em-
ployees. Hence they should be based on certain principles so that they must be fair, just and
acceptable to employees and their union. As far as possible, all the rules should be
framed in co-operation and collaboration with the representatives of employees. All the
rules should be appraised at frequent and regular intervals Rules should be uniformly en-
forced if they are to be effective.
A disciplinary policy should be preventive rather than punitive. It is essential that these
rules and regulations are properly and carefully formulated and communicated to employees.
Identical punishment should be awarded for identical offences, irrespective of the position or
seniority of the employee. If the penalty is imposed long after a violation of rules has
been committed, it loses its positive and corrective influence.
The ultimate purpose of a disciplinary action is to maintain discipline, to ensure productivity,
and avoid a repetition of the offence. A disciplinary action should be evaluated in terms
of its effectiveness after it has been taken.
Good Industrial Relations is important not only for the employers and employees but
also for the entire society. Unhealthy Industrial Relations are harmful to the industry and the
nation and result in wastage of resources, reduction of productive working days and reduction
of the national output. Good Industrial Relations is necessary to ensure uninterrupted produc-
tion, reduce industrial disputes, enhance employee morale and reduce wastages.
Trade Union Act of India defines trade unions as an organisation formed primarily to
regulate the relations between workers and employers. Before trade unions came into ex-
istence, the labor force worked in harsh conditions with low wages. Unions lent a voice to
the plight of workers. The main aim of trade unions is to represent its members at work and
protect their rights and interests. Unions achieve their goals through activities like repre-
sentation, where unions represent workers at their workplace, and negotiations over issues
like pay, working hours, work practices. Union representatives hold discussions with
employers and reach an agreement on worker issues through the process called collec-
tive bargaining. Under extreme circumstances, unions conduct strikes to attain their goals.
Industrial Relation

Trade unions activities are classified into two categories. Through their militant functions,
trade unions achieve their goals of protecting workers interest by means of force.
Trade unions use peaceful and cooperative methods to attain goals of helping members in
times of need and to promote healthy industrial relations.
Workers join unions for reasons like unions have better bargaining power than individ-
ual worker. Unions regulate discrimination at the work place, and provide a medium for
workers to voice their grievances. Unions provide members with basic facilities like training,
education, legal advice and other welfare and monetary benefits.
Trade unions are divided into four types, namely, craft of skills union, industrial un-
ions, general unions and white-collar unions.
These perspectives have their own strengths and advantages, and they also fit different kinds
of company objectives and IR systems. Unitarist perspectives assume that there is only one
source of leadership and that conflict should and can be avoided through the alignment of in-
dividual and organisational interests. Trade unions are seen negatively by unitarists. This per-
spective also fits individualist IR. Pluralists believe that there are competing interests and that
conflict can be properly managed. This perspective asserts the large role that trade unions can
play in the collective bargaining process, which makes it appropriate for collectivist IR sys-
tems. Organisations that have unitarist ER can make it more effective for organisational goals
through having a wide array of efforts that improve employee satisfaction, motivation, and
loyalty. Some of the suggested means are profit-sharing methods and other ways that result to
high-performance work systems.

Industrial Relation

Review Questions
2. Explain how an employee's grievance would be processed through the grievance procedure
in a large unionized organization.
3. What is collective bargaining? Mention the role of trade unions in collective bargaining
process according to Labor Act 1992.
4. Briefly describe grievance procedure. Also discuss why this process is important for an
organization.
5. "Disciplinary actions have to be more corrective than punitive." Justify.
6. What are trade unions? Why do people join trade unions? Discuss.
7. Define the concept of labor legislation. Briefly mention the labor legislation in Nepal.
8. What disciplinary problems arise in organization? What actions are taken in order to min-
imize those problems?
9. Labor dispute are common phenomenon in developing countries. In the perspective of this
given statement, discuss the major cause of labor disputes.
10. "Labor/Industrial relations are an interaction among employees, employers, government
and the civil society for maintaining industrial peace in the country." Discuss.
11. What major types of disciplinary problems are encountered by organization? Explain the
cause of such problems.
12. Define industrial relations. Explain the current situation of industrial relation in Nepal.

Human Relation


CHAPTER: IX
Human Relation
Introduction
A department in an organization responsible for the management of hiring qualified person-
nel for the purpose of filling vacant positions. Activities involved with the department include
advertising and posting, recruiting, staffing, interviewing, hiring, terminations, layoffs, career
training, and performance reviews of company employees.
HR is a product of the human relations movement of the early 20th century, when researchers
began documenting ways of creating business value through the strategic management of the
workforce. The function was initially dominated by transactional work such as payroll and
benefits administration, but due to globalization, company consolidation, technological ad-
vancement, and further research, HR now focuses on strategic initiatives like mergers and
acquisitions, talent management, succession planning, industrial and labor relations, and di-
versity and inclusion.
Measure to Maintain Sound Human Relation
By promoting honesty among the individuals.
Frankness clears the misunderstanding and restores the good relations.
Effective communication is a way to improve the relation among people.
Develop feeling and an ability to appreciate others ideas.
Realizing own mistakes before pointing others.
By requesting the others instead of issuing direct orders.
By praising subordinates even for slightly improvement.
By making the other people happy about doing the think you suggest.
By treating the subordinates with dignity and respect.
By helping the people in performing their duties.
Concept of Personality
Personality concerns the most important, most noticeable parts of an individual's psychologi-
cal life. Personality concerns whether a person is happy or sad, energetic or apathetic, smart
or dull. Over the years, many different definitions have been proposed for personality. Most
of the definitions refer to a mental system -- a collection of psychological parts including mo-
tives, emotions, and thoughts. The definitions vary a bit as to what those parts might be, but
they come down to the idea that personality involves a pattern or global operation of mental
systems. Here are some definitions:
"Personality is the entire mental organization of a human being at any stage of his develop-
ment. It embraces every phase of human character: intellect, temperament, skill, morality,
Human Relation


and every attitude that has been built up in the course of one's life." (Warren & Carmichael,
1930, p. 333)
(In an acknowledged overstatement...) "Personality is the essence of a human being." (Hall &
Lindzey, 1957, p. 9, characterizing statements by Gordon All port)
"An individual's pattern of psychological processes arising from motives, feelings, thoughts,
and other major areas of psychological function. Personality is expressed through its influ-
ences on the body, in conscious mental life, and through the individual's social behavior."
(Mayer, 2005)
Individual Differences
Individual differences are the variations from one person to another on variables such as self-
esteem, rate of cognitive development or degree of agreeableness. Historically, psychological
science has overlooked individual differences in favor of focusing on average behavior.
The science of psychology studies people at three levels of focus captured by the well known
quote: Every man is in certain respects (a) like all other men, (b) like some other men, (c)
like no other man" (Murray, H.A. & C. Kluckhohn, 1953).
Individual differences psychology focuses on this second level of study. It is also some-
times called Differential Psychology because researchers in this area study the ways in which
individual people differ in their behavior. This is distinguished from other aspects of psy-
chology in that although psychology is ostensibly a study of individuals, modern psycholo-
gists often study groups or biological underpinnings of cognition.
For example, in evaluating the effectiveness of a new therapy, the mean performance of the
therapy in one group might be compared to the mean effectiveness of a placebo (or a well-
known therapy) in a second, control group. In this context, differences between individuals in
their reaction to the experimental and control manipulations are actually treated as errors ra-
ther than as interesting phenomena to study.
This is because psychological research depends upon statistical controls that are only defined
upon groups of people. Individual difference psychologists usually express their interest in
individuals while studying groups by seeking dimensions shared by all individuals but upon
which individuals differ.
Importance of individual differences
The study of individual differences is essential because important variation between individ-
uals can be masked by averaging. For example, a researcher is interested in resting metabolic
rate in humans. The researcher gathers a sample of men, women, and children, measures their
Human Relation


metabolic rate and gets a single average. The researcher then tells the whole population that
they should be eating 1,900 calories a day.
What's wrong with this study? The researcher has neglected individual differences in activity
level, body size, sex, age, and other factors that influence metabolic rate. The average report-
ed based on the results is masking multiple dimensions that should be used to determine daily
caloric intake. Therefore, his or her conclusions are misleading if not outright false. This is an
extreme example to make a point, but it illustrates the problems that can arise by averaging
across groups.
Human Behavior is caused
Comprehension of a phenomenon involves identifying its origin, structure, substrate, and
function, and representing these factors in some formal system. Aristotle provided a clear
specification of these kinds of explanation, which he called efficient causes (triggers), formal
causes (models), material causes (substrates or mechanisms), and final causes (functions).
Aristotle's framework is applied to conditioning and the computation-versus-association de-
bate. The critical empirical issue is early versus late reduction of information to disposition.
Automata theory provides a grammar for models of conditioning and information processing
in which that constraint can be represented. Judging whether learning is better explained as an
associative or computational process requires that we clarify the key terms. This essay pro-
vides a framework for discussing explanation, association, and computation; it leaves learn-
ing as an unexamined primitive.
Research in Human relation
Illumination experiments (1924-1927)
Relay assembly test room experiments (1927-1932)
Bank wiring observation room experiments(1931-32)
Motivation
As noun motive means an objectives and as verb it means moving into action. Motivation is a
force which leads people to act to fulfill objectives. Motivation is the key to the management
to achieve effective work performance from workers. Motivation is a psychological and hu-
man aspect. It is the process of creating willingness among the employees to work in the best
possible ways.
William G. Scott motivation means a process of stimulating people to action to achieve
desired goals.
Dale S. Beach motivation can be defined as a willingness to work to expand energy to
achieve a goal or reward.
Human Relation


Features of Motivation
Psychological process
Continuous process
Complex and unpredictable
Pervasive function( responsible)
Influences the behavior
Concentrated on whole individual
Positive or negative
Importance of Motivation
Lead to profitable operation
High level of productivity
Best remedy for resistance to change
Effective use of human resource
Satisfaction of employees
Minimizes disputes and strike
Basis of coordination
Stability of workforce
Minimizes supervision cost

The Motivation Process
More money

In its simplest form, the motivation process begins with a need, an individual's perception of
a deficiency .For instance; an employee might feel the need for more challenging work, for
higher pay, for time off, or for the respect and admiration of colleagues.
Human Relation


These needs lead to thought processes that guide an employee's decision to satisfy them and
to follow a particular course of action. If an employee's chosen course of action results in the
anticipated out come and reward, that person is likely to be motivated by the prospect of a
similar reward to act the same way in the future. However, if the employee's action does not
result in the expected reward, he or she is unlikely to repeat the behavior. Thus, the reward
acts as feedback mechanism to help the individual evaluate the consequences of the behavior
when considering futures action

Core Phases of the Motivational Process:

1. Need Identification: First phase of motivation process is need identification where the
employee feels his/her some unsatisfied need. The motivation process begins with an
unsatisfied need, which creates tension and drives an individual to search for goals
that, if attained, will satisfy the need and reduce the tension.

2. Searching Ways to satisfy needs: Second phase is finding the different alternatives
that can be used to satisfy the needs, which were felt in first stage. These needs lead to
thought processes that guide an employee's decision to satisfy them and to follow a
particular course of action.

3. Selecting Goals: Once if the need is assessed and employee is able to find out the way
to satisfy the need than next phase is selection of goals to be performed.

4. Employee Performance: These needs lead to thought processes that guide an em-
ployee's decision to satisfy them and to follow a particular course of action in form of
performance.

5. Consequences of performance Reward/punishments: If an employee's chosen
course of action results in the anticipated out come and reward, that person is likely to
be motivated by the prospect of a similar reward to act the same way in the future.
However, if the employee's action does not result in the expected reward, he or she is
unlikely to repeat the behavior.

6. Reassessment of Need deficiencies: Once felt need is satisfied through certain re-
wards in response to performance than employee reassesses any deficiencies and entire
process is repeated again
Motivation Theories
Maslow needs of Hierarchy
Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943.
This theory is a classical depiction of human motivation. This theory is based on the assump-
Human Relation


tion that there is a hierarchy of five needs within each individual. The urgency of these needs
varies. These five needs are as follows-
1. Physiological needs- These are the basic needs of air, water, food, clothing and shel-
ter. In other words, physiological needs are the needs for basic amenities of life.
2. Safety needs- Safety needs include physical, environmental and emotional safety and
protection. For instance- Job security, financial security, protection from animals,
family security, health security, etc.
3. Social needs- Social needs include the need for love, affection, care, belongingness,
and friendship.
4. Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect,
confidence, competence, achievement and freedom) and external esteem needs
(recognition, power, status, attention and admiration).
5. Self-actualization need- This include the urge to become what you are capable of be-
coming / what you have the potential to become. It includes the need for growth and
self-contentment. It also includes desire for gaining more knowledge, social- service,
creativity and being aesthetic. The self- actualization needs are never fully satiable.
As an individual grows psychologically, opportunities keep cropping up to continue
growing.
According to Maslow, individuals are motivated by unsatisfied needs. As each of these needs
is significantly satisfied, it drives and forces the next need to emerge. Maslow grouped the
five needs into two categories - Higher-order needs and Lower-order needs. The physio-
logical and the safety needs constituted the lower-order needs. These lower-order needs are
mainly satisfied externally. The social, esteem, and self-actualization needs constituted the
higher-order needs. These higher-order needs are generally satisfied internally, i.e., within an
individual. Thus, we can conclude that during boom period, the employees lower-order needs
are significantly met.
Implications of Maslows Hierarchy of Needs Theory for Managers
As far as the physiological needs are concerned, the managers should give employees
appropriate salaries to purchase the basic necessities of life. Breaks and eating opportu-
nities should be given to employees.
As far as the safety needs are concerned, the managers should provide the employees
job security, safe and hygienic work environment, and retirement benefits so as to re-
tain them.
As far as social needs are concerned, the management should encourage teamwork and
organize social events.
As far as esteem needs are concerned, the managers can appreciate and reward employ-
ees on accomplishing and exceeding their targets. The management can give the de-
served employee higher job rank / position in the organization.
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As far as self-actualization needs are concerned, the managers can give the employees
challenging jobs in which the employees skills and competencies are fully utilized.
Moreover, growth opportunities can be given to them so that they can reach the peak.
The managers must identify the need level at which the employee is existing and then those
needs can be utilized as push for motivation.
Limitations of Maslows Theory
It is essential to note that not all employees are governed by same set of needs. Dif-
ferent individuals may be driven by different needs at same point of time. It is always
the most powerful unsatisfied need that motivates an individual.
The theory is not empirically supported.
The theory is not applicable in case of starving artist as even if the artists basic needs.
Herzbergs Two-Factor Theory of Motivation
In 1959, Frederick Herzberg, a behavioral scientist proposed a two-factor theory or the moti-
vator-hygiene theory. According to Herzberg, there are some job factors that result in satis-
faction while there are other job factors that prevent dissatisfaction. According to Herzberg,
the opposite of Satisfaction is No satisfaction and the opposite of Dissatisfaction is
No Dissatisfaction.
Herzberg classified these job factors into two categories-
a. Hygiene factors- Hygiene factors are those job factors which are essential for exist-
ence of motivation at workplace. These do not lead to positive satisfaction for long-
term. But if these factors are absent / if these factors are non-existence at workplace,
then they lead to dissatisfaction. In other words, hygiene factors are those factors
which when adequate/reasonable in a job, pacify the employees and do not make them
dissatisfied. These factors are extrinsic to work. Hygiene factors are also called as
dissatisfies or maintenance factors as they are required to avoid dissatisfaction.
These factors describe the job environment/scenario. The hygiene factors symbolized
the physiological needs which the individuals wanted and expected to be fulfilled.
Hygiene factors include:

Pay - The pay or salary structure should be appropriate and reasonable. It must be
equal and competitive to those in the same industry in the same domain.
Company Policies and administrative policies - The company policies should not be
too rigid. They should be fair and clear. It should include flexible working hours,
dress code, breaks, vacation, etc.

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Fringe benefits - The employees should be offered health care plans (medi-claim),
benefits for the family members, employee help programmes, etc.
Physical Working conditions - The working conditions should be safe, clean and hy-
gienic. The work equipments should be updated and well-maintained.
Status - The employees status within the organization should be familiar and re-
tained.
Interpersonal relations - The relationship of the employees with his peers, superiors
and subordinates should be appropriate and acceptable. There should be no conflict or
humiliation element present.
Job Security - The organization must provide job security to the employees.
b. Motivational factors- According to Herzberg, the hygiene factors cannot be regarded
as motivators. The motivational factors yield positive satisfaction. These factors are
inherent to work. These factors motivate the employees for a superior performance.
These factors are called satisfiers. These are factors involved in performing the job.
Employees find these factors intrinsically rewarding. The motivators symbolized the
psychological needs that were perceived as an additional benefit. Motivational factors
include:
Recognition - The employees should be praised and recognized for their ac-
complishments by the managers.
Sense of achievement - The employees must have a sense of achievement.
This depends on the job. There must be a fruit of some sort in the job.
Growth and promotional opportunities - There must be growth and advance-
ment opportunities in an organization to motivate the employees to perform
well.
Responsibility - The employees must hold themselves responsible for the
work. The managers should give them ownership of the work. They should
minimize control but retain accountability.
Meaningfulness of the work - The work itself should be meaningful, interest-
ing and challenging for the employee to perform and to get motivated.
Limitations of Two-Factor Theory
The two factor theory is not free from limitations:
1. The two-factor theory overlooks situational variables.
2. Herzberg assumed a correlation between satisfaction and productivity. But the re-
search conducted by Herzberg stressed upon satisfaction and ignored productivity.
3. The theorys reliability is uncertain. Analysis has to be made by the raters. The raters
may spoil the findings by analyzing same response in different manner.
4. No comprehensive measure of satisfaction was used. An employee may find his job
acceptable despite the fact that he may hate/object part of his job.
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5. The two factor theory is not free from bias as it is based on the natural reaction of em-
ployees when they are enquired the sources of satisfaction and dissatisfaction at work.
They will blame dissatisfaction on the external factors such as salary structure, com-
pany policies and peer relationship. Also, the employees will give credit to themselves
for the satisfaction factor at work.
6. The theory ignores blue-collar workers. Despite these limitations, Herzbergs Two-
Factor theory is acceptable broadly.
Implications of Two-Factor Theory

The Two-Factor theory implies that the managers must stress upon guaranteeing the ad-
equacy of the hygiene factors to avoid employee dissatisfaction. Also, the managers
must make sure that the work is stimulating and rewarding so that the employees are
motivated to work and perform harder and better. This theory emphasize upon job-
enrichment so as to motivate the employees. The job must utilize the employees skills
and competencies to the maximum. Focusing on the motivational factors can improve
work-quality.
Equity Theory
The core of the equity theory is the principle of balance or equity. As per this motivation the-
ory, an individuals motivation level is correlated to his perception of equity, fairness and jus-
tice practiced by the management. Higher is individuals perception of fairness, greater is the
motivation level and vice versa. While evaluating fairness, employee compares the job input
(in terms of contribution) to outcome (in terms of compensation) and also compares the same
with that of another peer of equal cadre/category. D/I ratio (output-input ratio) is used to
make such a comparison.
EQUITY THEORY
Ratio Compari-
son
Perception
O/I a < O/I b Under-rewarded (Equity
Tension)
O/I a = O/I b Equity
O/I a > O/I b Over-rewarded (Equity
Tension)

Negative Tension state: Equity is perceived when this ratio is equal. While if this ratio is
unequal, it leads to equity tension. J.Stacy Adams called this a negative tension state which
motivates him to do something right to relieve this tension. A comparison has been made be-
tween 2 workers A and B to understand this point.
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Referents: The four comparisons an employee can make have been termed as referents
according to Goodman. The referent chosen is a significant variable in equity theory. These
referents are as follows:
Self-inside: An employees experience in a different position inside his present organiza-
tion.
Self-outside: An employees experience in a situation outside the present organization.
Other-inside: Another employee or group of employees inside the employees present or-
ganization.
Other-outside: Another employee or employees outside the employees present organiza-
tion.
An employee might compare himself with his peer within the present job in the current or-
ganization or with his friend/peer working in some other organization or with the past jobs
held by him with others. An employees choice of the referent will be influenced by the ap-
peal of the referent and the employees knowledge about the referent.
Moderating Variables: The gender, salary, education and the experience level are moderat-
ing variables. Individuals with greater and higher education are more informed. Thus, they
are likely to compare themselves with the outsiders. Males and females prefer same sex com-
parison. It has been observed that females are paid typically less than males in comparable
jobs and have less salary expectations than male for the same work. Thus, a women employee
that uses another women employee as a referent tends to lead to a lower comparative stand-
ard. Employees with greater experience know their organization very well and compare
themselves with their own colleagues, while employees with less experience rely on their
personal experiences and knowledge for making comparisons.
Choices: The employees who perceive inequity and are under negative tension can make the
following choices:
Change in input (e.g. Dont overexert)
Change their outcome (Produce quantity output and increasing earning by sacrificing quali-
ty when piece rate incentive system exist)
Choose a different referent
Quit the job
Change self perception (For instance - I know that Ive performed better and harder than
everyone else.)
Change perception of others
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Assumptions of the Equity Theory
The theory demonstrates that the individuals are concerned both with their own re-
wards and also with what others get in their comparison.
Employees expect a fair and equitable return for their contribution to their jobs.
Employees decide what their equitable return should be after comparing their inputs
and outcomes with those of their colleagues.
Employees who perceive themselves as being in an inequitable scenario will attempt
to reduce the inequity either by distorting inputs and/or outcomes psychologically, by
directly altering inputs and/or outputs, or by quitting the organization.

ERG THEORY

In addition to the reduction in the number of levels, the ERG theory differs from
Maslow's in the following three ways:
Unlike Maslow's hierarchy, the ERG theory allows for different levels of needs to be pur-
sued simultaneously.
The ERG theory allows the order of the needs be different for different people.
The ERG theory acknowledges that if a higher level need remains unfulfilled, the person
may regress to lower level needs that appear easier to satisfy. This is known as the frus-
tration-regression principle.
Thus, while the ERG theory presents a model of progressive needs, the hierarchical as-
pect is not rigid. This flexibility allows the ERG theory to account for a wider range of
observed behaviors. For example, it can explain the "starving artist" who may place
growth needs above existence ones.
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Vroom's Expectancy Theory
Whereas Maslow and Herzberg look at the relationship between internal needs and the result-
ing effort expended to fulfill them, Vroom's expectancy theory separates effort (which arises
from motivation), performance, and outcomes.
Vroom's expectancy theory assumes that behavior results from conscious choices among al-
ternatives whose purpose it is to maximize pleasure and to minimize pain. Vroom realized
that an employee's performance is based on individual factors such as personality, skills,
knowledge, experience and abilities. He stated that effort, performance and motivation are
linked in a person's motivation. He uses the variables Expectancy, Instrumentality and Va-
lence to account for this.
Expectancy is the belief that increased effort will lead to increased performance i.e. if I work
harder than this will be better. This is affected by such things as:
Having the right resources available (e.g. raw materials, time)
Having the right skills to do the job
Having the necessary support to get the job done (e.g. supervisor support, or correct
information on the job)

Instrumentality is the belief that if you perform well that a valued outcome will be received.
The degree to which a first level outcome will lead to the second level outcome. i.e. if I do a
good job, there is something in it for me. This is affected by such things as:
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Clear understanding of the relationship between performance and outcomes e.g. the
rules of the reward 'game'
Trust in the people who will take the decisions on who gets what outcome
Transparency of the process that decides who gets what outcome
Valence is the importance that the individual places upon the expected outcome. For the va-
lence to be positive, the person must prefer attaining the outcome to not attaining it. For ex-
ample, if someone is mainly motivated by money, he or she might not value offers of addi-
tional time off.
The three elements are important behind choosing one element over another because
they are clearly defined: effort-performance expectancy (E>P expectancy) and per-
formance-outcome expectancy (P>O expectancy).

E>P expectancy: our assessment of the probability that our efforts will lead to the re-
quired performance level.

P>O expectancy: our assessment of the probability that our successful performance
will lead to certain outcomes.
Workplace Motivation - Carrot or Stick approach doesnt work any-
more

I am in this job because I have no other option. If this is what an employee of your compa-
ny feels, read on to know how this statement can be changed to something more positive - I
love what I do.
First things first - whose responsibility is it to ensure that an employee loves his job? While
an employee would say - the employer, the human resource experts have a different point of
view which sounds fair. Its both the employer and the employee who should work together
to make work fun for each other.
It is interesting to know here, that employees do not rank salary as the top factor in deter-
mining whether they like their jobs or not. What is important to them then - the opportunity
to do what is important. Almost all the employees would like to feel part of the big picture
and would want to contribute to the organizational goals in some way or the other. Doing the
mundane, routine work will never excite them - what excites them is - work that challenges
them to use their talent. Right Management Consultants conducted a survey sometime back
and found that 83% of about 500 workers surveyed were motivated by challenges at work.

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Also, as per an executive editor of the Harvard Business Review, while salary and
promotions could do a great job of de-motivating people if handled ineffectively, they
arent so much effective in motivating people.
So then what needs to be done for effective motivation at workplace?
Link Rewards directly to Performance- An organization should adopt a fair reward struc-
ture which provides incentive to the most deserving employee. Have an incentive structure
in place doesnt solve the problem... what makes it workable is the employees trust in the
system and believe that they will be rewarded if they perform well.
Compliment employees- Even though an employees name has not appeared in the list of
people getting incentives, go ahead and compliment that employee for a job well done - no
matter how small. There is nothing more satisfying to an employee than a pat on his back.
Be transparent- While there may be some strategic decisions which you might want to
share with the employees at a later stage, make sure employees do not give in to the ru-
mors. Stay in touch with the employees.
Work on your PDP- Every employee is responsible for his / her own career. He / she
should work towards his Personal Development Plan [PDP] as discussed and agreed by
his manager. Find out what are the training company offers and which is best suited to his
development needs. How this will motivate you - remember training always increase your
marketability and enhance your career.
Participate and Network- Employees - Remember you work for a company where a one-
on-one attention might not be possible. Do not wait for an invitation to participate in a dis-
cussion. If you are a part of a forum, then you have full right to express your opinion and be
a part of the process. Expressing yourself is a good way of motivating yourself.
Motivation and Morale - Relationship and Differences

Morale can be defined as the total satisfaction derived by an individual from his job, his
work-group, his superior, the organization he works for and the environment. It generally re-
lates to the feeling of individuals comfort, happiness and satisfaction.
According to Davis, Morale is a mental condition of groups and individuals which deter-
mines their attitude.
In short, morale is a fusion of employees attitudes, behaviors, manifestation of views and
opinions - all taken together in their work scenarios, exhibiting the employees feelings to-
wards work, working terms and relation with their employers. Morale includes employees
attitudes on and specific reaction to their job.

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There are two states of morale:
High morale - High morale implies determination at work- an essential in achievement of
management objectives. High morale results in:
A keen teamwork on part of the employees.
Organizational Commitment and a sense of belongingness in the employees mind.
Immediate conflict identification and resolution.
Healthy and safe work environment.
Effective communication in the organization.
Increase in productivity.
Greater motivation.
Low morale - Low morale has following features:
Greater grievances and conflicts in organization.
High rate of employee absenteeism and turnover.
Dissatisfaction with the superiors and employers.
Poor working conditions.
Employees frustration.
Decrease in productivity.
Lack of motivation.
Though motivation and morale are closely related concepts, they are different in following
ways:

While motivation is an internal-psychological drive of an individual which urges him
to behave in a specific manner, morale is more of a group scenario.

Higher motivation often leads to higher morale of employees, but high morale does not
essentially result in greatly motivated employees as to have a positive attitude towards
all factors of work situation may not essentially force the employees to work more ef-
ficiently.

While motivation is an individual concept, morale is a group concept. Thus, motiva-
tion takes into consideration the individual differences among the employees, and mo-
rale of the employees can be increased by taking those factors into consideration which
influence group scenario or total work settings.

Motivation acquires primary concern in every organization, while morale is a second-
ary phenomenon because high motivation essentially leads to higher productivity
while high morale may not necessarily lead to higher productivity.

Things tied to morale are usually things that are just part of the work environment, and
things tied to motivation are tied to the performance of the individual.
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Team Motivation - Tips for Motivating Team
A group heading towards a common objective will perform best when it is motivated as a
team. Team motivation is determined by how well the team members needs and require-
ments are met by the team.
Some tips for effective team motivation are as follows:

The teams objective should well align and synchronize with the team members needs
and requirements.

Give in written the teams mission and ensure that all understand it (as mission is a
foundation based on which the team performs).

For maintaining motivation, the team should be given challenges (which must be diffi-
cult but achievable) consistently.

Giving a team responsibility accompanied by authority can also be a good motivator
for the team to perform.

The team should be provided with growth opportunities. The teams motivation level
is high when the team members feel that they are being promoted, their skills and
competencies are being enhanced, and they are learning new things consistently.

Effective and true leaders can develop environment for the team to motivate itself.
They provide spur for self- actualization behaviors of team members.

Devote quality/productive time to your team. Have an optimistic and good relation
with your team members. This will make you more acquainted with them and you can
get knowledge of how well they are performing their job. Welcome their views and
ideas as they may be fruitful and it will also boost their morale.

Motivation is all about empowerment. The skills and competencies of the team mem-
bers should be fully utilized. Empowering the team members makes them accountable
for their own actions.

Provide feedback to the team consistently. Become their mentor. Give the team recog-
nition for good and outstanding performance. Give the team a constructive and not
negative feedback.

Discover and offset the factors which discourage team spirit such as too many con-
flicts, lethargy, team members escape from responsibilities, lack of job satisfaction,
etc.

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Team Building
Executives, managers and organization staff members universally explore ways to improve
business results and profitability. Many view team-based, horizontal, organization structures
as the best design for involving all employees in creating business success.
No matter what you call your team-based improvement effort: continuous improvement, total
quality, lean manufacturing or self-directed work teams, you are striving to improve results
for customers. Few organizations, however, are totally pleased with the results their team im-
provement efforts produce. If your team improvement efforts are not living up to your expec-
tations, this self-diagnosing checklist may tell you why. Successful team building, that cre-
ates effective, focused work teams, requires attention to each of the following.
Clear Expectations: Has executive leadership clearly communicated its expectations
for the team's performance and expected outcomes? Do team members understand
why the team was created? Is the organization demonstrating constancy of purpose in
supporting the team with resources of people, time and money? Does the work of the
team receive sufficient emphasis as a priority in terms of the time, discussion, atten-
tion and interest directed its way by executive leaders?

Context: Do team members understand why they are participating on the team? Do
they understand how the strategy of using teams will help the organization attain its
communicated business goals? Can team members define their team's importance to
the accomplishment of corporate goals? Does the team understand where its work fits
in the total context of the organization's goals, principles, vision and values?

Commitment: Do team members want to participate on the team? Do team members
feel the team mission is important? Are members committed to accomplishing the
team mission and expected outcomes? Do team members perceive their service as
valuable to the organization and to their own careers? Do team members anticipate
recognition for their contributions? Do team members expect their skills to grow and
develop on the team? Are team members excited and challenged by the team oppor-
tunity?

Competence: Does the team feel that it has the appropriate people participating? (As
an example, in a process improvement, is each step of the process represented on the
team?) Does the team feel that its members have the knowledge, skill and capability
to address the issues for which the team was formed? If not, does the team have ac-
cess to the help it needs? Does the team feel it has the resources, strategies and sup-
port needed to accomplish its mission?

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Charter: Has the team taken its assigned area of responsibility and designed its own
mission, vision and strategies to accomplish the mission. Has the team defined and
communicated its goals; its anticipated outcomes and contributions; its timelines; and
how it will measure both the outcomes of its work and the process the team followed
to accomplish their task? Does the leadership team or other coordinating group sup-
port what the team has designed?

Control: Does the team have enough freedom and empowerment to feel the owner-
ship necessary to accomplish its charter? At the same time, do team members clearly
understand their boundaries? How far may members go in pursuit of solutions? Are
limitations (i.e. monetary and time resources) defined at the beginning of the project
before the team experiences barriers and rework?

Is the teams reporting relationship and accountability understood by all members of
the organization? Has the organization defined the teams authority? To make recom-
mendations? To implement its plan? Is there a defined review process so both the team
and the organization are consistently aligned in direction and purpose? Do team mem-
bers hold each other accountable for project timelines, commitments and results? Does
the organization have a plan to increase opportunities for self-management among or-
ganization members?

Collaboration: Does the team understand team and group process? Do members un-
derstand the stages of group development? Are team members working together ef-
fectively interpersonally? Do all team members understand the roles and responsibili-
ties of team members? team leaders? team recorders? Can the team approach problem
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solving, process improvement, goal setting and measurement jointly? Do team mem-
bers cooperate to accomplish the team charter? Has the team established group norms
or rules of conduct in areas such as conflict resolution, consensus decision making
and meeting management? Is the team using an appropriate strategy to accomplish its
action plan?

Communication: Are team members clear about the priority of their tasks? Is there
an established method for the teams to give feedback and receive honest performance
feedback? Does the organization provide important business information regularly?
Do the teams understand the complete context for their existence? Do team members
communicate clearly and honestly with each other? Do team members bring diverse
opinions to the table? Are necessary conflicts raised and addressed?

Creative Innovation: Is the organization really interested in change? Does it value
creative thinking, unique solutions, and new ideas? Does it reward people who take
reasonable risks to make improvements? Or does it reward the people who fit in and
maintain the status quo? Does it provide the training, education, access to books and
films, and field trips necessary to stimulate new thinking?

Consequences: Do team members feel responsible and accountable for team
achievements? Are rewards and recognition supplied when teams are successful? Is
reasonable risk respected and encouraged in the organization? Do team members fear
reprisal? Do team members spend their time finger pointing rather than resolving
problems? Is the organization designing reward systems that recognize both team and
individual performance? Is the organization planning to share gains and increased
profitability with team and individual contributors? Can contributors see their impact
on increased organization success?

Coordination: Are teams coordinated by a central leadership team that assists the
groups to obtain what they need for success? Have priorities and resource allocation
been planned across departments? Do teams understand the concept of the internal
customerthe next process, anyone to whom they provide a product or a service? Are
cross-functional and multi-department teams common and working together effective-
ly? Is the organization developing a customer-focused process-focused orientation
and moving away from traditional departmental thinking?

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Cultural Change: Does the organization recognize that the team-based, collabora-
tive, empowering, enabling organizational culture of the future is different than the
traditional, hierarchical organization it may currently be? Is the organization planning
to or in the process of changing how it rewards, recognizes, appraises, hires, develops,
plans with, motivates and manages the people it employs?

Does the organization plan to use failures for learning and support reasonable risk? Does the
organization recognize that the more it can change its climate to support teams, the more it
will receive in pay back from the work of the teams?
Spend time and attention on each of these twelve tips to ensure your work teams contribute
most effectively to your business success. Your team members will love you, your business
will soar, and empowered people will "own" and be responsible for their work processes. Can
your work life get any better than this?

Team
Building
Communication
Problem
Solving
Planning/Ada
ptability
Trust
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Job Satisfaction
Term job satisfaction Definition: The satisfaction or utility that a worker receives from em-
ployment. Job satisfaction might result from the working environment (friendly co-workers,
supportive boss) or from the type of work performed (playing sports, creating artwork, ac-
complishing goals). Satisfaction generated by a job is part of the "total compensation" an em-
ployee receives; meaning workers with more job satisfaction are often willing to accept a
lower monetary wage payment.
There is some doubt whether job satisfaction consists of a single dimension or a number of
separate ones. Some workers may be satisfied with some aspects of their work and dissatis-
fied with others. There does, however, appear to be a positive correlation between satisfaction
levels in different areas of work. This suggests a single overall factor of job satisfaction.
However, it seems there is no one, general, comprehensive theory which explains job satis-
faction.
Today is still considered by a number of critics to be, a complex concept and difficult
to measure objectively. A wide range of variables relating to individual, social, cul-
tural organizational and environmental factors affect the level of job satisfaction. Spe-
cifically:
Individual Factors include personality, education, intelligence and abilities, age,
marital status. Orientation to work.
Social Factors include relationships with co-workers, group working and norms, op-
portunities for interaction, informal organization.
Cultural Factors include underlying attitudes, beliefs and values.
Organizational Factors include nature and size, formal structure, personnel policies
and procedures, employee relations, nature of the work, technology and work organi-
zation, supervision and styles of leadership, management systems, and working condi-
tions.
Environmental Factors include economic, social, technical and governmental influ-
ences.
These different factors, all affect the job satisfaction of certain individuals in a given set of
circumstances, but not necessarily in others. The various studies of job satisfaction have some
validity and have served the businesses in times of need and performance appraisal.
A strategic way of achieving job satisfaction is to establish a corporate culture that encourages
communication and is directed towards quality work. It is particularly important for employ-
ees to see excellence rewarded, to not fear making mistakes, to work in an atmosphere of
helpfulness, and to see a relationship between hard work and rewards. As the tool for such
strategic changes, organizational culture can be altered by reshaping functions, such as the
communications systems and by building teams and creating leaders. Managing change is the
challenge for today's businesses and its success or failure will judge the viability of any firm
in the years to come.
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Leadership
This definition is similar to Northouse's (2007, p3) definition Leadership is a process
whereby an individual influences a group of individuals to achieve a common goal.
Leaders carry out this process by applying their leadership knowledge and skills. This is
called Process Leadership (Jago, 1982). However, we know that we have traits that can in-
fluence our actions. This is called Trait Leadership (Jago, 1982), in that it was once common
to believe that leaders were born rather than made. These two leadership types are shown in
the chart below (Northouse, 2007, p5):

While leadership is learned, the skills and knowledge processed by the leader can be influ-
enced by his or hers attributes or traits, such as beliefs, values, ethics, and character.
Knowledge and skills contribute directly to the process of leadership, while the other attrib-
utes give the leader certain characteristics that make him or her unique. Skills, knowledge,
and attributes make the Leader, which is one of the:
There are four major factors in leadership (U.S. Army, 1983):
Leader
You must have an honest understanding of who you are, what you know, and what you can
do. Also, note that it is the followers, not the leader or someone else who determines if the
leader is successful. If they do not trust or lack confidence in their leader, then they will be
uninspired. To be successful you have to convince your followers, not yourself or your supe-
riors, that you are worthy of being followed.
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Followers
Different people require different styles of leadership. For example, a new hire requires more
supervision than an experienced employee. A person who lacks motivation requires a differ-
ent approach than one with a high degree of motivation. You must know your people! The
fundamental starting point is having a good understanding of human nature, such as needs,
emotions, and motivation. You must come to know your employees' be, know, and do attrib-
utes.
Communication
You lead through two-way communication. Much of it is nonverbal. For instance, when you
set the example, that communicates to your people that you would not ask them to perform
anything that you would not be willing to do. What and how you communicate either builds
or harms the relationship between you and your employees.
Situation
All situations are different. What you do in one situation will not always work in another.
You must use your judgment to decide the best course of action and the leadership style
needed for each situation. For example, you may need to confront an employee for inappro-
priate behavior, but if the confrontation is too late or too early, too harsh or too weak, then
the results may prove ineffective.
Also note that the situation normally has a greater effect on a leader's action than his or her
traits. This is because while traits may have an impressive stability over a period of time, they
have little consistency across situations (Mischel, 1968). This is why a number of leadership
scholars think the Process Theory of Leadership is a more accurate than the Trait Theory of
Leadership.
Various forces will affect these four factors. Examples of forces are your relationship with
your seniors, the skill of your followers, the informal leaders within your organization, and
how your organization is organized.
Principles of Leadership

Know yourself and seek self-improvement - In order to know yourself, you have to
understand your being, know, and do, attributes. Seeking self-improvement means
continually strengthening your attributes. This can be accomplished through self-
study, formal classes, reflection, and interacting with others.

Be technically proficient - As a leader, you must know your job and have a solid fa-
miliarity with your employees' tasks.

Human Relation


Seek responsibility and take responsibility for your actions - Search for ways to
guide your organization to new heights. And when things go wrong, they always do
sooner or later do not blame others. Analyze the situation, take corrective action,
and move on to the next challenge.

Make sound and timely decisions - Use good problem solving, decision making, and
planning tools.

Set the example - Be a good role model for your employees. They must not only hear
what they are expected to do, but also see. We must become the change we want to see
- Mahatma Gandhi

Know your people and look out for their well-being - Know human nature and the
importance of sincerely caring for your workers.

Keep your workers informed - Know how to communicate with not only them, but
also seniors and other key people.

Develop a sense of responsibility in your workers - Help to develop good character
traits that will help them carry out their professional responsibilities.

Ensure that tasks are understood, supervised, and accomplished - Communica-
tion is the key to this responsibility.

Train as a team - Although many so called leaders call their organization, depart-
ment, section, etc. a team; they are not really teams...they are just a group of people
doing their jobs.

Use the full capabilities of your organization - By developing a team spirit, you will
be able to employ your organization, department, section, etc. to its fullest capabili-
ties.

Attributes of Leadership
If you are a leader who can be trusted, then those around you will grow to respect you. To be
such a leader, there is a Leadership Framework to guide you:
BE KNOW DO
BE a professional. Examples: Be loyal to the organization, perform selfless service, and take
personal responsibility.
BE a professional who possess good character traits. Examples: Honesty, competence, can-
dor, commitment, integrity, courage, straightforwardness, imagination.
KNOW the four factors of leadership follower, leader, communication, situation.
Human Relation


KNOW yourself. Examples: strengths and weakness of your character, knowledge, and
skills.
KNOW human nature. Examples: Human needs, emotions, and how people respond to stress.
KNOW your job. Examples: be proficient and be able to train others in their tasks.
KNOW your organization. Examples: where to go for help, its climate and culture, who the
unofficial leaders are.
DO provide direction. Examples: goal setting, problem solving, decision making, planning.
DO implement. Examples: communicating, coordinating, supervising, evaluating.
DO motivate. Examples: develop morale and esprit de corps in the organization, train, coach,
counsel.

Human Relation


Summary
Individuals have a variety of changing, often conflicting, needs and expectations which they
need to satisfy in a number of different ways, and individuals' particular situations have a di-
rect bearing on motivation. The work of Porter and Lawler considers the relationship between
motivation, satisfaction and performance as separate variables, in terms of the expectan-
cy/valence theory (people being influenced by the expected result of their actions and the va-
lence, anticipated satisfaction, deriving from this). Managers and supervisors need to give
attention to the appropriateness of rewards in terms of individual performance, establish clear
relationships between effort, performance and rewards, and clearly establish procedures for
evaluating individual levels of performance.
HR is a product of the human relations movement of the early 20th century, when researchers
began documenting ways of creating business value through the strategic management of the
workforce. The function was initially dominated by transactional work such as payroll and
benefits administration, but due to globalization, company consolidation, technological ad-
vancement, and further research, HR now focuses on strategic initiatives like mergers and
acquisitions, talent management, succession planning, industrial and labor relations, and di-
versity and inclusion.
Individual differences are the variations from one person to another on variables such as self-
esteem, rate of cognitive development or degree of agreeableness. Historically, psychological
science has overlooked individual differences in favor of focusing on average behavior.
As noun motive means an objectives and as verb it means moving into action. Motivation is a
force which leads people to act to fulfill objectives. Motivation is the key to the management
to achieve effective work performance from workers. Motivation is a psychological and hu-
man aspect. It is the process of creating willingness among the employees to work in the best
possible ways.
Term job satisfaction Definition: The satisfaction or utility that a worker receives from em-
ployment. Job satisfaction might result from the working environment (friendly co-workers,
supportive boss) or from the type of work performed (playing sports, creating artwork, ac-
complishing goals). Satisfaction generated by a job is part of the "total compensation" an em-
ployee receives; meaning workers with more job satisfaction are often willing to accept a
lower monetary wage payment.
Leadership is a process whereby an individual influences a group of individuals to achieve a
common goal.

Human Relation


Review Questions
1. What are the measures to maintain sound Human Relation?
2. Explain Concept of Personality and what are its importance individual differences?
3. What is Motivation? Explain its core phases.
4. Compare and Contrast Maslow need of hierarchy an ERG Theory.
5. Distinguish between Motivation and Morale.
6. What is the importance of team Building in HRM? Elaborate.
7. Define Job Satisfaction. What are the factors to be considered to make employee satisfac-
tion?
8. Define Leadership. And explain its principles.
9. What are some of the attributes of leadership? Explain in brief.

Organizational change & Development


CHAPTER: X
Organizational Change and Development

Change Management Overview
Change is any variation/alteration/transformation, a passing phase from one state or form to
another, for example, a change of countenance; a change in habits or principles. Change im-
plies dissatisfaction with the old one and an urge for the new one. Change can be perceived in
two ways-changes as intrinsic and continuous, and extrinsic and discontinuous to the organi-
sation.
Change Management is a systematic approach of dealing with change, both from organisation
and individual perspective. Change Management can be seen from two perspectives, one is
from those implementing change and the other is the recipients perspective. Your view on
change management varies if you are an executive who is demanding a change, versus an
employee on whom the change is executed.
In many cases, neither the executive nor the employee has the knowledge of managing
change. First the project managers, consultants, or the members of the project team learn
about the necessity for change management. They recognize the two dimensions of change
management as the top-down managers perspective and the bottom-up employees perspec-
tive.
The managers perspective of change is result-oriented. They are always aware of the busi-
ness issues facing the organisation and are responsible for the financial performance of the
company. When a change is needed, managers need to act quickly. In many cases, executives
must evaluate the return on investment of this change as compared to other strategic initia-
tives in the company.
Front-line employees (and in some cases, include supervisors and managers) generally do not
have a day-to-day view of the business issues. Serving customers, processing orders, getting
the job done are the primary areas of interest. When changes are made, many employees lack
the knowledge of why the change is being made. They also do not share the same responsibil-
ities as managers. Therefore, they question as to how the change will impact them personally.
Many organisations have learnt the hard way through their failed projects that the change
management is not something addressed after the fact. Change management must always start
at the beginning of the project and should be included in all facets.
So what is change management? Change management is the successful management of a
business change, wherein the executive leaders, the managers and the front line employees


work in order to successfully implement the needed process, technology, or organisational
changes.
The goal of change management is to execute these business changes quickly to:
Minimize the impact on productivity.
Avoid unnecessary turnover or loss of valued employees.
Eliminate any adverse impact on your customers.
Achieve the desired business outcomes as soon as possible.
The Importance of Change
Change management plays an important role in any organisation, as the task of managing
change is not an easy one. When we say managing change, it means making changes in a
planned and systematic fashion. With reference to the IT projects, the change means the ver-
sions of a project and managing these versions properly. Changes in the organisation can be
initiated within the organisation or externally.
Technology has compressed the distances across organisations. Internet and web technologies
have given rise to honest corporations. Automation, mechanization, manufacturing systems
affects at both micro and macro levels of the organisation. These technological advancements
are examples of an external factor that impacts on change within the organisation. How the
organisation responds to these changes is important. Managing these changes come under
change management. Reactive and proactive responses to these changes come from the or-
ganisation.
Earlier, change management was an integral part of business management, but with the
emergence of Information Technology (IT), it has gathered importance. Information Tech-
nology Infrastructure management is one broad term, which includes all the elements neces-
sary to ensure smooth functioning of business processes. Good change management tech-
niques always help businessmen to adopt new ways of doing business.
Technology not only refers to machinery, equipment, and tool but is concerned with the use
of information and knowledge as inputs that are transformed into final outputs. This process
involves technology; hence choice of appropriate technology is a key factor for competitive
edge in the new environment.
Changes are brought into the system when the organisation faces challenges such as customer
demands and technological updates.
Change management process undergoes the following steps:
1. Identifying the need for change in an organisation.
2. Designing the changes as per organisations requirement.


3. Making others to understand the need for change for the proper functioning of an organisa-
tion.
4. Altering some organisational processes such as technology, performance meters to incor-
porate changes.
5. Managing both production and changes in such a way that the customers and stakeholders
are bonded with each other in a long run.
Managing the changes in an organisation requires certain set of skills like political skills, ana-
lytical skills, people skills, system skills, and business skills. If you have good analytical
skills, you can be a good change agent. You should examine the financial and political im-
pacts of the changes that can take place. You should have the knowledge that following of a
particular process will fetch immediate financial effects and start that process so that the
change process is noted by the management. You should change the workflow in such a
manner that it should reflect the financial changes that are taking place. Reconfigure the op-
erations and systems in the organisation in such a manner that you get the desired financial
impact.
So, change management is important in the business world, where the things are assessed
based on their perfection and capacity to address the needs of customers and clients.
The Impact of Change
Every organisation has a complex culture and is set in its own way of doing things. Some
companies have certain processes and policies that have been running for decades together
and usually it is unknown as to why they still exist. Under the idea that "This is just the way
we do it" many organisations are running and they never think that there is a better way of
doing the same things. People resist change; some people even dislike doing things different.
An important feature of any project lies in the impact of change management. As new tools
arrive and change the processes and policies, the people who are affected can be confused,
angry and anxious about their future roles and responsibilities.
To moderate the issues related to change, it is important to have the following three things to
drive the processes and policies, and to support the new vision:
Executive Management is a fundamental force that helps the organisation to move in-
to the next phase of business. The project and related changes in processes and poli-
cies should be driven from top to bottom. Employees may complain, but the project
champion should support the change and help the culture to incorporate the new vi-
sion.
Communicate a reliable message to drive the processes and policies, and to support
the new vision. Communication is a key to spread an answer to the question, "Why do


we need to do this?. If you cannot answer this question, change will be difficult and
the project will pause.
Show the progress of the project and the project teams talent in building the project.
If the stakeholder sees that change and sees the progress done towards the new busi-
ness goal, they feel more comfortable and confident about the decisions being made.
So, people are impacted by change management and it is the duty of every project manager to
be sympathetic to the cultural issues that arises during a project. Both communication and
support from the executive leadership will help to move on with the vision and strategies to
support the effort to change
Managing Change
Change management has become a top priority for business executives today. How you man-
age change in your business will determine your success. Change is something that forces an
organisation to advance in a market, reach business goals, and be more efficient.
However, change is unavoidable in todays business environment. The managers and organi-
sations have a choice: to be controlled by and be reactive to changes or be proactive and
manage the change process.
Both managers and employees perspectives for change must be considered here.
These two perspectives of change management are referred as:
Organisational change management.
Individual change management.
The knowledge and skills required to manage change comes from the two perspectives of
change: the managers and the employees. Organisational change management is the man-
agement of change from the perspective of managers or project teams, and individual change
management is the management of change from the perspective of employees.
Organisational change management
The management of change from manager or project teams perspective is called Organisa-
tional change management. Here, the focus is on broad change management practices and
skills that can help the organisation to understand, accept, and support the needed business
change. The main focus is on change management plans, communication plans and training
programs. The parties involved in this are project team members, human resources, and key
business leaders that sponsor the change.
For organisational change management, you have to build knowledge and abilities in the fol-
lowing areas:


Change management teams structure and roles.
Change implementation barriers.
Change management planning and strategies.
Employee resistance management.
Organisational change management methodologies.
Executive sponsorship building.
Communication plans, training, and educational programs creation.
Incentive and recognition programs.
Organisational change management covers all the activities aimed at helping an organisation
to successfully accept and adopt new technologies and new ways to serve its customers. Ef-
fective change management helps in transformation of strategy, processes, technology, and
people to enhance performance and ensures continuous improvement in a constantly chang-
ing environment. A comprehensive and structured approach to organisational change man-
agement is important for the success of any project that can bring significant change.
Significant organisational change occurs only when organisation changes its overall strategy
for success, adds or removes a major section or practice, and/or wants to change the nature by
which it operates. It also occurs when an organisation evolves through various life cycles.
To understand organisational change and begin guiding successful change efforts, the change
agent should have a broad understanding of the context of the change effort. This includes
understanding the basic systems and structures in organisations, including their typical terms
and roles. This requirement includes understanding of leadership and management of the or-
ganisations, as well.
In the past few decades, number of tools has been explored to help change agents to effec-
tively explore, understand and communicate, and guide the organisations. Tools from systems
theory and systems thinking are a major breakthrough. Even if the change agent is not an ex-
pert in systems theory and thinking, a basic understanding can develop a new way of work-
ing.
Types
There are many types of organisational changes:
Organisation-wide versus subsystem change: Usually, organisations undertake or-
ganisation-wide change to evolve into a different level in their life cycle. Examples
for organisation-wide changes are major restructuring, collaboration, cultural change.
Examples of subsystem change include addition or removal of a product or service,
reorganization of certain department, or implementation of a new process to deliver
products or services.

Transformational versus incremental change: Transformational change is also re-
ferred to as quantum change. Examples of transformational change include changing


an organisations structure and culture from the traditional top-down, hierarchical
structure to a large amount of self-directing teams, Business Process Re-engineering.
Examples of incremental change include continuous improvement as a quality man-
agement process or implementation of new computer system to increase efficiencies.
Sometimes, organisations experience incremental change, but its leaders fail to recog-
nize that change.

Remedial versus developmental change: Change can be used as a remedy to the
current situation. Examples for remedial changes are to improve the poor performance
of a product or the entire organisation, reduce burnout in the workplace, and help the
organisation to become more proactive and less reactive, or address large budget defi-
cits. Change can be developmental i.e., it can be applied to a successful situation and
make it more successful. Examples for developmental change are, expand the amount
of customers served, or duplicate successful products or services.

Unplanned versus planned change: Unplanned change occurs because of a major,
sudden surprise to the organisation, which forces its members to respond in a highly
reactive and disorganized fashion. Planned change occurs when leaders in the organi-
sation recognize the need for a major change and proactively organize a plan to ac-
complish the change. Note that the planned change often does not occur in a highly
organized fashion. Instead, it occurs in a chaotic and disorderly fashion than expected
by participants.
Roles in Change Management
Change management cannot be done by one person. It requires a system of actors all moving
in harmony to help employees to understand why the change is happening, get them familiar
with the change and finally ensure that they adopt the changes required in their day-to-day
work. Only by understanding the roles, which supports effective change management, you
and your projects can be successful.
The five roles related to change management are:
Change management resource/team.
Executives and senior managers.
Middle managers and supervisors.
Project team.
Project support functions.
Change management resource/team
The 2007 benchmarking study states that there is a growing body of data that shows a con-
nection between the success of a change initiative and how well the people were managed.
Change management activities will not be completed without dedicated resources. If there are
no dedicated resources during the time when budgets are squeezed, change management will
be pushed to the bottom of the priority list.


The requirements for the role are as follows:
Applying a structured change management methodology.
Formulating of strategies.
Developing plans.
Supporting other doers.
Executives and senior managers
The 2007 benchmarking study states that the active and visible participation of the senior
leader was cited as the #1 contributor to success. Employees will be happy to see and hear the
executive's commitment to the change. The influence they provide also carries over to other
change management actors. Effective sponsorship interprets success or failure of the project.
Participation of sponsors actively and visibly throughout the project.
Building a coalition of sponsorship and managing resistance.
Communicating directly with the employees.
Middle managers and supervisors
Managers and supervisors teams change how they do their jobs for the change to be suc-
cessful. In any organisation, there are two types of changes happening constantly the top-
down initiatives launched by senior leaders which are macro-changes, and responses to daily
demands from customers as well as suppliers, that are micro-changes. Through both types of
changes, managers and supervisors support their employees.
The requirements for the role are as follows according to 2007 benchmarking study:
Communicators are the people to whom employees report. Employees like to hear
messages about how the changes impact them and their team from the person they
report to.
If the manager opposes the change, team members will also oppose it and vice versa.
Change coaching is provided by middle managers and supervisors to help employees
to undergo personal transitions.
Liaisons help in interacting with the project team, taking direction, and providing
feedback.
The best involvement to moderate resistance comes from the employee's immediate
supervisor.



Project team
The task is to manage the technical side of the change. In the end, they design how things can
be done differently than they are today. Without any direction and management, the technical
side of the project will not move forward. The project team also ensures that change man-
agement is a part of the project, by providing the appropriate resources and time.
Designing the actual change.
Managing the technical side.
Engaging with change management resource / team.
Integrating change management plans into project team.
Project support functions
It brings expertise in a particular area that includes human resources staff, organisational de-
velopment staff, training specialists, communication specialists, solution specific subject mat-
ter experts, etc. In some cases, one of these might function as the change management team
or resource.
Experience and expertise: This role brings the experience of past changes that can
be applied to current changes.
Knowledge: These groups have special knowledge that helps project team and the
change management resource or team.
Tools: Each area brings specific tools to help in change management activities.
Among all the roles mentioned, two of the roles have direct contact with the employees. They
are executives and senior managers, and middle managers and supervisors. These two are
employee-facing roles because they are the people that employees want to hear from.
The other three roles-change management resource/team, project team, project support func-
tions do their work behind the scenes. They create and apply the plans that are executed by
employee-facing roles. These three are enabling roles because employees dont know who
they are and dont care for what they say.
Change process involves a number of individuals, and important among them are change
agents, change makers, and change leaders.
Change agents use their knowledge of change process, take decisions, and bring about de-
sired change.
Change makers in the organisation are always involved in change implementation process.


Resistance to change concepts
The Concept of Resistance emerges when an individual senses a threat to something that he
values. This threat could be for real or may just be a perception by the individual himself.
The resistance may arise either from a genuine understanding of the change or from misun-
derstanding. It could also arise as a result of his almost total ignorance about the change.
According to change theory, human systems look for homeostasis and equilibrium. Let us go
look into what the above statement is suggesting to us. Most of us prefer predictability and
stability in both personal as well as our professional lives. We typically avoid situations that
upset order, threaten our self-interests, increase stress or involve risk. When faced with
changes to our status quo, we tend to resist initially. The resistance continues and, in some
cases increases, until we recognize the benefits of the change and see the gains to be worth
more than the danger to our self-interests.
There are two fundamental sources of resistance. They are:
Fear.
Lack of awareness.
Reducing Resistance to Change
From the issues raised in the section above, it can be seen that change is complex and there is
not a single solution. There are chances that you may come across people who accept or wel-
come the change.
When an individual foresees possibilities of gain in the following areas such as:
Increased Security.
Money.
More Authority.
Status or Prestige.
Better work conditions.
Self satisfaction.
Better personal contacts.
Reduced time and effort.
Other Factors
Some of the other reasons that an individual accepts change are as follows:
Provides a New challenge.
Likes or Respects the source.
Likes the way in which the change is being communicated.


Reduces the boredom.
] Provides an opportunity for input.
Improves the future.
Perception that the change is necessary.
Thus, we can infer from the two situations that resistance to change can be minimized
through the following manner:
Education and communication.
Participation and involvement.
Facilitation and support.
Negotiation and agreement.
Manipulation and co-optation.
Explicit and implicit coercion.
The following is a step-by-step procedure which when followed will help you to minimize
the resistance to change:
1. Provide all the facts about the reason for changing. If risks are involved, acknowledge
them but explain.
2. Objectively explain the benefits that could result from the change.
3. Seek questions or clarifications and answer them.
4. Invite participation and ask for suggestions because the people involved know the situation
best.
5. Avoid surprise because this stirs unreasoning opposition more than any other factor.
6. Acknowledge the rough spots and explain how you plan to smooth the change.
7. Set standards and explain your expectations.
8. Contact the informal leaders and use their resources.
9. Acknowledge and reinforces the staffs co-operation and give them feedback on the pro-
cess.
10. Keep the two way communications open for suggestions and corrections.
Techniques for managing resistance
The 5 key techniques that are used to manage resistance to change:


Factual aspect of dealing with resistance to change.
Emotional aspect of dealing with resistance to change.
Personal aspect of dealing with resistance to change.
Individual and collective capacity for change.
Acceptance of the limitations of change.
Let us look into the mentioned aspects in detail:
Factual aspect of dealing with resistance to change: A good communication tactic is vital
for a successful change management procedure, and is essential to deal with the factual as-
pects of resistance.
There are 2 stages to the factual communication:
Before the change occurs and during the change process.
The structural and content part of your communication will help greatly from the or-
der of a programme-based approach to leading and overseeing the change initiative.
Emotional aspect of dealing with resistance to change: Many leaders in the world of
change management and change leadership are now speaking about the importance of the
emotional aspect of leadership and the need to address the human dimension of change.
The definitive work in this area is William Bridges as he focuses on transitions and the psy-
chological changes that lie behind significant organisational change.
He maintains that the situational changes are not as difficult for companies to make as the
psychological transitions of the people impacted by the change.
Personal aspect of dealing with resistance to change: We often either overlook or ignore
the factor of YOU as the change leader
It is easy to speak of change management but the reality is that change involves leadership
as well as management. The primary cause of failure in all the change initiatives is that all the
people related are to be dealt with their emotions. So the change leader is expected to possess
some very special qualities. What you do, and how you do it, is largely dependent on how
you are as a person. The mastery of this area is critical to the success of a change initiative.
According to Daniel Goleman, "The leaders emotions are contagious - they infect the organ-
isation"
Individual and collective capacity for change: Another factor that is often over-looked is
that of limits to how far and how fast people and organisations can change.
Why this happens to be so important is because organisational cultures are the single biggest
determinant factor of how an individual responds in an organisational environment.


In other words, you cannot jump from childhood to adult maturity in a single step and with-
out evolving through all the prevailing stages of development.
Acceptance of the limitations of change: Another dimension that that is involved in dealing
with the resistance to change, is that however well planned and executed things happen.
Whether we like it or not there are significant aspects of our personal and organisational lives
that are out of our control.
These things are generally very stressful and often cannot be fully resolved.
Approaches to Organizational Change
The various types of organizational changes are;
1. Individual Level Change
Individual level changes may take place due to changes in job assignment, transfer of an em-
ployee to a different location or the changes in the maturity level of a person which occurs
over a passage of time. The general opinion is that change at the individual will not have the
significant implications for the organization. But this is not correct because individual level
changes will have impact on the group which in turn will influence the whole organization.
Therefore, a manager should never treat the employees in isolation but he must understand
that the individual level change will have repercussions beyond the individual.
2. Group Level Change
Management must consider group factors while implementing any change, because most of
the organizational changes have their major effects at the group level. The groups in the or-
ganization can be formal groups or informal groups. Formal groups can always resist change
for example; the trade unions can very strongly resist the changes proposed by the manage-
ment. Informal groups can pose a major barrier to change because of the inherent strength
they contain. Changes at the group level can affect the work flows, job design, social organi-
zation, influence and status systems and communication patterns.
The groups, particularly the informal groups have a lot of influence on the individual mem-
bers of the group. As such by effective implementing change at the group level, resistance at
the individual level can be frequently overcome.
3. Organizational Level Change
The organizational change involves major programmes which affect both the individuals and
the groups. Decisions regarding such changes are made by the senior management. These
changes occur over long periods of time and require considerable planning for implementa-
tion. A few different types of organization level changes are:


Strategic change. Strategic change is the change in the very basic objectives or mis-
sion of the organization. A simple objective may have to be changed to multiple ob-
jectives. For example, a lot of Indian companies are being modified to accommodate
various aspects of global culture brought in by the multinational or transnational cor-
porations.
Structural change. Organizational structure is the pattern of relationships among var-
ious positions and among various position holders. Structural change involves chang-
ing the internal structure of the organization. This change may be in the whole set of
relationships, work assignments and authority structure. Change in organization struc-
ture is required because old relationships and interactions no longer remain valid and
useful in the changed circumstances.
Process oriented change. These changes relate to the recent technological develop-
ments, information processing and automation. This will involve replacing or retrain-
ing personnel, heavy capital equipment investment and operational changes. All this
will affect the organizational culture and as a result the behaviour pattern of the indi-
viduals.
People oriented change. People oriented changes are directed towards performance
improvement, group cohesion, dedication, and loyalty to the organizations as well as
developing a sense of self-actualization among members. This can be made possible
by closer interaction with employees and by special behavioral training and modifica-
tion sessions.
To conclude, we can say that changes at any level affect the other levels. The strength of the
effect will depend on the level or source of change.
Planning and Implementing Change
Outcomes and Evaluation of Change
While implementing organisational change it is important issue for practitioners and academ-
ics are how effective is the organisational change effort. Researchers where focused on em-
ployee and managerial reports to find if the change made is a failure or successful, later re-
searchers conducted quantitative studies of organisational change efforts more precisely. A
seven year quantitative meta-analysis of organisational change research was conducted by
Barry Macy and Hiroaki Izumi and they found structural changes and human resource chang-
es of organisational change efforts have a positive impact on an organisations financial per-
formance. The changes that are designed to change power or control systems in a firm such
as autonomous team or behaviour-modification reinforcement systems are referred to struc-
tural changes and the changes that eventually change the way employees viewed such as
recognition systems, management development and multi skill training that are passed within
the existing organisations hierarchical structure are referred to human resource change.
It is observed that some researchers have reported low level of success rate for change ef-
forts; however other studies have suggested that, it is not the type of change that affects the


impact as the method the change process is managed. Sharon Parker, Nik Chmiel and Toby
Wall said that downsizing did not have negative consequences for the existing employees
since the change was related to the improvements in work organisation and improved chances
for empowerment.
Several issues are considered to evaluate the effectiveness of organisational change and de-
velopment efforts that include:
A variety of strategies and change techniques, and to assess the effectiveness of
change efforts are examined into techniques such as structural interventions and hu-
man interventions. Researches should focus on discrete change techniques, such as
the introduction of management feedback systems that is, we should recognize the
specific change activities that work in particular settings.
Assessing the complex change in an accurate process, most change researches are ob-
served on a unique basis that uses a cross-sectional design that rely on the conserva-
tive information of those concerned in the change. Sometimes employees develop
post hoc-explanations of their actions which is a limitation to this approach. The ef-
fective change observation shows the change over an extended period of time, starting
from the evaluation earlier to the change, assessing the condition during change, and
examining the long term and short term effects of the change. In an ideal condition to
include control group is easy that is an comparable area of organisation that is not ex-
posed to change, for any variations that appear within an organisation it is easy to find
if the change effort is responsible or other factors such as seasonal or economic fac-
tors are responsible for the variations caused, but generally it is hard to include a con-
trol group since the entire organisation is undergoing change or it is not easy to com-
pare an organisation that is not undergoing the change.
Therefore it is important to focus on financial outcomes and consider employee outcomes
such as sadness, anxiety and exhaustion and also consider assessing the effects of change,
since in an organisation success is very important when considering the effectiveness of or-
ganisational change and development efforts. Thus evaluation of change is not a simple pro-
cess and is critical for a better understanding of works and the managers should carefully plan
the evaluation process and consider it as an essential part of the change program.
Organizational Development
What is Organizational Development?
There is no single definition of "Organizational Development." If we were to break it into its
parts we can discover one meaning: "Organization" has come to mean the coming together
of people and resources to form a unit. "Development" in its simplest form suggests change
and growth. So OD could be defined as "the practice of changing people and organizations
for positive growth."


In practice, Organizational Development can take on many forms, and typical OD activities
can include some of the following:
Team-Building
Organizational assessments
Career development
Training
E- Learning
Coaching
Innovation
Leadership development
Talent Management
Change management
Definitions
"OD is a planned process of developing an organization to be more effective in
accomplishing its desired goals." Human Resources Management & Development Handbook
"OD is a planned intervention aimed at improving individual and organizational health and
effectiveness." Jac Fitz-Enz
Organization development practitioners help companies manage change and align people,
process and practices or success.,, In its simplest form, OD work aims to be a catalyst that
helps the organization get from where it is today (point A) to its desired state (Point B) ASTD
American Society for Training and Development
Our purpose as professionals is to facilitate processes by which human beings and human
systems live and work together for their mutual benefit and mutual well-being. "Organiza-
tional development is a long-term effort led and supported by top management, to improve an
organization's visioning, empowerment, learning, and problem-solving processes, through an
ongoing, collaborative management of organizational culture-with special emphasis on the
consultant-facilitator role and the theory and technology of applied behavioral science, in-
cluding participant action research." Organization Development, [French & Bell, 1999]
Organizational Development Process
The OD Process is based on the action research model which begins with an identified prob-
lem or need for change. The process proceeds through assessment, planning of an interven-
tion, implementing the intervention, gathering data to evaluate the intervention, and determin-
ing if satisfactory progress has been made or if there is need for further intervention. The pro-
cess is cyclical and ends when the desired developmental result is obtained.



The OD process begins when an organization recognizes that a problem exists which impacts
the mission or health of the organization and change is desired. It can also begin when leader-
ship has a vision of a better way and wants to improve the organization. An organization does
not always have to be in trouble to implement organization development activities.
Once the decision is made to change the situation, the next step is to assess the situation to
fully understand it. This assessment can be conducted in many ways including documentation
review, organizational sensing, focus groups, interviewing, or surveying. The assessment
could be conducted by outside experts or by members of the organization.
After the situation is assessed, defined, and understood, the next step is to plan an interven-
tion. The type of change desired would determine the nature of the intervention. Interventions
could include training and development, team interventions such as team building for man-
agement or employees or the establishment of change teams, structural interventions, or indi-
vidual interventions.
Once the intervention is planned, it is implemented.
During and after the implementation of the intervention, relevant data is gathered. The data
gathered would be determined by the change goals. For example, if the intervention were
training and development for individual employees or for work groups, data to be gathered
would measure changes in knowledge and competencies.


This data is used to determine the effectiveness of the intervention. It is reported to the organ-
izations decision-makers. The decision-makers determine if the intervention met its goals. If
the intervention met its goals, the process can end, which is depicted by the raising of the de-
velopment bar. If it did not, the decision is made whether to continue the cycle and to plan
and carry out another intervention or to end it.
OD Intervention/Techniques
The number of OD interventions is large. But they vary in the range and depth of their pene-
tration into the organisational system and in the purpose they serve. No two interventions are
alike and there is no single OD method capable of serving all the likely objectives of an or-
ganisation. Sometimes several methods of OD are used together.
Some of the most important and frequently used techniques of OD are listed below

Sensitivity training
Team building
Survey feedback
Grid training
Process consultation
Management by objectives (MBO)
Role analysis technique (RAT)
Role negotiation technique
Force-field analysis


Eight Steps for Organizational Development Interventions
In an effort to increase its viability and effectiveness, a company will employ interventions as
it implements various change agents. The purpose of such interventions is to improve produc-
tivity, performance or behaviors through a series of structured individual and team activities
that focus on what employees do and how they do it.
Eliminating Hierarchical Decision-Making
When creating developmental change in an organization, the responsibilities of decision-
making should shift from being a task designated to managers to one that all the employees
share. In healthy organizations, managers understand that decision-making should occur
where the sources of information are, which is not always toward the top of the chain of
command.
Focusing on Groups
Because teams make up organizations, not just individuals, change must primarily occur in
groups in order to make a difference in the culture. According to Marvin Weisbord, groups
within an organization must have a clear understanding about its purpose, mission and goals,
as well as the purpose and organization of the company's structure. For change agents to be
effective, employees and their respective departments should have a good understanding re-
garding the various departments within an organization and their relationships. Leadership in
a company must have a balance, not act as if it is "above the law" and provide support to em-
ployees.
Building Trust
In order to create change and promote open communication, an organization must have a cul-
ture of mutual trust. Managers cannot expect employees to trust them automatically. Instead,
in order to breed trust, managers must first show employees that they are trusted.
Reducing Unnecessary Competition
While some competition is healthy, it is not always necessary to create change. Instead of
creating an environment focused on competition to help motivate employees, a company
should focus on creating a culture focused on collaboration. Collaborative conditions can
help improve teamwork and communication, as well as help employees feel their contribu-
tions are important.
Investing in Employees
When a company invests in its employees, employees will invest their time and talents back
into the company. In addition to monitoring goals, providing feedback and reinforcing posi-
tive employee activities, organizations should also work toward developing the skills of their


employees and enhancing their sense of well-being. Such investments can include education-
al opportunities, providing employee benefits and providing the support and tools needed to
accomplish work efficiently.
Interim Measurements of Control
When working toward a goal, it is important for a company to understand that the responsi-
bility of achieving goals falls on all levels of the organization, not just managerial strategies.
Therefore, the organization as a whole, individual departments and employees must evaluate
their activities against set goals.
Active Employee Participation
Employees will support what they help build. In order to create change, all employees should
have opportunities to participate actively in the decisions and achievements of their employ-
er. Doing so will help create a sense of ownership and loyalty in employees and help them to
embrace change agents.
Strategic Interventions
Strategic interventions sometimes are necessary to create change within a company and its
relationship with the external environment. Such interventions can include mergers or acqui-
sitions, a rapid expansion of the market, new or increased competition from another company
or reestablishing relationships with stakeholders



Summary
This unit provides you an overview of change management. Change management is actually
carried out in an organisation. The main purpose of change is to cope up with the changing
business environment and to sustain the position in the global market. Change management
basically deals with change.
As we know that managing change in an organisation is not an easy task. It needs systematic
planning such that changes brought in an organisation do not produce any adverse affect. The
customers' demands and technological updates also enforce an organisation to go for change
in their day-to-day activities.
We cannot consider change as vague process, as it involves employees and managers at dif-
ferent levels in an organisation to understand the importance of change and engage them-
selves in design and implementation of a transition. Organisations are also following a pro-
grammatic approach that considers those affected by the changes as well as supports the be-
haviour change.
We know that each organisation has complex culture and also has certain policies that have
been followed for decades. Thus people tend to resist any change that has been brought in the
organisation. Generally, people will be confused about the new roles and responsibilities. In
this situation, communication forms the key to let them know the importance of change.
The business executives place the change management on top priority. There can be organisa-
tional change management or individual change management. In organisational change man-
agement, the project team members, human resources, and key business leaders support the
change that has been implemented according to business needs. In individual change man-
agement, the changes are managed from the perspective of employees. Change management
cannot be dealt by a single person. The change management team, senior managers and su-
pervisors help employees by providing sufficient knowledge on the changes happening in the
organisation and make them adapt to these changes.
The resistance can arise from the individual who feels threat of losing something valuable or
can arise due to mere misunderstanding. The resistance arises due to fear of change and lack
of awareness. Changes need not significantly alter the way the leader leads. Dealing with re-
sistance to change involves looking totally at the sources and the causes of resistance. To a
large extent, resistance to change is the default element for the adult behavior, and often the
level of resistance is directly proportional to the life and work experience.
The ideal way of dealing with resistance is not to have to! If you have taken care to plan
thoroughly and have addressed all of the key areas required to successfully lead and manage
the change, you would have separated many of the totally unnecessary and expected causes
and sources of resistance.
Miscellaneous


HR Management in Nepali Context

The International Management Conference on Changing Perspectives of Management was
organized by Kathmandu Frontiers Associates (KFA) in association with the Nepalese
Academy of Management (NAM) from March 10 to March 12, 2011. The three day meet was
structured for CEOs, managers, entrepreneurs and management education fraternity to appre-
ciate the current management practices and discover best practices of the future. More than
200 professionals from over 30 countries took part in the conference and presented the re-
search papers and in-depth case studies. This write-up by Chris Brewster, Professor Interna-
tional Human Resource Management (HRM), and Henley Business School, UK focuses on
developing human resource management according to the size, sector and level of employ-
ment of the organization.
As it is the first international conference organized by Nepalese Academy of Management
(NAM), it is important to emphasize on the importance of developing ideas in the Nepali way
and without completely copying things from other countries. Because most of our manage-
ment ideas comes from the USA, there is a tendency of following what they are devising and
practicing which are not always right. Even if we try to replicate this for Nepal, it may not
work as desired. The situation here is different, people are different, the culture is different
and the most important, the systems and practices are different. It is important for Nepal to
understand the importance of original research on the way business is managed here. Then
the people will gradually begin to understand that the concept that Nepal should follow
should be quite different from that of the US or UK.
It is very difficult to analyze the human resource management trend in the private sector be-
cause of the variation of tasks being carried out. What is going on in the banking sector may
not be same as in the agricultural sector. On the other hand, the private sector is more effi-
cient than the public sector and we have but no alternative to make the public sector under-
stand the practices of the private sector to emulate them in the national sphere.
There is absence of evidence base in management. We really dont have the evidence about
what actually works. But there is an avid interest in some academia in getting more ideas
about management based on evidence.
HRM is definitely becoming more globalised. We can say that people are talking about cor-
porate social responsibility, quality and sustainable management so that the things we do now
will have a serious bearing for the future.
Most of the businessmen in the developing countries turn to small businesses and, only then
they tend to learn about the businesses. In another hand, people managing businesses in small

Miscellaneous


Countries are quite involved with their employees. One of the specific issues for the develop-
ing countries is the problem of formal and informal work. In these countries, lot of work is in
the informal sector. So, I think people must be conscious about employing the human re-
source management techniques in the developing society not just to focus on the minority of
the people in the formal sector but in the informal sector as well.
The way corporate governance operates is fundamental for the success of the business. But it
is very difficult to develop the thinking that the business needs long term thinking. So the
corporate governance is very closely linked to the possible way the organizations are man-
aged and the way people are engaged.
HRM is fundamentally an issue of planning and communication. It works with base of spe-
cialists in that area. But I am worried about the systems that put barriers between e-
governance and HRM.
I find Nepali HR executives are very smart and talented. Among them, some of the academi-
cians and practitioners would be very successful person in the future. They need lot more
knowledge and practice so that there will be lot more expertise in Nepal.
Behavioral Science
Behavioral Science deals with the interaction and communication of people. It is a discipline
that deals with the subject of human actions in the fields of sociology and social and cultural
anthropology. It abstracts experimental data to investigate the decision processes and com-
munication strategies in a social system. Behavioral sciences include two broad categories:
decision sciences and social - communication sciences. Decision sciences involve disciplines
like anthropology, psychology, cognitive science, organization theory, psychobiology and
social neuroscience. On the other hand, communication sciences include fields like anthro-
pology, organizational behavior, organization studies, sociology and social networks.
Organizational Psychology
Organizational Psychology is also known industrial psychology, work psychology, occupa-
tional psychology, and personnel psychology or talent assessment. It is the application or ex-
tension of psychological methods and principles to the solution of organizational problems. It
is concerned with those problems caused by human performance within organizational con-
texts. It entails conducting studies on organizational behavior and worker management inter-
actions, analyzing corporate culture and individual/group interactions, developing and evalu-
ating employee selection and appraisal techniques, assessing corporate leadership and em-
ployee motivation strategies, identifying causes and resolutions to internal conflicts and ad-
vising management of the potential psychological and social impact of corporate policies.

Miscellaneous


Bioscience
Bioscience is one of the branches of natural science dealing with the structure and behavior
of living organisms. It is a science whose systematized knowledge is applied to the functions
and problems of human being.
HR CHALLENGES
To remain in business, human resource managers need to efficiently address following
human resource challenges:
Handling Multicultural / Diverse Workforce: Dealing with people from different
age, gender, race, ethnicity, educational background, location, income, parental status,
religious beliefs, marital status and ancestry and work experience can be a challenging
task for HR managers. With this, managing people with different set of ideologies,
views, lifestyles and psychology can be very risky. Effective communication, adapta-
bility, agility and positive attitude of HR managers can bind the diverse workforce
and retain talents in the organization.
Managing Change: Who wants to change their ideology or way of working? Neither
you nor I. How can we expect others to change then? Bringing change in organiza-
tional processes and procedures, implementing it and then managing it is one of the
biggest concerns of HR managers. Business environment is so volatile. Technology
keeps changing every now and then. All thanks to globalization. Upgrading the exist-
ing technology and training people for them is a real headache for HR department.
The success rate of technology change depends how well HRD can handle the change
and manage people issues in the process.
Retaining the Talents: Globalization has given freedom to working professionals to
work anywhere in the world. Now that they have endless lucrative opportunities to
work, hiring and retaining the best industry talent is no joke. Maintaining harmonious
relations with them, providing excellent work environment and offering more remu-
neration and perks than your competitors can retain and motivate them.
Conflict Management: HR managers should know how to handle employee-
employer and employee-employee conflicts without hurting their feelings. Although it
is almost impossible to avoid conflicts among people still handling them tactfully can
help HR managers to resolve the issues. They should be able to listen to each party,
decide and communicate to them in a convincing manner in order to avoid future con-
flicts.
HR professional must be proactive with all strategies and action plans in order to meet the
changing needs of the organization. They must be thorough with the basic functions of HR
including planning, organizing, leading and controlling human resources.

Miscellaneous


Personnel Management vs. Human Resource Management:
During 19
th
century personnel management has been used in different management book in
1970 the term human resource management (HRM). Nowadays the term human resource
management is used widely in text book, human resource management new version of per-
sonnel management. The major difference between personnel and HRM are as follows:-

Basis of Difference Personnel Management Human Resource Manage-
ment

1. Time & Planning
Personnel management has short-
term focus & therefore react specific
personal problems by providing im-
mediate solution. Whenever there is
problem, it makes plan.
HRM is proactive and make
systematic which study before
any problems or changes take
place. It follows long-term
approach to work on a prob-
lem.

2. Investment.
Personnel management regards in-
vestment in people as a variable
cost.
HRM regard investment as a
social capital capable of de-
velopment.

3. Main concerns
The personnel function in unionizes
organization was mainly concerned
with negotiating & administering
collective bargaining. It focuses on
rules and regulations.
HRM function concern with
the wider notion of workforce
governance in which employ-
ees involvement and partici-
pations are emphasized.

4. Information and
Communication.
Personnel management specialist
used communication and infor-
mation mainly as a source of power
and controlling activities.
Communication and infor-
mation is mainly used as a
source of developing trust and
commitment among the or-
ganizations employees.

5. Aims
Personnel management aims at non-
manager specialist and professionals
to increase skills of employees.
HRM is more concern with
the manager by developing
management team in the or-
ganization.

6. Outcome.
Personnel management is concerned
with job satisfaction of employees.
HRM is concerned with the
development of the culture
and climate of organization.

Challenges of Human Resource Management:

In todays business environment, the job of managing people is getting more difficult. Differ-
ent factors directly affect human resource management. Therefore any changes in the envi-
ronment have challenges for human resource management. Some of the challenges of HRM
are as follows:-

Miscellaneous


1. Globalization:
Globalization is the process by which, transaction of business organization have been global-
ized across the world. Globalization provide platform for selling goods and services from one
country to another country. Only those companies can survive from these processes which are
able to employ and retain qualified people. The challenges for human resource department
are to review current HR policies in order to meet globalization.

2. Increasing concern for security and employment:
Security and employment is also the major concern for HRM. The increasing worldwide ter-
rorism is a major challenge not only for nation but also for the organization all over the
world. Therefore, national security provided to people is equally important. The 9/11 terrorist
attack in the USA (World Trade Centre & Pentagon) was a great challenge for the world.
Millions of people and thousands of business organizations were affected by this incident.
Therefore, the internal security problem and external challenges is a major threat for any
country.
3. Work force Diversity:
The success of organization depends on how much it can respond to the situation of work-
force diversity, workforce from different countries with different value, cultures, language,
education, training background representing different races and religions are participating in
work place. The role and responsibility of HRM is to handle diversity related problems.
4. Contingent Workforce:
Contingent workforce refers to the part time, temporary workers appointed for short-term
contract. Employers are now interested in appointing workers on contingent basis to fulfill
the demand of business. Employees of contingent nature can maintain a balance between
family and work. Moreover, they are challenges for HRD. Since they are part timers, it is the
role of HRD to use their skills. It is very difficult for the organization to use their skills for a
long time.
5. Decentralized work sites:
With the increasing use of information technology, work places are decentralized. Due to the
use of computers, e-mails and internet network, todays employees are not required to sit in
the office from 9 AM to 5 PM instead they can work at home and report to the head office
with the help of computer linkage. However, challenges are there for HR department to moni-
tor and evaluate the performance of workforce. Human resource department have to ensure
the quality of work in decentralized work sites.
6. Employees Involvement:
The need for employees involvement at work place is increasing to make them able to con-
tribute to a given job. Similarly, when the organization is larger in size, it is difficult for low-
er level management to work without responsibility and resources. To enhance employees
contribution, it is essential to delegate authority. The challenges for HR manager are to make
the people engaged and use their maximum effort. To make the employees involved the best
motivating factors will be to provide opportunities to work in challenging job.

Miscellaneous


Human Resource Management in Nepal:

Nepalese organizations are in the age of personnel management. There is least con-
cern with developing and utilizing HR potentiality.
There is nepotism and favoritism in most of the Nepalese organizations.
Nepalese top managers spend a lot of time in hiring and transferring employees.
There is over supply of human resources. Manpower planning is lacking in Nepal.
HR development has remained an area of least priority in Nepalese organization.
Training is not regarded as an investment in human resources.
Nepalese organizations are not oriented towards productivity improvement. There is
no harmony between individual and organizational goals.
Private enterprises lack systematic performance appraisal systems. Public enterprises
have legally prescribed performance appraisal system, but in practical they are not
used.
It can be concluded that the output of HR quality of work life, productivity and readiness to
change has not been achieved.

From the above definitions, the characteristics of human resource planning are as follows:-
1. It is related with the planning of human resources based on strategic plan.
2. It estimates demand and supply of manpower.
3. It assures that sufficient numbers of skilled and motivated employees are available.
4. It helps to utilize human resources in a cost-effective manner.

According to Schuler "Personnel and HR Planning involves forecasting human resource
needs for the organization planning the step necessary to meet those need."

According to Decenzo and Robbins, "Employment planning is the process of determining
organizations human resources."
The Top Five Types of Workplace Hazards

When you know how injuries occur in the workplace, you can put in place prevention
measures. The most common hazards are from chemicals, fires, repetitive motion, electricity
and fall related injuries. Keeping your employees safe can ensure a happier, more productive
workplace. Build safety policies that address the specific hazards in your workplace.
Chemicals
Your employees may be at risk of health hazards if their jobs include exposure to chemicals.
Substances that can harm your workers include fumes, gases, liquids, solids, dust, vapors and
corrosives. Whether your employees are at risk of ingesting the substance, inhaling it or ab-
sorbing it through the skin, you have a responsibility to ensure the risks are minimized. These
types of hazards can be in any type of business you run, from manufacturing to retail.
Miscellaneous


Fire
Fire is a risk for your business, no matter what type of company you are running. The Seattle
Fire Department Fire Prevention Division estimates 70,000 to 80,000 fires occur in business-
es in the U.S. each year. Knowing where your fire extinguishers are, holding fire drills and
informing employees of your emergency escape routes can ensure safety.
Repetitive Use Injury
When your employees repeat the same actions throughout the day, such as typing or rolling
dough, or washing windows, they are at risk of repetitive use injury. The parts of the body
that suffer from repetitive use are the back, shoulders, forearms, wrists and hands. Ensuring
adequate breaks from job duties can reduce the risk of injury.
Electrical Hazards
People, who work directly with electricity, including electricians and engineers, are at risk of
injury; personnel who work with electrical equipment in the office are also at risk of injury.
Even an office worker making a fix with power tools outdoors can sustain electrical injury
during adverse weather. You can minimize the risk of injuries by using one extension cord or
power strip per connection, keeping liquids clear of electrical equipment and conducting reg-
ular safety examinations.
Accidental Falls and Falling Objects
If your employees work at elevated heights, they may be at risk of accidental falls. Anytime
objects are stored at or above head level, there is a risk of injury caused by falling objects.
Wearing safety gear including a hard hat or harness, and installing guardrails or a safety net
can reduce the risk of injury. Instruct employees on the safe use of equipment.
Legal regulation of business environment of Nepal
Labor Act, 1992 (2049)

Labor Act 1992 (2049) replaced the Nepal Factory and Factory workers Act, 1959. The
Act emphasizes on job security, rights of remuneration after work, prohibition of child la-
bour, freedom of unite under the trade union, minimum wages, health, safety and welfares,
code of conduct, workers' participation in management and dispute settlement. Major High-
lights on Labour Act, 2049:
The rights, interests, facilities and safety of workers and employees working in enterprises
of various sectors shall be protected.
Non-Nepalese citizens shall not be permitted to be engaged at work in any of the posts until
and unless the Nepalese manpower available inside the country.
Miscellaneous


Change in the ownership of the Enterprise shall not be affected on the terms and conditions
of service of the workers and employees.
No worker or employee shall be deployed in work for more than eight hours per day or forty
eight hours per week and they shall be provided one day as weekly holiday for every week.
No agreement may be entered into between the manager and workers or employees in a way
to make the minimum remuneration, dearness allowances and facilities lesser than those fixed
by GON.
The person or institution, who engages the workers and employees of outside the Enterpris-
es at work, must pay the remuneration for the day engaged at work in accordance with the
agreement if such agreement in writing has been concluded between the two parties and with-
in seven days if there is no such agreement.
No child shall be engaged in work in any Enterprise.
Minors and females may be engaged in the works normally from 6 am to 6 pm except in the
prescribed conditions.
By making an appropriate arrangement with mutual consent between the proprietor and the
worker of employee, the females may also be engaged in the works similar to the males.
The Manager may transfer a worker or employee to any branch or unit of the Enterprise
without causing any difference in the nature or standard of work. .
Where any worker or employee is engaged to work for more than eight hours in a day or
forty eight hours in a week, he shall be paid overtime wages at the rate of one and one-half
time of his ordinary rate of wages.
One welfare Officer shall have to be appointed in Enterprise where 250 or more workers of
employees are engaged and one additional Assistant Welfare Officer shall have to be ap-
pointed where there are more than 1000 workers or employee.
The service of any permanent worker or employee may not be terminated without following
the procedures prescribed by this Labour Act or the Regulations or Bylaws made under this
Act.
The permanent worker of employee shall have to be paid with at least twenty five percent of
his remuneration as retaining allowance for the period of closure of a seasonal Enterprise dur-
ing off-season.
Proper safety provision should be made in working place to prevent from the probable
accidents, harm and injury to the employees.
Where fifty or more female workers and employees are engaged in the work, the Proprietor
of the Enterprise shall have to make provisions of a healthy room for the use of children of
such female workers and employees.
Miscellaneous


The Enterprise shall have to establish a Welfare Fund, as prescribed for the welfare and
benefit of the workers or employees.
In case any worker or employee of the Enterprise is physically wounded or seriously hurt or
dies in course of his work, the compensation shall be paid to him or to his family, as pre-
scribed.
The Proprietor shall have to constitute a Labour Relation Committee in each Enterprise in
order to create amicable atmosphere between the workers or employees and the management
and to develop healthy labour or industrial relation on the basis of mutual participation and
coordination.

Industrial Enterprises Act, 1992 (IEA)

Objectives:
To development overall economic status of the country, to make arrangements for fostering
industrial enterprises in a competitive manner through the increment in the productivity by
making the environment of industrial investment more congenial, straightforward and en-
couraging the act is enacted in 2049.
Major provisions in the act
Constitution of Industrial Promotion Board:
a) The Minister or State Minister for Industries - Chairman
b) The Assistant Minister for Industries - Member
c) Member (looking after industries), National Planning Commission - Member
d) The Governor, Nepal Rastra Bank - Member
e) The Secretary, Ministry of Industry - Member
f) The Secretary, Ministry of Finance - Member
g) The Secretary, Ministry of Commerce - Member
h) The Secretary, Ministry of Tourism - Member
i) The Director General, Department of Cottage and Small Industries - Member
j) Representative, Federation of Nepalese Chambers of Commerce and Industry - Member
k) Two persons, nominated by Nepal Government, either from among the industry, com-
merce and tourism sector organizations or from among the persons of high distinction in the
same field. - Member
Miscellaneous


l) The Director General, Department of Industries - Member Secretary
Functions, Duties and Powers of the Board:
a) To render necessary cooperation in formulating and implementing policies, laws and regu-
lations pertaining to the industrialization of the country.
b) To give guidelines in attaining the objectives of liberal, open and competitive economic
policies pursued by the country so as to make the industrial sector competitive.
c) To maintain coordination between the policy level and the implementation level of the in-
dustrial policy.
d) To cause to follow the ways and means for the prevention of the environmental pollution
by putting more emphasis on the avoidance of effects on the environment and the public
health.
e) To make recommendation to Nepal Government for the inclusion of any industry in the
classification of industries.
f) To make recommendation to Nepal Government to introduce changes in the Areas men-
tioned in Annex 3 by making evaluation thereof from time to time.
g) To give directives to the concerned body after making inquiries into the application sub-
mitted by any industry complaining that the industry has not received the facilities and con-
cessions to be made available by the Committee.
h) Other functions, duties and powers of the Board shall be as prescribed.
Constitution of the One-Window Committee:
1) Nepal Government shall, for the purpose of making available the facilities and concessions
to be enjoyed by any industry under this Act in time from a single place constitute a One-
Window Committee consisting of the following:
a) The Director-General, Department of Industries Coordinator
b) The Director-General, Department of Customs Members
c) The Director-General, Department of Excise Duty Member
d) The Director-General, Tax Department Member
e) The Director-General, Sales Tax Department Member
f) The Director-General, Department of Commerce Member
g) The Chief Controller, Nepal Rastra Bank Member
h) Representative, Federation of Nepalese Chambers of Commerce and Industry Member
Miscellaneous


i) One expert in the field of industry and commerce as designated by Government or one rep-
resentative from the Federation Member
Function, Duties and Powers of the Committee:
a) To make necessary decisions for making available the facilities and concessions to be en-
joyed by any industry under this Act.
b) To perform such functions as may be delegated by the Board under its functions, duties
and powers.
b) To make recommendations as may be required for making time-bound provisions on mak-
ing available infrastructural services such as electricity, water, and means of telecommunica-
tions, land, and road, and so on required for the industries.
c) Other functions, duties and powers of the Committee shall be as prescribed.
2) Any decision made by the Committee,

National Priority Industries
1. Agro and Forestry-based Industries.
2. Engineering Industry (Producing Agricultural and Industrial Machine).
3. Industry Manufacturing Fuel Saving or Pollution Control Devices.
4. Solid Waste Processing Industry.
5. Road, Bridge, Tunnel, Ropeway and Flying Bridge Constructing and Operating Industry,
and Trolley Bus and Tram Manufacturing and Operating Industry.
6. Hospital and Nursing Home (Only outside the Kathmandu Valley).
7. Industries Producing Ayurvedic, Homeopathic and other Traditional Medicine, and Indus-
tries Producing Crutch, Seat Belt, Wheel Chair, Stretcher and Stick and so on to be used in
aid of the disabled and orthopedic.
8. Cold Storage installed for the storage of Fruits and Vegetables.
Quality, Involvement and Commitment as Competitive
Advantages
The three critical factors that help achieve organizational excellence are:
Commitment to quality customer service.
Commitment to a high quality of work life.
Employee involvement.
Miscellaneous


Employee involvement implies that employees at all levels are involved in the successful op-
eration of the business. Employee involvement is present only when employees have the fol-
lowing facilities:
Authority to make decisions.
Good understanding of business operations.
Training and personal development opportunities.
Good and open channels for communication.
Good performance management programs.
A good reward program.
Quality customer service should be the core priority of any business. The top management
should be totally committed to quality and this commitment should be communicated to em-
ployees at all levels. Customer feedback should be constantly used to improve business prac-
tices. Organizations display a commitment to a high quality of work life if they follow
the practices listed:
Help employees balance their personal and work life.
Give its employees challenging jobs without overworking them.
Does not discriminate amongst its employees.
Equip its employees with the correct tools, materials and equipment.
Ensure job security.
Organizations can gain competitive advantage if they incorporate employee involvement,
quality assurance and a high commitment to good quality of work-life in their culture.
Employees too become committed to the organisation. The morale of the employees im-
proves and productivity increases.
HR infrastructure

Miscellaneous


The essential HR building blocks that build a productive workplace are:
Employment Contracts: A good employment contract clearly states the basic rights
and obligations of both the employer and the employee.
Staff Handbooks: These provide information about what is expected of the employ-
ees and what the employees can expect from the organisation.
Policies and Procedures: These specify the working of the organisation.
Good job descriptions: These describe the manner in which each job fits into the
overall organisation.
Proper Performance Evaluation Systems: These improve employee productivity.
Compensation System: It rewards and reinforces right behavior.

Progressive Discipline Procedure
Firm's competitiveness
Recent research has emphasized the strategic focus that human resource management must
have in order for an organization to fully utilize its human resources in a competitive market.
However, few empirical studies have been done to date regarding how human resource plan-
ning should be linked to strategy. An extensive in-depth study of four large, complex, and
very successful companies supports the widespread belief that human resource management
can be a powerful tool to enhance competitiveness when policies and practices are logically
driven by a firm's strategy and by the key environmental factors it faces.
The study identifies areas of selection; appraisal, reward, and development are handled by
these firms. Based on both the specific policies and the actual practices as perceived by mid-
dle managers (those that implement the policies), it presents a contingency framework which
offers guidelines as to how certain HRM practices should be implemented to gain competi-
tive advantage.

Miscellaneous


Employment and strategic planning process

Forecasting Future HR Needs (Demand)
Forecasting based on:
projected turnover
quality and nature of employees relative to needs
decisions regarding product quality and new markets
plans for technological and administrative change to increase productivity and reduce
headcount
financial resources available
Quantitative Approaches:
Trend analysis: review past employment levels
Ratio analysis: ratio of business activity/employees
Scatter plot: graph of business activity/employees
Regression analysis: statistical relationship between business activity and employees
Qualitative Approaches:
Miscellaneous


1. Nominal Group Technique
experts meet face-to-face
group discussion facilitates exchange of ideas
possible subjectivity, group pressure
2. Delphi Technique
experts work independently
wide range of views
difficult to integrate diverse opinions
3. Managerial judgment
Markov Analysis
tracking the pattern of employee movements through various jobs and developing a
transitional probability matrix
Differences between Personnel management and HRM

Miscellaneous


Miscellaneous


Miscellaneous


Importance of Induction & Training
Induction & training are important in any organization as it is the only way a new recruit can
become productive as quickly as possible. It can avoid costly mistakes by recruits not
knowing the procedures or techniques of their new jobs. The duration of induction &
training varies from job to job and organization to organization. It also depends on the com-
plexity of the job, the expanse of the business and the level or position of the job within the
business.
Induction & training includes:
Meeting new colleagues
Seeing the layout the premises
Learning about the duties of the job
Learning about the internal workings and policies of the business
Learning the values and aims of the business
Development of competencies

Miscellaneous


Job Specification and Job Description

RECRUITMENT Vs SELECTION

Miscellaneous


SELECTION PROCEDURE

Outplacement Is a Service for Laid Off Employees

When an organization makes the tough economic decision to lay off employees, any assis-
tance the company provides is appreciated. A severance package that covers two weeks, or
more, of pay for each year that an employee worked and continuation of benefits for a period
of time are the most common severance package components.
Outplacement is a rapidly growing component of a severance agreement. Whether outplace-
ment is effective in helping employees find jobs more quickly is up for debate. Experiences
of former employees vary and employers appear to do very little vetting or measuring of the
results of the outplacement firms they use.
What Services Does Outplacement Provide?
Outplacement is a service that is supplied by companies that specialize in helping employee's
job search following a layoff or job loss. Outplacement services are contracted for by the em-
ployer who is laying off employees to help employees make a swift transition to a new job.
People can pay for outplacement themselves but it is a bonus when provided by the employer
as part of a severance agreement.
Miscellaneous


Outplacement normally consists of individual or group career counseling and advising. Since
many laid off employees are unfamiliar with current job searching techniques, training in job
searching is provided. Outplacement firms help develop resumes and cover letters and even
apply for jobs for individuals. Outplacement firms also provide job leads and follow-up coun-
seling and advice.
Outplacement firms supply offices for job searching employees in some agreements and
group training in all aspects of job searching and career transition. Increasingly, interactive
outplacement services are becoming available online, so an employee does not need to travel
to see his or her career coach. Additional outplacement services are provided over the phone,
by instant message (IM) and even texting.
Prevalence of Outplacement
According to the Wall Street Journal, in 2009, "More than two-thirds of 265 U.S. employers
with layoffs during the past two years offered outplacement, at an average cost of $3,589 an
employee, according to a June survey for The Wall Street Journal by the American Manage-
ment Association and Institute for Corporate Productivity."
The WSJ, in the cited article, says that 58.5% of laid off professionals receive outplacement
for 1-3 months. Another 17.7% receive outplacement for 3-6 months. Executives are likely to
receive more services for a longer period of time.
The cost of outplacement ranges from a high of over $10,000 for senior executives to $1,472
for hourly employees. The quantity of services is reflected by the range. A company high-
lighted in an Inc. article, says that their coaching and support last for a year at a cost ranging
from $1,000 to $25,000, paid for by employers.
Success of Outplacement
The success of outplacement draws mixed reviews. Participants claim that too many people
are served by too few career coaches. Others claim that the advice they receive is trivial and
not very helpful in a serious job search. Others are unhappy with the resumes and cover let-
ters that outplacement firms develop and claim that they are boilerplate and embarrassing,
especially when a candidate is competing with other clients of the same outplacement firm
for the same job.
Outplacement recipients also complain about the methods used by outplacement firms to ap-
ply for jobs for them. But, the majority of complaints about outplacement seem to revolve
around a lack of individual attention and time from career coaches and the quality of the ad-
vice, assistance, and application materials.

Miscellaneous


GLOSSARY

Glossary


Glossary

Arbitration: The process that allows the parties to submit their dispute to an impartial
third party for resolution.
Autonomy: The extent of individual freedom and discretion employees has in performing
their jobs.
Action Learning: A training technique by which management trainees are allowed to
work full-time analyzing and solving problems in other departments.
Assistant to Position: Employees with demonstrated potential are sometimes given the
opportunity to work under a successful manger.
Application Blank: Application blank is a formal record of an individual's application for
employment.
Advertising: A way of communicating the employment needs within the firm to the pub-
lic through media such as radio, newspaper, television, industry publications, and the In-
ternet.
Awareness, Desire, Knowledge, Ability, and Reinforcement (ADKAR) Model: It is one of
the change management models that allow teams to focus their activities on specific busi-
ness results.
Burnout: The total depletion of physical and mental resources caused by excessive striv-
ing to reach an unrealistic work-related goal.
Biofeedback: A method of learning to control involuntary bodily processes, such as blood
pressure or heart rate.
Burnout: An incapacitating condition in which individuals lose a sense of the basic pur-
pose and fulfillment of their work
Boycotts: An agreement by union members to refuse to use or buy the firm's products.
Business Games: A development technique in which teams of managers compete with
one another by making computerized decisions regarding realistic but simulated compa-
nies.
Behavior Modeling: A training technique in which trainees are first shown good man-
agement techniques in a film, are then asked to play roles in a simulated situation, and are
then given feedback and praise by their supervisor.
Booz & Company: It is now the oldest management consultancy firm in business.
Glossary


Benchmarking: It is a process of comparing ones business processes with the best in the
industry.
Central Tendency Occurs when employees are incorrectly rated near the average or mid-
dle of the scale.
Contingent Workers: It is also known as part-timers, temporaries, and independent con-
tractors, comprise the fastest-growing segment of our economy.
Corporate Culture: The firm's culture reflects, in effect, how we do things around here.
This relates to everything from the way employees dress to the way they talk.
Conflict: Conflict is the process in which one party perceives that its interests are being
opposed or negatively affected by another party.
Collective bargaining: The process through which representatives of management and the
union meet to negotiate a labor agreement.
Constraints: Constraints are barriers that keep us from doing what we desire.
Capitation: Typically, the reimbursement method used by primary care physicians is an
approach to health care where providers negotiate a rate for health care for a covered life
over a period of time.
Communication Exchange of information between people; it occurs when one person un-
derstands the meaning of a message sent by another person, and responds to it.
Classification Method: A job evaluation method by which a number of classes or grades
are defined to describe a group of jobs is known as Classification method.
Compensation: The total of all rewards provided employees in return for their services.
Coaching/Mentoring: A method of on-the-job training where an experienced worker or
Method the trainee's supervisor trains the employee.
Case Study Method: A development method in which the manager is presented with a
written description of an organizational problem to diagnose and solve.
Career: Career can be defined as a general course of action a person chooses to pursue
throughout his or her working life
Career planning: Career planning is an ongoing process through which an individual sets
career goals and identifies the means to achieve them.
Career Paths: Career paths have historically focused on upward mobility within a par-
ticular occupation.
Glossary


Career Development: A formal approach taken by an organization to help people acquire
the skills and experiences needed to perform current and future jobs is termed as career
development.
Disability protection: Workers' compensation protects employees from job-related acci-
dents and illnesses. Some firms, however, provide additional protection that is more com-
prehensive.
Decoding: Process by which the receiver translates the sender's message into an under-
standable form.
Demands desires that are backed by the purchasing power or affordability.
Disability protection: Workers' compensation protects employees from job-related acci-
dents and illnesses. Some firms, however, provide additional protection that is more com-
prehensive.
Downsizing: A reduction in the number of people employed by a firm (also known as re-
structuring and rightsizing).
Discipline: A procedure that corrects or punishes a subordinate because a rule of proce-
dure has been violated.
Dual-Career Path: A career-path method, that recognizes that technical specialists can
and should be allowed to continue to contribute their expertise to a company without hav-
ing to become managers.
EAPs: Specific programs designed to help employees with personal problems.
Empowerment: Empowerment means giving employees the authority, tools, and infor-
mation they need to do their jobs with greater autonomy.
Enterprise Resource Planning (ERP): It is a computer related system used to manage
financial resources, materials, and human resources.
Employee Separations: An employee separation occurs when an employee ceases to be a
member of an organization.
Employee Rights: Employee rights allow them to engage in conduct protected by laws
and social sanctions.
Encoding: Process by which sender puts a message in a certain format to send to the re-
ceiver.
(ESOP): A defined contribution plan in which a firm contributes stock shares to a trust.
Extinction: withdrawing or failing or failing to provide a reinforcing consequence.
Glossary


Equity: Workers' perceptions that they are being treated fairly. Compensation must be fair
to all parties concerned and be perceived as fair.
External Equity: Exists when a firm's employees are paid comparably to workers who
perform similar jobs in other firms.
Flextime: The practice of permitting employees to choose, with certain limitations, their
own working hours.
Feedback: Information about some behavior and its effect.
Gain sharing: Plans that are designed to bind employees to the firm's performance by
providing an incentive payment based on improved company performance.
Grievance procedure: A formal, systematic process that permits employees to complain
about matters affecting them and their work.
Hypnosis: An altered state of consciousness that is artificially induced and characterized
by increased receptiveness to suggestions.
Health: Refers to the employees' freedom from physical or emotional illness.
Human Resource Development: A major HRM function that consists not only of T&D
but also individual career planning and development activities and performance appraisal.
Halo Error: Occurs when the evaluator perceives one factor as being of paramount im-
portance and gives a good or bad overall rating to an employee based on this factor.
Human Resource Information System: HRIS are systems used to collect, record, and
store, analyze, and retrieve data concerning an organization's human resources.
Human resource planning (HRP): It is the process of systematically reviewing human
resource requirements to ensure that the required number of employees, with the required
skills, is available when they are needed.
Horizontal conflict: It takes place between departments or groups at the same level of the
organization.
Internal Equity: Exists when employees are paid according to the relative value of their
jobs within an organization.
Increment: It is an increase of some amount.
Internal Recruiting Sources When job vacancies exist, the first place that an organiza-
tion should look for placement is within itself.
Internships: A special form of recruiting that involves placing a student in a temporary
job.
Job Pricing: Job pricing means placing a dollar value on the worth of a job.
Glossary


Job Evaluation: Job evaluation means systematically determining relative worth of jobs
to create job structure.
Job Rotation: It involves moving employees from one job to another for the purpose of
providing them with broader experience.
Job Rotation: It involves moving employees to various positions in organization in an
effort to expand their skills, knowledge and abilities.
Job Analysis Studying and under-standing jobs through the process known as job analy-
sis is a vital part of any HRM program
Job Specification: A job specification is a document containing the minimum acceptable
qualifications that a person should possess in order to perform a particular job
Job Description: A job description is a written statement of what the jobholder actually
does, how he or she does it, and under what conditions the job is performed.
Job Evaluation: It suggests about the relevant importance of a particular job in organiza-
tion.
Job Identification: Contains the job title, the status, date, and possible space to indicate
who approved the description, the location of the job, the immediate supervisor's title, sal-
ary and/or pay scale.
Job Summary: should describe the general nature of the job, and includes only its major
functions or activities.
Learning Organization: An organization skilled at creating, acquiring, and transferring
knowledge and at modifying its behavior to reflect new knowledge and insights.
Learning Organizations: Firms that recognize the critical importance of continuous per-
formance-related training and development and take appropriate action.
Layoffs: At times, the firm has no choice but to actually lay off part of its workforce.
Leadership: Leadership is a process where Leader/Person who influences individuals and
groups in an organization.
MBO: It is a goal-oriented performance appraisal method, requires that supervisors and
employees determine objectives for employees to meet during the rating period, and the
employees appraise how well they have achieved their objectives.
Merit Pay: A pay increase given to employees based on their level of performance as in-
dicated in the appraisal.
Motivation: Motivation is the inner drive that directs a person's behavior toward goals.
Glossary


Mediation: A process whereby a neutral third party enters a labor dispute when a bargain-
ing impasse has occurred.
Mentoring & Coaching: When senior employee takes an active role in guiding another
individual, we refer to this activity as mentoring and coaching
Motivation: Activities in HRM concerned with helping employees exert high energy lev-
els and to get performance in desirable direction.
Norms: Provide a frame of reference for comparing applicants' performance with that of
others. A norm reflects the distribution of scores obtained by many people similar to the
applicant being tested. The prospective employee's test score is compared to the norm and
the significance of the test score is determined.
Noise; All factors that interfere with and distort communication.
Negotiation: It is the process used by two or more parties to reach a mutually agreeable
arrangement to exchange goods and services.
On-the-job Training (OJT) : Training a person to learn a job while working at it.
Outsourcing: Out sourcing is the process of transferring responsibility for an area of ser-
vice and its objectives to an external service provider instead of internal employee.
Objectivity: Achieved when all individuals scoring a given test obtain the same results.
Outplacement: A company procedure that assists a laid-off employee in finding employ-
ment elsewhere.
Positive Reinforcement: Applying a valued consequence that increases the likelihood that
the person will repeat the behavior that led to it is termed as positive reinforcement.
Punishment: Punishment means administering an aversive consequence.
Point Method: Raters assign numerical values to specific job components, and the sum of
these values provides a quantitative assessment of a job's relative worth.
Pay for Performance: Pay for performance refers to any compensation method that ties
pay to the quantity or quality of work the person produces
Performance Analysis: Careful study of performance to identify a deficiency and then
correct it with new Equipment, a new employee, a training program, or some other ad-
justment.
Performance Management: A process that significantly affects organizational success by
having managers and employees work together to set expectations, review results, and re-
ward performance.
Glossary


Performance: Performance appraisal is a system of review and evaluation of an individual
or team's job performance.
Performance: Performance can be defined as efforts along with the ability to put efforts
supported with the organizational policies in order to achieve certain objectives.
Plans: Plans are methods for achieving a desired result.
Progressive Discipline: An approach to disciplinary action designed to ensure that the
minimum penalty appropriate to the offense imposed.
Positive Discipline: Encouraging employees to monitor their own behaviors and assume
responsibility for their own actions is called positive discipline.
Process conflict: Conflict over how work gets done.
Recruitment: It is the process of attracting individuals on a timely basis, in sufficient
numbers and with appropriate qualifications, and encouraging them to apply for jobs with
an organization.
Recruitment: Recruiting refers to the process of attracting potential job applicants from
the available labor force.
Reliability: The extent to which a selection test provides consistent results. If a test has
low reliability, its validity as a predictor will also be low. To validate reliability, a test
must be verified.
Relationship conflict: Conflict based on interpersonal relationships
Ranking Method: Raters examine the description of each job being evaluated and arrange
the jobs in order according to their value to the company.
Scanlon plan: Provides a financial reward to employees for savings in labor costs that re-
sult from their suggestions.
Safety: Involves protecting employees from injuries due to work-related accidents.
Stress: Stress is the body's nonspecific reaction to any demand made on it.
Simulation: A technique for experimenting with a real-world situation through a mathe-
matical model representing that situation. A model is an abstraction of the real world.
Strategic planning: is the process by which top management determines overall organiza-
tional purposes and objectives and how they are to be achieved.
Selection Process; Selection is the process of choosing from a group of applicants those
individuals best suited for a particular position.
Glossary


Standardization: Refers to the uniformity of the procedures and conditions related to ad-
ministering tests. It is necessary for all to take the test under conditions that are as close to
identical as possible.
Snap Judgments: This is where the interviewer jumps to a conclusion about the candidate
during the first few minutes of the interview.
Socialization: Teaching the corporate culture and philosophies about how to do business
Socialization: In order to reduce the anxiety that new employees may experience, attempts
should be made to integrate the person into the informal organization.
Stress: Stress is the body's nonspecific reaction to any demand made on it.
Steward: A union member who is elected to represent fellow workers in negotiating with
management.
Telecommuting: Telecommuting is a work arrangement whereby employees are able to
remain at home, or otherwise away from the office, and perform their work over telephone
lines tied to a computer
Transcendental Meditation A stress-reduction technique in which an individual, com-
fortably seated, mentally repeats a secret word or phrase provided by a trained instructor.
Training: The process of teaching new employees the basic skills they need to perform
their jobs.
Task Analysis: A detailed study of a job to identify the skills required so that an appropri-
ate training program may be instituted.
Training: The heart of a continuous effort designed to improve employee competency and
organizational performance.
Training: Training is a process whereby people acquire capabilities to aid in the achieve-
ment of organizational goals. It involves planned learning activities designed to improve
an employee's performance at her/his current job.
Trust: Trust is a positive expectation that another will not act opportunistically.
Task conflict: Conflicts over content and goals of the work
Transcendental Meditation A stress-reduction technique in which an individual, com-
fortably seated, mentally repeats a secret word or phrase provided by a trained instructor
Telecommuting: Telecommuting is a work arrangement whereby employees are able to
remain at home, or otherwise away from the office, and perform their work over telephone
lines tied to a computer.
Glossary


Validity: The extent to which a test measures what it purports to measure. If a test cannot
indicate ability to perform the job, it has no value as a predictor.
Vision: Vision that is a general statement of the organization's intended direction that
evokes positive emotional feelings in organization members.
Vertical conflict: It occurs between groups at different levels of the organization.
Vestibule or Simulated: Training employees on special off-the-job equipment, as in train-
ing airplane pilot training, whereby training costs and hazards can be reduced.
360-Degree Feedback: Involves input from multiple levels within the firm and external
sources as well.
Whistle Blowing: A situation in which an employee notifies authorities of wrongdoings in
organization
Yield Ratios Yield Ratios help organizations decide how many employees to recruit for
each job opening.

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HRM in Context

HUMAN RESOURCE MANAGEMENT Page 1

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