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IMTS (ISO 9001-2008 Internationally Certified) HUMAN RESOURCE MANAGEMENT





01-57 Human resource management – objectives, scope, importance – evolution of HRM –

role of HR manager – challenges faced by HRM – trends in HRM – Indian scenario and HRM – strategic human resource management


58-91 Job analysis – components, process, job design – recruitment – sources, techniques,

internet recruitment – employee testing and selection – types, effective interview – placement – induction


92-143 Training – importance – types of training – performance appraisal – objectives,

process, methods – job evaluation, promotion – demotion – transfer – separation and implication of job change


144-168 Compensation – factors determining pay rate – incentives – incentive plan, effective

incentive plan – employee benefits and services – employee welfare, safety and health


169-243 Industrial relations – collective bargaining – process, trade unions – workers

participation in management – grievance handling – redressal committees




Unit: 1 Human Resource / Capital Management INTRODUCTION

An organization is made up of four resources, namely men, material, money and machinery. Of these, the first one id living one, i.e. human resource and other three are non-living i.e.non human. It is the human/people that make use of non human resources. Hence, people are the most significant resources in an organization. It is man who makes all the difference in organizations. L.F.Urwick had remarked that “business houses are made or broken in the long run not by markets or capitals, patents or equipments, but by men”. According to Peter F.Drucker, “ man, of all the resources available to man, can grow and develop.”

The main objective of this Unit is to present a perspective for human capital management in the Indian context. Accordingly the meaning, objectives, scope and functions become the subject matter of this Unit.

Before we define HRM, it seems pertinent to first define the term “human resources.” In common parlance, human resources mean people. OR Personnel means the persons employed. Personnel management is the management of people employed.

Organization may be a manufacturing firm, a business concern, an insurance company, a governmental agency, social organizations, hospital, a university and even families. It may be small or large, simple or complex. An Organization is a human grouping in which work is done for the accomplishment of some specific goals, or missions.

What do you mean by personnel management or define the term personnel management or write short notes on personnel management? Introduction: •

1 + 1 makes an organisation i.e., where there are two or more persons there is in effect an organisation. The concept of organisation is its HR or people at work. HR have been defined as “from the national point of view, the knowledge skills creative abilities, talents, aptitudes and obtained in the population, where of form the individual enterprise point of view, they represent the total of the inherent abilities, acquired knowledge and skills as exemplified in the talents and aptitudes of its employees.

A human factor refers to “a whole consisting of interrelated, interdependent and interacting physiological. Psychological, sociological and ethical components. “The




management traditions, sentiments and behaviour, they differ widely also as groups and are subject to many and varied influences. Peoples are responsive they feel, think and act therefore; they cannot be operated like a machine or shifted and altered like a template in a room layout. They therefore, need a tactful handling by management personnel. •

Taking a look at this world of human beings is a rewarding experience. Contrasts abound in this world. Contrasts notwithstanding, one thing is certain – it is people who make an organization a success or allow it to be handed over to the board of industrial and financial reconstruction (BIFR). If HLL, INFOSYS, RIL, BAJAJ AUTO, ICICI have become star performers and HMT, mysore lamps, NGEC are on their way to the BFIR. It evidently shows how important human resources are to the life and health of the organization. Who are these so-called patrons? How to attract them? How to retain them? How to motivate them?

These questions need in-depth study and personnel management tries to study these and other related questions.Humanware Orgoware Infoware •

Workers, supervisors, managers and other employees directly involved in the organization form ‘humanware’.

Materials, machine, money, infrastructure and organization together form ‘orgoware’

Knowledge, skill, technology etc,. Are covered by ‘infoware’

When we look at closely, both the orgoware and infoware heavily depends on human beings. We can see ‘n’ number of examples in this aspect.

• •

“focus on people” is the main reason for the success of Japanese management. “as success today depends on “competitive advantage” of the organization, it is both obtained and sustained through knowledge and skill of its people”

Definition of personnel management or personnel administration or define the term personnel management or personnel administration or write short notes on personnel management or personnel administration: •

“It is that phase of management which deals with the effective control and use of man power as distinguished from other sources of power”.

“The management of HR is viewed as a system in which participants week to attain both individual and group goal”. Its objective is to understand what has happened and is happening and to be prepared for what will happen in the area of working relationships between the management and managers personnel (or man power) administration is concerned with the managerial (plant, organization, stuff, direct and count) and operative (procurement, development, maintenance and utilization) functions with a view to



attaining the organisation goals economically and effectively and meeting the individual and social goals. •

“PM is the recruitment, selection, development, utilization of and accommodation to human resources by organizations. The HR of an organisation consist of all individuals regardless of their vote, who are engaged in any of the organizational activities”.

“The PM is the process of attracting, holding and motivating people involving all managers – line and staff”. (+) Group concept – Create Group relationships within an organisation, to enable each person to make his maximum personal contribution to the organisation as a member of the working group, to achieve these things through respect for human personality and the well being of the individual.


Human Resource Management means:

“The management of human resources is viewed as a system in which participants seeks to attain both individuals of group goals”.

If an analysis is made of this definition it will be seen that personnel management involves procedures and practices through which human resources are managed (i.e. organized and directed) towards the attainment of the individual, social and organizational goals. By controlling and effectively using manpower resources, management tries to produce goods and services for the society.

Definitions: a Human Resource Management involves all management decisions and practices that directly affect or influence the people, or human resources, who work for the Organization. An organization’s employees enable an Organization to achieve its goals, and the management of these human resources is critical to an organization’s success. 2b According to Process Systems View Human Resource Management means: “ Human Resource Management is the systematic planning, development, and control of a network of inter related process affecting and involving all members of an Organization”.

DEFINITIONS: “Human Resource Management effectively describes the process of planning and directing the application, development and utilization of human resources in employment” –Dale Yoder. “Human Resource Management is that part of management process which is primarily concerned with the human constituents of an organization”. – E.F.L.Brech.




“The personal function is concerned with the procurement, development, compensation, integration and maintenance of the personnel of an organization for the purpose of contributing towards the accomplishment of that organization’s major goals or objectives” - Flippo

“It is the field of management which has to do with planning, organizing, directing and controlling the various operative functions of procuring, developing, maintaining and utilizing a labour force for the attainment of the company’s objectives”- Prof. Jucius “It is that part of the management function which is concerned with people at work and with their relationship within an enterprise. Its aim is to bring together and develop into an effective organization of the men and women who make up an enterprise and having regard to the well-being of an individual and of working groups, to enable to make their best contribution to its success” – The British Institute of Personal Management.

Key Terms used in this definition: Process: Process is an identifiable flow of interrelated events moving towards some goal, consequence and end. An example of the human resource management is the staffing process, a flow of events that results in the continuous filling of positions within the Organization. These events include such activities as recruiting applicants, making hiring decisions, and managing career transitions such as transfers and promotions. Flow: Flow implies movement through time and in the direction of a result; Inter-related: implies interaction within the process and between events; Goal and Consequence (Purpose): suggest a human objective; Events: are activities, happenings or change; End: implies some conclusion or consequence that may not necessarily be sought or planned by man.

System: System is a particular set of procedures or devices designed to control a process in a predictable way. For e.g. Staffing System of an Organization.

As a process it includes: Human Resource Planning; Job and Work Design; Staffing; Training and Development; Performance Appraisal and Review; Compensation and Reward; Employee protection and representation; Organization Improvement.





“Human Resource Management is the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources to the end that individual, organizational and societal objectives are accomplished". Edward Flippo This definition is a comprehensive and covers both the management functions and the operative functions. The purpose of all these functions is to assist in the accomplishment of basic objectives.

General Definition: “Personnel Management is the recruitment, selection, development, utilization of and accommodation to human resources by organizations. The human resources of an organization consists of all individuals regardless of their role, who are engaged in any of the organizations activities”.

Three aspects of Human Resource Management: Welfare Aspect: concerned with working conditions and amenities such as canteens, crèches, housing, personal problems of workers, schools and recreations; Labor or Personnel Aspect: concerned with recruitment, placement of employees, remuneration, promotion, incentives, productivity etc.; Industrial Relations Aspect: concerned with trade union negotiations, settlement of industrial disputes, joint consultation and collective bargaining. Difference between Personnel Management and Human Resource Management Dimensions


Nature of relations


Perception of conflict


HRM Unitarist or neo-unitarist is

Conflict is pathological

institutionalized Contract

Emphasis on compliance

Beyond contract commitment

Role of procedures

Rules dominated

Culture and values dominated

Planning perspective

Adhoc, reactive

Integrated, proactive



Non desirable

Level of trust



Key relation

Labour management


Management’s Role



Basis of job design

Division of labour


Key people

PM/IR specialist

Line people and general mangers

Skills acquisition





Learning Organization

Development Reward





Performance related




Characteristics of Human Resource Management 1. Human Resource Management is concerned with managing people at work. It covers all levels of personnel, including blue collared employees and white collared employees; 2. It is concerned with employees, both as individuals as well as group; 3. Human Resource Management is concerned with helping the employees to develop their potentialities and capacities to the maximum possible extent, so that they may derive great satisfaction from their jobs; 4. It is a major part of the general management function and has roots and branches extending throughout and beyond each Organization; 5. Human Resource Management is of a continuous nature; 6. Human Resource Management attempts at getting the willing co-operation of the people for the attainment of the desired goals.

HRM can be of full value to an Organization only when it is consistently throughout out and applied at all levels and to all management functions; in corporate policies, in the systems, procedures and in employment practices, etc. this integrative aspect of HRM is, therefore, of vital importance.

Employee Relations

Personnel Administration


Industrial Relations

Fig, 1








MANAGEMENT? NATURE / CHARACTERISTICS /FEATURES 1. Integral part of management: Human Resource Management is inherent in the process of management. This function is performed by all the managers’ throughout the organization rather than by the personnel department only. If a manager is to get the best of his people, he must undertake the basic responsibility of selecting people who will work under him. He must also take interest in training and motivating the employees and of appraising their performance for improving their quality.




2. Pervasive Function: Personnel Management is a pervasive function of management. It is performed by all managers at various levels in the organization. Every manager from managing director to the foreman is required to perform the personnel function on a continuous basis. It is not a responsibility that a manager can leave completely to someone else. However, he may secure advice and help in managing people from expects who have special competence in personal management and industrial relations. 3. It is universally relevant: Human Resource Management is relevant not just for a business organization alone. It has universal relevance. Effective management of the human resource is a task to be performed right from the household level to a government. The very fact that the Govt. of India has created a separate ministry called the ‘ministry of Human Resource Management’ proves this point. 4. It is goal-oriented: The goal of Human Resource Management is to make the best use of the available manpower resource of the organization. Only then it will be possible to achieve the ultimate goal of the organization, i.e., the targeted level of projects in the case of a business organization. 5. Systematic Approach in handling the manpower resource: Human Resource Management lays emphasis on a systematic approach to the task of managing the human resources of an organization. This is done by the performance of two sets of functions i.e. managerial function and operations functions. 6. On-going Activity: Human Resource Management is not something that is required only at a particular pout of time. It is a continuous affair. As long as manpower resource is needed in any place, the importance of its management will be felt 7. Development of manpower resource: Human Resource Development is part of Human Resource Management. Development of the manpower resource through training programmes is as important as its procurement needless to say, in an organization it is only the Human Resource that be trained to acquire greater skills. 8. It is a science as well as an Art: The subject Human Resource Management is both science and art. As a social science, it relies on experiments and observations for the sake of making inferences. As an art, it calls for certain special skills on the part of the manger for the effective handling of the manpower resource. 9. Relatively new: When compared with subjects like psychology, sociology, economics, marketing, financial management etc. Human Resource Management is relatively a new subject. It was




once popularly known by the name personnel management. After it became Human Resource Management, its scope widened.

Objectives of Human Resource Management Objectives are pre-determined ends or goals at which individual or group activity in an Organization is aimed. Objectives can be divided in to two parts: Primary Objectives: HRM’s main goal is the creation of a workforce with the ability and motivation to accomplish the basic organizational goals; They relate to the satisfaction of the personal objectives of the members of an Organization through monetary and non monetary devices; They relate to the satisfaction of community and social objectives, such as serving the customers honestly, promoting a higher standard of living in the community, bringing comfort and happiness to the society, protecting women and children and providing for aged personnel; To utilize human resource effectively; To establish and maintain a productive and self respecting relationship among all members of an Organization; To establish and maintain an adequate organizational structure; To bring about maximum individual development of the members of an Organization; to maintain a high morale and better human relations inside an Organization by sustaining and improving the conditions which have been established so that employees may stick to their jobs for a longer period;

Secondary Objectives: The secondary objectives aim at achieving the primary objectives economically, efficiently and effectively.

Objectives of Human Resource Management: 1. To make an optimum utilization of the human resource of the organization: By this we mean that every that every individual in the enterprise shall work to his potentials only then the amount spent on human resource will be justified.

2. To ensure that the organization has the required number staff: The objective here is to do away with the problem of both surplus and shortage of labour. Surplus labour would mean higher labour cost and inefficiency. Shortage of labour would mean that the organization is ill-equipped to cope with the volume of work.




3. To establish and maintain a sound organization structure: Human Resource Management aims at dividing the organization tasks into different functions, jobs and positions. The authority and responsibility associated with each such position is clearly defined. 4. To reconcile and organizational goals: There is often a clash between individual goal and organizational goal. Human Resource Management aims at integrating personal and organizational goals guiding the employees to work with a sense of involvement, commitment and loyalty towards the enterprise. 5. To provide scope for the development of personnel: Human Resource Management provides scope for the employees to enrich their job knowledge and skill by undergoing relevant training progrmmes. Employees need to update themselves in tune with requirements.

6. To ensure that the employees have higher job satisfaction: Human Resource Management ensures a higher level of jobs satisfaction among employees by providing them the kind of work environment that is equitable remuneration and social security benefits like provident fund, quality, insurance etc. 7. To provide scope of participation in decision making: Under Human Resource Management, employees are involved in the process of division -making. The decisions binding on employees are made with their participation. In other words, management does not take unilateral decisions. As employees are involved in decision – making, they extend their support to the implementation of any decision and do not show resistance.

Functions of Human Resource Management

According to different authors HRM functions can be divided in to different categories. Some of the categories are as follows: 1. General and Specific functions; 2. Personnel administration and Industrial relations functions. 3. Managerial and Operative functions

General and Specific functions: General Functions: To conduct personnel research; To assist in the programmes of personnel administration; To develop appraisal plans; To launch education and training programmes; To develop a competent work force;



To establish and administer varied personnel services delegated to personnel department. Specific Functions: Employment; Safety; Wage and salary; Benefit Schemes; Community relations and Advice and counseling the employees.

Personnel Administration and Industrial Relations Functions:

Personnel Administration: These functions relate to the function of managing people from the lower to the upper level of the Organization and embraces policy determination as well as implementation of policies by the personnel at the lower levels;

Industrial Relations Functions: These functions relate to interactions between the management and the representatives of the unions. Such functions involve all activities of employer employee relationship, such as Organization of the union members, negotiations of contracts, collective bargaining, grievance handling, disciplinary actions, arbitration etc- the purpose of all these being to prevent conflict between two parties.

Managerial and Operative Functions; Managerial Functions: Management is Personnel administration. It is the development of the people and not the direction of the things. Managing people is the heart and essence of being a manager. Thus, a Human Resource Manager is a manager and as such he performs the basic functions of management.




Inputs Human and Economic Resources interacting with environment al changes


Planning Determination of short to long range plans to accomplish Organization objectives

Organizing Development of the Orgn. Structure according to predetermined plans

Feedback of significant deviations from planned performance

Directing Stimulation and motivation of Organization personnel according to predetermined plans

Controlling Assurance that directed action is taking place according to predetermined plans. Outputs Goods and services needed by the organization customers

(Managerial Functions)

Fig: 2

Operative Functions: These functions are concerned with the activities specifically dealing with procuring, developing, compensating and maintaining an efficient work force. These functions are also known as service functions. Procurement Function; Development function; Compensating function; Integrating function; Maintenance function.

Managerial Functions:

Planning: Is a predetermined course of action. Planning is a hard job, for it involves the ability to think, to predict, to analyze and to control the actions of its personnel and to cope with a complex, dynamic fluid environment. They bridge the gap from where we are to where we want to go. The two important features of planning are research and forecasting. The task of forecasting personnel needs in relation to changes in production or seasonal variations and the leveling out of differences in the production extremely important, both for employees and for management. Therefore, planning and decision making has to be undertaken much in advance of an action so that unforeseen or




anticipated problems and events may be properly handled. This as also stressed by the saying: “ Good managers make things happen�. Organizing:

An Organization is a means to an end. It is essential to carry out the

determined course of action. Complex relationships exist between the specialized departments and the general departments as many top managers are seeking the advice of personnel manager. Thus, Organization establishes relationship among the employees so that they can collectively contribute to the attainment of company goals. Directing: Direction is an important managerial function in building sound industrial relations besides securing employee contributions. Co-ordination deals with the task of blending efforts in order to ensure successful attainment of an objective. The personnel manager has to coordinate various managers at different levels as far as personnel functions are concerned. Personnel management function should also be coordinated with other functions of management like management of money, machine, and material. Controlling: Controlling involves checking, verifying and comparing of the actualize with the standards, identification of deviations if any and correcting of identified deviations. Thus, action and operation are adjusted to predetermined plans and standards through control.

Fig. 3: Functions of Personnel Office/ Personnel Management.

Functions of Personnel Office

Managerial Functions

Planning Organizing

Employment HRD


Operative Functions



Human Relations, Placement.

H R P; Performance- Job Evaluation; Motivation; Recruitment; Appraisal; Selection;



Mgmt. Dev.

Wage & Salary


Quality- Circles. Orgn.Change & Dev. Fringe Benefits.






Operative Functions: The operative functions of human Resource Management are related to specific activities of personnel management e.g. employment, development, compensation & Relations. All these functions are interacted by managerial functions.

Employment: Employment is concerned with securing and employing the people possessing required kind and level of human resources necessary to achieve the organizational objectives. It covers the functions such as job analysis, human resource planning, recruitment, selection, placement, induction and internal mobility.

Human Resource Development: It is the process of improving, molding and changing the skills, knowledge, creative ability, aptitude, attitude, values, commitment etc. based on present and future job and organizational requirements. This function includes Performance Appraisal, Training, Management Development, Career Planning and Development, Internal Mobility (Promotion, Demotion), Organizational Development. Compensation: It is the process of providing adequate, equitable and fair remuneration to the employees. It includes job evaluation, wage and salary administration, incentives, bonus, fringe benefits, social security measures etc. Human Relations: Practicing various human resource policies and programmes Loire employment, development and compensation and interaction among employees create a sense of relationship between the individual worker and management, among workers and trade unions and management. It is the process of interaction among human beings. Human relations is an area of management in integrating people in to work situation in a way that motivates them to work together productively, cooperatively and with economic, psychological and social satisfaction. Human Resource Management Environment HR manager can’t perform his job in a vacuum as a number of environmental factors affect the HRM. In fact, these factors influence the Organization through human resources. Environment (with special reference to Human Resource Management): means the totality of all factors, which influence both the Organization and HRM sub system.

Fig. 4: Environmental Scanning of HRM Technological Marketing

Government & Legal

Orgn. Politics











Orgn. Structure


Social & Religious

The environment furnishes the macro context and the Organization is the micro unit. The external environment is comprised of those factors, which affect an organization’s human resources from outside the Organization. Important among them are: Economic; Social; Political; Governmental; Legal; Technological; Manpower in the country; Tradition and culture; Customers; Other organizations; Trade Unions in other organizations.

Internal Environment: The internal environment also affects the job of a personnel manager. The internal environmental factors include Organization objectives, policies, organizational structure, and the functional areas of the Organization with which the personnel manager works continuously like finance, marketing and production. Impact of internal environment factors is profound as they frequently and closely interact with HRM function in an Organization.

External Environment: The influence of external environment on HRM is also equally important, though the severity is comparatively less. People are essentially self-managing. In other words, while people manage other resources, themselves manage personnel. People themselves decide about the nature, time, and place of their employment. And people react to the changing conditions and to the techniques of management unlike money, material and machine. The changes includes in the external environment are: Technological obsolescence; Cultural and social changes; Changes in the policies of govt.; Politics and the like.




With the result, the work environment changes thereby affecting their productivity level.

Considering the complexities and the challenges in the HRM now and in near future management has to develop sophisticated techniques and efficient specialists to among the personnel on sound lines

Functional Areas/ Scope of Human Resource Management 1. Organizational planning, development and task specification; 2. Staffing and Employment; 3. Training and Development; 4. Compensation, Wage and Salary administration; 5. Motivation and Incentives; 6. Employee services and Benefits; 7. Employee records; 8. Labor and Industrial Relations; 9. Personnel Research and Personnel Audit.

EXPLAIN THE SCOPE OF PERSONNEL MANAGEMENT: 1. Recruitment, selection and job determination for the employees. 2. To adopt suitable wage system. 3. Education and training of employees. 4. Job analysis, job distribution and job evaluation 5. Labour welfare activities. 6. Personnel accounts 7. Public relations 8. Personnel planning and education.

SCOPE OF HUMAN RESOURCE MANAGEMENT: 1. Welfare Aspects of Employees: Functions associated with the welfare aspect of labour are connected with the conditions of work and the amenities such as provision of canteens, crèches, housing, transport, medical, education, recreational and cultural facilities and health and safety provisions. The personnel manger must be fully conversant wish the provisions of the Factories Act, 1948 and other labour laws Minimum Wages Act, ESI Act, Maternity Act etc. 2. Personnel Aspect of Employees: Functions associated with the labour or personnel aspect include activities concerned with manpower planning, recruitment, selection, placement, induction, promotion, transfer, demotion, separation, lay-out, retrenchment, training and development, wages and salary, administration etc.,




3. Industrial Relational Aspects of employees: Industrial or labour relations aspect is concerned with the company’s relations with the employees as a group and includes union management relations, joint consultation, negotiating and collective bargaining processes, discretionary action, grievance handling and settlement etc. The reorganization of human values as the basis of personnel management helps in achieving and maintaining good industrial relations.

Dale Yoder has specified the scope of Human Resource Management in terms of the following functions. Management policy: organizational


Setting general and specific management policy for and






organization for leadership and cooperation. Employees Development: Collective bargaining, contract negotiation, contract administration and grievance handling. Staffing the organization: Staffing the organization, finding, getting and handling prescribed types and number of workers. Motivation of Employees: Adding in the self-development of employees at all levels providing opportunities for personal development and growth as used as for acquiring requisite skills and expensive. Incentives to Employees: Developing and maintaining motivation for workers by providing incentives. Role of manpower: Receiving and auditing manpower management in the organization. Industrial Research: Industrial relations research carrying out studies designed to explain employees behaviour and thereby affecting improvements in manpower management.

EXPLAIN THE IMPORTANCE OF HUMAN RESOURCE MANAGEMENT: 1. Social Significance: a. Maintaining the gap between job available and job seekers according to their qualification b. Providing suitable environment and psychological satisfaction. c.

Maximum utilization resources

d. Eliminate waste or improper use of HR e. Helping people make their own decisions that are in their interest. 2. Professional significance: By providing a healthy working environment it promotes team work in the employees. This it does by




a. Maintaining the dignity of the employee as a human being b. Providing maximum opportunities for personal development c.

Provides healthy relationship between different workgroups

d. Improving the employee’s working skill and capacity. e. Correct the work errors of wrong posting and proper reallocation of work. 3. Significance for individual enterprises: a. Creating positive attitude among the employees through effective motivation. b. Utilizing effectively the available HR c.

Securing willing co-operation of the employees for achieving goals of the enterprise and fulfilling their own social and other psychological needs of recognition, love, affection, belongingness, esteem and self-actualization. Employee capabilities must continuously be acquired; sharpened and used any

organisation will provide proper HRM. a. To improve the capabilities of an individual b. To develop team sprit of an individual and the department c.

To obtain necessary co-operation from the employees to promote organizational effectiveness.

Importance / Essentials of Human Resource Management: 1. It helps the organization to identify correctly its manpower needs: The manpower needs of an organizational will have to be correctly determined. As amount spent on human resource is deemed an investment, it is necessary to determine the number of men required for doing the various jobs in the enterprise accurately so that investment in human resource will be at the optimum level. 2. It ensures that the organization does not suffer from either surplus or shortage of manpower: It is further important that the number of persons employed in the organization at any given point of time should neither be more or less than what is actually required. Human Resource Management helps to do away with the problem of both surplus and shortage of labour. 3. It facilitates the selection of the right man for the right job: Human Resource Management ensures the selection of the right man for the right job. It recognizes the fact that if a candidate is overqualified for the job, he will not have a positive attitude towards work and on the other hand, if he is under qualified, he cannot carry out the task assigned. 4. It focuses attention on the development of the skill of every individual in order to make him up-to-date: Every person in the workplace has to update his knowledge and skill in tune with the development in work methods. Human Resource Management takes note of the fact that a person who does not update himself will become outdated. 5. It recognizes the need for the appraisal of employee’s performance:




Performance appraisal is an in integral part of Human Resource Management unless the performance of the employees is periodically reviewed; it will not be possible for the employer to know their level of efficiency. 6. It considers the need to provide incentives to the employees performing well: Employees, who are very good in their work, need inducement in the form of incentives. These incentives may be financial as well as non-financial. Human Resource Management does recognize the fact that if good workers are not suitably rewarded, they may lose interest in their work. 7. It gives utmost importance to securing a favorable employee attitude: The attitude of the employees towards work is a crucial factor determining performance. Human Resource Management makes an earnest attempt to secure a favorable employees attitude. This is done by providing the employees with proper working environment. Counseling is provided to those employees who undergo stress. 8. It emphases the need for good human relation in every workplace: Human Resource Management places emphasis on cordial human relations. Conflicts are unavoidable in a workplace. But such conflicts shall not be allowed to damage inter-personnel relationships. 9. It provides scope for collective bargaining: The employer shall encourage the employees to form a union the workplace. This will give the employees the benefit of collective bargaining. In the absence of such a union, if any individual has certain grievances, he may find it difficult to represent the same to the management in his personal capacity.

Explain the basis or concept of personnel management: a. Managing people to “Rank and file employees at work”. Blue collared (craftsmen, foremen, operatives and labourers) and white collared employees (professional, technical and kindered workers, marketers, officials, proprietors, clerical workers and sales workers) b. Group and individual co-ordination, make them to involve in a group. c.

Helping the employees to develop their potentialities and capabilities to the maximum possible extent, so that they may derive great satisfaction from their job.

d. Recruitment selection and accommodate them. e. It is like water from a faucet continuous nature. f.

PERSONNEL MANAGEMENT attempts at getting the willing co-operation of the people for the attainment of the desired goal, “esprit de crops”.

EXPLAIN DIFFERENT TERMINOLOGY USED FOR PERSONNEL MANAGEMENT : Different terms such as ‘personnel or staff management, ‘personnel administration’, labour management, employee relations, manpower management, individual relations etc, have been used interchangeably.




This phrase ‘staff executive’ in charge of PERSONNEL MANAGEMENT personnel administration has been variously designated, reflecting changes, in status and functions, executives designated as personnel officer, personnel director, personnel man, personnel executive, staff and personnel manager, employment manager, labour welfare officer, labour liaison officer, labour officer or chief industrial relations officer. In India he is called ‘LWO’ personnel officer, Empl. Relation officer, ERO and so on.



Development of scientific management and social awakening at the end of 19 century

were the main causes of growth of personnel management. Personnel management was th

originated in U.S.A at the end of 19 century. •

The term is popular, by the name labour welfare, labour management, and industrial

relations. 1. Early philosophy (Before 1900): Robert Owen 1813 – he wrote book – a new view of society – stressed upon IR, Improvement of working conditions, operative labour management – they treat personnel management as a science. The view of Owen is wage incentives and labour welfare very slow progress only.

2. Efficiency and productivity movement (1900 – 1920) These two decades, scientific management movement, development of labour unions and the establishment of industrial corporations etc., size of industrial units increased – technology of job analysis, job evaluation, merit ranking and standard costing were adopted. Though of F. W. Taylor scientific management was greatly accepted.

3. Period of welfarism and Industrial Psychology (1920 – 1930) Up to 1925 personnel management is a staff line activity – many units scientific management was apposed by workers – because of this industrial psychology was developed. This is helped in the development of many new technologies such as psychological tests, scientific interview, and training on scientific basis; non-financial incentives personnel management becomes profession here.

4. Period of human relations in industries (1930 – 50) Prof. Elton Mayo – Hawthorne experiments – find HR and important they increase the production than any other physical resources. The experiment proved that the workers treated as human being. The social, psychological and moral feelings of workers are identified – fast development of personnel management many new technologies in selection, training trade union in flourished and good working conditions were provided.




5. Modern period (From 1950 up to current time) Personnel management becomes profession – new consents like behavioural science and social system. The concept of industrial democracy has been adopted. Large number of industrial houses is welcomed – new responsibilities upon personnel management are assigned. Personnel management is wider and wider.

The development of personnel management occurred due to the unsatisfactory recruitment policies and labour dissatisfaction. 1. In 1920 – Industrial disputes arises – producers and the government – recognised trade unions – many great industrialists appointed labour officers and took interests in labour welfare works. 2. In 1931 – When royal commission on labour recommended the appointment of labour officers to take care the recruitment and settle the grievances. 3. In 1934 – Bombay industrial development settlement act was passed under this act ‘LWO’ appointed whom responsible for the settlement of labour disputes. 4. In 1939 – ‘Government Labour commission, recommended the appointment of labour officers, a few labour acts were passed, to regulate the working hours of labour and the improvement in their working conditions. 5. In 1941 – A tripartite labour conference was held in which the representative of workers, producers and government took part, object is implement the labour rules for the settlement of disputes and to advice a system for industrial cases. 6. After independence – Several laws were enacted, 1948 – factories act, 1946 – Central Labour Investigation committee, this act made it compulsory that a ‘LOW’ show appointed in every factory employing 500 or more workers. 7. The government made wide ranging plans like improving the training, institutes were started, a. Xavier institute of labour relations (XLRI) b. Indian institute of personnel administration, Calcutta c.

Indian Labour Management institute Bombay

d. Institute of Industrial Relation – Bangalore,




e. Federation of all India Labour Welfare Office, Delhi f.

National Productivity Councils, Delhi.

EVOLUTION OF HRM The philosophy of managing human being as a concept was found developed in ancient literatures in general and in India philosophy in particular.

Till 1930’s it was not felt necessary to have a separate discipline of management called personnel mamagement. Infact, this job was assigned as part of the factory manager. Since 1930’s Certain developments took place which greatly contributed to the evolution & growth of HRM. These developments are given below. • • •

Scientific Management Labour Movements. Government Regulations.




Upto 1900

Nine inventions(1780)

Technological devt, Mass production concept, prosperity to employers Misery to employees.

Industrial Revolution (1870)



Scientific Management by Frederick Taylor USA –1911

Industrial psychology by HugoMusterbeemg USA-1913

Universal Impact, Scientific approach on standards, work strudy, productivity, human engineering etc.

Emphasis on morale, motivation, working environment, etc. Extrinsic & Intrinsic motivation and Human relations.

Hawthorne studies by prof. Elton Mayo(1932)

Emphsis on feeling, attitude & sentiments of workers, stress on emotions rather than logic, Approved shifted from scientific to human relation.

Improved recruitment selection, and testing methods. Management development programme. Behavioural approach,Motivation Theories of Maslow Herzberg Mc Greger & Others

Improved recruitment, selection and testing methods.




Experience from war & Training.

Management devlopment programme. •

Modern ERA after 1970

• • •

Innovation & creativity Human capital Empowerment.

Focus on employees & overall development and satisfaction of unique expectation. Human capital is more important than finance capital & market standing Improvement is promoted through development of competence, interest & commitments.



Major events.

Upto 1900


Bombay mill association was formed in india.



Sport of activities of trade union movements in India.



Resignation of congress govt. on protest of war efforts. Strikes and lockouts and Labour unrest due to reign of terror unleashed by British Govt. on Indian Lobours.


Second world war period, achieved some of the labour’s long standing demands like DA, adjudication Machinery etc. All types of employees including Govt servants form union.


Modern period

Reversal of trend in which employees exploited the employers. Because of outside influence, union become pawns in the hands of political parties. Weakness due to multiple unionism to exploit unity.





WRITE SHORT NOTES ON - EVOLUTION STAGES – PERSONNEL MANAGEMENT : 1. Industrial revolution era – relationship between employer and employee is stated as – ‘Slawer”, “Guild system” “serflom” 2. Era of trade unionism 3. Era of social responsibility feeling – Robert Owen – 1913 4. Scientific management era – 1900 – 1930 (1856 – 1955) 5. Industrial psychological era. 6. The behavioural era – 1955 (Abraham maslow – 1954 – motivation theory) 7. Personnel specialist and welfare era.






Indian TU Act protected TU activists.


Royal commission of Labour in India. Made recommandation on hire, wages, working hours prohibition of child labour


1948 1952 1956

Modern period after 1970

1976 1975 1976 1976

Employees state insurance act Employees provident fund act Industrial dispute act

Factories act Payment of wages act Equal remuneration act Workers compensation act.

ROLE OF HR PRACTITIONER / MANAGER The coordination and integration of activities in an organization just not happen, it has to be worked out. People tend to head off in different directions- to go their own sweet way. They will jot necessarily cooperate with one another. Thus, to begin with, the HR manager should have three main objectives in mind: 1. To gain the commitment and cooperation of all the members in his work group; 2. To get the group into action to achieve agreed objectives; 3. To make the best use of the skills, energies and talents of all the members.

In the modern era, the personnel manager typically performs a variety of the roles, such as a role of a conscience, of a counselor, a mediator, a company spokesman, a problem solver and a change agent. He performs many roles as per needs of the situation. Such as:




4. The conscience role is that of humanitarian who reminds the management of its moral and ethical obligations to its employees; 5. The personnel manager plays the role of a counselor to whom the employees frequently go for consultation and with whom they discuss their marital, health, mental, physical and career problems; 6. As a mediator, he plays the role of a peacemaker, offering to settle the disputes that may arise among individuals or groups. He acts a liaison and communicating link between an individual and a group and between labour and management; 7. The personnel a manger has always been a frequent spokesman for or representative of the company because he has a better overall picture of his company’s operation, since he deals intimately with many key organizational activities and functions; 8. The personnel manager also acts as a problem solver with respect to the issues that involves human resources management and overall long range organizational planning; 9. He works as a change agent within the organization because he is best suited to introduce and implement major institutional changes. He takes initiative for installing organizational development programmes and convinces the top management of their need. It is he who alerts the top management regarding managerial obsolescence in his organization; 10. The personnel manager plays many other roles as well. Any matter which need someone’s attention and which no body wants to deal with is, often handled by the personnel department. Such activities may be peripheral but important and crucial to the efficient and effective operation of an organization. It has been now fully recognized that the basic role of the personnel manager if “the management of the manpower resources.” Such management is concerned with “leadership” both in-group and individual relationship, and labour management relations. It effectively describes the process of planning, and directing the application, development and utilization is now considered as one of the four main functions, viz. finance, production, marketing, and human relations.

The ideal personnel manager is not a “decision maker” but a counselor not “collector of responsibilities” but an “advisor” to help the management make more reliable personnel decisions. In any organization it is these “line man” who determine the “personnel climate” for the entire organization. If the personnel man can meet the challenge of “staff role” he would make the effective contribution to industry.

Personnel Role

Welfare Role









Administrative Role

Fire Fighting/Legal Role

Time keeping

Grievance handling




effective use of human






Managing services-


Recruitment, selection

canteens, transport




Training development











Settlement of disputes

Human engineering: man



machine relationship




Collective bargaining



Joint consultation

motivation, leadership, communication etc.



assessment individual




behavior -


Philosophy, which seeks for the underlying explanations of human nature of conduct.


Ethics, which is concerned with moral and value judgements.


Logic, which concerned with the rules and principles of reasoning.


Mathematics, which tells the exact relations between quantities and magnitudes and systems.


Sociology, which deals with the forms and functions of human goods.


Anthropology, which concerned with physical and environmental relations to peoples social and cultural patterns.


Medicine, which in all its branches is concerned with the well being of the people.


History, which seek to record and explain past events.


Economics, whose interests are in optimizing choices among competing use of limited resources.

10. Management, which is concerned with a skilful leadership of organizational groups. 11. Political science, which in the best sense, is concerned with how people are governed how they govern themselves.

EXPLAIN THE ROLE OF PERSONNEL MANAGER? 1. Humanitarian who reminds the management of its moral and ethical obligations to its employees. 2. Counseling.




3. As a media for 4. Frequent spokesman or representative of company 5. Problem solver 6. Create and implement the change 7. He helps line managers learn to detect and solve their problems 8. Other roles like effective operation of an organisation.

EXPLAIN THE QUALITIES OF A HUMAN RESOURCE MANAGER. To be successful on his job, the Human Resource Manager shall hold an MBA (with specialization in Human Resource Management or Personnel Management) obtained from one of the Indian Institutes of Management (IIMS) or its equivalent. Knowledge of organization theory, behavioral science and labour laws is absolutely necessary for such a person. Apart from the academic qualifications mentioned above, the Human Resource manager is expected to have certain other qualities to be successful in his work.

1. He should possess good communication skills. He should be fluent in English, Hindi and a couple of Indian Languages. Only then, he will be able to convey his ideas emphatically. 2. He should be a creative person and only then he will be able to conceive novel ideas to solve complex Human Resource Management problems. 3. He should be able to analyse any problem objectively. Only then he will be able to arrive at a practical solution. 4. He should be able to inspire, induce and motivate he employees to put in their best efforts. For this, the manger must be a motivated person himself. 5. He should have leadership qualities without which he will is not be able to lead a team of subordinate staff and guide them properly. 6. He should not be an irritable person. He should be friendly and approachable. 7. He should be fair and honest in his dealings. Only then the subordinate staff will repose faith in him. 8. H should have ability to make decisions independently. 9. He should be curious always. Only then he will be able to a dynamic person 10. He should have good memory to be able to recollect anything. He should not give scope for others to prompt him to art.

IS (HRM) HUMAN RESOURCE MANAGEMENT A PROFESSION? EXPLAIN. Human Resource Management as a profession fulfils he following criteria of a profession. 1. An organized body of Knowledge:




Human Resource Management like medicine, law and engineering has welldeveloped concepts, principles theories and practices. A Human Resource Management professional cannot perform his tasks if he is not familiar with these concepts, principles etc. 2. Educational qualification: A person who wants to become a medical or engineering professional has to posses the minimum qualification and training prescribed for it. In the same manner, a person aspiring to be a Human Resource Management professional has to fulfill the educational qualification norms. In India, a person holding on MBA (with specialization in Human Resource Management or Personnel Management) obtained from one of the Indian Institute of Management (IIMS) or its equivalent is considered a Human Resource Management professional.

3. Regulatory Authority: The medical council and the bar council act as the regulatory authority for medical and law professionals as far as Human Resource Management is concerned, the Govt. of India has created a separate Ministry called the Ministry of Human Resource Department that is empowered to regulate the activities of any Human Resource Management institution. The National Institute of Personnel Management prescribes certain obligation for the Human Resource Management professionals. 4. Code of conduct: Every member of a profession has to observe certain ethical standards laid down for that profession. The code of conduct lays down ethical norms, which the members shall observe while dealing with their clients. Such a code of conduct exists for Human Resource Management professionals too in the manner it exists for medical, law and other professionals. Any member found to be violating the code of conduct might be disqualified from functioning as professional.

5. Surviving the commodity: A professional’s main obligation is to serve the society. He must not think in terms of personal gain always although his profession gives ample scope to earn. So, Human Resource Management has come to be recognized as a profession in the way medical, law and engineering are recognized. A profession is different from an occupation. A profession need not work for salary under an employer. He can have his own clients and get his remuneration from them directly. On the other hand a person who is employed as a clerk or as an officer or in some other capacity in a bank or in some other organization has to work for monthly salary under an employer. Same is true with regard to a profession who is employed in a college or university. He gets his salary at the end of the moth and is an employee of the Institution




where he is employed. A professional can be an employer for many. A doctor, for e.g. may have his own clinic and employ nursing staff, lab technicians and others.






It is concerned with determining the

It is concerned with the doing or

major policies and objectives of the

execution function, the policies and

business enterprise.

decisions to be implemented being those laid down by the administration. It refers o employees of the enterprise.




Decision making is mainly influenced by

The scope for its decision-making is

the force of public opinion, governmental,

limited. At the most, decisions are

policies, as also social and religious

influenced by the values, opinions and


beliefs of managers.

It is that part of management which is

It is a general name for the total process

concerned with the determination and

of executive control in industry or

caring out of the procedures by which

commerce. It khas responsibility for the

the progress of activities is evaluated and

effective planning and execution of

controlled as per plans.

various operations of the enterprise.

It refers to owners of the enterprise also

It refers to employees of the enterprise

by way of return on the capital invested

who, for working within the broad policy

by them; receive profits by way of



administration, are paid remuneration in





the form of salaries and sometimes, also a share to the profits.

Evaluating HR Function

Organizations can promote human excellence by offering a potential site for the flowering most forms of human excellence. Within an organization, if there is meritocracy, people compete for promotion and other rewards on the basis of good work rather than on the basis of “pull.� Recognition and rewards for creative ideas, discoveries, inventions, innovations etc. promote creative excellence. The human resource development movement in industry is aimed at facilitating organizationally useful individual growth and development. The more an organization promotes individual or team excellence, the more the organization itself is likely to excel because the work of any organization is dependent on the work of its individual members and employee groups.




The human factor across all organizations comprises three basic elements:

1. The people themselves who work in the organization; the skills and capabilities they possess and their attitude towards the company; 2. The management style prevalent in the organization, which usually stems from the top. The style may be aggressive, authoritarian, democratic or laissez faire and each type has a different impact on the way people work as individuals or in groups; 3. The organizational climate i.e. the work atmosphere in the company, as determined by the degree of interpersonal cooperation, the types of conflict resolution, the amount of trustworthiness, the prevalent organizational politics etc.; The quality of HRM practices prevalent in a particular organization can be rated by scrutinizing the following factors:

Organization Climate: 1. Do people feel they are giving enough responsibility? 2. Do people know what is expected of them in the shape of objectives and standards of performance? 3. Do people see themselves being fairly rewarded for their work and feel that promotion policies are fair? 4. Do the employees feel that they belong to a worthwhile company and are valuable members of working teams? 5. Is there adequate feedback to people on their performance, whether it is good, bad or indifferent? 6. Is there sufficient to challenge in their jobs? 7. Are people given enough support by their managers or supervisors in the shape of guidance or help?

Type of Management Style:

1. Does it tend to be Autocratic? 2. Does it tend to be Task centered or people centered? 3. Do managers tend to be distant or cold or approachable and friendly? 4. Do managers tend to be hard or soft on people? 5. Thus, an amalgamation of all the factors throws some light as an indicator of the quality of HRM practiced in an organization.





3. Lack of harmonious labour – management relations 4. Lack of organized labour unions 5. Traditional outlook of workers 6. Excess of labour force 7. Selfish policy of union leaders. WHO








RESPONSIBILITY (DEPARTMENT) 1. Employment department 2. Training department 3. Wages and salaries department 4. Employees development department 5. Labour welfare department 6. Labour relations department


The dictionary meaning of “policy” is a “planned action” and that “plan” is a policy. Policy making and planning are, therefore, synonymous. “A policy,” says Flippo, “is a man made rule of pre-determined course of action that is established to guide the performance of work toward the organization objective it is a type of standing plan that serves to guide subordinates in the execution of their tasks.” According to Calhoon, personnel polices constitute guides to action. They furnish the general standards or base on which decisions are reached. Their genesis lies in an organization’s values, philosophy, concepts and principles.” “Policies are statements of the organization over all purpose and its objective in the various areas with which its operation are concerned –personnel finance production marketing and so on.”


The aims of personnel policies should be/are: 1. To enable an organization to fulfill or carry out the main objective which have been laid down as the desirable minima of general employment policy; 2. To ensure that its employees are informed of these items of policy and to secure their cooperation for their attainment; 3. To provide such condition of employment and produces as will enable all the employees to develop a sincere sense of unity with the enterprise and to carry out their duties in the most willing and effective manner; 4. To provide an adequate, competent and trained personnel for all levels and types of management; and motivated them;




5. To protect the common interest of all the parties and recognize the role of trade union in the organization. 6. To provide for a consultative participation by employee in the management of an organization and the framing of condition for this participation, which, however shall not take place in technical, financial or trading policy; 7. To provide an efficient consultative service which aims at creating mutual faith among those who work in the enterprise; •

By developing management leadership which aims is bold and imaginative and guide by moral values;

By effectively delegating the human relation aspects of personnel function of line managers by enforcing discipline on the basis of cooperative understanding and humane application of rules and regulation; and

• .

By providing for a happy relationship at all levels


To establish the conditions for mutual confidence and avoid


misunderstanding between the management and the workers, by developing suggestion plans, joint management councils, work committees, etc., and by performance appraisal discussion; 9. To provide security of employment to workers so that may not be distracted by the uncertainties of their future; 10. To provide an opportunity for growth within the organization to person who are willing to learn and undergo training to improve their future prospects. 11. To provide for the payment of fair an adequate wages and salary to the workers so that their healthy cooperation may be ensure for efficient working of the undertaking; 12. To recognize the work and accomplishment of the employees by offering non-monetary incentives rewards; 13. To create a sense of responsibility on the part of those in authority, for the claims of employees as human being, who should be guaranteed protection of their fundamental rights and offered enough scope for developing their potential.

ESSENTIAL CHARACTERSTICS OF A SOUND PERSONNEL POLICY The main features of a good personnel policy are:

1. The statement of any policy should be definite, positive, clear and easily understood by anyone in the organization so that what it proposes to achieve is evident. 2. It should be written in order to preserve it against loss to stimulate careful consideration before its formulation and to prevent the promulgation of numerous, differing and temporary oral policies from multiple sources.



3. It must be reasonably stable but not rigid, i.e., it should be periodically revised, evaluated, assessed and revised and should, therefore, be in tune with the challenge of changes in the environment and should have built in resilience for adjustment from time to time. 4. It must be supplementary to the over-all policy of an organization, for if departmental policy were made such as to come into conflict and violet the company policy, it would be tantamount to insubordination. Peter drucker has observed: “the policies of an enterprise have to be balanced with the kind of reputation an enterprise wants to build up with special reference to the social and human needs, objectives and value.” 5. It should be indicate that the management knows that workers prefer to deal with the management on an individual basis. 6. It should recognize the desire of many workers for recognition as groups in many of their relationships. 7. It should be formulated with due regard for the interests of all the concerned parties-the employers, the employees and the public community. 8. It should be the result of a careful analysis of al the available facts. 9. It must provide a two-way communication system between the management and the employees so that the latter are kept informed of the latest developments. In the organization and the employers are aware of the action and reaction of employees on particular issues. 10. It should be consistent with public policy, i.e., with the spirit rather than the letter of the law, so that the intensions and settled course of an organization are appreciated in terms of public opinion from the standpoint of national, economic and social justice for the employees and for the community at large. 11. All interested parties should generally know it. 12. It must have not only the support of the management but also the co-operation of employees at the shop floor level and in the office. 13. Before evolving such a policy, trade unions should be consulted in 14. Matters of industrial relations; and the role of trade unions should be restricted only to this area. 15. It should be progressive and enlightened, and must be consistent with professional practice and philosophy. 16. It must make a measurable impact, which can be evaluate and qualified for the guidance of all concerned, especially in the field of the three ‘R’s of personnel management viz., recruitment, retainment and retirement. 17. It should be uniform throughout the organization, though, in the light of local conditions, slight variation may be permitted in specific policies relating to staffing compensation, benefits and services. 18. It should have a sound base in appropriate theory and should be translable into practices, terms and peculiarities of every department of an enterprise. 19. Except in rare cases, policies should not prescribed detailed procedures.





Challenges faced by HRM Major challenges of HRM The major challenges of HRM are: 1. Outsourcing HR activities 2. BPO and Call Centres 3. To balance work-life 4. To make HR activities ethical 5. To manage diversity 6. Attitude towards unions 7. Globalisation 8. Organisational restructuring 9. Changing demographics of work-force 10. Changed employee expectations

1. Outsourcing HR Activities Increasingly many large firms are getting their HR activities done by outside suppliers and contractors. Employee hiring, training and development and maintenance of statutory records are the usual functions contracted out to outsiders. P&G has signed a 10 year, $400 million deal with IBM to handle employee services. IBM will support almost 98,000 of P&G employees in nearly 80 countries with services such as payroll processing, benefits administration, compensation, planning, expatriate and relocation services, and travel and expense management.

2. BPO AND CALL CENTRES Business Process Outsourcing (BPO) Several MNCs are increasingly unbundling or vertical deintegrating their activities. Put in simple language, they have begun outsourcing (also called business process outsourcing, or BPO) activities formerly performed in-house and concentrating their energies on a few functions. Outsourcing involves withdrawing from certain stages/activities and relying on outside vendors to supply the needed products, support services, or functional activities. 3. Call Centres-Challenges

If an external company develops the software for a company, if someone else does advertising for the company’s products and if some other firm administers benefits for the company’s employees, it is BPO. Similarly, if some other company makes calls to the company’s customers or receives their calls, it is call centre business – a part of BPO itself. But because of its high visibility, call centre business is treated independently. 4. HOW TO BALANCE WORK WITH LIFE



Balancing work and life assumes relevance when both husband and wife are employed. Travails of a working housewife are more than a working husband, as the opening case to this Unit shows. Work- life balance is becoming a major challenge to HR manager as more women are taking up jobs to add to finances of their families or to become careerists. In India, workingwomen now account for 15 percent of the total urban female population of 150 million. The number is likely to increase as more number of girls is coming out of colleges and universities with degrees in their hands. 5. MAKING HR ACTIVITIES ETHICAL The HR manager’s role in building an ethical climate in the organisation is significant. The HR manager needs to carefully screen applications for jobs, weed out those who are prone to indulge in misdemeanors and hire those who can build a value driven organisation. Hiring ethically strong employees is only the beginning. The HR manager needs to institute; mechanisms to ensure ethical conduct of employees. 6. MANAGING DIVERSITY Employees of organizations are becoming increasingly heterogeneous. As days go by, diversity is going to be an important issue for the HR manager for the following reasons: The number of young workers in the work-force is increasing More women rejoining the work-force. The proportion of ethnic minorities in the total work-force is increasing Work force mobility is increasing International careers and expatriates are becoming common International experience is becoming a pre-requisite for career progression to many toplevel managerial positions. 7. GLOBALIZATION

How to face competition from MNCs is a worry for Indian firms. As globalization spreads, more foreign firms are entering Indian market and the challenge before domestic firms is going to be much more severe in the years to come. Many Indian firms are compelled to think globally, something which is difficult for managers who were accustomed to operate in vast sheltered markets with minimal or no competition either from domestic or foreign firms. The Internet is adding fuel to globalization and most large MNCs are setting up green field projects in India or entering into joint ventures with local companies. 8. Corporate Reorganizations It is difficult to imagine circumstances that pose a greater challenge for HRM than reorganizations resulting from acquisitions, mergers, divestitures or take-over threats. The reorganizations will have impact on organizational levels and employees. Employees experience anxiety and uncertainty about their places in a new organisation. The strength of unionized staff of Shaw Wallace, for example, has risen considerably in 1995, thanks to the acquisition of 14 distilleries. Executive strength has also gone up by 20 per cent in one year. As a trimming exercise, the company decided to retrench as many as 400 executives.





The employees of both the ‘taking over’ as well as the ‘taken over’companies will have anxious moments because of Fear of loss of jobs

Trends in HRM Job changes, including new roles and assignments Transfers to new geographic locations Changes in remuneration and benefits Changes in career possibilities Changes in organizational power, status, and prestige Staff changes, including new peers, supervisors, and Changes in corporate culture and loss of identity in the company.

CHANGING DEMOGRAPHICS OF WORKFORCE The major challenge that has resulted from changing workforce demographics concerns dual career couples, couples where both partners are actively pursuing professional careers. Organizations have been accustomed to using job moves and physical relocation as an important means of developing talent. Men or women moving through organizational ranks to upper-level positions need experience in a variety of roles in different organizational units. Frequently, physical relocation is required.

The increasing number of dual-career

professionals limits individual flexibility in accepting such assignments and may hinder organizational flexibility in acquiring and developing talent.

CHANGED EMPLOYEE EXPECTATIONS With the changes in workforce demographics, employee expectations and attitudes also have shifted. Traditional allurements such as job security, attractive remuneration, housing and the like do not attract and motivate today’s workforce. Employees demand empowerment and expect equality with the management. Previous notions on managerial authority are giving way to employee influence and involvement alongwith mechanisms for upward communication and due process.

LOSS OF JOY AND PLEASURE The HR manager of today is an unfortunate individual. He/she has been denied the joy and pleasure of hiring and managing thousands of employees under one roof. Which HR manager of today claims to have experienced the real HR challenges of yester years? Which HR manager today has received bricks, encountered menacing body language of irate workers, faced strikes, saw lockouts, witnessed vehicles being burnt, executives being lynched, saw graffiti on the walls in which his own name is dragged and maligned by militant




union leaders? The HR manager of today is a poor legacy of the one lived in the past. With regard to the HR function, the focus in the coming years would be on the following lines: HRM to become integral of business, Empowerment of employees, Focus on productivity through team building, Dynamic/flatter/matrix organizational structures, People-sensitive management styles and practices, Management of the changing workforce skill/sex/turnover, Managing the changing work diversification – change of priorities, Efficient use of information technology, Strengthening organizational communication, Greater focus on man-machine interface, Institutionalizing employee involvement, Sustaining individual effectiveness through performance feedback and counseling.

INDIAN SCENARIO AND HRM POSITION OF PERSONNEL MANAGEMENT IN INDIA: Despite the recent increase in his status, the personnel officer on indian scene continues to present a kaleidoscopic picture of his multiple role structure. Due to this diversity and elasticity of his he is called by several names: “buffer zone between labour and management”, social worker in the industrial setting and above all ‘staff advisor ‘ in the organisation and ‘executive’ in the personnel and welfare spheres. In the current tradition of India, the personnel officers is not invested with necessary authority to implement the decisions effectively and therfore commands relatively less respect from workers and trade unions as well as from technical and other managerial staff of the organisation. Factors which have impeded the growth and progress of personnel function in india can be summarised as follows 1. By creating welfare officers under factories act 1948, the government has done more harm than good because these statutory officers have not won the support of line management in their organisation. 2. A large number of industrial relations laws have resulted in a legalistic approach to labour relations and has made personnel executives dependent on lawyers. 3. The job results which cannot be measured in concrete terms has proved frustrating for many personnel executives for evaluating their success. 4. The job of personnel officer is considered as fire fighting function only to head off union troubles. 5. Many personnel executives consider line managers as inferior due to academic qualifications which results in hostility.




6. Personnel executives have generally short range perspective and remain insensitive to the organizations internal needs. 7. The human relations approach t personnel management has not yet taken a firm foothold in our country. The reasons are 1. Highly authoritarian culture. 2. Abundance of cheap labour. 3. Weak and unenlightened labour movement 4. Technological backwardness 5. Traditional management.







MANPOWER PANNING? MEANING: Human resource planning, in simple terms, is the process of determining the manpower needs of an enterprise so that it is possible to fill-up any vacancy as and when it arises, such a plan eliminates the risk of surplus or shortage of staff at any time. DEFINITION: “Human resource or manpower planning is the process of determining the manpower requirements and the means for meeting those requirements in order to carry out the integrated plan of the organization”. – Coleman “Human Resource Planning is a process of determining and assuming that the organization will have an adequate number of qualified persons, available at the proper times, performing jobs which meet the needs of the enterprise and which provide satisfaction for the individuals involved”. – Dale S. Beach. “Human Resource Planning is an integrated approach to performing the planning aspects of the personal function in order to have a sufficient supply of adequately developed and motivated people to perform the duties and tasks required to meet organized objectives and satisfy the individual needs and goals of organizational members” – Leon C. Megginson. It is clear from the above definitions that human resource planning is concerned with the task of projecting the manpower needs of an organization and steps to fulfill the same.






MANPOWER PANNING 1. Goal Oriented: The main objectives of Human Resource Planning are ensuring that the amount invested in human resource is justified. i.e., the organization should derive maximum benefits. If further ensures that the organization has the right number and types of person working at any given point of time. 2. Present and future manpower needs: After the present and future manpower needs of an organization have been anticipated, steps may be taken to fulfill the same through proper planning. Human resource planning, thus, relevance for the present and the future. 3. Systematic approach to the task of fulfilling the manpower needs: In the absence of Human resource planning, the organization will recruit staff at random. This leads to certain problems, e.g. surplus or shortage of manpower and the organization appointing unsuitable persons. Human resource planning follows a systematic approach to the entire process of recruiting staff in order to overcome these problems. 4. Promotes efficiently: Human Resource planning is required as it leads to greater efficiency. This is does by keeping the cost of recruitment and selection low and by ensuring right man for the right job. 5. Continuous process: It is not correct to think that human resource planning is required only in the early years of inception of an organization. It is something that is required continuously. In other words, as long as organization requires manpower, the need of human resource planning will be felt. 6. Flexibility: There is always a feeling among many that any type of plan makes things rigid. It may be said here that the human resource plan can be made flexible by making changes in it in tune with the changing manpower needs of the organization.

HUMAN RESOURCE PLANNING INTRODUCTION Planning is thought prior to action Planning has been visualized as a thought proper to action, embracing a scheme of action involving the determination of the strengths and weaknesses in the choice of the best course of action from the standpoint of strategy and programmes. The term “Plan� is defined as a forecast of future attainment and forms a written statement of what will be the outcome of this action specifying a time period ranging from one year to five years.




Meaning of Human Resource Planning:

Is both a process and a set of plans. It is the process used by organisations for assessing the supply and demand for future human resources. In addition, an effective HR plan also provides the mechanisms that will be used to eliminate any gaps that may be exist between supply and demand. Thus HR planning is process that is used to determine the number of employees to be recruited in to the organisation or the phased out of it.

Human Resource Planning as a process involving the following activities: 1. Forecasting of future human resource requirements; 2. Task of inventorying present resources and assessing the extent to which these resources are optimally utilized; 3. Anticipation of human resources problem, and 4. Planning of necessary human resource programme.

Manpower Planning Provides information in three dimensions: The estimated manpower requirements (including expectations of manpower utilization); The analysis of the external manpower market situation,& The resulting estimate of manpower availability from the two dimensions.

Strategic HRM

Strategies for Manpower Planning Manpower planning involves the application of a set of 9 strategies: 1. Collect, maintain and interpret relevant information regarding human resources; 2. Report periodically manpower objectives, requirements and existing employment and allied features of manpower; 3. Develop procedures and techniques to determine the requirements of different types of manpower over a period of time from the standpoint of organizational goals and modify these goals, if they make unrealistic demands for human resources; 4. Develop measures of manpower utilization as a component of forecasts of manpower requirements along with –if possible- independent validation; 5. Employ- if suitable- techniques leading to effective allocation of work with a view to improving manpower utilization; 6. Conduct research to determine factors hampering the contribution of the individuals and groups to the organization with a view to modifying or removing these handicaps;




7. Develop and employ methods of economic assessment of human resources reflecting its features as income generator and cost and accordingly improving the quality of decisions influencing manpower; 8. Evaluate the procurement, promotion and retention of the effective human resources in the context of the forecast requirements of the enterprise; & 9. Analyze the dynamic process of recruitment , promotion and loss to the organization and control these processes and organization structure with a view to encouraging the maximum individual and group performance without involving excessive costs.

Reasons for Human Resource Planning All organizations perform human resource planning, either formally or informally. The major reasons for employment planning are: More effective and efficient use of human resources: Human resources planning should precedes all other HRM activities. Careful analysis of all HRM activities shows that their effectiveness and efficiency, which result in increased productivity, depend on human resource planning. More satisfied and better developed employees: Employees who work for organizations that use good human resource planning systems have a better chance to participate in planning their own careers and to share in training and development experiences. Thus they are likely to feel their talents are important to the employer, and they have a better chance to utilize those talents; More effective equal employment opportunity planning: The govt. has increased its demands for equal employment opportunities.In sum, effective human resource planning ensures that HRM activities and programme will be built on a foundation of good planning. Proper planning should cut down on the number of surprises that occur involving human resource availability, placement and orientation.

The HR Planning Process HR Planning involves four distinct phases or stages: Situation analysis or environmental scanning; Forecasting human resource records; Human resource supply analysis; Action plan development. Situation analysis and Environmental scanning: The first stage in HR Planning is where the HRM function and strategic planning initially interact. The strategic plan must adapt to environmental circumstances, and the HRM function is one of the primary mechanisms that an organization can use during the adaptation process. For e.g. rapid changes in the technological environment can force an organization to quickly identify and hire employees with new skills that previously weren’t needed by the organization.




Without an effective HR plan to support the recruitment and selection functions in the organization, it will be impossible to move fast enough to stay competitive. Thus, organizations are becoming more dependent on an ability to gather relevant information about their environment and to react to this information.

Forecasting future demand for employees: The next phase of an effective HR Planning process is estimating not only how many but what kinds of employees will be needed in the future. Forecasting yields these advanced estimates or calculations of the organization’s staffing requirement. Although there are many quantitative tools to help with forecasting, it

is a process that involves a great

deal of human judgment. In addition, many successful HR planners also rely heavily on their “gut instincts” about future conditions. For e.g., planners at Unilever attribute much of their global successes to such instincts.

Analysis of the supply of current Employees: The third phase of HR Planning id designed to answer the question “How many and what kind of employees do I currently have in terms of the skills and training necessary for the future?” It should be obvious that this phase of HR Planning involves much more that simply counting the number of current employees in the organisation. The major tool used to assess the current supply of employees is the Skill Inventory. It is a list of names, certain characteristics and skills of the people working for the organisation. It provides a way to acquire these data and makes them available where needed in an efficient manner.

Action decisions in Human Resource Planning: After the HR Planning system has analyzed both the supply of and demands for future workers, these two forecasts are compared to determine what, if any, action should be taken. Whenever there is a discrepancy between these two estimates, the organization needs to choose a course of action for elimination the gap. No matter how good the HR Planning system is, an exact match between supply and demand forecasts is rare. Even when overall estimates are similar, there are frequently important gaps in certain subgroups. These data become inputs to facilitate decisions about training, promotion, demotion and similar decisions.

Action decisions with a shortage of employees: When employment specialists comparing demand to supply find the supply of workers is less than the demand, several possibilities are open to the organization. If the shortage is small and employees are willing to work overtime, it can be filled with present employees. If there is shortage of highly skilled employees, training and promotions of present employees, together with the recruitment of lower skilled workers, are possibilities.




Action decisions in surplus conditions: When comparison of employee demand and supply indicates a surplus, the alternative solutions include attrition, early retirements, demotions, layoffs, and terminations. Employee decisions in surplus conditions are some of the most difficult decisions managers must make, because the employees who are considered surplus are seldom responsible for the conditions leading to the surplus. A shortage of raw material such as fuel, or a poorly designed or marketed product can cause an organization to have a surplus of employees. Fig. 1: Human Resource Planning Process

STATE THE IMPORTANCE OF HR PLANNING? 1. To procure the required manpower: To perform the various jobs in the organization, people with varying skills, qualification and expectance are required. HR planning helps to fulfill such requirement. 2. To replace employees: Every year, a number of employees retire in workplace. These employed therefore have to be replaced. Vacancies arising due to retirement can be anticipated and suitable arrangement for replacement can be made. A vacancy may also arise when an employee dies or becomes incapacitated or dismissed on disciplinary grounds proper planning his enable the management to fill-up vacancies as and when they arise. 3. To tackle the problem of surplus of shortage of manpower: In the absence of proper planning of manpower needs, the organization is ---- to face the problem of either surplus or shortage of manpower. Surplus employees do not contribute to output. On the other hand, if there is shortage of manpower, the volume of work. To tackle both the problem, proper planning is essential. 4. To meet the needs of changing Technology: Rapid technological changes would render the existing workplace, the organization must require the exiting employees to update themselves or recruit a new set of workforce. Here again, human resource planning can help. 5. Expansion programmes: No organization is going to remain static. To undertake expansion activities additional hand are necessary. Such additional hands can be served thorough effective planning. 6. Optimum investment in human resource: Under Human Resource management, the amount spent on Human Resource is viewed as on investment. But it is necessary that such as investment is made at the optimum level in order to device maximum benefits. Human Resource

planning ensure optimum

investment in Human Resource.





1. The system analysis

2. Determining the time

Reconciliation 5. Preparation of

3. Forecasting the

frame of the plan


supply of manpower

action plans

I. THE SYSTEM ANALYSIS: The company has to design the systems in which the organization works it may be either closed or ‘open end’ a closed system will have all actions, variables, information and relationship necessary for he achievement of its goals, within its limits. A closed system have a high degree of predictability of its behaviour. This makes, planning very easy. An open end system is for more uncertain and unpredictable and appropriate corrective actions are after unknown. Ascending to T.C. Trepathy , generally, the manpower planning will work in a vast open – end system the / the national economy. Which contents of number of complicated open-end sub-systems (firms, unions, families and individuals)? Therefore a system has to be analyzed with regard to the planning. 1. Goals: The company’s goals should always be clear manpower planning cannot succeed until the goals to the organization (i.e. profit, welfare, unity etc.) are clearly defined and ------assigned to them. 2. External environment constraints: The company has to consider the external factors (such as population, investment, union rules) etc. which are beyond his control. 3. Internal variables: The HR managers has to identify those variables which are either the firms control foe e.g productivity incentives or training or redundancy payments.

II. DETERMINING THE TIME FRAME OF PLAN: The manger has to decide the time frame of his plan as this will show how much is changeable with in the system. For the shorter time span. There will be less variance. A reasonable accuracy can be expected in case of short-term forecasts up to 2 years a useful techniques is to roll on the forecast by a year at each annual revision. Thereby keeping the




length of the forecasting period unchanged whilst making nay amendment necessary in the light of changing circumstances. Short-term planning is undertaken to find a temporary match between the exiting individuals and the existing jobs. It aims at reamong the anomalies in posting and placements. Long –term planning, on the other hand, is done to a find proper match between the future jobs and their future incumbents. III. FORECASTING THE SUPPLY OF MANPOWER: The essential element in the manpower planning is the forecasting of the demand and the supply of manpower, for the period for which the plan is outlined. To forecast manpower demand in the future, the period for which the plan is outlined. To forecast manpower demand in the future, the HR manager must have a detailed knowledge to the company’s future achievements targets. Generally, the forecast will be made on the assumption of a given target level. The following steps are required to be followed for projecting manpower demand. 1. Selection of suitable method for calculation of manpower needs. 2. Estimation of the productivity rates. 3. altering the productivity rates and 4. Estimation of manpower requirements.

i) Suitable method: selection of a suitable method for the calculation of manpower requirements is an essential element. In case of a retail store, the best method is quantum of sales, and in case of a company producing steel. It may be tons of steel, for a university it may has to satisfy one requirements –the required manpower be proportional to the changes in the basic. In a steel co, tons of steel’ will serve as a useful basis for the calculation of manpower needs if the number of workers is performed to the output of steel.

ii) Productivity ratio: the second in the forecasting is output per individual. Productivity ratio can be calculated in a number of ways. The most typical method used by small companies is managerial judgment or copying ratios of other concerns. Fro instances, a manger of a small company may estimate the manpower needs on the basis of his own judgment or on the basis of experience of other similar companies that he needs 12 persons in his office to process 360 files per week on he basis of this ratios, one can easily forecast the number of men needed to carry out a planned volume of work. Sometimes, the productivity ratios are calculated with the help of statistical or work study technical. Here, there will use regression analysis to find out the movement in the values of the 2 variables-manpower and output-are corrected with each other. Afterwards, we can predict manpower requirements for a given level of production activity.




By using work study method, we can find out the work standard hours required to produce one unit okf output on the basis of work measurement done by industrial engineers. After finding the standards hours per unit, it is easy to forecast the number of workers required for producing the planned number of units.

iii) Making adjustments in the productivity ratio: The next step is to make adjustments in the producing ratio based on the changed in technology, changes in organizational structure training and better utilization of resources manpower estimates for the target years must reflect the productivity anticipated at that time.

iv) Projecting manpower requirements: After finding out the productivity ratios, the projection of operative manpower need for he target year is easier. After planning the need for each section or department the organization can proceed to

find out the ratios between the number of operative and

managerial personnel at various levels on the basis of certain assumptions about span of control, nature of work, technology and historical data. These ratios will help to work-out the projections for its managerial personnel.

FORECAST OF MANPOWER SUPPLY: Manpower demand is the key element manpower forecasting. The supply of manpower to fulfill the demand. The following are the sources of the supply of manpower. i) Internal supply forecast: This is a kind of internal sources through which can get the required manpower by regular promotions, turnover etc. the stochastic modes helps in forecasting internal supply is the markov-chain analysis. Under this method, the probabilities are calculated of he movement of people from one job to another in the organization or of leaving the organization on the basis of past record over same specified time period. Here, it is assumed that these probabilities would remain stable to make forecast future manpower supply in the organization. (ii) External supply forecast: The internal supply forecast will be successful only in the most exceptional situations. When the organization expends the supply will be less than the demand. Sometimes, the supply will exceed the generally given to increasing the supply by recruitment although other internal means to alter the supply. External supply forecast will be undertaken in the right of several local and national factors operating in the labour market. Avoiding to S. Ghosh, the following local factors worth mentioning i.

HR available at various distance from the work place.


Other employment chances available.


Availability of part-time labour





Competition prevailing in the market for similar categories of labor from other organization both local and national.


Output from the local educational system (general as well as technical)


People coming on emigration within the area and between it and other areas.


Shelter faculties available to the work force.


Transfer and communication facilities.

(iii) Reconciliation: Any manpower forecast depends on the cost factor. The manpower plans are reconciled with the company’s finances. Always, the manpower needs and manpower programmes will have the company’s finance. Always, the manpower needs and manpower programmes will have to be re-examined and reassessed and a suitable reconciliation within the financial constraints achieved. (iv) Action plans: After analyzing the manpower requirements, the action plans relating to productivity and manpower costs, covering the following subjects be prepared. ♦



Improvement in productivity and

Improvement in the retention of employees.

In the above areas of the manpower plan, it is essential to calculate the costs involved so that thy can be assessed against the potential benefits. It is also equally to indicate who responsible for implementing the plan, for reporting the progress and for monitoring the results achieved.

DISCUSS THE USES AND BENEFITS OF MANPOWER PLANNING. USES AND BENEFITS OF MANPOWER PLANNING: 1. Reduces labour cost: Manpower planning results in reduced labour cost as it helps the management to anticipate shortage and / or surpluses of manpower and correct these imbalances before they become unmanageable and expensive. 2. Best use of skills of employees: It is better basis for planning employee development that is designed to make optimum use of workers skills working in an organization. 3. It planning training faculty: It enables identification of the gaps existing manpower so that corrective training programme becomes more effective. 4. Improvements in all levels: It leads to improvement in the overall business planning process. 5. It is useful for making employees skill up to date:




It leads to a greater awareness of the once of sound manpower management throughout the organization. 6. It is Evaluation Tool: It serves as a tool to evaluate the effect of alternative manpower actions and polices. 7.Useful to managerial succession: It helps in formulating managerial succession plan as a part of the replacement planning process which is necessitated when job-change plans for mangers are formulated. Besides, this exercise would provide enough lead time for identifying and developing managers to make-up the corporate leader.

LIMITATIONS OF HUMAN RESOURCE PLANNING: 1. Expensive: Preparation and implementation of the HR plan is expensive is terms of time, efforts and money required. 2. Inaccurate forecasts: The manpower needs of an organization are determined based on forecasts. The HR plan is prepared in tune, with such forecasts. The success of the plan, therefore depends on the accurately with which the forecast are made inaccurate forecasts would only result in the failure of the plan. 3. Uncertainties: Absenteeism, seasonal nature of certain jobs, labour turnover etc. can separate the HR paln. 4. Trade union resistance: Trade unions often utilize the HR plan of an organization on the ground that it is detrimental to the interests of the employees. The plan may contain such measures as increase in workload, voluntary retirement redeployment of surplus labor etc. it is for these reasons the trade unions show resistance. 5. Rigidity: Any plan is basically rigid. The rigidity of the HR plan may, sometimes, affect implementation. Such a plan, thus, remains only on paper. 6. Focus on quantity: The manpower plan often focuses attention on the quantity of HR rather than quality. Quantity without quality does more harm than good.

WHAT ARE THE REMEDIES / MEASURES TO MAKE THE HR PLAN EFFECTIVE? REMEDIES / MEASURES TO MAKE THE HR PLAN EFFECTIVE: 1. Case-benefit analysis of the HR plan: One of the limitations of the HR plan is that it is expensive in terms of time efforts and money required. The costs of preparing such a plan may be compared with the benefits




accounting to the enterprise. It must be ensured that the benefits are greater than the costs incurred. 2. Making accurate Forecasts: As the success or failure of the HR plan depends on the accuracy of the forecasts, steps must be taken to predict the presented and future manpower needs of the organization more accurately. There are several quantitative and qualitative tools used for the purpose of forecasting. 3. Provision for future uncertainties: Adequate provision should be in the HR plan for such uncertainties as absenteeism, labour turnover etc. This would ensure proper implementation of the HR plan. 4. Involve employees and their unions: Employed participation in management is an integral part of human resource management while preparing the HR plan, the suggestions and values of the employees on the manpower needs of the organization can be received. Where ever possible, steps can be taken to incorporate such suggestions in the HR plan. This would, certainty, steps overcome resistance by the employees and their unions. 5. Introducing Flexibility: The rigid notice of the HR plan may hamper implementation. To overcome such a problem, certain amount of flexibility may be introduced into the plan. 6. Consideration of both quantity and quality: The HR plan to be fruitful must consider both the quantitative and qualitative aspects of the human resource.

EXPLAIN THE VARIOUS FACTORS THAT INFLUENCE HR PLANNING. FACTORS THAT INFLUENCE HR PLANNING Internal factors: 1. Recruitment policy of the organization: The policy of the organization regarding the source of recruitment and the method of selection is an important factor influencing the HR plan. 2. Availability of funds: It finance is not constraint, the organization may be in a position to offer an alternative salary package and thereby induce decreasing persons to apply for the various jobs. 3. Job requirement: Different jobs call for different qualifications and skills from prospective applicants. The requirement of every job, therefore will have to be borne in mind while preparing the AR plan. 4. Scale of operation: The manpower needs of an organization the scale of operation of which is greater, will naturally be more than the one with a lesser scale of operation.




5. Trade union influence: The demands of the trade union regarding the hours of work, source of recruitment etc. may also influence the HR plan. External Factors: 1. The reservation policy of the Government: The reservation policy of the Govt. provides for reservation of jobs for certain communities. The HR plan of every Govt. organization and Govt. aided organization has to give effect to such a policy. 2. Availability of the desired manpower: Before preparing the human resource plan, it must be ensured that the type of HR needed by the organization is actually available. This is because sometimes people with a certain skill or qualification may not be available in the job market. 3. Willingness of the job seekers to accept the terms and conditions: When an organization wants to recruit staff afresh, it must ensure that is terms and conditions of service are acceptable to the job seekers of they find the unreasonable, they may not be willing to apply. 4. Knowledge of the trend is the industry: Consideration of the trend in the industry in the manner of the type of workplace preferred for certain jobs, wage rates, hours of work etc. is important in preparing the HR plan. 5. Level of technology: A business is enterprise is highly susceptive to technologies changes. Technically qualified persons constantly update themselves to enhance their employment prospects. The job offers of an enterprise, therefore, must be such that the potentials of the individuals are fully and they are also rewarded suitability.

EXPLAIN THE HUMAN RESOURCE PLANNING AT VARIOUS LEVELS. HUMAN RESOURCE PLANNING AT VARIOUS LEVELS 1. Global level: Eminent persons throughout the would are considered for appointment in global organizations like the UNICEF, the UNESCO etc. computer professionals throughout the world and in particular from India are working for he corporate giants of the U.S and the European countries. 2. National Level: A citizen of India, possessing the requisite qualification, is considered for appointment in central government organizations. In India, organizations like the union public service commission (UPSC) and the staff selection commission (SSC) are empowered to conduct entrance steps to select suitable candidates for central government must be milling to serve in any part of India. A citizen of India, fulfilling the eligibility criteria, may be inducted into the Indian Army, Navy or Air force. There are also organization that select desiring sports




persons, thoughts the country to pay for India. The Board of center for cricket in India (BCCI) for example, has a selection committee that selected talented, cricketers throughout India to play your India. 3. State level: Vacancies in state Govt. organization in India are filled up with the help of the respective state public service commission. For e.g. the Tamil Nadu Public Service Commission (TNPSC) is empowered to hold entrance tests to select candidates for state Govt. service. An employee in the state Govt. service must be prepared to service in any part of the state. 4. Industry Level: The level of activity of a particular industry like automobile, textile, chemical etc. will determine its manpower requirements. Only persons possessing certain specific qualification and experience can be considered for appointment in these industries for e.g. a degree or diploma in automobile engineering is necessary for someone associate himself with the auto industry as a technician. 5. Firm/ company level: The scale of operation of particular firm or company will determine its manpower needs. The recruitment policy of the particular concern will indicate the mode of selection type of candidates (male or female, with or without previous work or without previous work experience and so on) for the various jobs. 6. Department/Division level: This is concerning the manpower needs of a particular departments or division within a firm or a company. The natures of activities of a particular department, the availability of financial resources etc. are some of the factors influencing the HR plan.

DISCUSS THE HUMAN RESOURCE RETENTION PLAN. 1. Job security for all the employees: Obviously, an employee who does not have job regularly will quit his present job if he finds a secured job elsewhere. 2. Pay benefits on par with those in rival concerns: The salary and other monetary benefits given to the employees shall be on par with those in rival firms. Only then the employees will have a feeling that the employer does not exploit them. 3. Promotion opportunities: Lack of promotion opportunities results in stagnation. This leads to monotony and boredom in the workplace. There should always be scope for the employees to move higher positions. 4. Facilities for Training: Training enables an employee to update his knowledge and skill of gives him greater confidence to meet future challenges.




5. Conductive working conditions: The physical environment as well as he social environment in the workplace should be conductive for he employees. 6. Encouraging workers participation in management decisions: Only then the employee will have faith in the management, as the latter cannot take individual decisions. 7. Challenging work: The work given to any employee must be of a challenging nature. It must give scope for the employees to exhibit their skills. 8. Motivation of employees: Inducement of employees is necessary to get the best all of them. This may done by offering them suitable tangible benefits. 9. Encouraging workers to form of union: When there is a trade union, the employees will be in a position to represent all their genuine demands collectively. 1. Facilities for Counseling: Employees do under crap stress in view of domestic and work related problems. Counseling, by the manager or by a specialist, enables them to get rid of their stress and perform then jobs better.

EXPLAIN THE GUIDING PRINCIPLES OF EFFECTIVE ERP. GUIDING PRINCIPLES OF EFFECTIVE ERP There are certain fundamental principles that make HR making effective there are as follows. 1. The plan should be as detailed as expenditure constraints allow. 2. Plan should not extend too far into the future, accurate prediction of the distant future is simply impossible. 3. All attendance courses of action should be considered. 4. Side effects and implications of the actions envisaged should be examined. 5. Institutions to individual and departments must be incorporated into the plan. 6. Plans should can use and easy to understand. Once the plan so formed is executed, its effectiveness in achieving set stated objectives should be periodically motivated. Variations, if any between actual and desired positions must be identified as easily as possible and the remedial measures should be introduced immediately.

HOW IS HR INFORMATION SYSTEM USEFUL IN HRP? HRIS-Human Resource Information system aspects to a computerized system that aids the processing of information relating to HRM it is a system of gathering, classifying, processing, recording and disseminating the information required for effective management of




HR in an organization HRIS forms an integral part of the management information system (MIS) MIS includes information relating to aspects finance, production, marketing, sales, accounting etc. HRIS collects and analysis date relating to HR of the organization. The inputs of employees, their abilities, qualifications, potentials, creative instincts, age, sex, their jobs, pay scales, organizational objectives, policies procedures etc. These inputs are processed and transformed into multiple forms of inputs like ------and many other devices. These outputs are made available at the fingertips of the manager through computer network. Thus, managers find HRIS as a decision support system device for managing human resources in the organisation. HRIS is considered superior one to that of manual system. The main advantages that HRIS offer individual. 1. It is both saving and cheaper device 2. It gives accurate information relating to human resource. 3. it makes resources 4. it makes information readily available as and when desired. 5. it acts as a decision support system. Like career planning, development skill, moral etc.

WHAT DO YOU MEANT BY PP AND EXPLAINS IT ? OR WRITE SHORT NOTES ON PERSONNEL POLICY? “A policy is man made rule or predetermined course of action that is established to guide the performance of work towards the organisation objectives.




“Main objective of personnel management is to get the work done by the employees working in an organisation so that the organisational objectives may be achieved in the best possible manner”.

“A policy is a pre-determined course of thought and action that is defined and established as a guide towards accepted goals and objectives”.

“Policies are general instructions, procedure and specific applications”.

“Pp constitute guides to action, they furnish the general standards or bases on which decisions are reached. Their genesis lies in an organisation value, philosophy, concepts and principles”.

EXPLAIN THE CHARACTERISTICS OF PP: 1. PP are the statement of objectives.




2. PP guides the management in respect of personnel problems. 3. A policy is a pre-determined and accepted course of action. 4. PP reflects the intentions to personnel management to guide subordinate and helps them in discharging their responsibilities. 5. PP provides the basis on which personnel decisions are taken.

EXPLAIN THE OBJECTIVES OF PP: 1. To protect the interest of labour and capital 2. To bring prosperity to the organisation 3. To provide the base for decision making 4. To facilitate the process of decision making 5. To develop the feeling of mutual co-operation and dignity between labour and management. 6. To bring the employees in a closer contact of management. 7. To provide the proper and adequate financial incentives. 8. To provide the safety of job to the workers. 9. To maintain the achievements of trained employees 10. To develop the feeling of royalty and faithfulness among employees towards the enterprise. 11. To provide the opportunity for development 12. To formulate justified policy regarding the terms and conditions of employment 13. To recognize the work of employees and to give due regards to their achievements. 14. To help in the selection of suitable persona 15. To develop the feeling of responsibility among managers and employees. 16. To provide the opportunities of maximum individual development. 17. To make possible maximum exploitation of HR


Pp guide the management and employees in the execution of their tasks. These policies are helpful in establishing co-ordination between labour and management. So the pp are essential for the smooth functioning of an organisation.

1. ESTABLISHMENT OF INDUSTRIAL PEACE: A personnel policy helps in developing harmonious relations between labour and management thus helps in solving the labour problems. 2. BASIS OF DECISIONS:




Personnel management helps in achieving the organisation objectives by taking relevant decisions at proper time. 3. UNIFORMITY IN DECISIONS: Pp are pre-determined course of action, so all the decisions based on Personnel polices are uniform. 4. Helpful in achieving: - the organisational objectives. 5. Delegation of authority: - is possible. 6. Helpful in effective control 7. Motivation to do more work 8. Helpful in evaluating efficiency. 9. Development of confidence among workers. 10. Co-operation from labour unions.

EXPLAIN THE PRINCIPLES OF PP: Pp are the policies, which guide the management and workers to discharge their responsibilities properly. These policies are helpful in establishing effective co-ordination between labour and management. These policies are based on some principle so that they may be helpful in achieving the organisation objectives.

1. Principle of Common interest: The interest of employees and employers of an enterprise is on and the same that means economic success of the enterprise. Pp must be based on the principle of common interest. Both parties must realise that there interests are not separated but are alike and the achievement of organisation objectives depends upon mutual co-operation and co-ordination. 2. Principle of recognition of trade unions: The work, liabilities and responsibilities of workers must be appreciated; human dignity of workers must always be honoured. There must be a direct relationship between workers and management all the facilities must be provided to the workers and their problems must be solved. 3. Principle of recognition of work and accomplishment: Due recognition must be paid to the work and accomplishment by formulating suitable Pp. This principle involves the determination of a satisfactory policy of wage payment, job security, reasonable standard of living, and sympathetic attitude towards labour, job a P Appreciation and job satisfaction. 4. Principle of development: Opportunities must be provided within the organisation so that the employees may improve their status earns more wages and share higher responsibilities. Personnel Polices must be formulated in the manner that the employees, who are willing to contribute some




thing for the prosperity of the organisation and to sacrifice their time, and efforts to improve themselves on the job, may get proper opportunities or development. 5. Principle of participation in management: The success of any policy is depends on the effective implementation and willing acceptance. If the decision regarding personnel matters is taken with the consultation and consent of the representatives of employees, it will improve the working conditions. 6. Principle of change: Change is the law of nature. It has been the general experience that the employees resist almost all the changes. Therefore, the management must take measures to prepare the employees well in advance to face these changes.

EXPLAIN THE FORMATION OF PP OR HOW TO FRAME THE PERSONNEL POLICY OR EXPLAIN THE PROCESS OF PP : 1. The name, objects, organisational structure and management must be introduced in brief. 2. The recruitment of employees must be in partial. 3. It must disclose the source of recruitment, selection, procedure and minimum qualifications for different job. 4. It must disclose the period of probation also. 5. Working conditions, work hours must be disclose (it differ for women’s, children etc) 6. It must disclose training programme 7. Principle of equal remuneration – equal work 8. Rules regarding payment overtime must be clearly mentioned. 9. The time payment of wages must be pre-determined. 10. Holidays must be announced well in advance. 11. The rules regarding absenteeism and slacks of employees must be specified. 12. The basis of promotion must be certain and specific the basis must be strictly be observed. 13. The rules of demotion must also be specified. These rules must be clearly communicated to the workers. 14. Possible measures should be adopted to remove the grievances. 15. The Policy must contain all detail about collective bargaining. 16. Possible measures should be adopted for the welfare and social security of the employees. 17. The policy must have detail of punishment on the vocation of rules of the organisation. 18. Schemes of labour participation in management should be specifically disclosed.




19. The policy should also have specific rules regarding retirement. 20. In addition to above particulars a. Leave with pay b. Rules regarding transfer c.

Rules regarding retirement

d. Safety rules e. The works that are prohibited f.


g. Labour relations h. Termination i.

Possible accidents and safety

TYPES OF PERSONNEL POLICIES: 1. Functional grouping of policies or organisational grouping of policies 2. Centralised policies

1. Functional grouping of policies: Those policies, which are, grouped for different categories of pp. E.g., for the management dealing with personnel planning, organizing and controlling or for management concerned with functions of procuring developing and utilizing man power. The centralised policies are framed for companies with several locations. Policies may be classified into major and minor.

OVERALL OBJECTIVES: Minor policies; cover relations in a segment of an organisation with considerable emphasis on details and procedures. Such policies are the out growth of major policies and preserve their unity of purpose.

BOARD OF THE USA VIEW THAT THE FOLLOWING MATTERS SHOULD BE INCLUDED IN THE PERSONNEL POLICY: 1. History of the company’s growth 2. Recruitment procedure in detail 3. Grievance redressal procedure 4. Safety rules 5. General practices like operation, attendance maintenance, punch card etc. 6. Co-operation 7. Employees financial aids 8. Training



9. Employees news and journal 10. Communication 11. Motivation 12. Health and hospitalization 13. Vacation with pay 14. Allowances 15. Leave details 16. Employees discussion methods 17. Company’s policy on compensation, reward 18. Social security like pension, gratuity etc 19. Collective bargaining 20. Garnishments 21. Public relations 22. Labour – company relations 23. Union relations 24. Prohibition activities – smoking, gambling, imbibing liquor etc 1. Maintenance and disciple rules regarding etc.





Unit – II Job Analysis Job Analysis is one of the most important functions of Human Resource Manager. Performance Appraisal, Job Designing, Personnel selection, employee training, career development and planning are among the many activities that depends upon the information gathered in the job analysis.

Key terms:

Job: A job may be defined as “a collection or aggregation of tasks, duties and responsibilities which as a whole is regarded as a regular assignment to individual employees”. Putting in different words the meaning of a job can be described as a pocket containing differentiated set of total workload in an organization.

Position: Position is collection of tasks and responsibilities regularly assigned to a person.

It is to be noted that job is impersonal and position is personal.

Today, however, the word job has many mutations depending upon how, when and by whom it is used. It is often used interchangeably with the terms like position and tasks. Before proceeding with a detailed discussion on “job Analysis” it would be fruitful to familiarize ourselves with terms that form specific job attributes.

Fig. Relationship among the different job components: 9 8 7 6 5

4 3 2 1 1 – Micro Motion 2 – Elements 3- Tasks 4- Duties 5- Positions 6- Job




7- Job Family 8- Occupation 9- Career

Micro Motion: The simplest unit of work is the micro motion. A micro motion involves a vary elementary movement such as reaching different work performed in an organization can be traced from a micro motions to an occupation grasping, positioning and releasing an object. It is the most elementary unit in to which a job can be broken down.

Elements: An element is alignment of two or more micro motions to make a basic movement like picking up an object.

A task is congregation of elements to constitute an activity for a specific purpose like preparing a lecture. Two or more related tasks performed in carrying out specific job responsibilities are referred to as duty.

A position constitutes specific duties and tasks group together. In an organization there may be one or more person assigned a position. A position constitutes the whole unit of work assignment

Job: When positions are combined they create a job.

A job family is a group of two or more jobs that either call for similar worker characteristics or contain parallel work tasks as determined by job analysis.

Occupation: A grouping of similar jobs or job families across organizations is termed as occupation.

A Career represents a sequence of positions, jobs or occupations that a person has over his or her working life.

Having familiarized oneself with the basic conceptual framework which acts as foundation stone for the knowledge on job analysis, we shall now proceed with a step-by-step discussion of the main topics.

Job Analysis Job Analysis is a written record of actual requirements of the job activities.





“Job Analysis is the process of determining and reporting pertinent information relating to the nature of a specific job.” Bayers and Rue

It is the determination of tasks, which comprise the job of the skills, knowledge, abilities, and responsibilities required of the holder for the successful job performance. Putting it in other words it is the process of getting information about the job incumbent’s skills, education and training to carry out the job effectively and terms on time for completion, performance standard.

It is procedure by which pertinent information is obtained about a job, i.e. it is detailed and systematic study of information relating to the operations and responsibilities of a specific job.

A job analysis results in two important documents: •

Job Description;

Job Specification.

Job Description:

Job description is written record of the duties, responsibilities and requirements of particular jobs. It is concerned with the job itself and not with the work. It is a statement describing the job in such terms as its title, location, duties, working conditions and hazards. In other words, it tells us “What to be done, and how it is to be done and why.” It is a standard of function, in that it defines the appropriate and authorized contents of a job.

Job Specification:

Job specification is a standard of personnel and designates the qualities required for an acceptable performance. It is a written record of the requirements sought in an individual worker for a given job. In other words, it refers to a summary of the personnel characteristics required for a job. It is a statement of the minimum acceptable human qualities necessary for the proper performance of a job.

Purpose and Uses of Job Analysis

Job Analysis is not useful but an essential part of organizational strategies to serve the following purposes:




Organization and Manpower Planning: It is helpful in organization planning, for it defines labour needs in concrete terms and coordinates the activities of the work force, and clearly divides duties and responsibilities;

Recruitment and Selection: By indicating the specific job requirements of each job (i.e. the skills and knowledge), it provides a realistic basis for the hiring, training, placement, transfer and promotion of personnel. “Basically, the goal is to match the job requirements with a worker’s aptitude, abilities and interests”. It also helps in charting the channels of promotion and in showing lateral lines of transfer;

Wage and Salary Administration: By indicating the qualification required for doing a specified job and the risks and hazards involved in its performance, it helps in salary and wage administration. Job analysis is used as a foundation for job evaluation;

Job Re-Engineering: Job Analysis provides information, which enables us to change jobs in order to permit their being managed by personnel with specific characteristics and qualification.

Employee Training and Management Development: Job Analysis provides the necessary information to the management of training and development programmes. It helps to determine the content and subject matter of in training courses. It also helps in checking application information, interviewing, weighing test results, and in checking references.

Performance Appraisal: It helps in establishing clear cut standards which may be compared with the actual contribution of each individual;

Health and Safety: It provides an opportunity for identifying hazardous conditions and unhealthy environmental factors so that corrective measures may b taken to minimize and avoid the possibility of accidents.

Employee Orientation: Effective job orientation cannot be accomplished without a clear understanding of the job requirements. The duties and responsibilities of a job must be clearly defined before a new employee can be taught how to perform the job.

Utilizing Personnel: Job Analysis information can help both employees and managers, pinpoint the root of a problem if employee functions are not adequate.

In sum, it may be noted that job analysis is a systematic procedure for securing and reporting the information, which defines a specific job.

Steps in Job Analysis/Process The major steps to be followed in carrying out job analysis in an organization can be described as follows:

Step 1: Studying job vis a vis the organization: Review the available Background information through organization workflow or process charts. Studies the job inter relationships. Often, a restructuring, down sizing, merger, or rapid growth will initiate this review.




Step 2: Selection of uses of job analysis information: Be selective regarding the future uses of job analysis. The employee or the manager may request a job analysis to determine the appropriate compensation, but they also be interested in formally documenting changes in recruitment, placement and training for a particular job.

Step 3: Identify the “job” to be analyzed: it is always advisable to choose flow representative and key positions for job analysis, thus avoiding unnecessary time and financial expenditure.

Step 4: collection of Job Analysis data: manager should consider using a number of different methods of data collection because it is unlikely that any one method will provide all the necessary information needed. Three of the most popular form of data collection is: •

Observation of tasks and behavior with the job incumbent i.e. both physical and mental activities;


Questionnaires and checklists;

Step 5: Develop a Job Description: Highlight the major tasks, pertaining to effective job performance through the written description;

Step 6: Develop a Job Specification: Transcript the information obtained after step 4 highlight what personal qualities, trait, skills, background is necessary for optimal job performance.

Job Performance

Data Collection methods


Degree of



Critical incident technique




Diary method Training material Dictionary of occupation

Step 7: Review and update of information: If no major changes have occurred in the organization, then a complete review of all jobs should be performed every three years.




Review & Update of information Develop a job specification Develop a job description Collection of job analysis data Identify the job to be analyzed Selection of uses of job analysis information Studying job vis a vis the organisation Contents of Job Analysis

A job Analysis provides the following information:

1. Job Identification; 2. Significant characteristics of a job; 3. What the typical worker does; 4. Which materials and equipment of a worker uses; 5. How a job is performed; 6. Required personnel attributes; 7. Job relationship.

It is obvious from the foregoing that a job analysis is usually a clear indication of a job description and job specification. Purpose of job analysis:To assist man power planning. To assist recruitment and selection. To assist equipment and facilities required for each job. To determine qualification & experience required for each holder. To set up production standard. To draw up training & development programme. To provide guidelines for promotion & transfers. To establish responsibility, delegate authority and fix accountability. To settle grievance on assignment of jobs or fixing compensations. To design working environment based on ergonomics.




To assist work study and work measurement. Content of Job analysis:1. Job identification:- Its title, code number if any. 2. Distinctive or significant characteristics of the job;- its location, setting, supervison, hazards & discomforts. 3. What a typical work does: Specific operations and tasks make up of assignment, the time limits of the job, the nature of a job- simple or complex the responsbility for the property etc. 4. What materials & equipments a worker uses:- Metals, plastics, yarns, milling machines, punch presses etc. 5. How a job is performed:- Nature of operation- lifting handling, cleaning, washing, feeding, removing, drilling, driving. 6. Required personal attributes:- Experince, training, apprenticeship, physical strngth, coordination, physcial demand, mental capabilities, aptitudes, social skills. STEPS IN JOB ANALYSIS: The fundamental process of jobs analysis involves five steps:a. Collection of information:First of all an overview of a job, it relation to other jobs, and its requirements for competent performance are collected. This information can be had from organization charts, job specifications and job description. b. Selection of representative position:The analysis of job would be time consuming and hence some sample, representative position is usually considered for the people. c. Collection of job data:This includes information regarding the features of a job, required employee qualification and the experience. This can be obtained from the employees who actually perform a job. d. Developing job description:The information collected above can be developed into a job description. Job description is a document that describes the main characteristics of the job and required qualification & experience on the part of the incumbents. e. Developing a job specification:It is through the job description, the job specification is derived. The job specification describes the qualifications of a person trying to occupy a specific position.





1. Job performance:With this approach, an analyst actually dies the job under study to get first hand exposure to what it demands. 2. Observation method:Here the analyst keenly observed the work connected with job. The advantage of this method is that it is a direct method. Demerits:1. Here the employee become conscious & his performance may be best or worst according to this attitude towards such studies. Either way it distorts the date. ii.In certain job, observation method is impossible . Example are managerial job, R & D word:2. Recording methods:Here the worker is assigned the responsibility of recording his activities during the performance of his job. Advantages:1. it gives firs hand information. Disadvantages:1. The attitude of the woldr 2. His record do not contain information such as work environment, tools & equipment’s , workers r/s with supervisor. 3. Interview Techniques:Interview can be conducted individually or collectively by the process of interview differing viewpoints are collected and collated. This methods gives better accuracy . The main disadvantage is it consumes more time. 5. Critical Indicate:These are collection of brief actual report that illustrate particularly effective or ineffective worker behaviours. Structures Questionnaires:These questionnaires list tasks, behaviors(Negotiating , co-ordinating, using both hands) or both. One of the most popular structured questionnaires is the position analysis questionnaires(PAQ). The PAQ is a behavior oriented job analysis questionnaires. It consists of 194 items that fall into the following categories. Information input-where and how the worker gets the information to do her or his job.




Mental processes – The reasoning, planning & decision making is involved in the job. Work output- physical activities as well as the tasks or devices used. Job context – physical or social Other job characteristics-Work continuity , responsibility. Conference method:This is a method of exchanging ideas & gathering information with the help of experts & supervisors. Conference become the platform for eliciting expert opinions by probing questions and through open discussion.

COMPONENTS OF JOB ANALYSIS:a. Job description. b. Job specifications. A. Job description:Job description as a written record of the duties, responsibilities and requirements of a particular job. It details the tasks of behaviors associated with performance of the job. It provides both organization information (location in structure, authority) and functional information (what the work is) FORMAT OF JOB DESCRIPTION XYZ & Co. File No Ref No. Job file: Programmer

Code no. 474


Job No. 103


Office Assistant Reporting to: office Family: Clerk Superintendent Supervision: Trainees



Functions:Create, process, store & retrieve computer date. Control, collect, summarizes & supplies information as directed. Conduct training & evaluation & computer operators under training II. Equipment tools: PCS type 286,386,486 Printers Dot Matrix & Laser




Calculator, Xerox machine III. Job Characteristics: Skilled operation of Pc’s printer, Calculator & Xerox machine Through in computer operations like data entry, computations, compiling, commands, WordStar operation Continuous & Occasional extra hours. Communication skill. IV. Work environment: Inside A/c rooms 8 hours shift 6 days in a week Occasional overtime Occasional travel. Group working 5 to 10 persons. Nature of supervision – Limited to functional & not administrative – practice to trainee. JOB SPECIFICATION: In state the employee’s characteristics (knowledge & skill) inferred to be necessary for performance. It translated the job descriptions in terms of the human qualification, which are required for a successful performance of a job.


Nationality: Indian Age: 30 yrs Sex: male or female

Educational qualification: 1. Graduate 2. PG/Diploma/Certificate in computer operation (well versed in WordStar & COBOL)

Experience: - Min 1yrs experience preferably in PC 286, 386, 486. Ability: -

Physical: - Healthy Mental: - good with fingers, analytical reasoning. Special: - command in English (Teaching (training HR skills)

Potential making & capacity to take higher responsibilities career path. Next promotion as system analyst in 2 yrs




JOB ANALYSIS A process of obtaining all pertinent facts about the job

Job description A statement contains such items as

Job specification It contains items such as

Job title

* Education


* Experience

Summary duties

* Training

Statement of work

* Skills

Tools & equipment’s

* special attitudes


* Initiative


* Responsibility

Working conditions

* Analyzing and judgement ability

What do you meant by Job design It is the division of total task to be performed into the manageable and efficient units, positions, departments and divisions and to provide for their proper integration. The subdivision of work is both on a horizontal scale – with different tasks across the organisation being performed by different people and on the vertical scale, in which higher level of the organisation are responsible for the supervision of more people, the co-ordination of subgroups, more complex planning etc.


Deciding goals or objectives

Estimating future organisational structure and man power requirements

Auditing hr

Planning job requirements and job descriptions and

Developing a human resource plan.

Job analysis: Each task is described in detail. Job analysis is a procedure and a tool for determining the specified tasks, operations and requirements of each job. “It is a process of getting information about jobs, specially what the worker does, how he gets it done, why does it, kill, education and training required, relation to other jobs; physical demand; environmental conditions. In other words, it refers to the anatomy of the job.




It is a complete study of job, embodying every known and determinable factor including the duties and responsibilities involved in its performance, the conditions under which the performance is carried on, the nature of the task, the qualities required in the worker, and such conditions of employment as pay, hour, opportunities and privileges. It also emphasis the relation of one job to others in the organisation.


Successful human resource planning should identify our human resource needs. Once we know these needs, we still want to do something about meeting them. The next step in the acquisition function, therefore, is recruitment. This activity makes it possible for us to acquire the number and types of people necessary to ensure the continued operation of the Organisation.

Recruiting is the discovering of potential candidates for actual or anticipated organizational vacancies or from other perspective, it is a linking activity- bringing together those with jobs to fill and those seeking jobs. “ Recruitment a process to discover the sources of manpower to meet the requirements of the staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective selection of an efficient working force” Yoder & others

“It is a process of searching for prospective employees and stimulating and encouraging them to apply for jobs in an Organisation. It is often termed positive in that it stimulates people to apply for jobs to increase the “hiring” ratio i.e. the no. Of applicants for a job.” Flippo

Technically speaking, the function of recruitment precedes the selection function and it includes only finding, developing the sources of prospective employees and attracting them to apply for jobs in an organization, whereas the selection is the process of finding out the most suitable candidate to the job out of the candidates attracted (recruited). Objectives of recruitment: ♦

To attract people with multi dimensional skills and experience that suit the present and future organizational strategies;

To induct outsiders with a new perspective to lead the company;

To infuse fresh blood at all levels of the Organisation;

To develop an organizational culture that attracts competent people to the company;

To search or head hunt/ head pouch people whose skills fit the company’s values;




To devise methodologies for assessing psychological traits;

To seek out non-conventional development grounds of talent;

To search for talent globally and not just with in the company;

To design entry pay that competes on quality but not on quantum;

To anticipate and find people for positions that does not exist yet.

Fig. 1:Recruiting and other Human Resource Management activities

Human Resource Planning


Job Applications


Which provides new employees for

♦ Orientation; ♦ Training/ Development; ♦ Etc. Factors affecting Recruitment There are a number of factors that affect recruitment. These are broadly classified in to two categories: 1. Internal Factors; 2. External Factors.

External Factors: The external factors include supply of and demand for human resources, employment opportunities and /or unemployment rate, labour market conditions, political and legal requirement and govt. Policies, social factors, information systems etc. External factors: Socio economic factors; Supply and demand factors; Employment rate; Labour market conditions; Political, legal and governmental factors;




Information systems.

Internal Factors: The internal factors include the company’s pay package including salary, fringe benefits and incentives, quality of work life, organizational culture, career planning, growth opportunities, size of the company, company’s product and services, company’s growth rate, role of trade unions and cost of recruitment.

Internal factors: Company’s pay package; Quality of worklife; Organizational culture; Career planning and growth; Company’s size; Company’s products and services; Geographical spread of the company’s operations; Company’s growth rate; Role of trade unions; Cost of recruitment; Company’s name and fame.

External Environmental Influences: ♦ The union; ♦ Govt. Requirements, regulations and laws; ♦ Economic conditions; ♦ activities: Composition of the labour HRM ♦ Equal employment opportunities; ♦ Job analysis; ♦ Recruitment; ♦ Planning; ♦ Selection; ♦ Training and development; ♦ Career planning and development; ♦ Benefits and services; ♦ Discipline;

Internal Environmental Influences: ♦ Strategy; ♦ Goals; ♦ Organizational Culture; ♦ Nature of the task; Effectiveness People ♦ Work Group; Criteria: Abilities; Performance; Attitudes Satisfaction; Preference Absenteeism; s; Turnover; Organisation End Scrap rates; Results; Grievance rates; Competitive Accident rates. products; Competitive services.




Sources of Recruitment

Recruitment is more likely to achieve its objectives if recruiting sources reflect the type of position to be filled. Sources are those where prospective employees are available like employment exchanges while techniques are those, which stimulate the prospective employees to apply for jobs like nomination by employees, advertising, promotion etc. Certain recruiting sources are more effective than others for filling certain types of jobs are. The sources of recruitment are broadly classified in to internal sources and external sources.

Internal Sources: are the sources within organizational pursuits. It includes (a) Present permanent employees; (b) present temporary/ casual employees; (c) retrenched or retired employees; (d) dependents or deceased, disabled, retired and present employees; (e) Promotions; (f) Transfers. Present Permanent Employees: Organizations consider the candidates from this source for higher-level jobs due to: (1) availability of most suitable candidates for jobs relatively or equally to the external source, (2) to meet the trade unions demands; (3) to the policy of the Organisation to motivate the present employees. Present temporary or Casual employees: Organizations find this source to fill the vacancies relatively at lower levels owing to the availability of suitable candidates or trade and pressures or in order to motivate them on the present job. Retrenched or Retired employees: Generally a particular Organisation retrenches the employees due to lay-off. The Organisation takes of the candidates for employment from the retrenched employees due to obligation, trade union pressure and the like. Sometimes the organizations prefer to re employ their retired employees as a token of their loyalty to the Organisation or to postpone some inter personal conflicts for promotion etc. Dependents of Deceased, Disabled, Retired and Present Employees: Some organizations with a view to developing the commitment and loyalty of build up image provide employment to the dependent(s) of deceased, disabled and present employees. Such organizations find this source as an effective source of recruitment. Promotions: Most of the internal candidates would be stimulated to take up higher responsibilities and express their willingness to be engaged in the higher level jobs if management gives them the assurance that they will be promoted to the next higher level. Transfers: Employees will be stimulated to work in the new sections or places if management wishes to transfer them to the places of their choice.




Why do organizations prefer Internal Source? Internal recruitment can be used as a technique of motivation; Morale of the employees can be improved; Suitability of the internal candidates can be judged better than the external candidates as “known devils are better than unknown angles”; Loyalty, commitment, a sense of belongings and security of the present employees can be enhanced; Employee’s psychological needs can be met by providing an opportunity for advancement; Employees economic needs for promotion, higher income can be satisfied; Cost of selection can be minimized; Cost of training, induction, orientation, period of adaptability to the Organisation can be reduced; Social responsibility towards employees may be discharged; Stability of employment can be ensured.

Why organizations don’t prefer internal sources? It often leads to inbreeding and discouraging new blood from entering in an Organisation; There are possibilities that internal source may “dry up”, and it may be difficult to find the requisite personnel from within an Organisation; Since the learner does not know more than the lecturer does, no innovations worth the name can be made. Therefore, on jobs which require original thinking (such as advertising, style designing and basic research), this practice is not followed; As promotion is based on seniority, the danger is that really capable hands may not be chosen. The likes and dislikes of the management may also play an important role in the selection of personnel.

External Sources: External Sources are those sources, which are outside the organizational pursuits. These sources include: (1) Campus Recruitment; (2) Private Employment Agencies/ Consultants; (3) Public Employment Exchanges; (4) Professional Associations; (5) Data Banks; (6) Casual Applications; (5) Similar Organizations; (6) Trade Unions; (7) Advertisements; (8) Employee Referrals. Campus Recruitment: different types of organizations like industries, business firms, service organizations, social or religious organizations can get inexperienced candidates of different types from various educational institutions like colleges and universities imparting education in science, commerce, arts, engineering and technology, agriculture. Medicines from the training institutes. Most of the universities and institutes imparting technical education in various disciplines provide facilities for campus recruitment and selection.




Fig.3 process of Campus Recruitment:

Form manpower addition plan

Identify campuses to recruit on

Conduct pre-placement Tasks

Secure place in the queue on each campus

Check application form of candidates Conduct written test for knowledge

Interview intensively for competence Identify suitable candidates

Cross check for inconsistencies Stay in touch with those who accept Advice through final year’s specialization

Make job offers

Provide support to ease stress

Continue informal interaction

Employment Agencies: These agencies or consultants perform the recruitment function on the behalf of a client company by charging fee. Line mangers are relieved from recruitment functions so they can concentrate on their operational activities and recruitment functions are entrusted to a private agency or consultants. These agencies are also called Executive Search Companies. Public Employment Agencies: The govt. set up Public Employment exchanges in the country to provide information about vacancies to the candidates and to help the organizations in finding out suitable candidates. Public sector and private sector industries have to depend on public employment exchanges for the specified vacancies. Professional Organizations: Professional organizations maintain complete data of their members and provide the same to various organizations on requisition. They also act as an exchange between their members and recruiting firms in exchanging information, clarifying doubts etc.



Data Banks: The management can collect the bio data of the candidate from different sources like employment exchanges, educational Training Institutes, candidates etc. and feed them in the computer. It will become another source and the company can get the particulars as and when they need. Casual Applicant: Depending upon the image of the Organisation, its prompt response, participation of the Organisation in the local activities, level of unemployment, candidates apply casually for the jobs through mail or hand over the applications in Personnel Department. This would be a suitable source for temporary and lower level jobs. Trade Unions: Generally, unemployed or underemployed persons or employees seeking change in employment put a word to the trade union leader with a view to getting suitable employment due to latter’s intimacy with management. Similar Organizations: Generally, experienced candidates are available in organizations producing similar products or are engaged in similar business. The management can get most suitable candidates from this source. This would be the most effective source for executive positions and for newly established organizations or diversifies or expanded organizations. Advertising: Advertising is widely accepted technique of recruitment, though it mostly provides one-way communication. It provides the candidates in different sources, the information about the job and company and stimulates them to apply for jobs. It includes advertising through different media like newspapers, magazines of all kinds, radios, television etc. Employee referrals: Friends and relatives of present employees are also a good source from which employees may be drawn. When the labour market is very tight, large employers frequently offer their employee’s bonuses or prizes for any referrals that are hired and stay with the company for a specific length of time.

Modern sources or techniques of Recruitment:

WALK IN: The busy organizations and the rapid changing companies do not find time to perform various functions of recruitment. Therefore, they advise the potential candidates to attend for an interview directly and without a prior application on a specified place. The suitable candidates among the interviewees will be selected for appointment after screening the candidates through tests and interviews. Consult In: The busy organizations encourage the potential job seekers to approach them personally and consult them regarding the jobs. The companies select the suitable candidates from among such candidates through the selection process. Head Hunting: The companies request the professional organizations to search for the best candidates particularly for the senior executive positions. The professional organizations search for the most suitable candidates and advise the company regarding the filling up of the positions. headhunters are also called search consultants.





Body shopping: Professional organizations and the hi tech training institutes develop the pool of human resources for the possible employment. The prospective employers contact these organizations to recruit the candidates. Otherwise, the organizations themselves approach the prospective employees to place their human resources. These institutions are called body shoppers and these activities are known as body shopping. Business Alliances: Business alliances like acquisitions, mergers, and takeovers help in getting human resources. In addition, the companies do also have alliances in sharing their human resources on ad-hoc basis. Tele Recruitment: The technological revolution in the Tele communication helped the organizations to use Internet as a source of recruitment. Organizations advertise the vacancies through the World Wide Web (www) Internet. The job seekers send their applications through e-mail or Internet.

In short: successful and effective recruitment programme necessitates having certain attributes such as: A well defined recruitment policy; A proper organizational structure; A well laid down procedure for locating potential job seekers; A suitable method and technique for tapping and utilizing these candidates; A continuous assessment of effectiveness of recruitment programme and incorporation of suitable modifications from time to time to improve the effectiveness of the programme; An ethically sound and fool proof practice telling an applicant all about the job and its position, the firm to enable the candidate judiciously decide whether or no to apply and join the firm, if selected.

EXPLAIN THE CHARACTERISTICS OF A GOOD RECRUITMENT POLICY: 1. All selections must be made at a central place of the enterprise. 2. The number of employees to be recruited must be determined well in advance according to the need of enterprise. 3. No such assurance should be given at the time of recruitment. Which may not be followed later on. 4. The quality experience, terms of service, salaries etc, must be determined well in advance. 5. Higher posts must be filled by promotions as far as possible. 6. The abilities of employees must be according to the need of their jobs. 7. The selection of employees must be strictly in accordance with the merit.




8. A senior, responsible and reliable officer completes the whole process of recruitment. 9. Officers must authorize new posts. 10. Recruitment policy must be fair and flexible.

EXPLAIN THE MAIN PRINCIPLES OF RECRUITMENT AND SELECTION: 1. Observation of government rules and regulations. 2. Policy of recruitment in accordance with the objects of enterprise 3. Clear policy of recruitment 4. Recruitment by a committee 5. Impartiality 6. Flexibility 7. Job security 8. Opportunity of development to the employees WHAT ARE ALL THE OBJECTIVES OF INDUCTION: 1. Provide necessary information about the enterprise. 2. Communicate rights, duties and responsibilities. 3. Introduction with other employees 4. To develop the feeling of confidence 5. Develop the feeling of loyalty and integrity.

EXPLAIN THE FACTORS AFFECTING RECRUITMENT: Internal factors like Recruitment policy HUMAN RESOURCE PLANNING strategy Size of organization (employees) Cost of recruitment And growth and expansion plans of the organisation. External factors like Supply and demand of specific skills in the labour market Political and legal considerations – such as reservation of jobs for scs, sts and so on Company’s image Perception of the job seekers about the company.




“Recruitment policy is concerned with quantity and qualifications of man power”.

METHODS OR TECHNIQUES OF RECRUITMENT: 1. Direct method: These include sending, traveling recruiters to educational and professional institutions, employee’s contracts with public and manned habits. E.G., DCM, TATA’S ETC.

2.Indirect method: Involve mostly advantage in newspaper, on the radio, in trade and professional journal, technical magazines and brouchers. E.G., THE HINDU – WEDNESDAY NEWSPAPER.

3. Third party methods: •

It includes private employment agencies


State or public employment agencies




Colleges and professional institutions


Professional recruiting organizations


Indoctrination seminars for colleges professors


Employee referrals (friends and relatives of present employees)


Trade unions


Causal labour or applicant at the gate


Unsolicited applications


Voluntary organizations


Computer data banks.

Psychological testing


Placement and Induction

WHAT DO YOU MEANT BY STAFFING OR DEFINE STAFFING Personnel management is concerned with this aspect of the enterprise. Staffing is a part of personnel management. This function pertains to the recruitment, selection, development, training and compensation of subordinate managers. Staffing function is continuous “Setting up of internal structures of roles and positions”.




“Filling position in the organizational structure through identifying work force requirements, inventorying the work force, recruitment, selection, placement, promotion, appraisal, compensation and training of people. “The process involved in identifying, assessing, placing, evaluating and directing individuals at work”.


Endogenous factors

Exogenous factors

Endogenous factors: These are the factors within the organization. A few of these factors attract people to organization; others will deter them for applying.

Image of organization: Good image of organization naturally attract potential candidate. Good image is built Up by a number of actions by management, which can good, will from the public. Example: social orientation in business, good public relation exercise, public services like building roads, public parks, and hospitals schools. Inaccessibility, pollution and unresponsiveness can bring about poor image, which deter person from the organization. Image of Job: Good public image of job is build up by better compensation & working conditions. Organizational policies experience on promotions & career path can also make the job attractive. Size & growth potential of the organization: Present size & rate of growth of the organization are important factors in attracting right talents to the organization. Exogenous factors: These are the factors, which are external to the organization and have decisive influence tot he recruitment process. Demographic factors: - These are very important aspects affecting recruitment. Some of these are 1. Biological factors: - this includes data relating to sex ratio, age group, educational level etc 2. Economic factors: - Economic conditions of people, the per capita income, disposable income of people, and proximity of other organization offering employment. Industrialization: - Industrialization within geographic are and beyond, existence of cluster of industries and geographic concentration etc will have performed influence. Labour market: -




“ The most striking features in the Indian Labour market is the apparent abundance of Labour… yet the right type of Labour is not too easy to find.


INTERNET RECRUITMENT: The technological revolution in the Tele communication helped the organizations to use Internet as a source of recruitment. Organizations advertise the vacancies through the World Wide Web (www) Internet. The job seekers send their applications through email or Internet.

EMPLOYEE TESTING AND SELECTION SELECTION Selection procedure is concerned with securing relevant information about an applicant. The objective of the selection decision is to choose the individual who can most successfully perform the job from the pool of qualified candidates.

The selection procedure is the system of functions and devices adopted in a given company to ascertain whether the candidate’s specifications are matched with the job specifications and requirements or not. The selection procedure cannot be effective until and unless: 1. Recruitment’s of the job to be filled, have been clearly specified (Job analysis, etc. 2. Employee specifications (physical, mental, social, behavioral, etc.) have been clearly specified; 3. Candidates for screening have been attracted.

SELECTION PROCEDURE There is no standard selection process that can be followed by all companies in all the areas. Companies may follow different selection techniques or methods depending upon the size of the company, nature of the business, kind and no. Of persons to be employed, govt. regulations to be followed etc.

Application Form Written Examination Preliminary Interview Group Discussion




Final Interview

Medical Examination Reference Checks

Line Manager’s Decisions Application Form: Also known as application blank. This technique is widely accepted for securing information from the prospective candidates. It can also be used as a device to screen the candidates at the preliminary stage. Information is generally required on the following items in the application forms: a) Personal background information; b) Educational attainments; c) Work experiences; d) Salary; e) Personal details; f)


Written Examination: The organizations have to conduct examination for the qualified candidates after they are screened on the basis of the application blanks so as to measures the candidate’s ability in arithmetical calculations, to know the candidates attitude towards the job, to measure the candidate’s aptitude, reasoning, knowledge in various disciplines, general knowledge and English language. Preliminary Interview: The Preliminary interview is to solicit necessary in formation from the prospective applicants and to assess the applicant’s suitability to the job. This step is useful as a process of eliminating the undesirable and unsuitable candidates. Group Discussions: The technique of group discussion is used in order to secure further information regarding the suitability of the candidates for the job. Group discussion is a method where groups of the successful applicants are brought around a conference table and are asked to discuss either a case study or a subject matter. Tests: The next stage in the selection process is conducting different tests. The objective of tests is to solicit further information to assess the employee suitability to the job. The important tests are:





Aptitude Test: a) Intelligence test b) Mechanical Test c) Psychomotor Test d) Clerical Test

Achievement Test: a) Job Knowledge Test; b) Work Sample Test.

Situational Test: a) Group Discussion; b) In Basket.

Interest Test:

Personality Test: a) Objective Test; b) Projective Test.

Aptitude Tests: These tests measure whether an individual has the capacity or latent ability to learn a given job if given adequate training. Aptitudes can be divided in to general and mental ability or intelligence or specific aptitudes such as mechanical, clerical, manipulative capacity etc. These are: 1. Intelligence Tests: These tests in general measure intelligence quotient of a candidate. In detail these tests measures capacity for comprehension, reasoning, word fluency, verbal comprehension, numbers, memory and space. 2. Mechanical Tests: These tests measure the capacities of spatial visualization, perceptual speed and knowledge of mechanical matter. 3. Psycho meter Tests: These tests measure abilities like manual dexterity, motor ability and eye hand coordination of candidates. 4. Clerical Aptitude: Measure specific capacities involved in office work, items of this test include spelling, computation, comprehension, copying, word measuring etc.

Achievement Tests: These tests are conducted when applicants claim to know something as these tests are concerned with what one has accomplished. These tests are more useful to measure the value of specific achievement when an Organisation wishes to employ experienced candidates. These are:

1. Job Knowledge Test: Under this test a candidate is tested in the knowledge of a particular job. 2. Work Sample Test: Under this test a portion of the actual work is given to the candidate as a test and the candidate asked to do it.




Situational Test: This test evaluates a candidate in a similar real life situation. In this test the candidate is asked either to cope with the situation or solve critical situation of the job.

1. Group Discussion: This test is administered through group discussion approach to solve a problem under which candidates are observed in the areas initiating, leading, proposing valuable ideas, conciliating skills, oral communicating skills, co-ordination and concluding skills. 2. In Basket Test: The candidate in this test is supplied with actual letters, telephone and telegraphic message, reports and requirements by various officers of the Organisation, adequate information about the job and Organisation. The candidate is asked to take decisions on various items based on the in basket information regarding requirements in the memoranda.

Interest Tests: These tests are inventories of the likes and dislikes of candidates in relation to work, job, occupations, hobbies and recreational activities.

Personality Tests: These tests prove deeply to discover clues to an individual’s value system, his emotional reactions, and maturity and characteristic mood.

1. Objective Test: most personality tests are objective tests as they are suitable for group testing and can be scored objectively. 2. Projective tests: Candidates are asked to project their own interpretation of certain standard situations basing on ambiguous pictures, figures etc., under these tests Final Interview: Final Interview is usually followed by testing. This is the most essential step in the process of selection. In this step the interviewer matches the information abstained about the candidate through various means to the job requirements and to the information obtained through his own observation during interview.

Types Of Interview: Type

Type of questions Usual applications



A predetermined checklist if





questions, usually asked of all

especially when dealing with


large number of applicants.

Few, if any, planned questions.

Useful when the interviewer

Questions are made up during

tries to probe personal details

the interview.

of the candidate to analyze why they are not right for the job.


A combination of structured

A realistic approach that yields



comparable answers plus in


depth insights.


unstructured resembles


usually done in practice.















Evaluation is based on the



solution and approach of the

modest stress.

and under

applicant. Stress

A series of harsh, rapid-fire

Useful for stressful jobs, such

questions intended to upset the

as handling complaints.


Medical Examination: Certain jobs require certain physical qualities like clear vision, perfect hearing, unusual stamina, tolerance of hard working conditions, clear tone etc. Medical examination reveals whether or not a candidate possesses these qualities. Reference Checks: After completion of the final interview and medical examination, the personnel department will engage in checking references. Candidates are required to give the names of reference in their application forms. In case the reference check is from the previous employer, information for the following areas may be obtained. They are: job title, job description, period of employment, pay and allowances, gross emoluments, benefits provided, rate of absence, willingness of the previous employer to employ the candidate again etc. Final decision by the line manager concerned: The line manager concerned has to make the final decision whether to select or reject the candidate after soliciting the required information through different techniques. A true understanding between the line managers and personnel mangers should be established to take proper decisions. Employment: Thus, after taking the final decision the Organisation has to intimate the decision to the successful as well as unsuccessful candidates. The Organisation sends the appointment orders to the successful candidates either immediately or after sometime depending upon the time schedule.

EFFECTIVE INTERVIEW Selection policy Selection policy lays down the guidelines for those engaged in the selection process. Every organization has its own selection policy. Usually this list contains 1. Policy of entrusting responsibility of selection to centralized or decentralized agency department. 2. Policy on source either from within the organization, from outside or from both State whether the selection policy is based in either to Fit a person to given job




Fit a job to a given person 3. In the case of fitting “ job to a person” differential testing policy must be laid down to conduct different types of test for each. Such policy requires the following Re-structuring of testing methods, procedure and sequence Re-design of job to suit the person Examples are employment of handicap persons 4. Hire the best available person 5. Reject the poor candidate 6. Motivate the talented to join the organization 7. Avoid job pirating from other organizations 8. Dissuade “ job hopping” and “job shopping” by employees 9. No discrimination in selection based on cast, creed, or sex. 1. Avoid child labour.


When once the candidate reports for duty, the Organisation has to place him initially in that job for which he is selected. Immediately the candidate will be trained in various related jobs during the period of probation of training or trial. The Organisation, generally, decides the final placement after the initial training is over on the basis of candidate’s aptitude and performance during the training/probation period. Probation period generally ranges between six months and two years. If the performance is not satisfactory, the Organisation may extend the probation or ask the candidate to quit the job .If the employee performance during the probation period is satisfactory, his services will be regularized and he will be placed permanently on a job.

Fig. 6: Employee Placement Process Collect data about the employee

Construct the employee’s profile

Match between sub group profile and individual’s profile

Compare sub-group profile to job family profile

Match between job family profiles and sub-group profiles

Assign the individuals to job family Assign the individual to specific job after further counseling and assessment




Placement is “the determination of the job to which an accepted candidate is to be assigned and his assignment to that job. It is a matching of what the supervisor has reason to think he can do with the job demands (job requirements), it is a matching of what he imposes (in strain, working conditions) and what he offers in the form of pay roll, companionship with others, promotional possibilities etc. It is not easy to match all factors to the new employee who is still unknown to many. So the new employee is placed as a probationer until the trial period is over.

SELECTION TESTS Tests are conducted in order to improve the selection decisions. Organization historically, relied considerably to a number of tests. Hugo Muster berg who is known as father of industrial psychology has provided the basis of psychological tests. Psychological tests were first introduced in US army during First World War for recruitment. This was a great success. This led to introduction of tests in selection in industries and business. Definition Tests are defined in the following words. “ A systematic procedure for comparing the behavior of two or more person”- Groonbach “ A sample of an aspect of an individual’s behavior, performance or attitude.” CHARACTERISTICS OF A GOOD TEST: a. Assumption Usually following assumptions are made: 1. No two individuals are born alike. They differ from each other in their attributes like physical abilities and interests. 2. In addition to the above persons possessing different skills perform differently in their jobs. 3. Organization is capable of administering tests and predicting future behaviour / performance. b. Validity. Validity is the extent to which test score is able to predict the future performance correctly. There are five variations of validity. Content validity’ Predictive validity Concurrent validity Construct validity Criterion related validity Content validity:

the content of test should truly and faithfully represent all attributes

required for the actual job.




Predictive validity: this is the degree to which the test score is capable of predicting the performance of the candidate, actually on the job. Concurrent validity: this is the extent to which the test scores are related with performance in the job, measured simultaneously. Construct validity: it is most difficult. It refers to the extent to which test measure the psychological attributes like “emotional stability” and “intelligence”. Criterion-related validity: this is the degree to which a particular selection test accurately predicts the important elements of work behaviour. c) Reliability: reliability is the ability of tests to give consistent result. This is the repeatability of result of test while conducted on the same person at a number of occasions. d) Standardization: test must be administered under standard conditions. This will enable comparison between persons based on test score secured by such persons e) Objectivity: the tests are designed in such a manner that different individuals can not only understand the questions or the task in the same way but can even respond and score in similar manner. In other words subjectivity is eliminated.

TYPES OF SELECTION TESTS: Aptitude test (proficiency test) Achievement test (performance test) Personality test Interest test. APTITUDE TEST This test is used to measure talent ability and potential capability of specific talent such as learning reasoning, mental ability and mechanical dexterity. Most common aptitude tests are Intelligence test: this test examines mental abilities such as verbal, reasoning, analytical ability, etc. one such test used in US army in second world war is known as the army general classification tests. It is also called as intelligent quotient, IQ= mental age / chronological age Mechanical aptitude test: in this test, the capacity of person to learn a particular mechanical type of work is checked. The parameters checked are spatial visualization, perceptual speed, manual dexterity and visual motor co-ordination Psychomotor test: Here applicants mental dexterity, control and coordination of muscles, are checked. ACHIEVEMENT TEST This test is conducted to measure the level of skill achieved either due to previous experience or due to training undergone Simulation test: (test ot measure knowledge)\ An office assistant is required to possess reasonable communication skill in oral and written forms. Applicants of such jobs are given written and oral tests.




Work sampling test: (test to measure skill level) An applicant for typist job is given a typing test to ascertain his skill on typing work. Typing test is reproduction of a work situation. PERSONALITY TEST: Research studies show most employee fail mostly because of personality defects and not due to lack of aptitude or ability. Personality tests are used to assess an individual applicants motivation, adjustment to stresses, capacity to interpersonal relationships, and self-image. It is usually used to assess the following attributes. Self confidence Ambition Decisiveness Optimism Patience Fear Distrust There are three types of personality tests 1. Objective test: this is an objective paper-and-pencil type test. The attributes checked are self- confidence, neurotic tendencies, dominance-submission and self-sufficiency. 2. Projective test: this is for checking his motives, values, and personality. Usually some of the tests used are Rorschach ink blot test Thematic apperception test California test of personality scale. 3. Situation test: this test is conducted to find out his behavioral pattern under stress and strain. Stress related to leadership situation is created and reaction of individual and groups are observed. INTEREST TEST In this case an attempt is made to find out in which type of job the candidate is best suited. This is also called vocational test. Fitting-person-to-job ahs become an important aspect of selection. Questions are asked on his likes, dislikes, hobbies, cultural activities and preferences, which through light into his interests or natural likings.

INTERVIEWS Interviews are widely used device for selection. This is a complex technique and its scope is very wide. It summarizes and integrates all information concerned with a candidate. It enables the organization to get a wholesome view of the candidate including his intelligence, personality, interest, aptitude, and attitude to the life.




DEFINITIONS “ It is a method by which an idea about an applicant’s personality including his intelligence breadth of interest, and general attitudes towards life can be obtained by face-to-face contact.”

-Strauss And Sayles

“Interviewing is deliberate, active listening with a purpose to draw the other person out to discover, what he really wants to say and to give a chance to express himself freely” OBJECTIVES It is the only way to see an applicant in action how he looks, his manner and his bearing It is the only way to witness how he interacts, how he responds, his way of thinking and the effects of his personality on another It is perhaps the best way to get at the “will do” features of performance- motivation, initiative, stability, perseverance, work habits, and judgments. The so-called, “can do” aspect can be examined by application, test and reference checks Some other views To get an opportunity to judge an applicant’s qualifications and characteristics. To establish a report between organizational personnel and applicant. To promote goodwill towards the company To get first hand information about the candidate. TYPES OF INTERVIEWS Structured interview/ patterned interview This is common method of interview. In this type necessary pre-planning work has been done to determine what information is required to be collected and how this is done. In other words, questions are predetermined and sequenced. Unstructured interview/ unstructured interview This is non-planned and non-formatted. Here the applicant is encouraged to talk freely on variety of subjects, including his views, on his aspirations, values, expectations, and judgment on contemporary topics including politics. This interview requires trained and qualified interviewer. Depth interview This is semi-structured. Here certain amount of planning is made to design and sequence questions to elicit required amount of information. Typical subjects discussed interviewed in such interview include life, educational career, previous experience, hobbies etc. Situation interview Here a group is interviewed instead of an individual. They are given a certain problem and asked to discuss among themselves and come out with an agreed plan of action for solving the problem. Here they will be watching the individual contribution and behavioral pattern of individuals. A lot of information on drive, motivation, attitude, leadership qualities and interpersonal relationships can be gathered.




Stress interview In this case interviewers take a hostile posture-making candidate to take a defensive posture. Offensive action is through putting annoying and embarrassing questions and in rapid succession with occasional interruptions and demonstration of annoyance and intolerance.


Introducing the new employee who is designated as a probationer to the job, job location, surroundings, Organisation, organizational surroundings, various employees is the final step of employment process. This process is important because of the high turnover rate among the new employees compared to that among senior employees. This is mainly because of the problem of adjustment and adaptability to the new surroundings and environment. further absence of information, lack of knowledge about new Organisation, cultural gap, and behavioral variations, different levels of technology, variations in the requirements of the job and the Organisation also disturb the new employee. Induction is necessary as the newcomer feel insecure, shy, nervousness and disturbing. This situation leads to instability and turnover.

“Induction is the process of receiving and welcoming an employee when he first joins a company and giving him the basic information he needs to settle down quickly and happily and start work�.

Lecture, handbook, film, group seminar are used to impart the information to new employees about the environment of the job and the Organisation in order make new employee acquaint himself with the following heads: 1. About the company; 2. About the department; 3. About the superiors, subordinates;

Objectives of Induction: I.

Putting the new employee at his ease;

II. Creating interest in his job and the company; III. Providing basic information about working arrangements; IV. Indicating the standards of performance and behavior expected of him. Making the employee feel that his job, however small, is, meaningful, that he is not a cog in the vast wheel; V. Informing him about training facilities; VI. Creating the feeling of social security; VII. Minimizing the reality shock which would be caused due to incompatibility caused between the employee expectations and actually what the company provides/offers




regarding pay, benefits, status, working conditions, responsibility, opportunity for growth, innovations, creative ideas etc. Advantages of Induction I.

First impression matters a good deal and results in less turnover;

II. Newcomer adjusts himself to the work quickly, and it saves the time of the supervisor; III. Reduces employee dissatisfaction and grievances; IV. Develop a sense of belongings and commitment.

In general, productivity forms a measure of the output of goods and services to the input of labour, material and machinery. The more productive a sector, the better its competitive position will be, as its unit cost will be lower. With the increase in productivity, earnings will improve, raising the standard of living. Improving productivity does not mean working harder. Rather it means working effectively. It means getting more out of what is put in. It is doing better with what one has.


Dismissal is a termination of service of an employee as a punitive measure. This may occur either on account of unsatisfactory performance of misconduct. Persistent failure on the part of employee to perform up to the expectations or specified standard is considered as unsatisfactory performance. Willful violation of rules & regulation by the employee is treated as misconduct.

Dismissal is a drastic step seriously impairing the earnings and image of an employee. Therefore, dismissal as a measure should be resorted to with great care and caution. It must be justifies and duly supported by the just and sufficient cause. Before an employee is dismissed, he must be served advance notice to explain his position. the reasons for dismissal must be clearly made known to the employee.




Unit- III TRAINING • Training is the act of increasing the knowledge and skill of an individual for doing a particular job. In the present scenario training is increasingly viewed as a means of fostering the growth of the individual employee but as an integrated part of organizational growth. • Training is a process of learning a sequence of programmed behaviour. It is application of knowledge. It gives people an awareness of the rules and procedures to guide their behavior. It attempts to improve their performance on the current job or prepare them for an intended job. Development is a related process. It covers not only those activities, which improve job performance, but also those, which bring about growth of the personality; help individual in the progress towards maturity and actualization of their potential capacities so that they become not only good employees but better man and women.

Definition Of Training: “Training is the act of increasing the knowledge and skills of an employee for doing a particular job.” Edwin. B.Flippo

“Training is the organized procedure by which people learn knowledge and \or skill for definite purpose”. Dale S.Beach It is the training that bridges the gap between Job requirements and employees present specifications. Training is a process by which attitudes, skills and abilities of employees to perform specific jobs are increased. Thus, it can be concluded that training is a process that tries to improve skills or add to the existing level of knowledge so that the employee is better equipped to do his present job, or to mould him to be fit for a higher job involving higher responsibilities. In other words, training is a learning experience that seeks a relatively permanent change in an individual that will improve his/her ability to perform his job.

Distinction between training and development Training is a short-term process utilizing a systematic and organized procedure by which non-managerial personnel learn technical knowledge and skills for a definite purpose. Development is a long-term educational process utilizing a systematic and organised procedure by which managerial personnel learn conceptual and theoritical knowledge for general purpose.




Training refers only to instruction in technical and mechanical operations, while development refers to philosophical and theoretical educational concepts. Training is designed for non-mangers while development is designed for managerial personnel. Training and development differs in four ways: “What” is learned; “Who” is learning; “Why” such learning takes place; “When” learning occurs. Learning Dimensions




Non Managerial Personnel

Managerial Personnel


Technical and Managerial operations



ideas Why?

Specific job related

General knowledge


Short Term

Long Term

Objectives Of Training The primary purpose of training is to establish a sound relationship between the worker and his job –the optimum man task relationship. To upgrade skills and prevent obsolescence. To develop healthy and constructive attitude To prepare employees for future assignments The Focus Of Training Is On Three Broad Objectives: To bring about attitudinal change. To bring about quality to be the very top of agenda. To savagely cut waste. Importance And Benefits Of Training Training is important to develop the employees and make them suitable for the job. Training constitutes significant part of management control. Benefits of training to following are: Organization Level: It leads to improve profitability It improves the job knowledge, skills and morale of the work force It helps in organizational development and preparation of guidelines for work It enhances quality of work and appropriate climate for growth It supports in improving organizational communication Individual Level: It help in encouraging and achieving self development It provides a sense of growth in learning It increases job satisfaction and recognition It helps the individual in effective problem solving





TRAINING AND DEVELOPMENT: “Training is not something that is done once to new employees. It is used continuously in every well-run establishment. Every time you get some one to work in the way you want it done, you are trained. Every time you give directions or discuss a procedure, you are training�.

Benefits: Better performance Lesser training period Elimination on of wastage Uniformity procedures Elimination of misfits Economy in material handling Less supervision High morale Reduction in labour turnover Removes fear of the employees.

A Model Training Program Should Encompass The Following Points: Management









implementation. The companies approach to the training function, which would include guidance for design and execution as well as dissemination of relevant information to all employees. Provision for annual or periodic surveys in order to ensure that training are need based and development oriented. Identification of priority area since resources are always scarce and programs must be prioritized according to felt needs. What are all the objective of training 1. To establish the feelings loyalty among the workers and employees towards the enterprise and its management. 2. To increase the morale of employees. 3. To enable the workers and employees to do their work in the best possible manner. 4. To make them efficient to do their work in the changed circumstances. 5. To fulfill the desires of development and promotion of the employees. EDUCATION: Education is a learning process, intended for the twin process of improving intellectual abilities and moral character. Intellectual abilities involve development of capacities of




objective analysis and synthesis. Moral character involves development of socially acceptable value system, behavior, maturity and attitude.

Education is concerned with increasing the general knowledge and understanding of the employees’ total environment.

- Tripathi Training

“Training is a short term process, which is “ application specific” intended for improving skills or knowledge which has immediate application to the benefit of individual as well as the organisation.” “ Training is the art of increasing the knowledge and skills of an employee for doing a particular job”

-tripathi development

Development is the process of transition of an employee from a lower level of ability, skill and knowledge to that of higher level. This transition is influenced by education, training, work experience and environment. “Development covers not only those activities which improve job performance, but also those which bring about growth of personality, help individual in the progress towards maturity and actualization of this potential capacities, so that they become not only good employees but better men and women.” -Memoria Training and development differs in four ways, a) Who is learning? b) What is learned? c) Why such learning takes place? d) When learning occurs? Learning dimension




Non-managerial personnel

Managerial personnel


Technical and managerial

Theoretical and conceptual




Specific job related purpose

General knowledge


Short term

Long term




Learning of present job


Learning of other related jobs


Learning not related to any specific present or future job

Purpose Improved performance on the present job of the employee. Preparation of the employee for related jobs in not too distant future. General growth of employees




Elements of HRD Climate – OCTAPACE Openness

a climate congenial for free expression of ideas and opinions



a tendency of being generally helpful to each other, to

accept Interdependency and work as a team. Trust


a basic faith in each other



Genuine communication process convertible into action, People are encouraged to take initiative

Autonomy Confrontation


people have a fair degree of freedom of activity problems are faced rather than postponed for fear of some Body or in anticipation of hurting somebody.

Organizational Role clarity

having pride in being part of organization -

Career development Job satisfaction

Employee is clear about his role and function employee’s growth aspirations are taken care of.


A favourable feeling with which employees view their roles.

Identification Of Training Needs Organizational Analysis: - It involves a study of entire organization in terms of analysis of objectives, utilization of resource, environmental scanning and organizational climate analysis.

Task/Role Analysis: - It involves a careful study of jobs within in an organization in a further effort to define specific content of training. It requires systematic collection of data about the job, role or position and what type of behavior, skill, and knowledge the jobholder must have to perform certain specified tasks. Manpower Analysis: - It is conducted through appropriate observation, supervisory evaluation. This analysis is undertaken to know about the specific areas in which training is needed


INDUCTION ON TRAINING: ~ At introducing a new employee to other employees and to the enterprise. Introduction to the whole enterprise and personnel. JOB TRAINING: ~

Given to the workers in the handling of machines,

equipments and materials. Workers become more proficient and operations becomes most facilities.





May be given to the employees in different crafts by an

experienced crafts man. Experiences in craft tools. TRAINING FOR PROMOTIONS: ~

To seek the bigger designations and

promotions the employees are send to special training. These types of training are called training for promotions. The training may be related to the personality development, communicational improvement, technical seminars Etc., REFRESHER TRAINING: ~ –

Refresher courses are organized for existing employees for

giving them training in the latest development in the field of technology and science. Technical Seminars, some type of orientation programmes, new equipment model training Etc., COMPONENTS OR FUNCTIONS: •

Forecasting future manpower requirements.

Making an inventory of present manpower resources and assessing the extent to which these resources can be employed.

Anticipating manpower problems by projecting present resources into future, comparing them with the forecast of requirements to determine their adequacy.

Placing the necessary programmes – recruitment, selection, training and development etc.

: THE METHOD OF TRAINING IS ADOPTED BY DECIDING THE FOLLOWING FACTORS: 1. Skills required. 2. Qualification of the candidate 3. Cost and time available 4. Depth of knowledge required. DESIGNING TRAINING METHODS

Training methods are means of attaining desired objectives set for a training programme. In practice, a variety of training methods are employed for achieving these objectives. But an organization cannot use all types of training methods for the reason like cost involved and also their relevance to organizational need hence, organization needs to select a method or mix of methods to meet its training needs the choice of training method would depend on a Varity of factors, such as purpose of training, nature of contents, relevance to the participants, level of trainees, competence of trainers/instructors, cost, etc. Depending on the training result and the process employed to attain these, the various training methods can broadly categorized into four groups as under:

1. On- the job oriented methods 2. Off the job training methods



On the job oriented training methods. As the name itself denotes, methods include in this cluster are those whose main objectives are centered around the job, i.e., learning on the job itself by a variety of methods. The main methods, which fall into this category, are discussed here under:

On the job training (OJT). On the job training is probably the most Common approach to training, which can range from relatively unsophisticated “observe and copy” method to highly, structured courses. In this method, the new employee is placed on a job and taught the skills necessary to perform it a trainer or superior teaches the employee. Since trainee learns by observing and handling the job this is also termed as ‘observing, and copying’ or ‘learning by doing.’

Job instruction training (JIT). In this method, a trainer or supervisor gives instruction to an employee how to perform his job. This method of training is appropriate for acquisition or improvement of motor skills and routine and repetitive operations.

Coaching: this is similar to the JIT .in this method, the superior teaches or guides the new employee about the knowledge and skills of a specifically defined job. The superior points out the mistakes committed by the new employee and then also gives suggestions to improve upon.

Job rotation: in this method, a trainee moves from one job to another and from one department to another. This type of training method is more appropriate for developing multiskilling, operational flexibility, providing satisfaction from routine jobs and broadening the overall perspective of the trainee.

Vestibule training: this is a system in which employees learn their jobs on the equipment they will be using, but the training is conducted away from the actual work floor. This type of training is commonly used for training personnel of clerical and semi-skilled grades.


Role-play: this is just like acting out a given role as in stage play. In this method of training, the trainees are required to enact defined roles on the basis of oral or written description of particular situation.

Case method: the case is an actual event or situation on organizational problems, which is a written description for discussion purpose. Trainees are asked to analyses the event




or circumstances with an objective to identifies problems, trace out the causes for it and find out the solution to solve the problems.

Management games: the game is devised on the model of business situation. Then, trainees are divide into groups who represent the management of competing companies. They make decisions just like these are made in real life situations. Decisions made by the groups are evaluated and the likely implications of the decisions are fed back to the groups.

In basket exercise: this is also called ‘in tray’ method of training. This is built around the ‘incoming mail’ of manager. The trainees is presented with a pack of papers and files in tray containing administrative problems and are asked to take decision on these within a specified time limit. The decision taken by the trainees are compared with another. The trainees are provided feedback on their decisions.

Lectures: lecture is by far the most commonly used direct method of training. In this method the trainer provides knowledge to the trainees usually from prepared notes. Notes are also given to the trainees. This method is found more appropriate in simulations where some information is required to be shared to a large number of audience and which does not require more participation from audience. It is a low cost method. The major limitation of this method is that it dose not provide for active involvement of the trainees.

Conferences/seminars: in this method, the trainer delivers a lecture on the particular subject, which is followed by queries and discussions. The conference leader must have the necessary skills to lead the discussion in a meaningful way without losing sight of the topic or theme. This method is used to help employees develop problem-solving skills. Programmed instructions: this is the recently developed technique based on the principle of positive reinforcement developed by B.F.Skinner. This technique is used to teach nonmotor and behavioral skills. The subject matter to be learned is prepared and condensed into logical sequence from more complex. The trainer monitors trainee’s independent progress through the programme. The trainee gets instant feedback on his learning however; this method is expensive and time consuming also. Sensitive training: sensitive training is also known by a Varity of names such as tgroups, laboratory training and encounter groups. (The “T” is for training.)The objective of sensitive training is to increase participants’ insights into their behavior and the behavior of others by encouraging an open expression of feelings in the trainer guide T-group. This approach is useful for understanding people’s behavior particularly when they are involved in inter personal relationships. Development of positive thinking, improvement in





inter-personal relationships, proper motivation of people and organizational development are some of the important benefits of transactional analysis as a technique of training. Conclusion:

To conclude, each method of training has some strengths and weaknesses. Given the purpose of a training programme, the level of participants the competence of trainers, etc., the appropriate method has to be chosen to impart training.

MANAGEMENT DEVELOPMENT While drawing a distinction between training and development in previous Unit, we introduced in brief, the concept of development/ based on that concept, we elaborate it in more detail. The term “development” implies overall development in a person. Accordingly, Management development means not only improvement in job performance, but also improvement in knowledge, personality, attitude, behaviorism of an executive, etc. It means that executive/management development focuses more on the executive’s personal growth. Management Development is a systematic process of growth and development by which managers develop their abilities to manage. Management Development is concerned with improving the performance of the managers by giving them opportunities for growth and development. Definition: “Executive /Management Development includes the process by which managers and executives acquire not only skills and competency in their present job but also capabilities for future managerial tasks on increasing difficulty and scope. ” Flippo. “Any activity designed to improve the performance of existing managers and to provide for a planned growth of managers to meet future organizational requirements is called management development.” S.B.Bhudiraja




Techniques Of Management Development There are mainly two techniques of management development, one is the formal training and the other is through the on the job experience.

Important Techniques Of Management Development

On-The-Job Technique Coaching


Case method

Off-The-Job Technique Under




Grid training


In basket





On The Job Techniques

1 Coaching: In coaching the trainee is place under a particular supervisor who acts as an instructor and teaches job knowledge and skills to the trainee. 2. Job Rotation: The transferring of executive s from job to job and from department to department in a systematic manner is called job rotation. 3. Under Study: An under study is as person who is in training to assure at a future time, the full responsibility of the position currently held by his superior. 4 Multiple Management: Multiple management is a system in which permanent advisory committees of managers study problems of the company and make recommendations to higher management.

Off-The Job Technique 1.

The Case Study: Cases are prepared on the basis of actual business situations that happened in various organizations.

2. Incident Method: This method was developed by Paul Pigors. It aims to develop the trainee in the area of intellectual ability, practical judgment and social awareness.

3. Role Playing: A problem situation is simulated by asking the participants to assume the role of particular person in the situation.

4. In Basket Method: The trainees are first given background information about a simulated company, its products, key personnel, various memoranda and all data pertaining to the firm. The trainee has to understand all of this and make notes of it.




5. Sensitivity Training: The main objective of sensitivity training is the “Development of awareness of and sensitivity of behavioral patterns of oneself and others”.

6. Simulation: Under this technique the situation is duplicated in such a way that it carries a closer resemblance to the actual job situation.

7. Managerial grid: It is a six-phase programme lasting from three to five years. It stats with upgrading managerial skills, continues to group improvement, improves inter group relations, goes into corporate planning, develops implementation method and ends with an evaluation phase.

8. Conference: A conference is a meeting of several people to discuss thee subject of common interest.

9. Lectures: It is the simplest technique. The lacquerer organizes the material and gives it to a group of trainees in the form of talks.

Objectives of Executive/Management Development 1. Improve the performance of mangers at all levels; 2. Identify the persons in the organization with the required potential and prepare them for higher position in future; 3. Ensure availability of required number of executives mangers succession who can take over in case of contingencies as and when these arise in future; 4. Prevent obsolescence of executives by exposing them to the latest concepts and techniques in their respective areas of specialization; 5.

Replace elderly executives who have risen from the ranks by highly competent and academically qualified professionals;

6. Improve the thought process and analytical abilities; 7. Provide opportunities to executives to fulfill their career aspirations; 8. Understand the problem of human relations and improve human relations skills.

MANAGEMENT TRAINING INSTITUTES IN INDIA i. In India – All India Council for technical Education (AICTE), All India Managerial Institutions, Post graduate Institutions Management of training, Arrangement of managerial education in colleges and universities, Small Industries organization.




Industrial management board, National productivity council, Private management Institutes by TATA, BRILA, JK Groups, SAHAU JAINS GROUP, XLRI, AIMA Ect. Training and development is a long term education process utilizing a systematic and organized procedure by which managerial personnel learn conceptual and theoretical knowledge for general purpose”.

What is learned, who is clearing, why such learning take places, when learning occurs”. •

Learning dimensions training development who?

Non-managerial personnel Managerial personnel.

Learning dimensions training development what?

Tech and mechanical operations theoretical and conceptual ideas.

Learning dimensions training development why?

Specific Job related purpose General knowledge.

Learning dimensions training development when? Short term Long term. Job Instruction training (JIT) : The JIT method requires skilled trainers, extensive job analysis, training schedules, and prior assignment of the trainee’s job knowledge. This method is also known as “training through step-by-step learning”. It involves listing all necessary steps in the job, each in proper sequence. This steps show that is to be done, along side each step is also listed a corresponding “key point”, which show how it is to be done and why. 2.Demonstrations and examples or learning by seeing. 3.Simulation is a technique, which duplicates, as nearly as possible, the actual conditions Encountered on a job.

TRAINING EVALUATION: Two writers have suggested that four basic categories of outcomes can be measured: 1.Reaction: Evaluate the trainee’s relation to the programmed. Did he like the programme? Did he think it worthwhile? 2.Learning: learning did the trainee learn the principles, skills and fact that the supervisor or the trainer wanted him to learn?




3.Behaviour: whether the trainee’s behaviors on the job changed because of the training programme. 4.Results: What final results have been achieved?. Did he learn how to work on machine?. Did scrapped costs decrease? Was turnover reduced? Are production quotas now being met? Etc.

Executive Development: Knowledge and skills of the management. 1

Technical skills,


Human skills.


Conceptual skills are those, which make it possible for a movement to consider an enterprise as a whole and evaluate the relationship, which exists between various parts or functions of a business.

CONCEPTS AND AREAS OF MANAGEMENT DEVELOPMENT PROGRAMMME General administration Q 1: How to decide overall company strategy? Q 2: How to evaluate capital expenditure proposals? Q 3: How to improve the flow of information needed to control the organization? Q4: How to launch a new project? Marketing & Sales Q 1: How to forecast demand? Q 2: How to generate new product ideas? Q 3: How to launch a new product? Q 4: How to determine the profitability of a product or product line? Q 5: How to improve product design?

Production Q 1: How to remove factory bottleneck? Q 2: How to improve product quality and reliability? Q 3: How to cope with complex mixes? Such as several factories, delivery to many customers, or several products from many raw materials available from many different sources, or several products profitability made by several process, etc. Q 4: How to cut labour cost? Q 5: How to improve labour relations? Human Resource Q 1: How to improve training methods? Q 2: How to bring order and equality into wages and salary schemes? Q 3: How to recruit the right number of the right type of people? Purchasing Q 1: How to check quality and reliability of raw materials?




Q 2: How to cut down the cost of purchasing holding stocks? Research Q 1: How to reduce the time taken to complete research?

CAREER MANAGEMENT Introduction Career Management: A career is all the jobs that are held during ones working life. Edwin B. Flippo defines career as a sequence of separate but related work activities that provides continuity and, order and meaning in a person’s life.

Career management focuses on career goals and it is the process of designing and implementing goals, plans and strategies to enable the organization to satisfy employee needs while allowing individuals to achieve their career goals.

Following are the key ingredients for career management, which focuses on the process of implementing organizational career planning.

Top management support. Coordination of other human resource activities. Involvement of superiors. Use of human resource managers as consultants. Periodic skill assessment. Realistic feedback about career progress. Equal access and open enrollment. Focus on psychological success rather than advancement. Flexibility for individual needs. Climate setting for career development. Small Pilot Programmes. Periodic programme assessment. Career management involves both organizational actions and individuals’ initiatives to ensure that when the career plans developed by the organizational requirements and individuals aspirations undergo unanticipated changes, they are managed appropriately on a continuing basis. Categories for Career Management

There are three major categories to undertake career management. To select a field of employment and employer: - One cannot manage his career unless one has a long-range objective and the first point is to think in terms of where you ultimately want to be. Other important point is to view your potential employer and position in terms of long-range career goals.




To know where you are: - To be aware of the opportunities available to you in the current position and to carefully and honestly posses current performance. Plan your exit: - To leave the current organization on good terms and not under questionable circumstances.

Career management is complementary to management development and it is concerned with planning and shaping the path, which people take in their career progression within the organization. The underlying assumption of career management is that, in the context of management succession, the organization should be alert to provide able people with training, guidance and encouragement to enabler them to fulfill their potential. HR APPROACHES TO IMPROVING COMPETENCIES Following are the approaches, which help in improving competencies among the employee of the organization. 1. Incentives. The term in incentives means an inducement, which rouses of, stimulates one to action in a desired action. An incentive has a motivational power, and may be broadly grouped into (a) Financial incentives: - Common use of money as incentive are in form of wages and salaries, bonus, retirement benefits, medical reimbursement, etc. money plays a significant role in satisfying physiological and security/ social needs. (b) Non-Financial Incentive: - the following non – financial incentives could be effectively usedi.

Appreciation of work Done




Knowledge of result


Worker’s participation In Management:


Opportunity for Growth


Suggestion System


Job Enrichment

2. Management By Objectives (MBO): - Management by Objective can simply be defined as a programme that encompasses specific goals, anticipatively set for an explicit time period, with feed back on goal progress.

3. Training: - Training is a process of learning a sequence of programmed behavior. It is application of knowledge. It gives people an awareness of the rules and procedures to guide their behavior. It is used to teach the employee the most efficient and effective ways of performing their job. Also used for better quality of their working. 4. Off the job techniques: - Many Techniques could be very effectively used for the purpose and these are: a) The Case Study




b) Role Play c) In-Basket Method d) Sensitivity Training SUCCESSION PLANING Meaning: Organizations run on eternal basis. The survival and thrive of any organization on continuous basis requires a succession of person to fill key position. This is done through “ succession planning.�

Succession planning can be defined as an executive inventory report indicating what individuals are ready to move into higher positions in the organization. In an organization, position at higher levels fall vacant due to various reasons like retirement, resignation, promotion, transfer, death etc. Therefore, the very purpose of succession planning is to identify, groom, develop and make the people ready to occupy higher levels job as and they fall vacant.

SOURCES 1. Internal Sources; 2. External Sources.

1. INTERNAL SOURCES: Succession from internal sources is advantageous to the organization as well as to the internal employees. This is so because while organization can buy employees loyalty and commitment, employees feel belongings and shared feelings and development along with the organizations. In order to groom internal employees to assumes higher responsibility in future, some professionally run large organization ask their managers and supervisors to identify the internal employees having potentialities to replace them in jobs should the need arise.


Succession through outside talent in certain cases like

when competent and qualified are not available internally, when major expansions, diversification and growth plans are in offering. Experiences suggest that complete dependence on either internal or external sources is not advisable to any organization what is often advisable in this regard is judicial balance between the two sources should be maintained

The succession planning involves the following core activities:

3. Analysis of the demand for executives, managers and professional by level, function and skills.




4. Audit of existing executives and inventory of likely future supply from both internal and external sources. 5. Planning individual career paths based on objective estimates of future needs and drawing on reliable appraisal and assessment of potential. 6. Undertaking career counseling in the context of future requirements of executives and managers. 7. Accelerated promotion scheme with development targeted against the future needs of the organization. 8. Training and development activities to groom people for future roles. 9. Planned recruitment to fill short-term vacancies and provide people for development to meet future needs. 10. The actual process by which jobs are filled includes recruitment procedure internal appointment procedure, methods of assessments, internal search mechanism and often use of computer based information systems

Socialization Concepts of socialization:

In simple words socialization is the process of adaptation. Different thinkers have defined socialization differently. For example, Feldoman, has defined socialization as “acquisition of work skills and abilities adoption of appropriate role behavior and adjustment to the norms and value of the work group.”

In the opinion of Manen and Schein, “socialization can be conceptualized as a process made up of three stage: pre- arrival, encounter and metamorphosis.” Thus socialization can be defined as a process of adaptation that takes place as individual attempt to learn the values and norms of work roles.


The socialization process involves the following three phases: i.

Pre- arrival





Pre- arrival: the pre- arrival phase explicitly recognizes that all the new recruits arrive the organization with a set of values attitudes expectation and learning. in other word pre arrival refers to all the learning that occurs before a new member joins the organization.




Encounter: upon entry into organization, the new member enters the encounter stages. The role-playing starts here. The member’s starts comparing expectation, the image of the organization, which he had formed during pre arrival phase with reality. If expectation and reality concur the encounter is smooth. But seldom it concurs. When the two differ, stress and frustration set in what follows thereafter is mental process of adjustment. In the process of adjustment. In the process of adjustment the individual tries to replace his/her own values and norms with those of the organization. At the other extreme, the member simply cannot reconcile to those values and norms of the organization and gets disillusioned and quits the job.

Metamorphosis: In this stage, the member master the skills required to adjust with the organization norms and values. This is a stage going through changes. Hence, this is called metamorphosis stage. This is of course a voluntary process and a conscious decision, which enables the new member to become compatible with the organization. This signals the completion of socialization process.


You’ve just taken over as CEO of a company; what aspects of that company can you change / there are several, including its strategy, culture, structure tasks, technologies, and the attitudes and skills of its people. All such changes will require the support and expert advice of the HR department.

STRATEGIC CHANGE: Organization change often starts with strategic change, a change in the firm strategy, mission and vision. Strategic change may require other changes for instance in the firm production technology, structure and culture.

CULTURAL CHANGE: Implementing a strategic change often requires changing the culture the firm’s shared values and aims. For example, it created a new set of “heroes ”, individuals and teams who were publicly congratulated whenever their behavior reflected new values of quality, teamwork. and customer focus.

HR plays an important role in changing culture. For example one expert advocates five “ primary embedding mechanisms “ to change a company’s culture, each of which requires HR support and advice: 1. Make it clear to your employees what you pay attention to measure and control. 2. React appropriately to critical incidents and organizational crises. 3. Deliberately role model, teach and coach the values you want to emphasize 4. Communicate your priorities by the way you allocate rewards and status.




5. Make your HR procedures and criteria consistent with the values you espouse.

STRUCURAL CHANGE: Organizing redesigning the organizations departmentalization, coordination span of control, reporting relationship or centralization of decision-making is relatively direct and quick method of changing an organization.

TASK REDESING: The task and authority assigned to individual and teams within the organization are often changed as well.

TECHNOLOGICAL CHANGE: Technological changes are modification to the work method the organization uses to accomplish its tasks. They may include new production technologies, new selection and screening procedures and new performance appraisal techniques.

CHANGE IN PEOPLE ATTITUDES AND SKILLS: Sometimes the employees themselves must change. Techniques such as lecture conferences and on-the – job training and often used to provide new or present employees with the skills they need to perform their job adequately


1. Establishing a sense of urgency 2. Mobilizing commitment to change through joint diagnosis of business problems 3. Create a guiding coalition 4. Develop a shared vision 5. Communicate the vision 6. Enable employees to facilitate the changes 7. Generate short term win 8. Consolidate gains and produce more change 9. Anchor the new ways of doing things in the company’s culture 10. Minorities progress and adjust the visions as required.

Performance Appraisal

Once the employee has been selected, trained & motivated. , He is then appraised for his performance .Performance appraisal is the step where the management finds out how




effective it has been at hiring and placing employees .If any problems are identified steps are taken to communicate with the employees & to remedy them.

Definitions It is defined “ as a process of evaluating the performance of a job in terms of its requirement.” A performance appraisal is a process of evaluating an employee’s performance of a job in terms of its requirements Mc Gregor says, “ Formal performance appraisal plans are designed to meet three needs, one of the organisation and other two of the individual, namely: i.

They provide systematic judgments to back up salary increases, transfers, demotion or terminations.


They are means of telling a subordinate how he is doing, and suggesting needed changes in his behaviour, attitudes, skills, or job knowledge. They let him know “ where he stands” with the boss


They are used as a base for coaching and connecting the individual by the superior.

According to Heyel “ It is process of evaluating the performance & qualifications of the employees in terms of requirement of the job for which he is employed

for purposes of

administration including placement, selection for promotions providing financial rewards & other actions which require differential treatment among the members of the group as distinguished from actions affecting all members equally.

“Process of estimating or judging the value, excellence, qualities or status of some object, person or thing.” IMPORTANCE OF PERFORMANCE APPRAISAL Performance appraisal provides systematic judgment to back up salary increases, transfers, demotion or terminations They are means of telling subordinates how he is doing & suggesting needed changes in the behaviour attitudes, skills, and job knowledge. They let him know where he stands with the boss. The superior uses them as a base for coaching & counseling the individual. It provides adequate feedback to each individual for his or her performance. It plays a vital role in identifying training & development needs & to evaluate the effectiveness of training & development programmes. i.

It helps in comparison of employees




It unifies the appraisal procedures so that all employees are rated in the same manner, utilizing the same approach so that the ratings obtained of separate personnel are comparable. ii.

It helps in management decisions It provides information, which is useful in making and enforcing important decisions

about selection, training, promotions, pay increases, transfers, lay offs, discharges, salary adjustments etc. iii.

It can used a legal document It provides information in the form of records about ratings, which may be produced

as evidence when decisions on ratings are challenged in a court of law. Even arbitrators accept these in the course of grievance handling procedures as authentic records. iv.

It serves to stimulate and guide employee development. Appraisal programmes provide information on the weaknesses of employees and

enable them to gauge their own value and accomplishments and to know what they are doing. v.

It helps in weeding out poor employees By finding out employees’ qualifications and his work and comparing it with job

requirements, inefficient employees and those whose views are not in harmony with the company’s objectives or management philosophy can be weeded out or persuaded to adjust themselves. vi.

Periodic and accurate appraisal constraints a supervisor to be alert and competent in his work.


It gives supervisors a more effective tool for rating their personnel, enables them to make a careful analysis of their men and gives them a better knowledge and understanding of them.


It makes for better employer-employee relations


It helps in manpower planning.

EXPLAIN THE OBJECTIVES OF PERFORMANCE APPRAISAL; (1) To make a comparative study of the abilities of different employees. (2) To reward the more efficient employees. (3) To improve the justification of different rate of wages. (4) To evaluate the success of training programmes. (5) To forecast the need of training nature of training needed. (6) To determine a policy for promotions and transfer. (7) To motivate the employees to do better and more coork. (8) To establish harmonious relations between employees and employers. What should be rated? 1) Quality=Result.




2) Quality=activity completed-dyes. 3) Timeliness. 4) Cost effectiveness. 5) Need for supervision. 6) Enter personal impact. 7) Training.

The functions of performance appraisal is – 1. It seeks to provide an adequate feedback to each individual for his or her performance. 2. (ii) It purposes serve as a basis for improving or changing behavior towards some more effective working habits. 3. (iii) It aims at providing data to managers with which they may judge future job assignments and compensation. “ Employees or personnel rating is the evaluation or appraisal of the relation worth to the company of a man’s services on his jobs.” “ Merit ranking is a systematic, periodic and so far as humanly possible an impartial rating of an employee excellence to his present job and to his potentialities for better job”.

Process of performance appraisal The Evaluation Process

The process of performance appraisal follows a set pattern, which is periodically appraised by his superiors. The process of evaluation begins with establishment of performance standards .At the time of designing a job & formulating a job description performance standards are usually developed for the position. These standards set should not be vague but should be clear .The next thing is that these standards should be communicated to the employees for the employees left to themselves & for making communication effective feedback is necessary from the subordinate to the manager. The third step is measurement of the performance, to determine the actual performance is that, it is necessary to acquire information about it .The sources used for measuring the performance can be through personal observation, statistical reports etc .The fourth step is the comparison of the actual performance with the standards. The next step is the results of are discussed periodically with the employees, where plus points & weak points are discussed .The final step is initiation of corrective action where necessary. EXPLAIN THE STEPS, PROCESS, WAYS, OR PROCEDURE FOR DOING PERFORMANCE APPRAISAL.




1) The process of evaluation begins with the establishment of performance standards, at the time of designing a job and formulating a job description, performance standards are usually developed for the position establishing performance standards. 2) Communicate performance expectations of employees, communicate the expiration and collect the feed back of the subordinate regarding the same that should be properly rectified. 3) Measurement of actual performance we should concerned how we measure and what we measure by personal observation, statistical report oral reports and written reports. 4) Compare the actual and standard performance to know the deviation it is done. 5) Discuss the appraisal with employees this has to be periodically discussed with the employees where goods points weak points and difficulties are indicated and discussed so that the performance can be improved. 6) If necessary corrective action is initiated, immediate corrective action can be two types; one is immediate and deals predominately with systems. The other basis and delves into causes. Immediate corrective action is often described as “putting out fires”.

Establish performance standards

Communicate performance expectations to employees

Measure actual performance

Compare actual performance with standards

Discuss the appraisal with employee

If necessary, initiate corrective action

Traditional methods lay emphasis on the rating of the individual’s personality traits,




Such initiative, Dependability drive, Responsibility, Creativity, Integrity, Leadership potential, Intelligence, Judgment, Organizing ability etc, Never methods place move emphasis on the evaluation of work results job achievements, Then personality traits, Result oriented appraisal tend to be more objective and worth while, Especially for concern selling and development purposes.

Methods of Performance Appraisal

Traditional methods:

1. Straight Ranking Method: It is oldest & simplest method of performance appraisal by which the man & his performance is considered as entity by the rater .The whole man is compared to with the whole man .The relative position of each man is tested in terms of his numerical rank .It may also be done by ranking a person on his job performance against that of another member of competitive group placing him as number

2. Paired Comparison Technique :In this each employee is compared every trait all other persons in pairs one at a time .In this judgments is simpler than the ordinary ranking method.

3. Man-to-Man Comparison Method: This technique was used by the USA army during the First World War. In this method certain factors are selected for the purpose of analysis (such as leadership, dependability & imitative) the scale of man is also created for each selector.

4. Grading Method: In this method the rater considers certain features & marks the carefully according to a scale.

They select the features like analytical ability,

cooperativeness, dependability, self-expression, job knowledge, judgment, leadership & organizing ability etc.




5. Graphic Method: This is the most commonly used method of performance Appraisal .In it one of the each person is rated on a continuous scale. These factors are employee characteristics & employee contribution which includes qualities such as initiative, leadership, cooperativeness, dependability, industry, attitude

6. Forced Choice Description method: in this ranking method it attempts to correct a rater’s tendency to give consistently high or consistently low ratings to all the employees. This method uses objective reporting & minimum subjective ratings.

7. Free Essay Method: Under this supervisor make s a free form, open ended appraisal of an employee in his own words & puts down his impression about the employee .He take into account of these factors like relationship with fellow supervisors, job knowledge & potential, employee characteristics & attitudes, physical conditions, development needs for future.


1. Management By Objectives: It is potentially a powerful philosophy of managing and an effective way of operationalising the evaluation process. It is defined as “ a process whereby the superior & subordinates managers of an organization jointly identify its common goals, define each individuals major areas responsibility in terms of results expected of him & use these measures as guides for operating the unit & assessing the contributions of each of its members.

2. Assessment Center method: The assessment center concept was initially applied to military situations in the Germany army in the 1930 .The purpose of this method was and is to test candidates in a social situations using a number of assessors & a variety of procedures. The most important feature of the assessment centre is job related simulations. These simulations involve characteristics that Managers feel are important to the job success. The evaluators observe & evaluate participants as they perform activities commonly found in these higher levels of jobs.

3. 360 degree performance appraisal: The appraisal may be any person who has thorough knowledge about the job done by contents to be appraised, standards of contents & who observes the employee while performing a job .He should asses the performance without bias .The appraiser are supervisors, peers, subordinates employees themselves users of service. Performance appraisal by all the parties is called 360degree appraisal. 4. Human Asset Accounting method: The human asset accounting method refers to activity devoted to attaching money estimates to the value of a firm’s internal human




organization & it’s external customer goodwill .If a well trained employee leaves a firm the human organization is worthless& if they join the company the human assets are increased.

5. Behaviorally Anchored Rating Scales: This a new appraisal technique which has been recently developed .It provides better results as compare to other techniques .The BARS is usually consist of five steps. (a) Generate critical incidents: Person with knowledge of the job to be appraised are asked to describe specific illustrations of effective performance behaviour (b) Develop performance Dimensions: These people then cluster the incidents into small set of performance dimensions. Each cluster must be defined. (c) Reallocate Incidents: Any group of people who also the job then reallocate the original critical incidents. They are given clusters definition’s & critical& asked to redefine each incident to the dimension (d) Scale of Incidents: The second group is generally asked to rate the behaviour described in the incident as to how effectively or ineffectively it represents performance on the appropriate dimensions. (e) Develop Final Instrument: Subsets of incidents are used as behaviour anchors for the performance dimensions.

360 DEGREE FEEDBACK Introduction This attempt to update the traditional employee appraisal process is one of the fashionable techniques of the mid 1990s, fitting in with other newts tools called team management, employee empowerment and total quality management.

In 360 degree feedback the appraisal should may be done by any person who has thorough knowledge about the job done by the contents to be appraised, standards of contents & who observes the employee while performing the job .The appraiser should be capable of deciding what is important & what is relatively less important. He should assess the performance without bias .The appraisers are supervisors, peers, subordinates employees themselves users of services & consultant. Performance appraisal by all these parties is called 360-degree feedback.

Definition 360-degree feedback, as the term implies, brings together formal appraisals from everybody that the person being assessed comes into contact with—line managers, subordinates, colleagues, peers, and even outsiders such as clients. Another name for it is




multi-source feedback and a variant is upward feedback, in which subordinates appraise their supervisor’s performance. Though it is frequently intimidating or dispiriting for the person concerned, some studies indicate that such feedback can be helpful in changing behaviour and improving performance. However, others suggest that the technique shows little or no improvement over more traditional methods and has the disadvantage that results need skilled interpretation. They say 360-degree feedback should be regarded as an organizational process rather than a mechanical tool. FEATURES OF 360-DEGREE FEEDBACK •

360-degree feedback is an assessment process used to improve managerial effectiveness by providing the manager with a more complete assessment of their effectiveness, and their performance and development needs.

The process involves obtaining feedback from the manager's key contacts, normally: o

The manager him/herself











Feedback is normally gathered by means of a questionnaire, which asks participants to rate the individual according to observed behaviors - usually managerial or business-specific competencies.

The 360-degree process will not suit all companies. You should assess how well it would fit with your current culture before launching a scheme and a pilot scheme is worth building into your programme.

Communicating the scheme, it's purpose and benefits to all those involved will be a key factor in reducing the participants' fears and gaining their commitment to any new scheme.

Presenting the results of the appraisal to managers in a constructive way is critical to the success of the process. All feedback, positive and critical, should be presented, with the aim of highlighting and acting on areas for development.

Results can be aggregated to give you some feedback on organizational strengths and weaknesses in relation to your business objectives and training strategy.

A -- What is a 360° assessment? It's a full-circle overview of a person's performance on the job. Instead of a single evaluation from the boss, a person receives feedback from many workplace sources. Sometimes 360°s are called multi-source or multi-rater assessments.




The boss still gives input, but peers and direct reports (people who report to the participant) also get involved in the evaluation process. The person participating in a 360° gets to rate his or her performance, too. Applying their individual observations and experiences, everyone involved brings different perspectives to the assessment. For participants, the feedback from multiple work associates is highly motivating. Used as a springboard for professional growth, the assessment can make a powerful impact on an individual's career and a company's success. The 360° assessment process is designed as an ongoing process that can be used at key intervals, usually annually, to monitor the progress of professional growth.

B -- How does the Checkpoint 360° system work? 1.

The participant and his or her boss, peers and direct reports fill in surveys. Responses











The standard Checkpoint survey has 70 items and takes approximately 15 minutes to complete. It covers competencies in the areas of Communications, Leadership, Adaptability, Relationships, Task Management, Production, Development of Others and Personal Development. 2.

Results from all of the surveys are compiled in a confidential feedback report. Graphs and charts relate the data in a detailed, easy-to-understand format. The report presents a balanced picture of perceptions about a person's skills.


Participants use the information from the feedback report to establish goals and ongoing action plans, aimed at better utilizing their strong points and improving their weaker skills. They can use the 360° process before and after training opportunities to measure their effectiveness and measure gains. C -- Why should a company implement a 360° process?

The process leads to better job performance, as participants use the 360° to sharpen their skills. As a consequence, productivity in the workplace increases, and a company enjoys more success. Groups have found that the 360° process is an excellent method for establishing specific training needs. When a business has a clear objective to accomplish or a specific mission to carry out, a 360° assessment can be a valuable tool. It can help everyone to focus on skills consistent with the company's goals and to target their development plans to fit the direction the business is taking.




If a business is struggling in a particular area, a 360° system can help identify the skills requiring attention. Participants can then make the chances necessary to remove obstacles to success.

D -- What are the advantages of a 360° feedback system?

Everybody involved in the process benefits: Participants get a fairer, well-rounded impression of how their work is viewed by others. Applying this valuable information, they can take steps to continuously improve their effectiveness on the job. Bosses get an overall perspective about a person's skills and, consequently, develop a more accurate, on-target training plan for each individual. Peers and Direct Reports get an opportunity to share concerns, which helps them contribute to constructive changes in their work environment. At the same time, they can confirm positive behaviors that do not need attention. Team members can use the information to identify and prioritize team development needs. The process can improve their teamwork, increasing their ability to solve problems together. The organization can develop appropriate skills to consistently reflect company values. Continuous progress can be achieved through periodic reevaluations using the 360° system.

E -- How do companies use the 360° results?

Most businesses initially use the 360° feedback for employee development. Some begin by using it for development planning and then expand to use the 360° system for appraisal and pay decisions. Later, they may also use it in promotion and succession planning. When the initial use is for development only, everyone has a chance to become familiar with the process and make any necessary adjustments. It also allows time to build trust in the value of the 360°. For uses other than development, specific legal guidelines must be followed.

When implementing a 360° system, its use must be taken into account. For instance, companies will need to have a policy about who sees the 360° survey results. When the feedback will be used solely for development, the participant might be the only person to see the report. If the results will be used for performance management, both the participant and his or her boss will review the report.




WHAT DO YOU MEANT BY JOB EVALUATION: Job evaluation is the process of valuing or assessing or evaluating the worth of the job in comparison with other jobs in the organization. Based on job evaluation, all the jobs in the organization can be arranged, in an hierarchical order of their worth and priced.

DEFINE JOB EVALUATION: Definition: Job evaluation is a process of determining the relative worth of the various jobs within the organization, so that differential wages may be paid to jobs of different worth. -

Wendell French

Job evaluation is a method, which helps to establish a justified rank order of jobs as a whole, being a foundation fro setting of wages. – Netherlands committee Introduction Job evaluation is the output provided by job analysis. As seen earlier, job analysis describes the duties of a job, authority relationships, skills required, conditions of work, and additional relevant information. Job evaluation on the other hand, uses the information in job analysis to evaluate each job- valuing its components and ascertaining relative job worth. It involves, in other words, a formal and systematic comparison of job relative to another, so that a wage or salary hierarchy results. So it is a process by which job in an organization are evaluated.

If job values are not properly studied, it is very likely that jobs would not be properly priced, i.e., high valued jobs may receive less pay than low valued jobs. When employee realizes that this is happening, they become dissatisfied. They may leave the organization, reduce their efforts or perhaps adopt other modes of behavior detrimental to the organization.

Definition- “Bureau of labour statistics, USA “Job evaluation is evaluation or rating of jobs to determine their position in job hierarchy. The evaluation may be achieved through assignment of points or use of some other systematic method of essential job requirement such as skills, experience and responsibility”.

According to ‘Kimball and Kimball’ “Job evaluation is an effort to determine the relative value of every job in a plant to determine what the fair basic wage for a job should be”.

According to ‘Wendell French’ “Job evaluation is the process of determining the relative worth of the various jobs within the organization, so that different wages may be paid to jobs of different worth”.




Explain the Objectives of job evaluation 1. Secure and maintain complete, accurate and impersonal descriptions of each distinct job or occupation in the entire plant. 2. Provide a standard procedure for determining the relative worth or value of each job within the plant. 3. Determine a rate of pay for each job, which is fair and equitable with relations to other jobs in the plant community and industry. 4. Ensure that like wages are paid to all qualified employees on like work. 5. Promote fair and accurate consideration of all employers for advancement and transfer. 6. Provide a factual basis for the consideration of wage rates for similar jobs both within the community and within the industry. 7. Provide information for the work, organization employee’s selection, training and numerous other important purposes.

WHAT ARE ALL THE PRINCIPLES OF JOB EVALUATION : 1. Job evaluation must attempt to rate the job and not the man. 2. Elements of job selected for the job evaluation must be common to most of the jobs, few in number and simple to identify and easy to Skill 3. Clear definition of elements and consistency of degrees of such elements, improve accuracy of job evaluation. 4. secure willing co-operation and support of supervisors on job evaluation. This is obtained by selling this idea among them and obtain their participation in the process. 5. secure cooperation and participation from employees. minimize number of wages rate within each grade. Procedure for Job Evaluation Step 1: Analyze & prepare job description- this require a preparation of job discription and also a analysis of job requirement for successive performance.

Step 2: Select and prepare job evaluation plan-

Means job must be broken into small

components i.e it should involve the selection of factors, elements needed for the performance of all jobs for which money is paid, determining their value and preparing return instructions for evaluation.

Step 3:Classify Jobs: This Requires grouping for arranging jobs in a correct sequence in terms of value to the firm and relating them to money terms in order to ascertain their relative value.




Step 4:Install the programme: This involves explaining it to employees and putting it into operations.

Step 5:Maintain the programme: Jobs cannot continue without updating new jobs and job changing in obedience to changing conditions and situations.

Methods of job evaluation There are five popular methods of job evaluation. Two of them are qualitative and two quantitative. ADVANTAGES OF JOB EVALUATION 1.

Job evaluation is a logical and, to some extent, an objective method of ranking jobs relative to one another. It may help in removing inequalities in existing wage structures and in maintaining sound and consistent wage differentials in a plant or industry.


In case of new jobs, the method often facilitates fitting them into existing wage structure.


The method may lead to greater uniformity in wage rates, thus simplifying wage administration.


The method helps in removing grievances, arising out of relative wages; and improves labour management relations and workers morale.


The information collected in the process of job description and analysis be also used for the improvement of selection, transfer and promotion procedure on basis of comparative job requirements.


The method replaces many accidental

LIMITATIONS OF JOB EVALUATION These are: 1) Though many ways of applying the job evaluation techniques are available, rapid changes in technology and in the supply and demand of particular skills have given rise to the problem of adjustment. These need to be probed. 2) Substantial differences exist between job factors and the factors emphasized in the market. These differences are wider in cases in which the average ay offered by a company is lower than the prevalent in other companies in the same industry or in the same geographical area. 3) A job evaluation frequently favours groups different from those, which are favoured from the market. ‘Kerr and Fisher’ observes, “the jobs which tends to rate high as compared with the market those of janitor, nurse and typist, while craft rates are relatively low. Weaker groups are better served by an evaluation plan than by the market; the former places the emphasis not on force but on equity”. 4) Job factors fluctuate because of changes in production, technology, information system, and division of factors and such other factors. Therefore the evaluation of the job today is made on the basis of job factors and does not reflect the time job factor in future.




5) Job evaluation takes a long time to install, requires specialized technical personnel, and may be costly. 6) A large number of jobs are called ‘red circle jobs’. Some of these may be getting more and other less than the rate determined by job evaluation.

Qualitative Methods: Ranking method: Ranking of job is normally done by an expert committee formed by the organization. This committee consists of representatives from management and executives. It is a direct system of comparing hobs together so that they are ranked in their order of importance starting with the least important in the first rank and moving to the most important in the last. Here the jobs are ranked as a “whole job” instead of breaking them into parts. Advantages: Simple and easy to understand Faster and inexpensive Disadvantages: Subjective and influenced by personal bias Specific job requirements are not taken into account.

GRADING METHOD OR CLASSIFICATION METHOD Here the different grades or classes of jobs are predetermined based on certain criteria such as skill, knowledge, responsibility etc.

Quantitative methods: Point rating method: Jobs are divided into compound fraction, points/ weights are assigned to each factor depending on the degree of its importance in a particular job. The total points for a job indicate its relative worth of the job. Procedure: i.

Determine the job to evaluate


Select the factor


Define the factor


Determine the degree


Determine relative value of job factors

vi. Assign point value to degrees. vii. Find point valued viii. Assign moral values.




Advantages: Most common and popular method. More systematic and objective Evaluation become more objective since factors are weighted in terms of points. Disadvantage: Method is less flexible Requires more time and money. FACTOR COMPARISON METHOD Here ranking is done based on objective criteria, which are called factors. In this method each job must have job description. Ranking of factors are made based on job descriptions. ADVANTAGES Scientific method Jobs are compared with each other to obtain relative value. DISADVANTAGES Few factors make the study unrealistic. Requires experts. JOB EVALUATION METHODS / SYSTEMS There are four basic, traditional system of job evaluation: (1) The ranking system, (2) The grading or job classification system; (3) The point system; (4) The factor comparison system. The first two systems are popularly known as non-analytical or non-quantitative or summary systems, because they utilize non-quantitative methods of listing jobs in order to difficulty and are, therefore, simple. The last two systems are called the analytical or quantitative systems, because they use quantitative techniques in listing the jobs. 1) THE RANKING SYSTEM Mechanism: Under this system, all jobs are arranged or in order of their importance from the simplest to the hardest, or in the reverse order, each successive job being higher or lower than the previous job in the sequence. It is not necessary to have job description Generally speaking, the following five steps are involved in the system: Step 1: Preparation of job description, particularly when the ranking of the job is done by different individuals and there is a disagreement among them.

Step 2: Selection of raters, jobs may be usually ranked by department or in clusters. This eliminates needs for directly comparing factory jobs and clerical jobs. Most organization uses a committee of raters. Step 3: Selection of rates and key jobs, usually a series of key jobs or bench-mark jobs (10 to 20 jobs, which include all major departments and functions) are first rated; then the other jobs are roughly compared with these key job to establish a rough rating.

Step 4 : Ranking of all jobs. Each job is than compared in details with other similar job to establish its exact rank in the scale. For this each rater must be given a set of ‘index card’,




each of which contains a brief description of jobs. These jobs are than ranked from ‘lowest to highest’ or from ‘highest to lowest’ are ranked first and than the next highest and next lowest and so forth until all the cards have been ranked.

Step 5: Preparation of job classification from the rating: The total ranking is divided into an appropriate number of groups or classifications, usually 8 to 12. All the jobs within a single group or classification receive the same wage or range of rates.

Merits of Ranking Method of Job Evaluation: 1. The system is simple, easily understood, and easy to explain to employees. Therefore, it is suitable for small organizations with clearly defined jobs. 2. It is far less expensive to put into effect than other systems, and requires little effort for maintenance. 3. It requires less time, fewer forms and less work, unless it is carried to a detailed point used by company. Demerits: 1. As there is no standard for an analysis of the whole job position different bases of comparison between rates occur. The process is initially based on judgment and tends to be influenced by a variety of personal biases. 2. The system merely produces a a job order and does not indicate yo what extent it is more important than the one below it. 3. Specific job requirements are not normally analysed separately.

2) JOB CLASSIFICATION OR GRADING METHOD Under this system, a number of pre-determined grades or classifications are first established by a committee and than the various jobs are assigned within each grade or class. Grade descriptions are the result of basic job information which is basically arrived from the job analysis. After formulating and studying job description and job specifications, jobs are grouped into classes or grades which represent different pay levels ranging from low to high. Steps: The following 5 steps are generally involved: 1. The preparation of job descriptions, which gives us basic job information usually derived from a job analysis. 2. The preparation of job descriptions, so that different levels or grades of job may be identified. 3. Selection of grades and key jobs. About 10 to 20 jobs are selected, which include all the major department and functions and cover all the grades. 4. Grading the key jobs. Key jobs are assigned to an appropriate grade levels and their relationship to each other studied.




5. Classification of all jobs. Jobs are classified by grade definitions. All the job in the same grade receive the same wage or range of rates. For example, menials may be put into one class, clerks in another, junior officers in other class, and the top executive in high class. Merits: 1. This method is simple to operate and understand, for it does not take much time or require technical help. 2. The use of fully described job classes meets the need for employing systematic criteria in ordering jobs to their importance. Since many workers think of job in, or related to, cluster or groups, this method makes it easier for them to understand rankings. 3. If an organization consists of 500 people holding to different jobs, the jobs might be broken up into perhaps 5 classes, arranged in order of importance from high to low, and described class by class. 4. The grouping of jobs into classifications makes pay determination problems administratively easier to handle. Pay grades are determined for, and assigned to, all the job classifications. 5. It is used in important government and operates efficiently, but it is rarely used in an industry. Demerits 1. Although it represents an advance in accuracy over the ranking method, it still leaves much to be desired much because personal evaluations by executives establish the major classes, and determine into which classes each job should be placed. 2. Since no detailed analysis of a job is done, the judgment in respect of a whole range of jobs may produce an incorrect classification. 3. It is relatively difficult to write a grade description. The system become difficult to operate as the number of job increases. 4. It is difficult to know how much of a job’s rank is influenced by a man on the job. 5. The system is rather rigid and unsuitable for a large organization or for very varied work.

3) THE POINT SYSTEM This method is the most widely used type of job evaluation type. It requires a identifying number of compensable factors and than determining degree to which each of these factor is present in the job. Once the degree to which each factor is determined, the corresponding number of points of each factor are added and an overall point value is obtained. Steps : This system requires a detailed examination of the jobs. The Steps in these method followed are: Step 1: The jobs have to be determined first which are to be evaluated. They are usually clustered. The jobs, which require (1) similar activities, (2) the same workers characteristic or




traits and work on the same kind of materials (say wood or metal are placed in the same cluster or family). Step 2: For the purpose, a pre-determined number of factor are arbitrarily selected by raters. The number of factors used varies a great deal from company to company. The common factors are: Education and training; experience; physical skills and effort; planning for the supervision of others; external contacts, internal contacts; confidential information and working conditions. Step 3: The next step is to break down each factors into degrees or levels, and to assign a point value each level or degree. Step 4: Determination of relative values or weighs to assign each factor. For each job or cluster of jobs some factors are more important than others. For example for executives, “the mental requirements” factor would carry more weight than “physical requirements”. The opposite might be true of “factory jobs”. Step 5: The next step is to assign money values to points. For this purpose, points are added to give the total value of a job; its value of a job is translated into terms of money with a predetermined formula.

4) THE FACTOR COMPARISON METHOD Under this system, jobs are evaluated by means of standard yardstick of value. It entails deciding which jobs have more of compensable factors than others. The evaluation committee selects some’ key’ or benchmark jobs for which they are clearly understood job description and counterparts in other organizations and for which the pay rates are such as agreed upon and are acceptable to both management and table. Steps involved:

Step 1: Clear-cut job descriptions are written and job specifications are preferably in terms of compensable factors. The people specifications are generally provided with a set of definitions which have been used in each of the compnsable factor selected. Step 2: Selecting of key jobs: Such jobs are those jobs which represent the job under study; and for which pay is determined to be standard or reference points and for which there is no controversy between management and the employees. Step 3: Ranking of key jobs: Several different members of the job evaluation committee rank the key job on each of five factors (mental requirements, physical requirements, skill requirements and working conditions). Step 4: Valuing the factors: The basic pay for each ‘key’ job is allocated to each factor. Step 5: Comparing all job with each jobs: All the other jobs are than compared with the key jobs, factor by factor, to determine their relative importance and position in the scale of jobs. Step 6: Establishing the monetary units value for all jobs: monetary values are assigned to each factory of every key job.




Merits: 1. It is a systematic, quantifiable method for which detailed step by step instructions are available. 2. Jobs are compared to other job to determine a relative value. 3. It is a fairly easy system to explain to employees 4. There are no limits to the value, which may be assigned to each factor. 5. The plan does not require a translation from points to money. 6. The reliability and validity of the system are greater than the same statistical measures obtained from group standardized job analysis plans. Demerits: 1. It is costly to install, and somewhat difficult to operate for any one who is not acquainted with the general nature of the job evaluation techniques. 2. Wage level change from time to time, and there minor inconsistencies may be brings in order to bring all the job in alignment. 3. Money rates, when used as a basis of rating, tend to influence the actual rate more than the abstract rate. 4. The system is complex and cannot be explained to, and understood by every day non-supervisory organizational employees.

Once a job is evaluated, or say ranked, the next step is to convert this measurement in to salary bracket. In other words, it implies simply breaking up the total salary structure in to sun divisions corresponding to the number of classes of job arrived at through job evaluation. However, several other factors also need to be looked in to before a right type of salary structure is evolved. Establishing Pay Equity People have no basic or instinctive need for money, a commodity that is important only if it can satisfy other needs. Organizations frequently overestimate the value workers place on monetary rewards. The equity theories can help explain employees’ reaction to compensation system. EQUITY: Employees wanted to be treated fairly. Equity is the balance between the inputs an individual brings to a job and the outcome he or she receives from the it. An employee input includes experience, education, special skills, effort and time worked. Outcomes include pay benefits, achievement, recognition and any other rewards. Individuals use a complex process to determine what is fair. Inputs are continually compared with outcomes-the individual’s special skills and efforts are weighed against the pay and recognitions given by the organization. However inputs and outputs are in different units, and are hard to compare to each other directly.




However, inputs and outcomes are in different units, and are hard to compare to each other directly. Thus, equity theory suggests that individuals determine whether they are being fairly treated by comparing their own input/outcome ratio to the input/outcome ratio of someone else. This other person may be in the same job or in other jobs, in the company or outside the company, in the same industry or outside the industry sense of inequity arises when the comparison process uncovers an imbalance between inputs and outcomes of the employees compared with others.

Equity Theory

My rewards (outcomes)


Other’s Rewards

My contributions (Inputs)

My rewards





Other’s Contribution


My contributions

Other’s Rewards Other’s Contribution


Action to Restore Equity from Under-Reward Equity: 1. Person could ask for a raise. 2. Persons could reduce contribution (work harder). 3. Person could try to get other to increase contribution (work harder). 4. Last resorts: Quit or choose another comparison other.

My rewards My contributions


Other’s Rewards Other’s Contribution




Action to Restore Equity from Over-Reward Equity 1. Person could increase contributions (work harder or longer, cultivate additional skills). 2. Persons could ask for a pay cut. 3. Person could attempt to get other a raise. 4. Person could attempt to get other to reduce his or her contribution. 5. Last resorts: Quit the job or choose another comparison other.

DESIGNING EQUITABLE COMPENSATION SYSTEM Internal Equity: It refers to the relationships among jobs within a single organization. Internal equity exists when the pay differentials between different jobs within the organization and perceived as fair - neither too large nor too small.




External Equity: It refers to the comparisons of similar jobs in different organizations (for example, the pay received by presidents of various electrical manufacturing firms.

Individual Equity: It refers to comparisons among individuals in the same job with the same organization There are accepted procedures for establishing internal, external and individual with an organization.

METHODS FOR ESTABLISHING INTERNAL EQUITY 1. Job Evaluation methods: The major purpose of job evaluation is to determine the relative worth of the jobs within an organization. A systematic comparison can define an internal job hierarchy that ranks jobs in terms of their relative contribution to the organizational objectives. The five most frequently used job evaluation methods are 1. Job ranking 2. Job grading or classification 3. The point method 4. Factor comparison Establishing External Equity Methods of Establishing External Equity: 1. Wage and Salary surveys: - to establish a competitively priced wage structure, organizations typically rely on wage and salary survey data collected from other organizations. The survey process involves identifying the jobs to be included, selecting the organizations to be surveyed, and then actually collecting the data. The data then must be interpreted so that wage rates can be set within the context of the organizationâ&#x20AC;&#x2122;s pay policy. 2. Identifying Key Jobs: - in practice, employers do not seek market data on all jobs. Instead, they gather survey information only for key jobs, which generally have the following characteristics: a.) The job content is relatively stable over time. b.) The jobs occur frequently, both in the organization and in the surveyed organizations. c.) The jobs can be defined quite precisely. d.) The jobs are performed in a similar manner in most organizations. 3. Selecting Organizations to Survey:-Identifying organizations to survey can be important. Organizations to covered in a wage survey typically include those that Employ workers with the same skills. Are within geographic distances that would make employees willing to commute or relocate, and



132 Are in the same or similar industry.

However, the considerations that go into selecting a set of organizations to be surveyed vary for different jobs. 4. Collecting Data: - rather than running their own wage survey, many organizations obtain the results of surveys undertaken by industry associations, professional associations, government agencies, or consulting firms. Numerous annual surveys cover a wide choice of job families and industries. At local levels, Units of Society for Human Resource Management or Chambers of Commerce often undertake surveys for their membership. For a company that wants to collect and analyze its own data, it is important to obtain information on the characteristics of the responding organization, as well as on both direct and indirect compensation. The organizational information is needed to judge the comparability of the competitor in terms of size, products, and financial condition. It is also crucial to know the types and amounts of benefits offered as well as incentives and hourly pay. Of the three summary measures, the median is the most useful in setting wage ranges. The mean can easily become distorted if a few workers are paid at extreme rates. The median is not the subject to such distortion. 5. Pay Level Policy: - once an organization has completed an internal job evaluation and obtained wage survey data, it needs to translate this information into pay rates for each class of jobs. This process involves appropriate interpretation of survey results, the merging of the job evaluation with the survey data, and consideration of the organizationâ&#x20AC;&#x2122;s pay level policy.

Establishing Individual Equity As mentioned earlier, jobs evaluated as having nearly the same value are usually combined into a single wage grade. A single wage may be selected for each grade and paid to every person whose job falls in the grade. More commonly, however, a range of pay rates is set for each grade. When a range is set, the issue of individual equity becomes salient, and the organization must have a system for determining where in the range the compensation of each employee should be.

Steps in designing Individual Equity: Designing pay ranges: The range associated with a pay grade sets the upper and lower bonds of possible compensation for individuals whose jobs fall in the grade. Setting Individual pay: Individual equity requires that rewards to employees be allocated fairly across individuals performing the same jobs. The two commonly used approaches to determine how workers are placed and progress through the pay ranges are seniority and merit. A newer method bases increments on the number of skills mastered. In short, equity concern centers on setting the pay of individuals within a wage grade. Typical bases for this decision include seniority, merit, and skill. Merit pay system has the




potential to motivate high performance, but they are difficult to administer in a way that employees perceive as fair.

PROMOTION WHAT IS MEANT BY PROMOTION OR DEFINE THE TERM PROMOTION: Advancement with in an organization is known as promotion. It involves a change from one job to another that is better in terms of status and responsibility. The change to the higher hob is accompanied by increased pay and privileges. The term dry promotion refers to an increase in responsibility and status without any increase in pay.

EXPLAIN THE TYPES OF PROMOTION: 1. Horizontal promotion: In this type of promotion employeeâ&#x20AC;&#x2122;s job classification remains the same only his position is increased. Ex: A lower division clerk may be promoted as upper division clerk with same job assignment and responsibility. 2. Vertical promotion: In this type of promotion an employee crosses his hob classification. This increases his responsibility and status. Ex. A superintendent becomes departmental manager.

EXPLAIN THE NEED OR ADVANTAGES OF PROMOTION: ORGANISATIONAL NEEDS: No organization can rely on outside recruitment to fill all its requirements. Jobs, which are not quite unique, may require familiarity with the people, procedures, policies and the special characteristics of organization in which they are performed. Thus, promotional ladders are needed to funnel upward those who have broad experience, in the organization. PROVIDING SATISFACTION: Promotion is used as reward and as an inducement to better work performance and other organizationally approved form of behaviour. 3.PROVIDING SATISFACTION: Opportunities and clear policies for promotion provide satisfaction to employees in the following manner. Employees get job satisfaction in the organization. Promotion provides economic and moral development in employees. They are able to increase their productivity for promotion, which inculcates the habits of learning new things. Their morale remains high, which is quite useful to employees as well as to the organization. BASIS FOR PROMOTION:



134 1.Promotion on merit basis. 2.Promotion on seniority basis


Merit is taken as base for promotion

Efficiency is ensured in the organization.

Conscientious and systematic attempts are undertaken to measure merit. o

Test scores


Performance appraisal


Analysis of behaviour is taken into consideration for the judgment.


Seniority can be defined as length of recognized service in an organization.

While determining the seniority of individuals in the organization, the rules should be carefully and specially spelled out.


“A promotion is the advancement of an employees to all better in terms of greater responsibility, more remuneration or status, greater skill and specially increased rate of pay or salary”.

“ A promotion involves a change from one job to another that is better in terms of status and responsibilities”.

What are the reasons for promotion?. •

To reward the ability and efficiency of the employees

to develop the feeling of integration with the enterprise among the employees

to provide and opportunity of development to the employees

to motivate them to do their jobs with responsibility

to develop the feelings of loyalty

to maintain discipline

to reduce labour turnover to establish coordinate human relations

to fill higher posts

to maintain the industrial peace.


Better utilization of abilities.

Responsible and efficient employees

rewards for services of employees

provides an opportunity to the employees


maintain employee strength



135 •

Reduce labour turnover.

It make the cost straining

minimize industrial conflict

establish the sweet human (skills) relations

attract the workers

possible utilization of resources

It increase the recognition of enterprise.


1.Horizontal promotion: The nature of job remain same, responsibilities also remain same, only designation and salary increase.

2.Vertical promotion: Nature of job change, it involves greater responsibilities, better status, higher pay and more facilities.

Explain the ideal promotion policy or the principles of a sound promotion policy?. (1)To promote the present employees to the vacant higher posts. (2) Consideration of ability and seniority. (3) Promotion policy must be well defined and properly communicated. (4) Impartial promotion. (5) Order of promotions must be clear. (6) Promotion by top management. (7) Freedom of representation to the employees or labour unions. (8) Temporawaery promotion in the beginning. (9) Arrangement of training. Seniority as sole criteria It refers to length of service in the company or in its various plants or in its departments or in a particular position. This is an area of dispute between union and management. Union prefers policy of seniority as the basis for promotion. Management in the other hand prefers merit as a basis for promotion. Advantages 1. Easy and simple. All employees are assured that promotion will come automatically when it is due. 2. Focus on individual career prospects and security. 3. Risk is reduced. A known devil is better than an unknown angel 4. Avoid favoritism and arbitrariness by management. 5. Policy is more acceptable to majority of employees and unions. 6. It is compatible with Indian psychology of respecting age and experience.

Disadvantages 1. Merit is devalued 2. Promote mediocre performance and inefficiency. 3. There is no guarantee that past experience or length of services increases ability. 4. Such organizations fail to attract talented hands from outside.




5. Create frustration to young and talented persons leading to a situation where good employees will leave the organisation. Merit as sole criteria for promotion The rule followed is “ promote the best man available”. Today, efficiency is the main consideration for promotion. Advantages: •

It brings rewards for meritorious work, extra competence, achievement and initiative.

It encourages and employee to work hard so that he may get an opportunity for advancement in the organisation

It leads to increased productivity, for individual are satisfied that there merit and competence will be properly appreciated and rewarded.

It attracts talented hands from outside.

Disadvantages: 1. In discourages senior employees 2. Employee’s morale will reduce.

Merit and seniority as the basis for promotion This is the most widely based method. This approach will reduce the disadvantages of either of the policies given below. If two employees are of same seniority give weightage to ability and merit in promotion. If two employees are of it merit and ability give weightage to seniority in promotion. The exact weightage between the two depends on the organisation, nature of work and responsibility, competition existing in the market, grade/rank to which promotions are made.

Explain the kinds or types of promotion. •

1) Multiple chain promotions, which provide for a systematic nuking of each position to several others. Such promotions identify multi promotional opportunities through clearly defined avenues of approach to and exit from each position in the organization.

2) Up or dry promotion, a person must either earn a promotion or seek employment elsewhere.

Dry promotions are those, which are given in lieu of increases in compensation. i. e, when all compensation is adjusted upward to keep pace with the cost of living we have dry promotions.

Define the term promotion policy. The usual policy is to take merit into consideration sometimes length of service, education, training courses completed, previous work history etc, are factors which are given weight while deciding a promotional through promotions are made on the basis of ability, hard work, co-operation, merit, honesty, many informal influences are powerful.

DISCUSS SENIORITY VERSUS MERIT: “ Seniority refers to length of services in the company or in its various plants or in its departments, or in a particular position. Under straight plant wise seniority in all jobs, promotions go to the oldest employees, provided that he is fit for the job. Occupational seniority may be within a department, within a division or in the entire plant. Seniority offers certain rights and benefits.




1. Some rights are based on competive seniority among employees. Rights to promotion, transfer, lay off and recalls are such examples. 2. Other benefits have nothing to do with one man relative to another, e.g. a man may be entitled to have 15 days causal leave in a year, a pension after 30 years and a certain amount of sick leave after 6 month’s service trade unions are favour on seniority and mgt is favour on merit. The most widely used basis for promotion combines both the ability and seniority. 3. The best policy when there are two employees of almost equal seniority, ability or merit should be the deciding factor in a promotion. Vice-versa, such equal seniority- ability is a factor equal ability- seniority is a factor satisfies to both of them. Arguments for and against promotions by

Seniority system:

Representation by sen- by trade unions:

1. (1)Simple to understand and operate all of them are assured. 2. (2) Build moral. 3. (3) Optimum utilization of existing resources. 4. (4) More economical than recruitment cost. 5. (5) Management will have a known man.

But this system suffers from certain draw backs too such as: (1) In efficient may be promoted. (2) Imbreading ideas. (3) Worth is not appeared to due recognition. (4) Change in coor king system. (5) Whole sale promotions. The system of promotion by merit enjoys these benefits:1. It brings rewards for meritorious work, extra competence, achievement and initiative. 2. (2) It encourages an employee to work hard so that he may get an opportunity for advancement in the organization. 3. It leads to increased productivity, for individuals are satisfied that their merit and competence will be properly appreciated and rewarded.(appreciated and rewarded). “ Promote the best main available”. In India: In public companies (sector) elaborate rules exists for regulating seniority of employees in different services cadres. More on seniority (because of political pressure’s). Demotion De promotion with in an organization is known as demotion. It involves a negative change from one job to another that is not better in terms of status and responsibility. The change to the lower job is accompanied by decreased pay and there will be no privileges.




The term demotion refers to an decrease in responsibility and status with any decrease in pay.

What do you meant by transfer or defines the term ‘transfer’? “A transfer involves the shifting of an employee from any job to another without special reference to change responsibility or compensation. ” According to date “Transfer may involve promotion, demotion or no change in status and responsibility”.

What are all the Reasons for transfer: (1) Lack of sufficient no of employees in a particular department. (2) Surplus no of employees. (3) No equality in the department. (4) Rectify wrong placement. (5) Disputes. (6) Adverse effect of specific job. (7) Train different job. (8) Requisition of the employees. (9) Agreement.

TRANSFERS “ A transfer involves the shifting of an employee from one job to another without special reference to changing responsibilities or compensation”

- Yoder

Transfer is a horizontal or lateral movement from one section/ department/ job to another within the plant or to another plant of the same organisation either at the time place or to a different place. Purpose of transfer: 1. To meet resources leveling requirement (By transferring from surplus area to deficient area) 2. To improve effectiveness of organisation (By utilizing available talents by rotating them) 3. To increase versatility of employees (By job rotation they will be exposed to different areas, experience etc.) 4. Training and development 5. To improve human relation. Conflict between two individual in-group can vitiate the healthy working climate. In such cases transfer of such employee may assist improving human relation. 6. To replace an employee It is to replace an employee who was employed for a longtime or those who could not perform due to failing health. 7. To meet employees’ request (Convenience of time or place for him) 8. To utilize services of employees in a better manner. (Increase his efficiency or utilize his special knowledge and skill acquired by him through training and development)




9. To maintain tenure system In civil services and government organizations, there is a regular practice of transfer at periodic intervals.

Explain the kinds or types of transfers. 1) Production transfer: When an employee is transferred keeping in view the needs of production, it is known production transfer. 2) Replacement transfer: When an employee is transferred to a different dept or job to replace the employee of that particular dept or job. 3) Versatility transfer: When an employee transfer from one job to another or from one dept to another, with a purpose to train to him for different jobs. Such transfer aims the efficiency. 4) Shift transfer: When an employee is transferred from one shift to another on the same job. 5) Remedial transfer: When an employee is transferred from one dept to another from one job to another to solve a particular problem, it is known as remedial transfer, eg: transfer because of his dispute with any of his follows. a. Demotion b. Layoff c.

Termination & service

d. Retirement e. Supervision f.


g. Retrenchment.

Lay off: means the refusal of employer to assign the job to an employer to assign the job to an employee because the employer is unable in job. Causes of lay off: Shortage of lay off Power Finance more stock Breakdown Any other incident. Retrenchment: The termination of an employee from his services due to the adverse economic conditions of the org. eg; Surplus employees, Principle is “Lost in first out”.


Halo effect: o

One marked characteristic of the candidate (either favorable or un favorable) may be allowed to dominate the appraisal of his entire personality.

Leniency: o

(3) Projection: o

If he rated by too raters, their rating may be different.

Error projection arises when an interviewer expenses his own liabilities, skills, and values in an applicant.

(4) Stereo typing:



140 o

When the interviewers how already for me some men fall association between a particular trait, culture or communal origin and a particular type of personality. Therefore objectivity is a desirable quality interviewer.

Separation and implication of job change : Means cessation of service with the organization for one or other reason.

Resignation Discharge and dismissal Suspension and retrenchment Lay off.

Rate of absenteeism =

Man-days lost during a certain period/ total man-days during the period x 100.

Labour turn over rate (LTR) = S x 100 S= F During certain period. F=

No. Of workers who left the enterprise

Average no of workers on pay roll.


HRD implies that the organization wants to enhance the overall capabilities of its employees to develop their potential in directions best suited to them.

Basic Concepts Of HRD: The belief that every person has potential which can be utilized for better productivity or services has enabled to establish a process of converting this potential into reality. In this process the human being is continuously helped to acquire knowledge and skill and to change to the organizational culture. Therefore the basic concepts of HRD are: â&#x20AC;˘

To acquire capability to meet present and future job specification.


To develop an organizational climate to bring about team spirit and group dynamism.








There are efforts being made to synchronies three basic elements of HRD:







To fulfill desired objectives. Training and education can be appraised immediately by simple question answer approach but development evaluation needs ability to predict the long term results. A realistic and long-term HRD plan appears to be difficult but if planned properly, funded adequately and supervised minutely, implementation of HRD practice helps the organization to grow fast.

Facts About HRD: It is with belief that under certain circumstances people are capable of improving their capability. It is the process of helping people to acquire competencies. In an organizational context HRD “…is a process by which employees of an organization are helped in a continuous and planned way to acquire or sharpen capabilities. HRD develops an organizational culture in which supervisor-subordinate relationships, team work, collaboration among units are strong and contribute to the professional well being, motivation and pride if employees. Employees are continuously helped to acquire new competencies through a process of planning, feedback, training etc. Why HRD Is Needed? It is required for continuous development of competencies. To avoid a saturation point in terms of growth of an employee by enhancement of competencies. To improve the service and effectiveness of employees.

Benefits Of HRD Unlike education, training in HRD not only develops the competence of the individuals but also develops his/her latent potential for the total effectiveness of the organization. The benefits from HRD are therefore many. Some of them are: It helps employee to diagnose his/her own strengths and weaknesses.

It develops creativity in employees.

It helps employee to develop himself/her in a given organizational climate to improve not only his/her performance but that of the organization. It develops trust and openness amongst employees thus enriches interpersonal relationships. It creates environment for realistic feedback and guidance from superiors



142 . It provides long term & short term development opportunities. It smoothens the career development plans. It helps organizations to use available human resource for future challenging responsibilities after developing them. It enables an overall development of personality of employees and the organizations.

Features Of HRD In An Organization Founded on the belief that people are capable of growth and management has to create an environment of growth. This belief is to be manifested in managerial practices and in the behavior of managers and supervisors who are the key agents of HRD in the organization. For operational purposes large Organizations focus on HRD, generally the areas concern are Recruitment, raining, Appraisal, planning etc.

LEARNING AND DEVELOPMENT Definition of Learning: Any relative permanent change in behavior that occurs as a result of experience. Learning is a kind of action, and it takes place through number of development methods undertaken by the organizations. There are four important points in terms of learning and development. Learning involves a change in behavior and opens a way for development. Any temporary change in behavior due to fatigue or any reason is not a part of learning. Learning is totally based on some form of practice or experience. There must be practice or experience must be reinforced in order for learning to occur The most effective and quick method of Learning is Learning on the job, this is been referred as on the job training. In this method the trainee has direct personal responsibility.

Facts About Learning And Development: Learning if it is adopted to the real needs is enforced it creates a long-term impact. The technique of on the job training is very useful in the case of leaning and Development in teaching skills at the work place or the desk or in the laboratory. The focus is mainly on imparting practical inputs in order to convert it into a more fruitful training.

Characteristics And Principles Of Learning And Development: It requires purposeful activity. It is a Problem solving process. Learning and development go hand in hand. Friendly competition stimulates learning and development..


143 Early Successes increases the chances for effective learning and d3evelopment.

Benefits Of On The Job Training In Order To Highlight The Relevance Of Learning And Development: The trainee learns effectively as he experiences the same problem, which he will be facing on the job. Learns to locate the fault and corrects error. Confidence in speed and senses of productiveness, and gets positive and reinforcive support.

Benefits Of Job Rotation Method In Order To Highlight The Relevance Of Learning And Development. It is a effective method to develop small number of people in various jobs by rotation.

It is mainly used for management development methods where managers are exposed to handle the situation of other departments. Such a exposure gives you the opportunity of acting in a service role with increased knowledge and sensitivity. PERSONAL DEVELOPMENT PLANNING Survival, Growth and Effective existence of an organization require a succession of people to fill various important jobs. Personal Development planning focuses on for main steps Individual Needs Vision linked with needs. Action plan to achieve the vision. Results focusing on maintaining the change. Following are the points to highlight Personal Development Planning: To first of all identify individuals interest, skills and potential. To identify life goals and career goals. To develop a written plan (including schedule to achieve individual goals) Seeking and obtaining the best first. Communicating to management the individual career plan. To seek Counseling from the manager and from the HR organization. To evaluate the internal and external opportunities. To making known yourself and your accomplishments. Advantages Of Personal Development Planning It helps the individual to have the knowledge of various career opportunities. To select the career which is suitable to ones life style. To satisfy individualsâ&#x20AC;&#x2122; esteem needs. To improve the individual employees performance on the job. To increase the level of Job Satisfaction.



UNIT - IV EMPLOYEE COMPENSATION One of the most difficult functions of HRM is that of determining rates of monetary compensation. Not only it is one of the most complex duties, but it is also one of the most significant to both the organisation and the employees.

Wage & salary refers to the establishment & implementation of the sound policies & practices of the employees compensation . It includes such as such areas as job evaluation , surveys of wage & salary, analysis of relevant organizational problems ,development & maintenance of wage structure, profit sharing

& incentives

etc. The basic purpose of wage & salary

administration is to establish & maintain an equitable wage & salary structure .The secondary objectives to establishment & maintenance of an equitable labour –cost structure .The compensation is mainly concerned with the financial aspects of the needs ,motivation & rewards. Managers Must analyse the needs of the employees so that reward can be designed to satisfy some needs.


Compensation: Compensation may be defined” as money received in the performance of work , plus many kinds of benefits & services that organization provides their employees .” Money is included under direct compensation while benefits come under Indirect Compensation. may consist of life ,accident & health insurance ,employer’s contribution to retirement ,pay for vacation or illness . Wages: Wages are defined as the remuneration paid for the services of labour in production, periodically to an employees /worker. These are generally refers to hourly rate or daily rate paid to such groups as production & maintenance employees (Blue Collar).

Salary: Salary on the other hand refers weekly or monthly rates paid to the weekly or monthly rates paid to clerical, administrative & professional employees (White collar workers) AIMS OF COMPENSATION MANAGEMENT As far as the organisation is concerned, employee compensation programs are designed to do three things: To attract capable employees to the organisation To motivate them toward superior performance, and To retain their services over an extended period of time.



The aims of wage and salary administration are numerous and sometimes conflict with each other. The main objectives of wage and salary administration are: 1. To acquire qualified competent personnel: Candidates decide upon their career in a particular organisation mostly on the basis of the maount of remuneration the organisation offers. So the organisation should aim at payment of salaries at that level, where they can attract competent and qualified people. 2. To secure internal and external equity: Internal equity does mean payment of similar wages for similar job within the organisation. External equity implies payment of similar wages to similar jobs in comparable organisations. 3. To retain present employees: The organisation must keep the wage level at the competitive level, in order to prevent such quits. 4. To ensure desired behaviour: Good compensation reinforce desired bahaviour like performance, loyalty, accepting new responsibilities and changes etc. 5. Control costs: To keep labour and administrative costs in line with the ability of the organisation to pay. 6. Comply with Legal regulations: A sound wage and salary system considers the legal challengers imposed by government and ensures the employerâ&#x20AC;&#x2122;s compliance. 7. To pay according to the content and difficulty of the job and in tune with the effort and merit of employees. 8. To facilitate pay roll administration of budgeting and wage and salary control. 9. To simplify collective bargaining procedures and negotiations. 10. To promote organisation feasibility.

PRINICPLES Of WAGE & SALARY ADMINISTRATION There are several principles of wage and salary plans, policies and practices. The important of them are: 1. There should be definite plan to ensure that differences in pay for jobs are based upon difference in job requirements. 2. The general level of wages and salaries should be reasonably in line with that prevailing in the labour market. 3. Wage and salary plans and policies should be sufficiently flexible. 4. Job evaluation must be done scientifically. 5. Wage and salary administration plans must always be consistent with overall organisational plans and programmes. 6. Wage and salary administration plans and programmes should be in conformity with the social and economic objectives of the country like attainment of equality in income distribution and controlling inflationary trends. 7. Wage and salary administraion plans and programmes should be responsive to the changing local and national conditions.



8. These plans should be simplify and expedite other administrative processes.


The organization ability to pay: The first important factor which determines the pay rate is the as the companies with good sales & high profits have the ability to pay higher wages to the employees as compare to any other small scale company .


Supply & Demand Force of labour : The labour market conditions or supply &

demand forces at the national ,regional & local levels because if the demand for certain skills is high & supply is low the price to be paid for these skills will be high & similarly if demand for skill is low & supply of manpower is more than salary paid will be low . 3. Prevailing Market Rate: The next factor is the prevailing market rate or known as going market rate or comparable wage .It includes the competition demand ,then the government laws & judicial decision ,trade union encourages this practice so that people have equal pay ,equal work. 4. The Cost of living: The Cost of living is the usually regarded as automatic minimum pay criterion & it is based on the increase or decrease in an acceptable cost of living index .When the cost of living increases ,workers & trade union demands adjusted wages. 5. The Living wages : It means that the wages


should be adequate to enable

employees to maintain himself & his family at a reasonable level of existence . 6. Productivity : It is the another criteria measured in the terms of output per man hour . Technological improvement, better organization & management better methods of production by labour & management

the development of

,greater skill by labour are

responsible for the increase in productivity . 7. Trade Union Bargaining Power : The trade unions play an important role ,generally the stronger & powerful the trade union, the higher wages, As a strike or threat of strike is the most powerful weapon used by them . 8. Job Requirements : The more difficult a job is more higher is the wages. As the jobs are graded according to the relative skill ,effort ,responsibility & job condition required . 9. Managerial Attitudes : The managerial attitudes plays an imp role like top management desires to improve or maintain morale & to attract high caliber employees to reduce turnover& to provide high living standard . 10. Psychological & Social Factors: These determine in a significant measure how hard a person will work for the compensation received or what pressure he will exert for his hike in compensation .Wages as a measure of success in life ,people may feel secure or have an inferiority complex .


147 Incentives WAGE CONCEPTS

Minimum Wage: must provide not merely for the bare sustenance of life but for the preservation of the efficiency of the workers by providing some measure of education, medical requirements and amenities. This is the wage established according to the provisions of the law. Living Wage: It represents a standard of living, which provides not merely for bare physical sustenance but decency, protection against illness, requirements of essential social needs and some insurance against important misfortunes;

Fair Wage: The wage, which is decided according to the productive contribution of the work done by him. Methods of wage payment Time wage: Wages are paid on the basis of time spent Wages = number of days worked x rates per day Wages = number of hours worked x rate per hour. Merits: Simplest method Earnings of workers are regular The quality of work can be kept high DEMERITS No distinction between efficient and inefficient workers. Guaranteed remuneration makes workers indifferent Productivity of labour becomes low unless close supervision is used Piece rate: Wages are paid on the basis of output and quality of work done. Wages = Number of units produced x rater per unit Merits: It works as an incentive to produce more Records are related to efforts. Management can distinguish efficient and inefficient DEMERITS Earnings of the workers are not assured In order to maximize the wage they excessively work which spoils their health. Creates jealous between efficient and inefficient worker. Balance or debt method:



It is the combination of time and piece wage system. Workers are guaranteed a time rate with alternative piece rage. If wages are calculated at piece rate and exceeds tine rate, the workers get credit. On the other hand if time wage exceeds piece wage the worker is paid time wage and the deficit is carried forward as debt to be recommended in future.

Incentive plan: Individual incentive: a. Time based Halsey plan: under this minimum wage is guaranteed. A standard time is fixed to the worker performs his job is less than standard time, he is given bonus. Total wages = T X R + 50% (S-T) X R MERITS simple to understand employers and employees get equal benefit Guaranteed minimum wage DEMERITS Standards based on past performance ;may not be scientific Workers get half of the benefits for efficiency Much clerical work is involved Rowan plan: Under this scheme, time saved is expressed as a percentage of time allowed and the normal rate is inflated by this percentage. Bonus = time taken / time allowed x time saved x HR Merits: There is a guarantee of maximum work Since bonus increases at a decreasing rate at higher levels of efficiency, workers are not induced to such through the work EMERSONâ&#x20AC;&#x2122;S EFFICIENCY PLAN A minimum wage rate for workers is guaranteed irrespective of their performance. The worker is paid hourly rate when his performance is below 66.71 efficiency from 66.71 up to 100% efficiency the time he actually works plus an increasing bonus according to the degree of efficiency on the bonus of step bonus rates. Above 100% efficiency, an additional bonus of one percent of the hourly rate is paid for each one percent increase in efficiency Merits: A minimum wage rate is guaranteed Since bonus varies with the efficiency it acts as a motivation for the efficient worker. Demerits.


149 Little incentive after 100% efficiency level A great deal of clerical work is involved.

Bedeaux plan: Here the basic unit of time is the minute termed as B. a job should be complete in so many minutes and if the worker completes the job before the standard time then the bonus is given to him according to the number of points saved Merits: It can be applied to any kind of job When management establishes a carefully amended performance standard. Bedeaux point system of incentive wage payment become successful in motivating the employer towards better performance. Output based TAYLORâ&#x20AC;&#x2122;S PLAN The scheme was introduced by F.W.Taylor with 2 objects a. to give adequate incentive to worker and induce them to produce up to their full capacity. b. To provide the workers with 2 different types of piece rates. One is used for worker whose production is lower than the minimum prescribed production and a higher rate is paid to workers whose production is much above the standard level Benefits Provides strong incentive to efficient and hard working employees Inefficient workers are penalized Worker do not share reward with the foreman Demerits: No guarantee of minimum wage. It is harsh for worker who is below standard 2. Merrich multiple piece rate plans: up to 83.3% efficiency â&#x20AC;&#x201C; normal rate from 83.3% to 100% - 10% above normal rate above 100%

- 30% above the normal rate

Merits: less harsh for beginners it is more flexible Demerits: minimum wage is not guaranteed. 3. Ganttâ&#x20AC;&#x2122;s task and bonus plan: under this there is guaranteed minimum wage to every worker. If the worker achieves or excess, he gets extra wage varying between 25% to 50% of the hourly rate for the time



allowed for the tasks. But if a worker fails to complete the tasks within the standard time, he receives only the wages of actual time spent at the specified rate. II Group Incentive Scheme: 1. Priest Man Bonus Plan: it is the most applied method â&#x20AC;&#x201C; under these methods a committee of workers and management, sets the standard of performance. A minimum wage is guaranteed to each worker. The group gets bonus when actual output exceeds the standard,. The supervisor also gets benefit 2. Scalar Plan it is plant wide scheme designed to involve workers in making suggestions for reducing the cost of operations and improving work methods by showing the gain of increased productivity. This plan has 2 basic features. a. financial incentives are used to increase productivity and reduce cost. PAY FOR PERFORMANCE Pay for performance system involves rewarding the employees according to their performance, or results achieved or contribution to organizationâ&#x20AC;&#x2122;s performance as individuals or as a part of a group. It involves a shift in focus from remuneration models based on the worth of jobs and employee skills to their performance. Designing a performance linked reward systems is conditioned by a variety of factors such as the nature of business, type of technology, the attitude of unions and human resource management strategies of the organization. This system reduces labour cost, result in increase in real wages and motivate performance. They provide a method of absorbing cost escalation on account of pay increases and thus help in sustaining competitiveness of the organization.

Forms and Choice of Performance Linked Reward System There are several types of Performance linked reward schemes. Generally these are designed to share with or distribute to employees as individuals groups or a collectivity productivity gains, profit improvement or financial results of enterprise performance. Such schemes fall into the broad categories: 1. Schemes based on individual or small group performance including piece rates, traditional merit pay and sales commission. 2. Incentive schemes which may relate pay to profits on the basis of pre determined formula. 3. Bonus schemes based on contribution to productivity and profitability according to a predetermined formula with gains sometimes distributed among the individual employees on the basis of merit rating. 4. Productivity bargaining. 5. Employee strike options plan (ESOP) 6. Competency based pay. 1. Merit Incentive Pay



The merit incentive pay scheme provides another method of recognizing and rewarding differential performance. This method could particularly be suitable for office staff. The scheme essentially involves the following steps: a) The determination of result oriented merit rating procedures, b) The identification of job and their relative importance c) The formulation of scale of reward and d) The communication of the basis of monetary reward.

Under a system of merit increments, there is no prompt relationship between reward and effort. The quantum of reward at a point of time will be considered inadequate. Additional cost on the form of enhanced allowances is built for the company on permanent basis. Employees continue to benefit from their best performance even if it remains below standard in the future. Employees getting merit awards cannot visualize a proportionate relationship between their performance and rewards. The basis of determining the quantum cannot be explained to employees who are not given such awards. This may evoke jealousy and friction and may thus jeopardize cooperation and goodwill. 2. Incentive schemes Output based incentive scheme are appropriate where tasks are repetitive and measurable These involve the following steps: 1. Selecting the objectives 2. Determining the parameters of performance in accordance with the objective 3. Determining the norms or base values or benchmark values for each parameter 4. Determining performance reward relationship 5. Fixing the relative importance of the selected parameters that is, their weightings. 6. Designing information and procedure formats. 7. Determining the maximum payable incentive amount (incentive opportunity) and payment period. 8. Formulating a communication and review scheme These are, however, not suitable for technology and service activities, which require information sharing problem solving and team work. Productivity gain or profit sharing or employee stock option plan (ESOP) may be suitable types for such activities 3. Group incentive and productivity gain sharing. Under the productivity gain sharing schemes productivity gains are shared in accordance to an agreed pre-determined formula. Profit sharing gives a share of profit. Sometimes, the quantum of bonus is determined on the basis of profit as well as productivity improvements according to pre determined benchmark value for each of them.


152 Productivity bargaining Productivity bargaining can provide yet another method of improving productivity and

linking wage increase to such improvements. Productivity bargaining, however dose not mean an incentive scheme or wage increase in return for assurance and promise from union in return for achieving production targets. This method implies: a) A detailed analysis of the firms operations b) The identification of cost reduction possibilities c)

Estimation of savings in cost

d) The development of a system of indexing wages increase with cost reduction actually realized over time.

The climate for productivity bargaining has never been more favorable than now it is for managements to take initiative and build this approach in their collective bargaining relationship with unions.

Long-term incentive (ESOP) Long term incentive in the form of employee stock options schemes are operated both to improve long-term incentives and to reduce fixed cost. ESOP envisages employee participation in and ownership of company equity. This plan is intended to provide an incentive to the employees to improve the all round performance and growth of the company and share its prosperity. The plan usually involves allotments of equity shares according to laid down procedure and subject to governmental regulations, laws and rules. The employees benefit in the form of enhanced market value of his share and capital gains, which in turn depend on company and employee performance .several software and high tech organization such as infosys have conceived and designed such plans . Competency based pay The competency is a critical determinant of performance. Therefore there is an increasing interest in offering monetary incentive for acquiring competencies required for higher performance on the present job or the next job. Such competency may for instance include values, attitude and behavioral characteristics, which influence performance. In designing a performance linked reward scheme, choice of an appropriate scheme should be considered as critical. The choice will be determined by a Varity of factors such as nature of the organization, the nature of technology, the nature of profits the nature of markets, the human resource strategy and business objective. For reviewing an incentive scheme and designing an appropriate scheme. ISSUES AND TRENDS

1. Level of education 2. Trade union



3. Organization culture 4. Package of monetary and non monetary incentives 5. Rewarding good performance 6. Performance pay and performance management 7. Caveats ELEMENTS/INGREDIENTS OF A GOOD WAGE PLAN Basic elements of good wage plan are as follows: 1. Should be easily understandable; 2. Easy Computation; 3. Capable of motivating Employees; 4. Should provide remuneration as soon as employees have made efforts; 5.Should be relatively stable;

EFFECTIVE INCENTIVE PLAN COMPONENTS OF THE COMPENSATION SYSTEM Jobs offered by an organization vary in terms of their values. Job value is ascertained by job evaluation. Jon evaluation is a systematic method of appraising the value of each job in relation to other jobs in an organization. We have already discussed the job evaluation method of in the previous Unit on job evaluation. Once all the jobs are assigned values, then these are placed in a grade, or say, a rate per job. These grades are arranged in an hierarchical order starting with lower to higher jobs. Thus, job and salary structure consist of the various salary grades and their different levels of single jobs or group of jobs. Basic Wage/Salary; Dearness Allowance; House Rent Allowance; City Compensatory Allowance; Conveyance Allowance; Leave Travel Concession; Education Subsidy; Bonus (Profit bonus /Incentive Bonus); Medical; Provident Fund; Pension; Overtime; Fringe benefits; Social security benefits. In case of executives, various reimbursements are also made as part of their salaries. These are:


154 Company leased accommodation; Servant salary reimbursement; Company maintained car; Driver salary reimbursement; House maintenance reimbursement; Children education; Scholarship to the children; Electricity, water, gas charges reimbursement; Insurance premium; Hospitalization; Office maintenance at residence; Household furniture and appliances; Holiday homes; Interest free loans for house building & many more.

In short, the main objective of wage and salary administration is to establish and maintain an equitable wage and salary system to obtain, retain, and motivate people to required skill in an organization. The whole administration of wage and salary payment is based upon three principles, namely, external equity, internal equity and individual equity.


Management is concerned with attracting & keeping employees, whose performance meets at least minimum levels of acceptability ,& at keeping absenteeism & turnover to tolerable levels .The provision of benefits & services are important in maintaining the employees & reducing the turnover & absenteeism low .

The financial incentives are paid to specific employees whose performance whose work is above standard. On the other hand the employees benefits & services are provided to all the employees based on their membership in the organization.

According to the Employee Federation of India has defined Fringe Benefits “Fringe Benefits includes payments for non working time ,profits & bonus ,legally sanctioned payments on social security schemes ,worker’s compensation ,welfare & contribution made by the workers under such voluntary schemes for the post retirement ,medical ,educational ,cultural & recreational needs of the workmen.”

According to the Cockman “ Those benefits which are provided by the employer to or for the benefit of the employees & which are not in the form of wages ,salaries & time related payements.” Features of Fringe Benefits



1) Wages are directly related to the work done & paid regularly usually weekly monthly & benefits which a worker enjoys in addition to the wages or salary he receives. 2) Benefits are not given to workers for any specific jobs they have performed but are offered to them to stimulate their interest in their work & to make their job more attractive & productive for them. 3) Fringe represents a labour cost for the employer , it is basically an expenditure incurred 4)

Fringe is never a direct reward geared to the output, effort for merit of an employees not on the basis of hard work or long hours of work but on the basis of length of services ,his sickness ,sex the hazard of life .

5) The fringe benefit is enjoyed by all . 6) Fringe benefit must constitute a positive cost to the employer & should be incurred to finance an employee benefit.

OBJECTIVES OF FRINGE BENEFITS To create & improve sound industrial relations. To Boost up employee morale To motivate the employees by identifying & satisfying their unsatisfied needs. To provide qualitative work environment To protect health & safety of the employees To promote employees welfare by providing welfare measures like recreation facilities.

COVERAGE/SCOPE OF BENEFITS 1) Employee Security Payments: (a) Employers Contribution stipulated in legal enactment: old age, survivor, disability health (b) Payments under the workmenâ&#x20AC;&#x2122;s compensation Act. (c) Supplemental unemployment benefits (d) Accident insurance (e) Pensions (f)

Contribution to the saving plans & health & welfare benefits.

2) Payment for the time not worked: (a) Rest Period: Among the office jobs the breaks popularly known as rest break or coffee break are allowed during the day to the workers (b) Holidays: Holidays which includes Christmas ,New Years, Holi ,Diwali on which the employees have to be paid & they do not have to work. (c) Vacation : Paid vacations vary from 15 days to 1month in a year . (d) Sick Leave : This is provided to the employees when is out on illness (e) Severance Pay : This provides one time payment to an employee when he is terminated


156 (f)

Leave of Absence: These are generally educational leave provided to managers or management trainees during training period .

(g) Pension Programmes (h) Insurance

( C) Bonus & Awards :These consist of financial amenities & advantages as holidays ,over time & shift premium ,attendance bonus, Diwali bonus etc.

EMPLOYEES SERVICES In addition to the above fringe benefits, organization provides a wealth


service that

employees find desirable .These services are usually provided by the organization at no cost to the employees .These services are provided at the discretion of the management & are generally are concern to trade union.

These services mainly include:

1) Services related to the type of work performed, including subsidies for the purchase & upkeep clothing, uniforms 2) Eating facilities cafeteria, lunch rooms, canteens, lunch rooms 3) Transportation facilities including parking & bus services 4) Childcare facilities, comprising nurseries, day care centers for children. 5) Housing services including company owned housing projects. 6) Financial & legal services including sponsoring of loan funds. 7) Recreational social & cultural programmes including athletics, beauty, social clubs , parties ,picnics . 8) Educational services 9) Medical services 10) Flexitime

POTENTIAL APPRAISAL Evaluating what a person can perform or do is called ‘potential appraisal or evaluation.’ Potential refers to the abilities present but not currently utilized. It is a latent capacity in a person to discharge a responsibility. “People are like icebergs. What you see above the surface (performance) is only a small part. A large part of the attributes needed to perform excellently in future job, which I call potential is not immediately visible. It is hidden below surface.” Potential represents latent capacities and qualities in a person, which manifest while performing the job.



The objectives of potential evaluation are to: 1. Promote an employee to higher levels of jobs involving higher order or responsibility, which the employee can effectively discharge without being over burden and stretched. 2. Assist the organization to allocate jobs among employees as per their capabilities so that organizational responsibilities are discharged effectively.

A potential employee is characterized by the following attributes: 1. Ability to foresee future opportunities. 2. Consistency in approach and performance. 3. Responsive to condition whatever comes in the way. 4. Person with high level of integrity. 5. Broader vision and micro perception.

HOW TO EVALUATE EMPLOYEE POTENTIAL? The potential of employees can be evaluated by following the following steps: 1. Determination of role dimension: the process of potential evaluation starts with determining the role dimension of the employee whose potential is to be evaluated. Job description and job specification help determine the role dimensions. The former provides information about the responsibilities involved in a job, while the later provides information on attributes the jobholder should possess. 2. Determination of mechanism: having determined the role dimension a mechanism to evaluate these attributes in an employee is evolved. Obviously, the mechanism should be appropriate to appraise the potential of employee by a designated appraiser. 3. Linking potential with other elements: in order to evaluate potential in a meaningful manner, other elements of human recourse management such as feedback, counseling, training, job rotation, etc. should also be lined with it. motivation in practice - introduction to financial incentives •

Although some theorists like Herzberg believe that money is not a positive motivator (although lack of it can de-motivate), pay systems are designed to motivate employees.

The scientific / Theory X approach, in particular, argues that workers respond to financial rewards.

Getting employee pay right (often referred to as the “remuneration package”) is a crucial task for a business.

Why is pay important? • It is an important cost for a business (in some “labour-intensive” businesses, payroll costs are over 50% of total costs) • People feel strongly about it. Pay helps to satisfy many needs (e.g. security, esteem needs, resources to pursue self-actualisation)



• Pay is the subject of much important business legislation (e.g. national minimum wage; equal opportunities legislation) • It helps attract reliable employees with the skills the business needs for success • Pay also helps retain employees – rather than them leave and perhaps join a competitor • For most employees, the remuneration package is the most important part of a job – and certainly the most visible part of any job offer. There are many methods of financial reward (these are covered in separate revision notes) • Time-rate pay • Piece-rate pay • Commission • Performance-related pay • Bonuses • Shares and options • Benefits in kind (“fringe benefits”) • Pensions Because pay is a complex issue, there are several ways in which businesses determine how much to pay, and which methods to use: • Job evaluation / content; this is usually the most important factor. What is involved in the job being paid? How does it compare with similar jobs? • Fairness – pay needs to be perceived and be seen to match the level of work • Negotiated pay rates – the rate of pay may have been determined elsewhere and the business needs to ensure that it complies with these rates. • Market rates – another important influence – particularly where there is a standard pattern of supply and demand in the relevant labour market. If a business tries to pay below the “market rate” then it will probably have difficulty in recruiting and retaining suitable staff • Individual performance – increasingly, businesses include an element of “performancerelated” reward in their pay structures. However, it is important to remember that pay is only one element of motivation and will work best where management also give attention to: • Developing good management and supervision; • Designing jobs and organising work groups to make them as satisfying as possible; • Providing feedback to staff about their performance and training and development; • Making effective arrangements for communications and consultation.


159 motivation in practice - time rate pay

Time rates are used when employees are paid for the amount of time they spend at work. This is the most common method of payment in the UK.

The usual form of time rate is the weekly wage or monthly salary. Usually the time rate is fixed in relation to a standard working week (e.g. 35 hours per week).

The employment contract for a time-rate employee will also stipulate the amount of paid leave that the employee can take each year (e.g. 5 weeks paid holiday).

Time worked over this standard is known as overtime. Overtime is generally paid at a higher rate than the standard time-rate – reflecting the element of sacrifice by an employee. However, many employees who are paid a monthly salary do not get paid overtime. This is usually the case for managerial positions where it is generally accepted that the hours worked need to be sufficient to fulfil the role required.

The main advantages of time-rate pay are: • Time rates are simple for a business to calculate and administer • They are suitable for businesses that wish to employ staff to provide general roles (e.g. financial management, administration, maintenance) where employee productivity is not easy to measure • It is easy to understand from an employee’s perspective • The employee can budget personal finance with some certainty • Makes it easier for the employer to plan and budget for employee costs (e.g. payroll costs will be a function of overall headcount rather than estimated output) The main disadvantages of time-rate pay are: • Does little to encourage greater productivity – there is no incentive to achieve greater output • Time-rate payroll costs have a tendency to creep upwards (e.g. due to inflation-related pay rises and employee promotion. motivation in practice - commission •

Commission is a payment made to employees based on the value of sales achieved. It can form all or part of a pay package. Commission is, therefore, a form of “incentive pay” (see also performance-related pay, bonuses).

Commission, like piece-rates, is a reward for the quantity or value of work achieved. In most cases, the employee is paid a flat percentage of the value of the good or service that is sold.

The rate of commission depends on the selling price and the amount of effort required in making the sale.



For example, commission rates could range from 5% where the product sells easily (e.g. household goods sold door-to-door) to 30% where the effort is substantial.

Advantages of Commission •

The main advantage of commission from an employee’s point-of-view is that it enables high performing sales people to earn huge amounts.

The main advantage to the employer is that the payroll cost is related to the value of business achieved rather than just the amount produced. After all, businesses exist to sell goods and services for profit – not just to make things (piece rates simply reward amounts produced, not sold).

Disadvantages of Commission There are several drawbacks with using commission payments: •

• Sales people may cut corners to make sales (e.g. not explain the product or service in enough detail to potential customers). This was a major problem in the recent pensions mis-selling scandal in the UK

• High commission earnings enjoyed by some of the sales team may be resented elsewhere in the business – particularly if the sales actually depend on a team effort

• It is difficult to change what proves to be an over-generous commission structure without upsetting and demoralising the sales team

• Once commission payments have been made, the sales force may lose some motivation until they begin to focus on the next payment (which might be up to 12 months away)

As a result of the above disadvantages, most businesses that use commission as an incentive payment method offer a basic pay plus a moderate commission level. In this way, if sales and profits justify the change, the commission rate can always be increased slightly.

Recent research suggests that the use of commission is reducing in comparison with the growth of other incentive payment methods. motivation in practice - national minimum wage

Many businesses in the UK, including large numbers of small businesses, are affected by the national minimum wage. It is worth understanding how this works since it may be relevant in a business studies case study exam.

Who the Minimum Wage Applies To •

The national minimum wage in the UK is currently £4.20 for workers aged over 21 and £3.60 for 18 to 21 year olds.

These rates will rise to £4.50 and £3.80 respectively from October 2003; with a further proposed rise to £4.85 and £4.10 from October 2004. There is also a minimum training wage for new employees over 21 of £3.60 an hour, but this wage applies only to workers doing accredited training and for a maximum of 6 months. A worker's hourly rate of pay may include such payments as bonuses and performance-related pay.



There is no national minimum wage for workers aged under 18. Other exemptions from the minimum wage are the self-employed, volunteers, apprentices, members of the armed services, and people working as part of a family.

What Employers Have to Do •

Employers have to keep records that show that they are paying the national minimum wage, although it is up to an employer what form these records take.

Employees have a right to see their pay records and legal rights to the national minimum wage.

The Inland Revenue enforces the legislation, and employers can be taken to an employment tribunal or to court if they fail to pay the minimum wage. There are financial penalties for failure to comply with national minimum wage legislation.

Employers found not to be paying at least the minimum wage may be served an enforcement notice ordering them to make minimum wage payments and refund any underpayment. If this notice is ignored employers may face a penalty notice and a fine of £7.40 per worker for each day they do not comply. motivation in practice - job rotation What is Job Rotation? •

Job rotation involves the movement of employees through a range of jobs in order to increase interest and motivation.

Job rotation can improve “multi-skilling” but also involves the need for greater training.

In a sense, job rotation is similar to job enlargement. This approach widens the activities of a worker by switching him or her around a range of work.

For example, an administrative employee might spend part of the week looking after the reception area of a business, dealing with customers and enquiries. Some time might then be spent manning the company telephone switchboard and then inputting data onto a database.

Job rotation may offer the advantage of making it easier to cover for absent colleagues, but it may also reduce' productivity as workers are initially unfamiliar with a new task.

Why is Job Rotation Important? Job rotation is seen as a possible solution to two significant challenges faced by business: (1) Skills shortages and skills gaps, and (2) Employee motivation •

Skills shortages occur when there is a lack of skilled individuals in the workforce.

Skills gaps occur when there is a lack of skills in a company’s existing workforce which may still be found in the labour force as a whole.



According to the Treasury and DfES, both skills shortages and gaps are major problems acting as major barriers to economic growth and the reduction in long-term unemployment in the UK. motivation in practice - structuring the pay package

With so many methods of pay available, how should a business decide to structure the pay package it offers to employees, and what rate of pay should it use?

Start with the “Market Rate” •

The starting point is usually to find out what the “market rate” is. Paying the market rate involves careful job evaluation (it helps to know what is being compared to what!).

Factors that help determine the market rate for a job include: • Whether the skills that are required are widely available • The overall level of unemployment in the employment “catchment area” • Whether the job requires specialised (or even highly specialised) skills There are several ways in which a business can obtain data on market rates: • Local employment agencies • Job centres • Job adverts in national newspapers of specialist publications (e.g. professional journals) • Commission (or contribute towards) a specific salary survey in the industry More or Less? •

The next question is – should the business pay MORE or LESS than the market rate? Factors to consider here include:

• Does the business need above-average employees (e.g. salesmen with an industry reputation for being strong performers) • Does the business need trained employees or is it prepared to invest in training beginners? • Are the skills wanted by the business needed urgently (in which case – the business would probably want to pay more) • Do factors affecting the mobility of labour need to be addressed – e.g. are there transport problems that need to be solved (e.g. pay for a rail season ticket) or relocation allowances to be offered to encourage new employees to move home?

Structure The third important question is how to structure the remuneration package. •

• Should employees be paid on the basis of time spent working (e.g. time-rates) or the amount they produce (e.g. piece rates) or some other measure of performance?

• Should the remuneration package be a combination of approaches (e.g. some basic pay per month + a commission-related incentive)?



• What kind of remuneration package is used by competitors - this may provide a useful guide as to how to structure the package (and it may also influence what employees expect)

In deciding the answers to these questions, a business should try to construct a pay structure that is simple (to help employees understand it), logical and fair motivation in practice - piece rate pay

Piece-rate pay gives a payment for each item produced – it is therefore the easiest way for a business to ensure that employees are paid for the amount of work they do. Piecerate pay is also sometimes referred to as a “payment by results system”.

Piece-rate pay encourages effort, but, it is argued, often at the expense of quality. From the employee’s perspective, there are some problems. What happens if production machinery breaks down? What happens if there is a problem with the delivery of raw materials that slows production? These factors are outside of the employee’s control – but could potentially affect their pay.

The answer to these problems is that piece-rate pay systems tend, in reality, to have two elements: • A basic pay element – this is fixed (time-based) • An output-related element (piece-rate). Often the piece-rate element is only triggered by the business exceeding a target output in a defined period of time Case study: Piece-rate pay in practice in the UK – Home-based workers •

In the UK many thousands of people engage in what is known as “home-based work”. This refers to work:

• In the home, or near the home in premises that are not those of an employer • For a cash income (i.e. not unpaid household work)

Whilst there are many successful business people and well-paid professionals working from home, the use of piece-rate pay is focused is on those at the other end of the scale – home-based workers, mainly women, who earn only a subsistence level income.

Subsistence level home-based workers fall into two broad categories: •

• Those who work for an employer, intermediary or subcontractor for a piece-rate, who are not responsible for designing or marketing the product, but simply contribute their labour. These workers are often called subcontracted or dependent home-workers

• Workers who design and market their own products, but who cannot be considered to be running small businesses - known as own-account workers.

The majority of home-based workers are women who do home based work in order to combine earning cash with other responsibilities, such as child-care and household



management. Many earn well below the local minimum wage or average earnings. Most dependent workers work informally, without a proper employment contract. They are rarely organised or supported by formal trade ety motivation in practice - performance related pay Performance-related pay is a financial reward to employees whose work is: • Considered to have reached a required standard, and/or • Is above average •

Performance related pay is generally used where employee performance cannot be appropriately measured in terms of output produced or sales achieved. Like piece-rates and commission, performance related pay is a form of incentive pay.

Whilst the detail of performance-related schemes varies from business to business, there are several common features:

• Individual performance is reviewed regularly (usually once per year) against agreed objectives or performance standards. This is the performance appraisal.

• At the end of the appraisal, employees are categorised into performance groups – which determine what the reward will be (if any)

• The method of reward will vary, but traditionally it involves a cash bonus and/or increase in wage rate or salary.

Performance-related pay has grown widely in recent years – particularly in the public

sector. This is part of a movement towards rewarding individual performance which reflects individual circumstances. According the Equal Opportunities Commission, a well-designed performance-related pay scheme would have the following elements: • Objective setting • Communication and understanding of objectives • Consideration of performance against objectives • Translation of evaluation into performance rating • A link between ratings and the determination of pay • A separate appeals procedure Disadvantages of Performance Related Pay There are several problems with performance-related pay: •

• There may be disputes about how performance is measured and whether an employee has done enough to be rewarded

• Rewarding employees individually does very little to encourage teamwork

• It may encourage unhealthy rivalry between managers



• There is much doubt about whether performance-related pay actually does anything to motivate employees. This may be because the performance element is usually only a small percentage of total pay

Employee Welfare LABOUR WELFARE AND SOCIAL SECURITY Two inevitable consequences of the modern factory system have been that: 1.

It has made workers powerless. They have lost all control over the process and the product of their labour. All decisions concerning production are made by the ruling entrepreneur; and


It has made jobs meaningless. Jobs have become so much specialized that they require very little skill on workers’ part and give them no opportunity to demonstrate all the skills that they possess. They experience their jobs as intrinsically dissatisfying and monotonous.

These conditions when coupled with exploitative management practices alienate the workers and lead them to revolt against the existing social norms. Their self-interest and careerism increase and their dedication to work declines.

This has made the task of a

personnel manager very challenging by bringing into sharp focus the need for labour welfare and social security measures. These measures operate to neutralize the harmful effects of large-scale industrialization and urbanization. They enable the workers to live a richer and more satisfactory life. They also benefit the employer in several ways many of which are not subject to quantification. Among these benefits are: 1.

More effective recruitment (because these benefit add to job appeal).


Improved morale and loyalty.


Lower turnover and absenteeism


Good industrial relations


Reduced influence of union


Reduced threat of further government intervention It is doubtful whether labour welfare and social security programmes motivate

employees to increased productivity.

According to the two-factor theory propounded by

Herzberg the factors which motivate workers to produce more are increased responsibility, advancement, growth, recognition, achievement and the work itself.

Labour welfare and

social security benefits do not fall under any of these factors. There is evidence to show that after sometime these benefits, not being dependent on production or performance, are taken for granted by the workers. Labour welfare and social security measures are also known as employee service programmes or fringe benefits. Employees enjoy these services (such as canteens, crèches, education and recreation facilities, etc.) without any reference to the specific work done by them. In the case of economic benefits (such as disablement compensation for employment



injury, retirement benefits, medical and maternity benefits, etc.) their amount is not predetermined and can be ascertained only after the event. LABOUR WELFARE The Oxford dictionary defines labour welfare as “efforts to make life worth living for workmen”. These efforts have their origin either in some statute formed by the State or in some local custom or in a collective agreement or in the employer’s own initiative.


employer may voluntarily initiate labour welfare measures in his undertaking with the following objectives: 1.

To give expression to philanthropic and paternalistic feelings


To win over employees’ loyalty and increase their morale.


To combat trade unionism and socialist ideas.


To build up stable labour force, to reduce labour turnover and absenteeism.


To develop efficiency and productivity among workers.


To save oneself from heavy taxes on surplus profits.


To earn goodwill and enhance public image.


To reduce the threat of further.


To make recruitment more effective (because these benefits add to job appeal)

It is, however, difficult to precisely define the scope of labour welfare efforts. Different writers have defined it in different ways. Some writers say that only voluntary efforts on the part of employers to improve the conditions of employment in their factories form the scope of labour welfare efforts. Some others say it includes not only voluntary efforts of the employer but also the minimum standards of hygiene and safety laid down in general legislation.

Principles of Labour Welfare Services Following are generally given as the principles to be followed in setting up a labour welfare services: 1.

The Service should Satisfy Real Needs of the Workers: This means that the manager must first determine what the employee’s real needs are with the active participation of workers. In one case, a company manager who had a bias for sports purchased all sports facilities, and hired a sports director without consulting workers. But when the whistle was blown to play the ball, nobody wanted to play.


The Service should be Such as can be Handled by Cafetaria Approach: Due to the differences in sex, age, marital status, number of children, type of job and the income level of employees there are large differences in their choice of a particular benefit. Hence, it is suggested that a package total value of benefits should be left to the choice of each individual employee. This is known as the ‘cafetaria’ approach. Such an approach individualizes the benefit system though it may be difficult to operate and administer.




The Employer should not Assume a Benevolent Posture.


The cost of the service should be calculable and its financing established on a sound basis.


There should be periodical assessment or evaluation of the service and necessary timely improvement on the basis of feedback.

Types of Labour Welfare Services We may classify all labour welfare services two heads: intramural and extramural. Intramural services are those which are provided within the factory (such as safety, health and counseling services). Extramural are those which are provided outside the factory (such as education, housing, transport, recreation, etc.) We are describing below three important welfare services, viz., safety, health and counseling.

SAFETY AND HEALTH Safety Service Prevention of accidents is an objective which requires no explanation. This is one area in which there is complete identity of employer employee interests â&#x20AC;&#x201C; the employee does not want to be injured and the employer does not wan to incur the cost of injuring him. The cost of accidents are enormous in suffering to the injured, in reduction or loss of earnings, in disabilities and incapacities which afflict those involved and in compensation, insurance and legal costs, in lost time, filling in reports and attending to enquires, and in spoilage of materials, equipment and tools to management. According to and I.L.O. report, despite progress in recent years, the price for livelihood paid in lives, limbs and health remains unbelievably high. About 9 million persons were injured in 1983 as results of on-thejob accidents in 64 countries â&#x20AC;&#x201C; 24,000 of these injuries were fatal. The situation, the report says, is worse in the third world than in the industrialized West. Increasingly new risks are added to the old ones. Human beings are exposed to more and more chemical substances and exposure limits have been adopted for only a fraction of them and that too in a limited number of countries. As regards multinational enterprises (which are the major employers with some 44 million people on their payrolls) the report observes that these enterprises have better safety and health performance at home than in their subsidiaries in developing countries. But this is due to lack of observance of safety and health instructions by local workers. Accidents are the consequence of two basic factors:

technical and human.

Technical factors include all engineering deficiencies related to plant, tools, material and general work environment. Thus, for example, improper lighting, inadequate ventilation, poor machine guarding and careless housekeeping are some hazards which may cause accidents. Human factors include all unsafe acts on the part of employees. An unsafe act is usually the result of carelessness. In some cases it may be deliberate also. In most instances carlines can be attributed to the entail condition f the employee.

For example, an employee



emotionally upset, worried or disturbed is very often careless.

A constantly harassed

individual with home worries and a nagging wife is the sort of person likely to have an accident.

Young and new employees, because of their difficulty in adjusting to the work

situation and to life in general, also have many more accident attention to what they are doing. A fatigue increases during the work session, the liability of having an accident raises. Intake of liquor tends to destroy perception and judgement and slows up reaction.. Many accidents lead to further accidents as the behaviour of the work group becomes disrupted by their occurrence and the worry that is generated by them. Underlying the spate of accidents is an uneasy sense of insecurity, loss of status, maladjustment and frustration. In short, the work group becomes more and more demoralized and ill-disciplined.



UNIT â&#x20AC;&#x201C; V Industrial Relations Task is a work that an employee is expected to do. Several tasks constitute a job. When we describe task here, we keep the job in mind because an employee holds a job and through that he or she discharges tasks associated with it. Task has implications on employee motivation and satisfaction. Several job characteristics such as skills required, task significance, autonomy and feedback of results have motivational effects. In fact, impact of job on employee motivation is so significant that Herzberg advocated the concept of job enrichment.

It is the leader who matters in any functional area of business. HRM is no exception. Leader must orchestrate the distinctive skills, experience, personalities and motives of employees. A leader provides direction, encouragement and authority to evoke desired behavior. A leader chooses right people and motives them to consistently strive towards making them overreach themselves. Leadership involves catalyzing the learning process among followers, as well as creating the environment that contributes to improving performance. The leader is an important source of

knowledge about the tasks, the organisation and the HRM polices,

programs and goals.


Unionization as an external factor was examined earlier. The same has been included here as an internal environment. This is justified because a firmâ&#x20AC;&#x2122;s personnel activities will be influenced by its own union(s) as well as the unions of other plants. A trade union may be understood as an association of workers or management formed to protect their own individual interests. The role of a union is too well known, not needing any elaboration here. All HR activities-recruitment, selection, training, compensation, IR and separation-are carried out in consultation with union leaders. The role of unions becomes pronounced when a new wage agreement needs to be signed. General y, a wage agreement has a life of three years. After the expiry of one agreement, a new one has to be reached.




INDUSTRIAL RELATIONS Meaning Broadly, the term â&#x20AC;&#x2DC;Industrial Relationsâ&#x20AC;&#x2122; is used to denote the collective relationship between management, employees and government in any industrial or non-industrial organisation. Individual relationships of workers with their management are thus excluded from the scope of industrial relations and form part of personnel management.

Approaches to Industrial Relations There are 3 important approaches to Industrial Relations; each approach looks at the term differently. These approaches are: (a) Systems approach. (b) Pluralist approach and (c) Marxist approach

Systems Approach John Dunlop, who is regarded as the Father of this approach, considers industrial relations as a distinctive sub-system of society consisting of 3 principal actors, viz., managers, workers and government agencies. These actors, through their interactions, produce a web a rules and procedures which not only govern the work place and the work community but also distinguish one industrial relations system from another.

According to Dunlop, the interactions among the 3 actors are influenced by several forces in the environment, the most important among them being technology, markets and power relations in the wider society. As technologies employed by different enterprises differ so do the skills required from workers and managers, nature of supervision, pattern of work organisation, and the role played by the stage regulatory agencies. Similarly, the nature of the market in which an enterprise operates leaves its imprint on industrial relations. Firms, operating in a competitive market are differently placed from monopolistic producers and therefore the industrial relations in the two contexts are also different. Finally, the power position of the three actor sin the wider society has a crucial bearing on how they go about the business of making rules.

Dunlop argues that an industrial relations system is essentially stable and cohesive. While there is a conflict of interests among the actors, there is also a body of common ideas that each actor holds towards the place and function of the others in the system. This shared ideology and compatibility of views enables them to resolve conflict by framing appropriate rules.



Pluralist Approach This approach is commonly associated with the writings of Flanders, Clegg ad Fox. The essence of this approach is that every industrial organisation is a coalition of various conflicting interest group such as employees, shareholders, consumer, the community, the government and so on.

The problem of management in this situation is to control and

balance the activities of various groups which is not when we regard industrial relations as essentially stable and cohesive. The pluralists, however, agree with the systems view that the centre piece of industrial relations is job regulation – the making and administration of rules for regulating employment relations.

Marxist Approach Represented by Hyman and others this approach differs from the other two approaches in its definition or the fundamental meaning of industrial relations. This approach holds that to define industrial relations exclusively in terms of rules and regulations (as the other two approaches do) is far too restrictive. It argues that if industrial relations are mere job regulation through shared ideology then why do conflicts never cease? Marxists seek answer to this question in the lack of balance of power between the bargaining partners even as rules are continuously made and enforced. Their assertion is that conflict can never be held in check unless capital accepts that labour has a right to an equal share in power.

Having differed on the fundamentals, Hyman goes on to explain why systems theorists and pluralists are far off the mark. He contends that it is wrong on the part of these people to equate the study of industrial relations with the study of the institutions of job regulation such as trade unions, employers’ associations and government departments. While a study of these institutions is important, the study of ‘social processes’ (such as informal groups), which operate in reaching agreements is even more important. In fact, these processes play a vital role in taking care of the needs and aspirations of workers. Hence, Hyman suggests that it would be more appropriate to define industrial relations as the study the ‘processes’ of control over work relations. Industrial relations is about who controls, what, how and why.

Nature of Industrial Relations Industrial Relations are always a mixture of cooperation and conflict. However much cooperation may be sought as an organisational objective, some conflict will always remain. There are at least 3 reasons for this: 1.

Both the groups (labour and management) develop different orientations and perceptions of their interests. They also develop generally negative images about each other.

HRM 2.

172 There are no mutually accepted yardsticks or norms to tell to the two groups how far they should go in the pursuit of their objectives. In the absence of norms both groups claim complete rationally for their demands.


There is no neutral field for the groups to meet on. This means that whenever the two groups meet each other for negotiations they bring with them some carryover from the past besides their inherent distrust and suspicion for each other.

Significance The











overemphasized. Good industrial relations are necessary for the following reasons. 1.

To help in the economic progress of a country.

The problem of an increase in

productivity is essentially the problem of maintaining good industrial relations. That is why they form an important plank of the economic development plan of every civilized nation. 2.

To help establishing and maintaining true industrial democracy which is a prerequisite for the establishment of a social society


To help management both in the formation of informed labour relations policies and in their translation into action.


To encourage collective bargaining as a means of self-regulation. They consider the negotiation process as an educational opportunity, a chance both to learn and to teach.


To help government in making laws forbidding unfair practices of unions and employers. In a climate of good industrial relations every party works for the solidarity of workerâ&#x20AC;&#x2122;s movement. Unions gain more strength and vitality. There is no interunion rivalry. Employees give unions their rightful recognition and encourage them to participate in all decisions. Unions divert their activities from fighting and belligerence to increasing the size of the distribution-cake and to making their members more informed (workersâ&#x20AC;&#x2122; education) on vital issues concerning them.


To boost the discipline and morale of workers. Maintenance of discipline ensures orderliness, effectiveness and economy in the use of resources. On the other hand, lack of discipline means waste, accidents, loss and confusion.

It also means

insubordination and non-co-operation.

Conditions for Good Industrial Relations Good industrial relations depend on a great variety of factors. Some of the more obvious ones are listed below: 1.

History of industrial relations;


Economic satisfaction of workers;


Social and psychological satisfaction of workers;


Off-the-job conditions of workers;




Enlightened and responsible labour unions;


Negotiating skills and attitudes of management and workers;


Public policy and legislation;


Education of workers; and


Nature of industry and business cycles.


History: No enterprise can escape its good and bad history of industrial relations. A good history is marked by harmonious relationship between management and workers. A bad history by contrast is characterised by militant strikes and lockouts. Both types of history have a tendency to perpetuate themselves. Once militancy is established as a mode of operations there is a tendency for militancy to continue. Or, once harmonious relationship is established there is a tendency for harmony to continue. A perpetuating tendency does not mean that a history of harmony cannot explode into violence but rather that the probability of conflict is greater when conflict has become accepted as normal and that the probability of peaceful relations is greater when mutual understanding is expected to continue as a part of standard operations.


Economic Satisfaction of Workers: Psychologists recognise that human needs have a certain priority. Need number one is the basic survival need. Much of manâ&#x20AC;&#x2122;s conduct is dominated by this need. Man works because he wants to survive. This is all the more for underdeveloped countries where workers are still living under subsistence conditions. Hence economic satisfaction of workers is another important prerequisite for good industrial relations.


Social and Psychological Satisfaction:

Identifying the social and psychological

urges of workers is a very important step in the direction of building good industrial relations. As has been revealed by the Hawthorne experiments a man does not live by bread alone. He has several other needs besides his physical needs which should also be given due attention by the employer. The employment relationship is not just an economic contract. If an employer thinks that his leadership is fulfilled when he gives standard economic rewards and provides conventional benefits, he should not blame his employees when they render the minimum prevailing level of work. Both the rendering their minimum, and both are losers in their relationship. Society loses even more. Minimum performance will disappear primarily as employees and employers alike realize that the work contract is much more than simple economic wages and fringe benefits. It is a joint venture involving a climate of human and social relationships wherein each participant wishes


174 to feel that he is fulfilling his needs and contributing to the needs of others. This supportive climate requires more than economic rewards. The supportive climate of an organisation is essentially build around social and psychological rewards.

These rewards differ from economic rewards in one

important respect. It is that whereas economic rewards because of their limited size can be allocated to some individuals only, social and psychological rewards can be distributed among all to any extent.

Their stock is never depleted.


participation in management, job enrichment, suggestion schemes, redressal of grievances, effective two-way communication are some such social and psychological rewards.


Off-the-job Conditions: Although some employers may occasionally wish that they could employee only a person’s skill or his brain but all that can be employed is a whole person, rather than certain separate characteristics. A person’s different traits may be separately studied, but in the final analysis they are all part of one system making up a whole man. His home life is not totally separable from his work life, and his emotional condition is not separate from his physical condition. Each affects the other. Hence for good industrial relations it is not enough that the workers’ factory life alone should be taken care of. His off-the-job- conditions should also be improved.


Enlightened Labour Unions: The most important single condition necessary for good industrial relations is a strong and enlightened labour movement which may help to promote the status of labour without jeopardizing the interests of management. Investigations show that unions though talk much of the employers’ obligations to the workers, say very little about the workers’ responsibility to the employer. They try to get for the employee, not help him give. If they could help the employee more in this direction, they might gain for him more than all their “getting” pressure will ever secure. Many enlightened unions, however, usually do focus on employees contributions and responsibility and they have gained both social and economic rewards by this approach. Such unions exhort workers to produce more, persuade management to pay more, mobilize public opinion on vital labour issues and help Government to enact progressive labour laws. They also go a long way in making collective bargaining a success and in preventing strikes. In this connection we must remember that according to one estimate hardly 30% of the total work force in our country is unionized. Of the unionized work force only a very small proportion consists of those who are affiliated to any central union.


Negotiating Skills and Attitudes of Management and Workers:


management and workers’ representatives in the area of industrial relations come from a great variety of backgrounds in terms of training, education, experience and attitudes. These varying backgrounds play a major role in shaping the character of


175 industrial relations.

Generally speaking, well-trained and experienced negotiators

who are motivated by a desire for industrial peace create a bargaining atmosphere conducive to the writing of a just and equitable collective agreement. On the other hand, ignorant, inexperienced and ill-trained persons fall because they do not recognise that collective bargaining is a difficult human activity which deals as much in the emotions of people as in their economic interests.

It requires careful

preparation and top-notch executive competence. It is not usually accomplished by some easy trick or gimmick. Parties must have trust and confidence in each other. They must possess empathy, i.e. they should be able to perceive a problem from the opposite angle with an open mind. They should put themselves in the shoes of the other party and then diagnose the problem. Other factors which help to create mutual trust are respect for the law and breadth of vision. Both parties should show full respect for legal and voluntary obligations and should avoid the tendency to make a mountain of a mole hill.


Public Policy and Legislation: When government regulates employee relations, it becomes a third major force determining industrial relations – the first two being the employer and the union. Human behaviour is then further complicated as all three forces interact in a single employee relation situation. Nonetheless, governments in all countries intervene in management – union relationships by enforcing labour laws and by insisting that the goals of the whole society shall take precedence over those of either of the parties. Government intervention helps in three different ways: (i) It helps in catching and solving problems before they become serious. Almost every one agrees that it is better to prevent fires than to try stopping them after they start’ (ii) it provides a formalized means to the workers and employers to give emotional release to their dissatisfaction; and (iii) it acts as a check and balance upon arbitrary and capricious management action.


Better Education: With rising skills and education, workers; expectations in respect of rewards increase. It is a common knowledge that the industrial workers in India are generally illiterate and are misled by outside trade union leaders who have their own axe to grind. Better workers’ education can be a solution to this problem. This alone can provide workers with a proper sense of responsibility which they owe to the organisation in particular and to the community in general.


Nature of Industry: In those industries where the direct and indirect labour costs constitute a major proportion of the total cost, lowering down the labour costs becomes important particularly when the product is not a necessity and, therefore, there is little probability to pass additional costs on to the consumer. Such industries


176 cannot grant liberal increases in wages or fringe benefits to their workers and have industrial relations different from other types of industries.


Business Cycle:

Business cycle also affects industrial relations.

In general,

industrial relations are good when there is boom and prosperity all around. During such periods levels of employment and wages rise which make workers happy. But during recession, there is a decline to employment levels and wages. This makes workers unhappy and mars good industrial relations.

Causes of Poor Industrial Relations The analysis of the causes of poor industrial relations varies according to the orientation and perception of the analyst. An economist will always interpret the situation in terms of the market forces of supply and demand, a politician will interpret it in terms of ideologies and class war and a psychologist in terms of opposing interests, goals and motives.

In fact, each analysis gives only a partial explanation of the situation.


industrial relations are the result of a number of socio-economic, political and psychological factors which are briefly described bellow.


Uninteresting Nature of Work: People want to make a life out of work rather than just a living. Work is such a dominating part of our lives that no matter how much satisfaction we have outside it, we are not living a satisfying life unless we live with satisfaction at work also. The problem of poor industrial relations is essentially a product of large-scale production which has made man subordinate to the machine. Owing to extensive specilisation, a worker in a factory performs only a minor operation in the whole process of production. This has made him lose his sense of pleasure, pride and satisfaction from work which he used to get earlier by producing the whole product. This dissatisfaction of the worker on the shop floor generally culminates into big strikes and lockouts.


Political Nature of Unions: Another major irritant to good industrial relations is the politicization of labour unions by outside political leaders. This leads to multiple Outside leadership

Ineffective Politicalisation collective bargaining

Vicious circle of trade unionism in India



Lack of constructive Multiplicity purpose

Poor finance Inter-union rivalry unions on the one hand and inter-union rivalry on the other.

Inter-union rivalry

depresses both a unionâ&#x20AC;&#x2122;s membership and its finances. The final result is that a union finds itself unable to carry out constructive activities or to play an effective role in collective bargaining.

Its status is reduced to a mere strike-committee.


circular relationship among all these factors is depicted in the figure above. The outside who get themselves elected as union leaders by making wild promises to the members later facer the difficult of living up to their promises. The obvious way to meet their promises is to make excessive demands on management. Each union leader tries to excel others in pressing his demands because it costs nothing to make big demands. This competition of demand charters (blessed by rival political parties) many times flares up into industrial unrest.


Poor Wages:

Too much tight or complicated wage and incentive and payment

systems are also a cause of poor industrial relations.

Wage salary differentials

between occupations also create a feeling in inequity and mar good industrial relations.


Occupational Instability: Another important factor which sometimes affects good industrial relations is the specter of change in occupation.

Occupational stability

makes workers feel secure on their jobs. It produces an enervating effect on them. Workers who have held a job for several years generally win confidence on that job and do not like any change being made in it because they fear the following consequences to ensure:



The new job will not give them as much satisfaction as the earlier job.


The new job will reduce their wages and seniority structure.


The new job will require them to undergo some training.


The new job will change the existing social relationships.


The new job will reduce opportunities for growth and development.

Poor Behavioural Climate: The behavioural climate of an enterprise which is made up of its culture, traditions and methods of action may be either favourable to the worker or unfavourable.

Favourable climate is one which helps him meet his

economic, social and psychological wants. enterprise in his mind.

It produces a good image of the

On the other hand, unfavourable climate is one which


178 prevents him from meeting his various types of needs and produces in his mind a poor image of the enterprise. This eventually drives him to seek membership of a militant labour Organisation where he can given vent to his negative feelings and fight against his employer. This becomes a cause of poor industrial relations.

Effects of Poor Industrial Relations Poor industrial relations produce highly disquieting effects on the economic life of the country. They leave behind a lot of privation for the workers, reduction in output and profits for industries, high prices and inconvenience for the general public and an atmosphere of mutual distrust and suspicion for the workers and the employers. The nation as a whole suffers inasmuch as the national dividend gets reduced owing to reduced production. We may enumerate the ill effects of industrial disputes as under: 1.

Multiplier Effect:

Modern industry and for that matter modern economy are

interdependent. Hence although the direct loss caused due to industrial conflict in any one plant may not be very great, the total loss caused due to its multiplier effect on the total economy is always very great.


Fall in Normal Tempo: Disputes adversely affect the normal tempo of work so that plants work far below the optimum level. Costs build up. Absenteeism and labour turnover increase. Plant discipline breaks down and both the quantity and quality of production suffer.


Resistance to Change: Dynamic industrial situation calls for change more or less continuously. Methods have to be improved. Economics have to be effected. New technologies have to be introduced. New products have to be designed, produced and put in the market. Each of these tasks involves a whole chain of changes and this is resisted bitterly if there is industrial conflict.


Frustration and Social Cost: Every man comes to the work place not only to earn a living. He wants to satisfy his social and egoistic needs also. When he find difficulty in satisfying these needs he feels frustrated. Disputes take a heavy toll in terms of human frustration. They reduce cordiality and aggravate social tension.

Suggestion to Improve Industrial Relations In the light of the above discussion following can be the suggestions to improve industrial relations: 1.

Each Management and Union should Develop Constructive Attitudes Towards Each Other: If managers do not fully accept the union or if union leaders do not fully accept the business system, harmonious industrial relations cannot be expected. Management must accept workers as equal partners of a joint venture.

It must


179 recognise their union as the spokesman of their grievances and as custodian of their interests.


All Basic Policies and Procedures Relating to Industrial Relations should be Clear to every Body in the Organisation and to the Union Leaders:


personnel manager must make certain that the line people will understand and agree with these policies. Failure to follow the spirit and letter of these policies can result in unnecessary misunderstanding and a deterioration of industrial relations.


The Personnel Manager should Remove any Distrust by Convincing the Union of the Company’s Integrity and his Own Sincerity and Honesty: Suspicions, rumours and doubts should all be put to rest.


The Personnel Manager should not Vie with the Union to Gain Workers’ Loyalty. He should not Try to Wean them Away from the Union. Workers feel, and rightly so, that they can be loyal to both the organisations. Several research studies also confirm the idea of dual allegiance. There is strong evidence to discard the belief that one can owe allegiance to one group only.


Management should Encourage Right Kind of Union Leadership: While it is not for the management to interfere with union activities, or choose the union leadership its action and attitude will go a long way towards developing the right kind of union leadership. “Management gets the union it deserves” is not just an empty phrase. Management should create conditions which would stimulate growth of competent and constructive leadership.


After the Settlement

is Reached

the agreement


be Properly

Administered: This involves the application, interpretation, and enforcement of the terms and conditions which the parties have agreed to both in letter as well as in spirit.

Development of Trust – How Done? Research has revealed that ‘Trust’ between the parties (union and management) is the single most important factor responsible for creating good industrial relations.


between the parties can be developed by building competencies in the management and unions on the one hand and developing right processes on the other. (a)

Competencies: Competencies are to be built in the two parties as under: (a) Knowledge: •

About rules of the workplace

About the legal framework of IR.


180 •

About the commitments made in various settlements and awards.

About the emerging environmental scenario, customs and practices.

About workers sociology and problems of workers.

(b) Skills: •

Leadership skills.

Inter-personal skills.

Problem-solving skills.

Negotiating skills.

(b) Attitudes: •

Positive beliefs about each other

Faith in participative mechanisms.

Flexibility and resilience.

(b) Process Development: For good industrial relations ‘processes’ are more important than ‘contents’. Process means the ‘how’ aspect. For example, ‘how decisions are arrived at’, ‘how negotiations are conducted’, ‘how information is shared with the union’, ‘how goals are set in the organisation’ and so on. The correct process helps each party in being more honest and open and in better understanding the feelings of the opposite party.

HRD/OD Interventions Following is a list of possible interventions for tackling specific IR problems: IR Problem

Intervention -



Work Redesign


Job Enrichment




Review of Disciplinary Machinery



Lack of Knowledge about



Rules, regulations


Ensuring effective communication

Delay in personnel


Research for identifying



the causes of delay


Reorganisation of personnel function


Survey research


Information – sharing


Union-management interface


Collaborative projects (say, an employee

Alienation of employees

Problem of Discipline

Mistrust between management and union

Lack of Collaboration

Welfare/education etc.)



Meaning: According to Sec. 2(k) of the Industrial Disputes Act an industrial dispute means any dispute or difference between employers and employers or between employers and workmen, or between workmen and workmen, which is connected with the employment or nonemployment or the terms of employment or with the conditions of labour, of any person.

Important points which emerge from this definition are: 1.

The use of the adjective â&#x20AC;&#x2DC;industrial disputeâ&#x20AC;&#x2122; relates the dispute to an industry. Clause (j) of Section 2 defines the word industry thus: Industry means any systematic activity carried on by co-operation between an employer and his workmen (whether such workmen are employed by such employer directly or by or through any agency, including a contractor) for production, supply, or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature) whether or not (i)

any capital has been invested for the purpose of carrying on such activity; or


such activity is carried on with a motive to make any gain or profit.

The following are included within the meaning of industry. (a)

Any activity of the Dock Labour Board established under Sec 5-A of the Dock Workers (Regulation of Employment) Act, 1948.


Any activity, being a profession practiced by any individual or body of individuals.


Any activity relating to the promotion of sales or business or both carried on by an establishment.

The following are excluded from the word industry: (a)

Any agricultural operation except where such agricultural operation is carried on in an integrated manner with any other activity which is referred to above.


Hospitals or dispensaries.


Educational, scientific, research or training institutions.


Institutions owned or managed by organizations wholly or substantially engaged in any charitable, social or philanthropic service.


Khadi or Village industries.


Any activity of the government relatable to the sovereign functions of the government including all activities carried on by the departments of the


182 Central Government dealing with defence, research, atomic energy and space. (g)

Any activity which is carried on by a co-operative society in which less than 10 persons are employed.


‘Workman’ means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward. His terms of employment may be expressed or implied. For the purposes of any proceedings under this Act in relation to an industrial dispute, ‘workman’ includes any person who has been dismissed, discharged or dispute, ‘workman’ includes any person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute. But ‘workman’ does not include any such person i.

Who is subject to the Air Force Act, the Army Act or the Navy Act; or


Who is employed in the police service or as an officer or other employee of a prison; or


Who is employed mainly in a managerial or administrative capacity; or


Who, being employed in a supervisory capacity, draws wages exceeding Rs.1,600 per mensem or exercise functions mainly of a managerial nature.

It should be noted that an employee engaged in any work whether directly or indirectly connected with the main industry, is a workman if the payment of his wages has a bearing on the fund of the company. Thus, a gardener who works at teacher who works at the managing director’s bungalow but receives salary from the company or a teacher who works in a school run by the factory is a workman. Further, the definition does not make any distinction between a full-time employee and a part-time employee. Both are workmen if other tests are fulfilled.


Only specific types of disputes, i.e., those which bear upon the relationship of employers and workers and the terms of employment and conditions of labour are included under the term.

Thus, disputes between government and an industrial

establishment or between workmen and non-workmen are not industrial disputes.


The use of plural number for the disputant parties in the definition raises doubt on whether there can be an industrial dispute between an employer and an individual workman. This doubt is however, removed by Sec. 2A which was added to the Act in 1965. This action considers an individual dispute as an industrial dispute if it relates to discharge, dismissal, retrenchment of termination of a worker’s services and is raised on or after Dec. 1, 1965.



Forms of Disputes Strikes, lockouts and gheraos are the most common forms of disputes.

Strike Section 2(q) of the Industrial Disputes Act, 1947 defines strike as under: “Strike means a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal under a common understanding of any number of persons who are or have been so employed to continue to work or to accept employment”. Thus, the essential ingredients of strike are: 1.

There should be an ‘industry’ within the meaning of Section 2(j) of the Industrial Disputes Act, 1947 in which the striking persons should be employed.


There should stoppage of work in pursuance to a concerted plan in combination. Where the workers absent together from the work place not to stop work but to participate in a demonstration which may incidentally result in the stoppage of work it is not a strike because it is not in pursuance to a concerted plan.


There should be contract of employment between the striking workmen and the industry. Thus when the workmen refuse to do additional work which the employer in law has no right to ask them to do it would not amount to strike.

It should be

remembered that the duration of the cessation of work is absolutely irrelevant for the purpose of determining whether a particular cessation amount to strike or not. 4.

The cessation of work need not necessarily be connected with an industrial dispute to amount to a strike. For this reason, sympathetic strikes, protest strikes, etc., are ‘strikes’ within the meaning of the term. But under the Bombay Industrial Relations Act, 1946 there is an explicit provision Sec. 3(36) that to be called a strike the cessation of work should be in consequence of an industrial dispute.

Forms of Strikes Cessation of work may take place in a number of ways as described below: 1.

Stay-in-strike, Sit-down Strike, Pen-down Strike or Tool-down Strike: All these forms of strike are considered by courts as an invasion on the rights of employer and therefore illegal. Sit-down or stay-in strike amounts to trespass upon the property of the employer.



Slowing down the pace of production is one of the most pernicious

practices that discontented workmen sometimes resort to. It would not be far wrong to call this dishonest. For, while thus delaying production and thereby reducing the output, the workmen claim to have remained employed and thus to be entitled to full wages. Apart from this also, ‘go-slow’ is likely to be much more harmful than total cessation of work by strike. For, while during a strike much of the machinery can be fully turned off, during the ‘go-slow’ the machinery is kept going on a reduced speed


184 which is often extremely damaging to machinery parts. For all these reasons ‘goslow’ has always been considered a serious type of misconduct. But it is not a strike because at no time the work stops in this form.


Hunger Strike: Hunger strike is a strike with some or all strikers or even outsiders for acceptance of the demands.


Lightning or Wildcat Strike: A wildcat strike is an unofficial strike, i.e., a strike not sanctioned by the union. Such strikes occasionally occur in violation of the no-strike pledge in collective bargaining agreements. In such a situation the union is obligated to use its best efforts to end the strike. Such strikes are prohibited in public utility services under Section 22 of the Industrial Disputes Act, 1947 and in all industrial establishments in U.P., Maharashtra, M.P. and Gujarat, where notice is required to be given. Further, the standing orders of a company generally require for notice.


Work-to-rule: In this form employees, though remaining on job, do the work literally in accordance with rules or procedure laid down for the purpose. Usually rules of work are accordance with rules or procedure laid down for the purpose. Usually rules of work are followed in such a manner that they result in dislocation of work. In U.S.A. these tactics are recognized as a form of strike. But in India they are not covered by the definition of “strike”.

Lock-out Section 2(1) of the Industrial Disputes Act, 1947 defines “lock-out” to mean the temporary closing of a place of employment or the suspension of work, or the refusal by an employer to continue to employ any number of persons employed by him. Lockout, thus, is the counterpart of strike – the corresponding weapon in the hands of the employer to resist the collective demands of workmen or to enforce his terms. It has been held by the court that the suspension of work as a disciplinary measure does not amount to lockout. Similarly, temporary suspension of work called lay-off is not lock-out.

Gherao Gherao means encirclement of the manager to criminally intimidate him to accept the demands of the workers. It amounts to criminal conspiracy under Section 120-A of the I.P.C. and is not saved by Sec. 17 of the Trade Unions Act on the grounds of its being a concerted activity.



There are 3 approaches to labour-management negotiations, viz., unilateral; bipartite and tripartite. In the unilateral approach the employer alone decides the terms and conditions of employment for his workers assuming that he knows what is best for them. In the bipartite approach the employer negotiates with his workers.

This is also known as collective

bargaining. In the tripartite approach, besides the 2 main parties. a third party (generally the State) also participates in the negotiations. boards, etc., are examples of triartitism.

Conciliation, arbitration, adjudication, wage

In this chapter we are describing the bipartite

approach, i.e., collective bargaining.

MEANING Collective bargaining may be defined as the process in which conditions of employment are determined by agreement between representatives of the union, on the one hand, and those of the employer, on the other. It is called “collective” because both the employer and the employees act as a group rather than individuals.

It is described as

“bargaining” because the method of reaching an agreement involves proposals and counterproposals, offers and counter-offers. Collective bargaining is usually resorted to in respect of “interest issues” where some new rights are to be created or existing rights to be expanded or modified. Where a dispute arises over the enforcement of an existing right – a “rights issue” as we call it, it is in the interest of both the sides that such rights issue is not magnified into a collective bargaining issue and is amicably resolved through grievance procedure or arbitration.

PROCESS The bargaining process has been caricatured in a variety of ways: 1.

as a poker game combining deception. bluff, luck and ability


as a debating society with long – winded speeches to impress one’s colleagues and possibly have some effect on the opposition;


as power politics or pure brute strength in forcing terms of settlement on the weaker party, and finally;


as a rational process in which appeal to facts and to logic reconciles conflicting interests in the light of common interests. All of these elements are involved in some degree and combination in the bargaining process.

While “mature” collective

bargaining no doubt implies enlargement of the rational process, there can be no such thing as complete escape from the other elements.

According to Walton McKersie, a collective bargaining process generally consists of four types of activities: distributive bargaining, integrative bargaining, attitudinal structuring and intra organisational bargaining.



The first type of activity often involved in a collective bargaining process is distributive bargaining. This is straight-out haggling over how to split up a pie. In this type of activity one party’s gain is the other party’s loss. When there are economic issues in disputes (e.g., wages), this type of activity predominates in the bargaining process. Second type of activity is integrative bargaining. This is negotiation of an issue on which both parties may gain, or at least neither one loses. A co-operative search for the best job evaluation system or a training programme is examples of integrative bargaining. Third type of activity involved in collective bargaining is attitudinal structuring. The process of collective bargaining helps in shaping such attitudes as trust or distrust, friendliness or hostility between the parties. This simple fact that both parties have to deal with each other almost daily and that they do not have just a sporadic relationship promotes restraint between the negotiators during the bargaining process. But if there is a backlog of bitterness, it can erupt and destroy all negotiations over a new contract. The fourth type of activity that goes on in all collective bargaining is intraorganisational bargaining, i.e., manoeuvring to achieve consensus within the labour and management organizations. There are always groups within a union which believe that their interests are not being given adequate consideration by the organisation. The skilled workers may believe that the union pays too much attention to the unskilled; women members may think that their interests are not fairly considered by the men who run the union and so on. Similarly, on the side of the employer, there may be differences which need to be resolved; for example, the sales manager may urge that a settlement be made with the union and a strike avoided at all costs so that the relationship with important customers can be protected but the finance manager may insists that any wage increase beyond a given amount would be disastrous to the company’s finance.

Difference between Collective Bargaining and Co-operation Collective bargaining should be distinguished from labour-management co-operation. In collective bargaining each party tries to outguess the other, to hide its own motives, to play up the concessions it grants to its opponent, and to play down those it receives. The process is reasonably well characterized by the metaphor of “playing one’s cards close to the chest”. Geneuine co-operation, on the other hand, occurs only when the “cards are face up on the table”.

In collective bargaining each party fights for as big a piece of the pie as can be obtained. In co-operation each party strives to increase the size of the pie so that there will be more for every one who partakes of it.

However, both procedures have important roles in union-management relations. There are some problems which lend themselves most readily to collective bargaining.



Illustratively it can be said that the problem best suited for collective bargaining procedure is the establishment of the general level of wages.

Problems best suited for co-operative

procedure are problems connected with: i.

the internal wage structure,


administration of job evaluation plans,


formulation of a general labour policy,


handling of grievance procedure, and


increasing productive efficiency, e.g., agreeing to work for longer hours, voluntary layoff, modernization, and so on.

Following are some recent examples of labour-management co-operation in our country: 1.

The pilots of Indian Airlines agreed in August 1994 to work for longer hours to improve the financial viability of airlines.


The workers of Indian Drugs and Pharmaceuticals Ltd., agreed to defer wage revision in a bid to save their jobs.


The Mumbai port and dock workers agreed to merge with the Mumbai Port Trust to tide over their acute financial crisis.


The trade unions of Indian Iron and Steel Co., agreed to radically modernize their existing sick and aged plant and machinery.

Structure of Collective Bargaining The term ‘bargaining structure’ refers to the level – local, regional, industrial or national – at which bargaining takes place.

One important determinant of bargaining

structure is the nature of bargaining issues. Some issues, like wages, which have wide implications, are handled within expanded bargaining structures. Other issues, such as pensions and insurance plans, are best treated on a company – wide basis because of the need for uniformity created by actuarial and administrative considerations. Finally, there are questions of work rules, safety, washing facilities, etc., that are essentially local in nature and must be related to the conditions that prevail in a particular plant or department. From the point of view of an individual establishment plant – level bargaining is generally useful in that the settlement is tailored to the conditions of the enterprise, e.g., its capacity to pay, its market conditions and objectives, etc.

Benefits of Collective Bargaining 1.

It provides a method for the regulation of conditions of employment by those directly concerned. The employers and workers in an industry know more about its conditions and problems than any one else.

HRM 2.

188 It often leads to better mutual understanding:

The employers gain a greater

insight into the problems and aspirations of the workers, while the latter become more aware f the economic and technical factors involved in industrial management. 3.

It provides a flexible means of adjusting wages and conditions of employment to economic and technological changes in industry. The parties can meet whenever necessary and can adapt the terms of their agreements to these changes.


It creates a sort of ‘industrial jurisprudence’. Two kinds of rules – procedural and substantive are framed.

Procedural rules, as the name implies, set out the

procedures that govern the behaviour of the two groups – employer and union, and regulate the manner in which they deal with each other. They lay down, for example, how contracts may be negotiated, modified, renewed, or terminated. Substantive rules, on the other hand, regulate the relations between individuals and not groups. It is possible to distinguish three different kinds of relations between individuals which are regulated by substantive rules. There is first the economic relationship. The rules set down the terms on which existing as well as prospective workers will offer their labour to the employer. They also stipulate manning procedures, recruitment policies and the like. Next comes the political relationship. Here the rules stipulate who may exercise power over whom, and for what purpose. Last comes the social relationship. Rules provide standards of behaviour based on shared interests, sentiments, beliefs and values among various groups of employees. 5.

It leads to better implementation of decisions because of the direct involvement of both the parties in reaching them. Parties know that the decisions are their own and are not imposed.

Conditions Essential for Successful Collective Bargaining: For collective bargaining to be fully successful there are certain essential prerequisites. These are described below: 1.

A Favourable Political Climate: If collective bargaining is to be fully successful, a favourable political “climate” must exist; in particular, the government and public opinion must be convinced that collective agreements are the best method of regulating certain conditions of employment. Collective bargaining has often been practiced in countries where the authorities have been hostile to it and it has been hampered by obstacles and restrictions; in other countries and authorities have merely tolerated it without giving any positive encouragement. In such conditions the establishment and maintenance of collective bargaining processes is a hard struggle and can have only a limited success. In some extreme cases, as in Germany under the National Socialist regime, collective bargaining has been eliminated entirely by the radical step of abolishing trade unions and employers’ organizations, conditions of employment being regulated by the State Obviously, wherever trade unions have been made illegal there can be no collective bargaining.


189 By contrast, governments in many countries actively encourage collective bargaining, for example, by removing any legislative restrictions which may hamper it and by facilitating bargaining process through the provision of facilities for conciliation and arbitration, or by specifically conferring a right to bargain collectively, laying down rules concerning the form and content of agreements, registering them, extending their application and assisting in their enforcement.


Freedom of Association:

Freedom of association is essential for collective

bargaining. Where such freedom is denied collective bargaining is impracticable, and where it is restricted, collective bargaining is also restricted. In the early stages of trade union organisation some employers not only refused to employ any worker who was a member but would carry their hostility to the point of violence. They might even require each worker they employed to enter into a contract with them that, as a condition of employment, he would not join a trade union. Such ‘anti-union contracts’ (picturesquely known as ‘yellow-dog’ contracts in the United States) are now illegal in a great number of countries. It should be borne in mind, however, that the removal of such restrictions does not necessarily imply that strong organizations of either workers or employers will in fact be formed and does not in itself confer any positive rights to bargain collectively. It still leaves employers in a position to discourage workers from forming trade unions or to refuse to employ union members. Company – dominated unions may be set up to hinder the formation of free trade unions. In some countries trade unions have, after a period of struggle, grown strong enough to prevent or greatly limit such attempts to deny or restrict freedom of association. In other countries, governments have enacted legislation giving workers the right to form associations and making illegal any attempt by employers to interfere with this right; but in such cases the law still leaves workers free to choose whether they will organize or not.


Stability of Workers’ Organisation: Workers may have freedom of association but, unless they make use of that right and form and maintain stable unions, collective bargaining will be ineffective. If an organisation is weak, employers can say that it does not represent the workers and will refuse to recognize it or negotiate with it. Before entering into agreements with a trade union, employers will want a reasonable assurance that it will be able to honour its undertakings, and this implies both that the union can exercise authority over its members and that its membership is sufficiently stable. If the latter fluctuates widely, at times covering only a small fraction of the workers, it cannot be considered as a reliable instrument for collective bargaining. In the early stages of trade union organisation in any country, industry of occupation the smallness and instability of union membership is one of the main reasons for the


190 infrequency of collective bargaining. This is particularly true in many occupations in the industrially underdeveloped countries. Before recognizing a union, employers sometimes demand evidence that it has enough members to justify entering into collective bargaining with it. A frequently used test is the number of members who are in good sanding (i.e., who regularly pay their dues to the union). This test is applied where official recognition, carrying with it the right to bargain on behalf of the workers, is to be granted to a union. Rivalry between unions is often a cause of instability in workers’ organizations. Each of several unions recruits some of the workers, but no one union is really representative. Employers will often refuse to bargain while such issues are unresolved on the workers’ side, arguing that the workers must first put their own house in order before they can reasonably claim the right to bargain collectively.


Recognition of Trade Unions: Even assuming that freedom of association exists and that the workers have established stable organizations, collective bargaining cannot begin until employers recognize the organizations for that purpose. Employers will give such recognition only if they believe it to be in their interest or if they are legally required to do so. Once a trade union is strong enough, employers may decide that it is in their interest to recognize it and negotiate with it; otherwise, they may be faced with strikes, and the ensuing financial losses m ay be far greater than the cost of any concessions on wages and conditions they may have to make in negotiations with the union.

The granting of recognition may also have the positive benefit of improving

industrial relations, and this may react favourably on production.

A group of employers or an employers’ organisation may find it to their advantage to recognize a trade union not only because recognition could be a means of avoiding losses from strikes, but also because any agreements negotiated would regulate conditions of employment for all the employers and thus safeguard all of them against competition by undercutting labour standards. 5.

Willingness to “Give And Take”: The fact of entering into negotiations implies that the differences between two parties can be adjusted by compromise and concession in the expectation that agreement can be reached. Obviously, if one or both sides merely make demands when they meet there can be no negotiation or agreement. Consequently, at the start each side normally puts forward claims which are intended to provide a basis for bargaining, and as the negotiations proceed one side will agree to reduce its demand on one item in return for some concession by the other side. The art of bargaining is for each side to probe the other to find out it’s strength and weakness. On some points one side may be unwilling to depart much from its starting position, whereas on others its attitude may be more flexible; the


191 attitude of the other side is probably similar though the points on which it is relatively rigid or flexible may be different.

In these circumstances the two sides have

considerable room for man oeuvre and for “give and take”. Willingness to “give and take” during negotiations does not necessarily mean that concession made by one side will be matched by equal concessions from the other. One side may make greatly exaggerated demands which it will have to tone down considerably if agreement is to be reached. Also, depending on the relative strength of the two parties, economic conditions at the time and skill in negotiation, one side may win more concessions than the other. 5.

Avoidance of Unfair Labour Practices: Unfair practices in collective bargaining are sometimes resorted to both by employers and by trade unions. They are liable to hamper the development of collective bargaining and to embitter negotiations so much by the suspicion and distrust they cause as to make agreements difficult to reach. It cannot be sufficiently emphasized that only in an atmosphere of mutual recognition and respect collective bargaining will have a reasonable chance of success.

Collective bargaining is a process to reach a certain goal, and it is,

therefore, important to make sure that it is really a common goal. There must be the common objective of maintaining peace and discipline, improving work methods and working conditions, increasing earnings of employees as well as profits of the undertaking. That the management has the right to manage and the union has the right to organize itself and fight for justice must be fully recognized and accepted by both sides. Unless there is this basic unanimity of views collective bargaining is a mere trial of strength.

How Collective Bargaining Works? Where collective bargaining is carried on at the level of an undertaking the actual conduct of the collective bargaining process is very simple. Before the bargaining conference begins, each side fixes the composition of negotiating team, prepares for the negotiation and works out its strategy and tactics.

Negotiating Team On the company side the negotiating team may consist of the personnel manager, production manager and the company lawyer. The chairman of the company is usually kept out of the negotiating team for two reasons. First, if he is present on the bargaining team, he may be forced to given an instant yes or no on an issue that deserves more careful consideration.

Second, selecting someone other than the chairman of the company as

spokesman places the bargaining teams on an equal footing.

It is not essential for the

number of representatives on the employer’s side and the workers’ sides to be equal, as deicions are not taken by majority vote. On any proposal the whole of the employer’s side, acting in unison, either accepts it or disagrees with it. Similarly, the workers’ representatives



â&#x20AC;&#x201C; if they all belong to the same union or if all the unions involved are pursuing a common line of action â&#x20AC;&#x201C; act in unison.

On the workersâ&#x20AC;&#x2122; side, where there is a single trade union, the negotiating team consists of the office-bearers if that unions, each claiming the exclusive right to represent all the workers including the non-members. The management then has a problem in deciding whom to accept as the bargaining agent. It may follow any one of the following courses: i.

Select the representative union by secret ballot;


Select through verification of membership by some government agency;


Bargain with a joint committee of all the major unions;


Bargain with a negotiating committee in which different unions would be represented in proportion of their verified membership;


Bargain with a negotiating committee which consists of representative of every department of the organisation elected by secret ballot irrespective of their union allegiance.

Qualities and Attribute which Members of Negotiating Teams must possess: i.

They must have the Right Attitudes: It is obvious that unless the right attitudes are there, bargaining cannot make any progress. Right attitudes require the willingness to accept the legitimacy of the role and the function of the other party.

If the

management starts with the proposition that the union is a nuisance; it has no business to come and make demands on the management; it is only there to mislead the workers and to blackmail the management, then obviously the process of bargaining cannot get off to a very favourable start. Similarly, if the attitude of the union is that the management is selfish, autocratic; interested only in exploiting and humiliating the workers and trying to pay them a little as possible, find loopholes in the law, then again the right attitude will not be there.


They must Possess skill to Analyze Problems: the whole ranges of problems which come up for discussion during collective bargaining are often quite complicated and tricky.

Finding solutions to problems such as wages, bonus, manning, up

gradation, leave. Promotion etc., generally becomes difficult, first,

because the

financial stakes may be high and second, because different groups of interests may be involved and these interests may not always be easy to reconcile with each other. So, the members of the negotiating team must possess the skills of analyzing the problems and finding out which are the compelling parameters relevant to the two sides. In other words, this means trying to understand what the other side is saying and why it is saying it.

HRM iii.

193 They must have an intimate knowledge of operations, working conditions, production normal and other relevant factors.


They must be Skilled in Adopting Tactics: The whole process of bargaining which involves narrowing the gap between the two side can become possible only if each side can be successively pinned down to certain positions. Sometimes what happens is that the side which is more clever tries to avoid getting itself committed to any position and tries to make the other side go on making concessions. Hence, the need to use tactics. (Read the section on ‘Bargaining Strategy and Tactics’ below).


They must Have Credibility: People from both sides must have faith in members. Credibility, like virginity, once lost can never be regained.

Bargaining Power: Before the negotiations start, each side in collective bargaining weight its bargaining power and also determines the maximum concessions which it will give to the other side. This depends mainly on the estimated cost of the work stoppage (Strike or lockout) to the party concerned and also on its estimate of the other party’s cost arising out of the stoppage. The higher the expected cost of work stoppage to the management, the greater would be the concessions which it would offer to the other party. Some factors which determine the cost of stoppage are us under:


Existing State of the Market:

The management should try to understand the

existing state of the market for its product or service and the cyclical or other changes in business expected in the near future. In a highly competitive market, management must avoid work stoppage by granting a little more concessions to the workers lest it may cause good deals of transfer of the demand to the competitors. The need to avoid work stoppage would be still higher, if the inventory of the product is small or the nature of the product is such as to exclude the possibility of inventory – holding. Any expected changes in the business cycle in the near future should also be analysis and anticipated carefully before collective bargaining starts.


management may adopt a more lenient attitude during a boom than during a recession.


Availability of Labour: It is also necessary to analyse the relevant labour market situation in terms of availability of labour, wages in other concerns and other details. If substitution of labour is possible or if the production in the plant stopped by the strike can be transferred to another plant stopped by the strike can be transferred to another plant under the same organization, the management can adopt a stiff attitude.




Financial Capacity to Pay: Management must also consider its financial capacity to pay as reflected in the expected sales incomes, its liquid cash position, the prospects of bank credit, the expected profits in future the minimum rate of return on equity capital, needs of investment and the total productivity of the unit concerned.


repeated credits are need from the banks a long-drawn out stoppage may prove harmful for the organisation.

The plea of ‘lack of ability to pay’ is, however, played down by labour unions. They reject this plea on the following grounds. i.

The data produced by the management are fake. The earnings have been understated.


There are several instances of management extravagance and inapt financial decisions.

iii. The work should get what he is entitled to get and not what the organisation is able to pay. In other words, the management must plan its revenue according to its expenditure and not vice versa. iv. Wage rise should be accepted by the management like any other rise in the cost of other inputs and the management should offset this cost rise by running business more efficiently.


Technology Implications:

The management should carefully work out the

technological implications in terms of maintenance of the idle plant in case of a work stoppage, expected impact of the settlement on the technological operation of the company, and so on.


Reactions of Shareholders and Directors: The management should anticipate the possible reactions of directors and shareholders to the stand taken by it in the course of collective bargaining.


Union’s Strength: The management must also judge the financial strength of the union and the capacity of its leaders to carry the workers with them in a settlement or a showdown. With weak financial position a union would not be able to sustain a long-drawn strike and may accept even unfavourable terms.


Government Laws and Attitude: The management must carefully think about the government’s industrial relations policy, the national wage policy, the economic situation in general and inflationary context in particular, for anticipating what would be the possible reaction of the government in this industrial dispute – whether it would remain apathetic or neutral, or would actively intervene to force a settlement. In the


195 latter case, it should also judge whether the government would lean more in favour of management or labour.

Preparation for Negotiations A common cause of failure of collective bargaining is not really adverse attitudes nor even the unwillingness to accept each other’s bonafides, but failure to do sufficient homework which leads, first, to confused arguments and counter – arguments and, second, to prolongation of the whole process. The day to start preparations for negotiations on the next contract is the day present contract goes into effect. Everything that happens under the present contract may become a factor in next negotiations.

Any clause that causes

confusion, works unfairly, or proves unworkable probably should be revised at the next negotiation. But unless notes are made at the time the trouble occurs, it is to be forgotten by the time the next negotiations roll around. In many companies supervisors are asked to record situations which indicate the need for revision of any contract clause as and when they occur. In fact, no one knows the operating faults in labour contract better than a supervisor who is required to work under it daily.

Another continuing process in other preparation for contract negotiations is a study of the grievance records. Grievances repeatedly arising under the same contract clause give a clue to needed revisions.

Next comes the study of contracts of all other comparable companies. Each and every clause of these contracts should be well appraised as to its applicability to one’s own situation.

One can make a list of all such clauses which one would like to use during

negotiations to prove that such clauses have been agreed to elsewhere.

Next comes the study of wage picture of companies in one’s own community and industry.

The wages prevalent in companies which are ‘pattern setters’ should also be

studied. Figures should not be obsolete.

Then comes information about the union, its leadership, history, finance and demands. The impact of these demands on the company’s finances should be well studied. Finally, management should prepare a list of resource people in the company who are most likely to know or be to ascertain quickly the impact of proposed contract changes on the company’s operation sand costs.

Type of Negotiating Procedures: There can be three types negotiating procedures: Haggling – bargaining, Boulwarism and Continuous bargaining.



Haggling bargaining is the orthodox procedure of labour negotiations. This can be tow types: the piecemeal approach and the total approach. In the piecemeal approach issues are settled one by one in some order such as ‘easiest’ first or ‘from the beginning to the end’ of the draft demands. Each item arises as a separate issue, is argued out, disposed of and ticked away. Attention then turns to the next. In the total approach the issues are thought to be interrelated and interdependent. Therefore, no issue is settled independently. Each issue is discussed and laid aside as other are brought forward; but every issue remains open until suddenly the would complex is ready to crystallize into a total agreement.

Boulwarism, known after its originator, Lemuel Boulware, formerly a vice-president of the General Electric Company, differs from haggling – bargaining procedure in to respects. First, in this procedure the company refuses to play the haggling game. Instead of starting low and letting itself be dragged up to the final offer it perhaps had in mind from the start – a tactic that makes the union the hero and the company the villain in the eyes of may workers – the company makes its first offer a full and final one. Second, in addition to meeting with union representatives, the company conducts an extensive communication programme in which it tries to sell its offer directly to the employees and urges them to make their views known to their union official. There are several avowed objectives of this policy. By making a good offer from the beginning and explaining it directly to the workers, the company hopes to demonstrate that it ‘does right voluntarily’ by its employees and not because it is forced to do so by the union. Similarly, by refusing to alter its first and final offer the company wants to prove that it is soundly based on facts from the very beginning and there is no room for any change in the offer unless some new facts are brought to the knowledge of the management. Following is a brief description of this approach as followed by the G.E.C from 1946 to 1964 when it was given up on being declared as bad faith bargaining by the National Labour Relations Board.

The capacity itself seeks through extensive year round research into all pertinent facts to determine what is “right” for employees. Its research includes not only a study of business conditions, competitive factors, economic trends, and the like but the gathering of its won information as to its own information as to employee needs and desires through independent employee attitude surveys, comments made by employees at informative meeting, direct discussions by supervisor with employees; and statements in union publications. When bargaining, begins the company, as part of its overall research listens to the presentations made by all the unions with which it deals and evaluates the unions’ demand with the help of the facts it has on hand including those supplied by the unions.

G.E. then makes an offer which includes everything it has found to be warranted without anything held back for later trading or compromising. G.E. does not initially present



its offer on an avowed “take it or leave it” basis. It professes a willingness to make prompt adjustments in its offer but only when new information from any source or a significant change in facts indicates that its initial offer galls short of being right. But otherwise the company so declares that it will not change its offer at any cost and may even takes strike to any duration”. The third bargaining procedure has been dubbed “continuous bargaining” to contrast it with conventional dead line bargaining. Instead of postponing meaningful negotiations until the last few weeks or even the last few hours before a strike deadline, this approach calls for the parties to explore particularly bargaining problems in joint meetings over a long period of time, sometimes throughout the life of each contract. This negotiating procedure was first recommended in 1959 by James P. Mitchell the then Secretary of Labour in the U.S.A. In 1959 the Steel strikes in America continued for 116 days and so he warned against the antiquated practice of negotiating I n the last month of an expiring contract with tension, tempers and time tables in continuous bargaining runs the risk of being charged with becoming too friendly with management and may eventually lose his intraorganisational support and his union job.

Bargaining Strategy and Tactics If the negotiating procedure is of the haggling and bargaining type it becomes important for management to plan its strategy prior to entering the conference room. Strategy is concerned with mapping out the plan and basic policies to be followed in the bargaining process. Management may, for example, decide as a part of its strategy to keep its eyes on the entire package and its ultimate results rather than on immediate gains or losses. It may adopt a strategy of keeping the public and its own personnel informed of the issue, and so on.

Tactics are different from strategies. They are the particular actions that are taken while on the bargaining table objective being to bluff the other party. These are employed to create impressions of enhanced strength as well as to probe the other party to find out the level of its critical sticking points. Some common tactical devices are shouting and table pounding, getting up from the bargaining table in a huff, requesting a recess, conceding certain demands with some fight, tabling a troublesome clause, suggesting for negotiation matters of no real importance or causing one of the team members to pose as friendly and well-disposed to the other side, while the other member is actually hostile.

Of particular interest with respect to collective bargaining is the legal status of tactics. How far are they valid when the law requires collective bargaining to be done in good faith? It appears that only those tactics that result into the presentation of false information about issues subject to bargaining (i.e., wages, hours, and conditions of employment) are a violation. Others are allowable.



Bargaining Conference The bargaining conference usually arranges for a chairman to conduct the proceedings. Sometimes it is agreed that each side in turn shall choose the chairman from among its members. In some conferences the two sides may agree that one of the members from the employerâ&#x20AC;&#x2122;s side shall be chairman, perhaps on account of his greater experience. When the negotiations take place at the industry level the law in some countries. (e.g., in Belgium and France) provides that the parties shall meet under an independent chairman.

Usually, at the first meeting one side submits a claim and there are opening statements by a leader from each side. This is followed by a general discussion or exchange of views. AT the start there may be quite a wide gap between the two sides, through each believes that the other can be induced to make concessions and thus make the margin narrower. In the course of discussion each side tries to find strong and weak points in the otherâ&#x20AC;&#x2122;s defenses, and experienced negotiators acquire great skill in doing this. Often after discussions for some time the difference is narrowed down until it is not worth a dispute and after some further manoeuvring an agreement is reached.

Following are some important points to be remembered in the bargaining process. 1.

Parity of Bargaining Strength on the Two Sides: If one of the two sides is in so dominant a position that it can impose its will on the other side, then it is not a bargaining situation. It is situation of dictation in which it is extremely difficult for the dominant party to be judicious and discreet. Such party will always use its superior strength in indiscriminately maximizing its benefits.


Problem-solving Approach: Neither party should adopt a win-lose attitude. The attitude should be to find a solution rather than to win an argument.


Good Beginning: Well begun is half done. Hence, it is essential to put members in the right frame of mind before the talks begin. Probing into the cause of conflicts in the past, though necessary to avoid conflicts in future, should not be allowed to cloud the present views and attitudes of members.


Continuity of Talks: The talks should never be allowed to reach a dead end. It may at times be necessary to leave controversial points alone for the time being and move to the next issue. As long as talks continue ultimate solutions will be possible for all issues. To keep the discussion fluid is, therefore, very important.



The Collective Bargaining Agreement: The usual outcome of collective bargaining is the collective agreement or labour contract. This is the written statement of the terms and conditions arrived at by collective barging. It is the charter on which employers and unions agree. It usually consists of a preamble, a series of clauses and one or more appendices that list job classifications, wages rates, and other relevant details. In some countries, as in the United States and India these arrangements enjoy the status of a legal contract that can be enforced in a court of law. In Britain, on the other hand, the agreement is purely voluntary and not justiciable. The following list indicates some of the main items which are included in collective agreements: 1.

Wages, including time rates, piece rates and other incentive methods of payment, and procedure for increasing or decreasing wages in the event of changes in the cost of living.


Hours of work, overtime and rates of pay for overtime; regulation of shifts and rest periods.


Annual holidays and rates of pay for holidays.


Sick leave and leave of absence for other reasons (for example, to enable a worker who has been elected as a trade union official to take part in union activities).


Seniority rights with regard to laying off and rehiring.


Dismissal for disciplinary offences.


Number and training of apprentices.


Fringe benefits


Establishment of fair production standards, including satisfactory quality of output, and methods of increasing productivity and reducing waste.


Joint consultation procedure


Methods of settling grievances and disputes over the interpretation of the agreement.


Prohibition of strikes and lockouts during the periods covered by the agreement.


Duration of the agreement, its subsequent continuation unless notice of termination is given, and the length of such notice.


Procedure for negotiating a new agreement.

Union-Security Clauses In some countries where national law and practice so permit the collective agreement may also include clauses on preference in recruitment for trade union members.

These are

known as â&#x20AC;&#x2DC;Union Securityâ&#x20AC;&#x2122; clauses and may be of 3 types: closed shop, union ship and maintenance of membership shop.


200 Under the closed shop clause the employer undertakes to employ only union

members. As soon as a worker ceases to be the member of the union his services are terminated. Under the union shop clause though the employer has the freedom to employ a non-union worker but the worker so employed must join the union later a specified period after terminated. Under the maintenance of membership shop clause the workers are given by the employer the option to become members within a certain period after employment. Those who decide to be the members are, however, not allowed to leave the union without losing their jobs.

The closed shop and the union ship clauses amount to compulsory trade unionism. Following are the merits and demerits of these clauses. Merits: 1.

There is no possibility of the non-unionists benefiting from the trade union activities of the unionists;


There is no need to persuade workers to become members or to pay their membership dues;


There is no risk of rivalry or jurisdictional disputes; and


There is no fear of the union providing to be unrepresentative or unstable.

Demerits: 1.

The entire control over labour goes in the hands of the union;


Workers are deprived of their freedom to join or not to join a union;


Face-to-face contacts between union leaders and workers are reduced to the minimum; and


Monopolistic conditions make union leaders complacent and inefficient. If anything is more important to collective bargaining than the agreement itself, it is

how the parties apply the agreement and live under it from day to day.

It is in the

implementation of the agreement that a number of grievances arise which need to be resolved every day. Disputes may arise over the interpretation of certain ambiguous clauses of the agreement or its applicability to non-union members who are not a party to the agreement (because a collective agreement in principle applies only to those workers on whose behalf it was signed).

Many agreements contain clauses specifying the procedure to be adopted for resolving such disputes.

All clauses of an agreement should be put in writing as clearly and concisely as possible. Legal terminology should be at a minimum because most of those who will use the contract are not lawyers. The agreement should then be signed by both the parties and communicated to those who will work by it.



In India, a collective bargaining agreement is called a ‘settlement’ within the meaning of Section 2(p) of the Industrial Disputes (Central) Rules. As to the persons on whom a collective bargaining agreement is binding, Section 18(1) of the Industrial Disputes Act clearly lays down that “it shall be binding only on the parties to the agreement”. Thus, a collective bargaining agreement does not automatically extend to workers employed in the industrial establishment concerned who are not a party to the agreement even though they have obtained certain benefits under it.

Under Section 29 of the Industrial Disputes Act any person who commits a breach of any term of the settlement is punishable with imprisonment for a term which may extend to six months, or with fine, or with both (and where the breach is a continuing one, with a further fine which may extend to two hundred rupees for every day during which the breach continues after the conviction for the first) and the court trying the offence, if it fines the offender, may direct that the whole or any part of the fine realized from him shall be paid by way of compensation, to any person who in its opinion has been injured by such breach.

Collective Bargaining in India Collective bargaining in India has passed through several important phases during the last few decades. It was during the 1960s that it began to show up in some pockets across the country due to two reasons.

One reason was that during this period large

industries will well-developed employers’ associations and trade union centers had come up in many big cities which facilitated collective bargaining. Examples were the cotton textile industry in Bombay, Ahmedabad, Coimbatore, Kanpur and Indore, the jute industry in Calcutta, the coir industry in Kerala and the plantations in southern and eastern India. The other reason was the encouragement for bilateralism which came from the public sector comprising the banking, coal, steel and railways.

Collective bargaining took a bank seat –as did industrial conflict – with the declaration of emergency in 1976.

With civil liberties suspended and the government bestowing

extraordinary powers upon itself, the environment became lest congenial for collective bargaining. But as soon as the emergency was lifted in 1977 a new chapter in collective bargaining began with unions making unprecedented demands on employers.

It was

Boulwarism in the reverse. The labour’s power was at its peak like never before. It was asking for all sorts of allowances from employers or faces a strike.

The above phase continued till the late 1980s when union power began to plateau. The pendulum had taken its swing from one end to the other. Now it was the employer’s turn to gain upper hand. Initially employers’ demands were for increased production – they were asking for greater volumes rather than increased efficiency or productivity. But they soon



began to bargain for increased productivity through lockouts. Notable lockouts were at Bata and Wimco in West Bengal and at Hindustan Lever in Bombay. The four-month lockout at Bata compelled workers to accept sweeping changes in work methods and labour deployment. The sixteen-month lockout at Wimco forced workers to accept new production norms and the year-long lockout at Lever authorized management to modernize the plant and prune the work fore as it wanted.

AT present, there is a sea change in the environment. Unions which have been accustomed to making demands are now at the receiving end, with employers asking them to roll back wages and reduce benefits. Concession bargaining or the practice of employers asking labour to make concessions, has become commonplace. Managements have also been attracted by Japanese work practices which focus on multiskilling, flexible deployment, and greater worker involvement in improving productivity. The centrality of the two institutions – trade unions and collective bargaining – which all prior theories have upheld – is suddenly in doubt.

The strategic management approach to industrial relations is now demanding

productivity and performance from the system. Why has Collective Bargaining (bipartitism) not flourished in India? Collective bargaining is the ultimate in negotiations and is possible only when workers’ and employers’ organizations are equally strong, mature and conscious of their right s and duties. That is why in no country except Israel one finds unadulterated bipartitism. Even in the U.S.A. it is not practiced in its pure form/ State steps in certain situations. In India both bipartitism and tripartitism have co-existed but they generally operate at different levels. AT the unit level it is generally the bipartitism that has flourished where as at the industry and national levels it is the tripartitism that has prevailed.

Some reasons for

bipartitism not flourishing at the national level are that: 1.

labour is a concurrent subject;


there are varying conditions of work and life in different parts of the country;


there is absence of strong central unions and empolyers’ organisations who can represent country – wide interests; and


there are a number of problems (e.g., layoffs and closures) which need to be looked at from the point of view of larger objectives of government policy. Hence in tackling such problems government’s participation at the national level becomes unavoidable.

Even at the plant-level bipartitism has not made much headway in our country due to the following reasons: 1.

Excessive Dependence on Compulsory Adjudication for the Settlement of Industrial Disputes: There is not a single piece of legislation at the nation level which requires an employer to bargain or prescribes the method of identifying a bargaining agent. There is no law requiring voluntary agreements to be registered or giving any guarantee that a rival union will not raise a dispute on the very subjects


203 already covered by the voluntary agreement. On the other hand, what the Industrial Disputes Act provides is a system of conciliation and compulsory adjudication which, therefore, have remained the main stay for ta large number of industrial organizations and trade unions in our country.


Reduction in the Area of Collective Bargaining: The area of collective bargaining has gradually receded in recent years due to the emergence of several new institutions and modes such as wage boards, statutory fixation of minimum wages and payment of bonus, regulation of fines and deductions, working hours, over time payment, holidays, leave and other working and employment conditions including welfare and social security measures.


Weak Trade Union Movement: Trade union movement still covers only a small portion to the total industrial employment.

Besides, the unions are too weak to

bargain collectively on account of their small membership, poor financial resources, their multiplicity, inter-union rivalry, politicization, poor leadership and absence of suitable legislative provisions for recognizing them as bargaining agents. If no unit, far less in an industry, do we have a union which is recognized and is recognizable as a representative union with which an employer can negotiate a settlement in the hope that it would be acceptable to all the endure for the stipulated period. And so far we have not evolved a fool-proof system to determine the majority union. 4.

Little Government Support: The government has shown little interest in collective bargaining because i.

It does not have confidence in the bargaining strength of our trade unions,


It has fear of strikes and lockouts.


It has fear of the communicates gaining in strength, and


It has apprehension of the planned economy being disrupted y inflation, etc.,

In a planned economy the overall industrial relations pattern is sought to be developed taking into account the overall objectives of the nation and governmentâ&#x20AC;&#x2122;s fiscal, monetary and industrial policies.

Hence unadulterated bilateral negotiations without the

stateâ&#x20AC;&#x2122;s involvement are not possible.

Recommendations of NCL to make Collective Bargaining more Effective in India 1.

Compulsory adjudication of disputes should be used only as a last report


Trade union should be strengthened both organizationally and financially by amending the Trade Unions Act to make registration of unions compulsory, enhance the union membership fee, reduce percentage of outsiders in the union executive and among the office bearers and increase the minimum number of members of union applying of registration of union.


Legal provision may be made either by a separate legislation or by amending an existing enactment for


204 i.

Compulsory recognition of trade unions and certification of unions as bargaining agents



Prohibition and penalization of unfair labour practice


Bargaining in good faith by both employers and union.


Conferring legal validity and legitimacy on collective agreements

Workersâ&#x20AC;&#x2122; education should be intensified for building up internal union leaderships and making workers more knowledgeable and conscious about their rights and obligations.


The idea of one union for one plant or one industry should be popularize


The Government should declare its policy to allow and encourage the parties to settle their conflicts by bipartite consultation and negotiation consistent with public safety and interest of the society in general.

Other Suggestions 1.

Unions should be made strong so that they are able to honour the terms of collective agreements. They can be made strong in the following ways: i.

By Excluding Minority Unions from Industrial Relations Rights Such as Right to Bargain or right to Carry Labour Disputes to Conciliation or Industrial Tribunals. This will spur minority unions into expanding their membership. AT present many of them feel why they should exert themselves when a mere 5, 10 or 15 per cent membership gives them all the privileges of representation, conciliation and adjudication.


By Freeing Unions from Political Control and Building New Leadership. To achieve these ends there should be greater use of the local Indian language in the




correspondence, etc.





Face-to-face negotiations should take the place of

conciliators, tribunals and lawyers. A real complaints procedure for settling the daily small problems of the factory must develop and the union posts should be made whole time and salaried iii.

By making secret ballot vote rather than check-off membership the test of a unionâ&#x20AC;&#x2122;s majority status.


Adequate statutory provisions should be made to make an agreement cover all the workers. At presents, under Section 18(1) of the Industrial Disputes Act, a collective agreement binds only those workers who are a party to it. An agreement does not automatically extend to workers who were not a party to it even though they might have obtained certain benefits under it.


On the failure of negotiations both parties should have equal right and freedom to strike work or to declare a lockout. It is totally unjust and inequitable to leave one


205 party absolutely free in the exercise of its right and to impose all sorts of curbs on the right of the other party.


In addition to the existing authorities under the Industrial Disputes Act, one more authority should be constituted to promote collective bargaining. Its functions may include advising parties on various aspects of collective bargaining (such as procedure, content and form of agreement), helping parties in resolving jurisdictional disputes and registering agreements concluded by the parties..


Each party should cultivate the right type of attitude towards the other party. If the management starts with the proposition that the union is a nuisance or that it must win and union lose, then obviously the process of bargaining cannot get off to a very favourable start.

Similarly, if the union starts with the proposition that the

management is selfish, autocratic and exploitative and the union must have the last word then the process of successful bargaining cannot begin. 6.

Each party should develop the skill to under stand the viewpoint of the other party. To acquire this skill a lot of homework is required which is helpful in analyzing a problem. Failure to do sufficient homework leads to confused arguments and counterarguments and delays the whole process of collective bargaining.


A tradition of successful collective bargaining should be built. Every issue which is amicably settled through collective bargaining strengthens the possibility that future issues also will be similarly settled and vice versa.


Collective bargaining should usually be resorted to in setting disputes concerning interests only.

Disputes concerning rights should not be magnified into collective

bargaining issues and should be better settled through grievance redressal machinery.

Collective Bargaining in Central Public Sector Undertakings Collective bargaining in central public sector undertakings is done according to the guidelines issued by the Department of Public Enterprises (earlier known as the guidelines issued by the Department of Public Enterprises (earlier known as the Bureau of Public Enterprises). This department gives the content and limits of financial commitments which public enterprise can make with the union during the course of bargaining. However, in many instances these limits are circumvented by the management by making gentlemanâ&#x20AC;&#x2122;s promises with the unions on several issues outside the written agreement and implementing these promises over a period through administrative orders.

In core industries like steel, coal, ports and docks and banks, collective bargaining is done at the national level for the industry as a whole. Thus, in steel industry, one main collective agreement is entered into by the National Joint Committee comprising representatives of trade unions and the steel companyâ&#x20AC;&#x2122;s management. This is followed by several supplementary agreements being entered into at the plant level to cover aspects not



covered in the national level agreement. Such centralized bargaining has resulted in creating uniform wage structures and fringe benefit patterns in all public sector units irrespective of the nature of industry (labour or capital-intensive) and the paying capacity of a unit as determined by its financial performance. This is in sharp contrast to a private sector unit where its wages and firings benefits are more geared to its specific requirements and circumstances.

The Future of Collective Bargaining There has been a decline in the number of workers covered by collective bargaining in several industrialized nations. Bargaining coverage has declined from 70 to 47 percent of the employee force in the U.K., and from 26 to 18 percent in the U.S.A. in the course of a decade from 1980 to 1990. Many forces have combined to bring about this decline. Decline in trade union membership has been the fundamental force, followed by the preference of employers for individualized pay under the influence of HRM, strategies, the decline of centralized bargaining structures and the growth of enterprise level negotiations that tie benefits to the economic situation of the firm.

With collective bargaining, as with trade unions, adversaralism is acknowledged to be the root of the problem. There is general agreement that the future of collective bargaining lies in its ability to transform itself from an adversarial process to an integrative and problemsolving partnership between labour and capital.


Definition, Nature and Scope of a Trade Union Different authors have defined a trade union in different ways. Sydney and Beatrice webb have defined a trade union as “a continuous association of wage earners for the purpose of maintaining or improving the conditions of their working lives”.

According to

G.D.H. Cole, “a trade union means an association of workers in one or more occupations – am association carried on mainly for the purpose of protecting and advancing the members’ economic interests in connection with their daily work”. Lester defines a trade union as “an association of employees designed primarily to maintain or improve the condition of employment of its members”. Cunnison defines a trade union as “a monopolistic combination of wage earners who stand to the employers in a relation of dependence for the sale of their labour rand even fro its production; and that the general purpose of the association is in view of that dependence to strengthen their power to bargain with the employers”.

It should be noted that in none of the definitions cited above the employers’ associations or professional bodies have been mentioned as trade unions. This is because these bodies differ so much from the employees’ unions that it is difficult to group them with



the latter. The employees’ unions are primarily concerned with the terms and conditions of employment of their members (i.e., the terms of sale of their service).

The employers’

associations, on the other hand, are concerned, among other things, with influencing the terms of purchase of services in favour of their members. So the two should not be placed in one category. As regards the associations of professional men, it may be observed that they also differ fundamentally from employee’s unions. Professional associations include the selfemployed as well as the employees’ whereas trade unions consist only of the people who are employed by others. Therefore, the associations of professional men should also not be described as trade unions, although if any particular professional association consists only of people who are employees of others, for example, the School Teachers’ Association, it may be described as a trade union as it is wholly a union of employees. In India, however, the term trade union refers, besides employees’ organizations, to employers’ associations also. Similarly, in Britain, even the associations of professional people such as Artists’ Federation or Musicians’ Union are also recognized as trade unions.

Difference between Labour Movement and Trade Union Movement There is lot of confusion on the use of terms ‘labour movement’ and ‘trade union movement’. Often the two are used interchangeably. However, there is a slight distinction between the two.

The ‘labour movement’ is ‘for the worker’ whereas the ‘trade union

movement’ is ‘by the workers’. This distinction needs to be noticed all the more because till the workers organized themselves into trade unions, efforts were made mainly by the social reformers to improve the working and living conditions of labour. These efforts should be taken as forming a part of the labour movement and not that of the trade union movement. The labour movement thus conveys a higher degree of consciousness amongst workers than conveyed by mere trade union movement. In India, the labour movement started from 1875, when a number of measures through legislation, administration and welfare work, were taken by the Government, the social workers and the enlightened employers. The trade union movement, on the other hand, started after 1918, when the workers formed their associations to improve their conditions. It is, thus, a part of the ‘labour movement’ which is a much wider term.

Trade Union Theories Different answers are given to the question, “what factors lead to the origin of trade unions?” These answers are known as trade union theories or approaches to the origin of trade unions. Following is a brief description of some of these approaches:


Social Psychological Approach of Robert Hoxie: According to Hoxie, trade unions grow out of the socio-psychological environment of the workers. Workers who are similarly situated economically and socially, closely associated and not very much divergent in temperament and training, tend to develop a common interpretation of


208 their social situation and a common solution of their problems of living. This leads them to unite into a union. Thus differences of environment cause different unions to develop. Hoxie identified the following 4 types of unions on the basis of their aims and methods. i.

Business Unions: Also known as ‘Bread and Butter Unions’, these unions aim at bringing about improvement in the wages and working conditions of their members. Collective bargaining is the usual method followed by these unions with heavy reliance on strike as a weapon.


Friendly or Uplift Unions: These unions chiefly aim at elevating the moral, intellectual and social life of their members. To realize this aim these unions advocate the use of non-political methods such as setting up of co-operative enterprises, profit-sharing, mutual insurance, etc.


Revolutionary Unions: These unions aim at replacing the capitalist system by the socialistic system by political and violent means such as strikes, sabotage, boycott, etc. Collective bargaining is also used in so far as the main aim is not overlooked.


Predatory Unions: As their very name indicates, these unions are given to plundering benefits by whatever means they may lay their hands on. These unions do not subscribe to any legal or ethical ideology or code of conduct.


Sociological Approach of Frank Tannenbaum: According to Tannenbaum, trade unions are the by-products of an industrial society in which automization has destroyed the old way of life and robbed the worker of his identity, purpose and creativity. Union are a reflection of the worker’s spontaneous urge to re-establish his identify. Trade unions help the worker in regaining his social life.


Protest Approach of Kerr, Dunlop and others: According to these writers a trade union is a form of organized protest against the evils of industrialization. Besides bringing about a basic change in the relationship between man and his work and between man and his cultural setting, industrialization inevitably circumscribes worker’s freedom by imposing discipline. The worker often finds his work distasteful and his compensation never commensurate with this contribution. Formation of a union is one of the organized forms of protest – an expression of the worker’s resentment over the prevailing industrial system.


Industrial Democracy Approach of Webbs:

According to Sydney Webb and

Beatrice Webb trade unions are the means to achieve industrial democracy. They assert that political democracy alone cannot yield to the worker the fruits of freedom of contract, freedom of association, freedom of opportunity, etc., because the stands on an unequal footing vis-à-vis his employer. He can enjoy the fruits of political democracy only when he is granted industrial democracy which means that he is given say in running the industry. To achieve democratic administration of industry is the main aim of a trade union.

HRM 5.

209 Classless Society Approach of Kari Marx: In Marxâ&#x20AC;&#x2122;s view trade unions represent a prime instrument for destroying the capitalist class. He admits that although these unions by themselves cannot bring about a class-less society still they are important to carry on the economic struggle against the oppression and to bring about a revolutionary transformation of the working class.


Sarvodaya Approach of Gandhi:

Gandhi considers trade unions as essentially

reformist organizations whose main functions to raise the moral and intellectual standards of labour.

They should also undertake programmes for teaching

supplementary occupations to their members so that uncertainty of employment during strike may be reduced to minimum. According to Gandhi, unions are not anticapitalist organizations. They are in the least degree political. Their main aim is to increase their internal strength, to work conscientiously and to take from the employer no more than what is rightfully due to the labourers. For the sake of simplicity we may subsume various trade union theories into three.

These are the classical theory, neo-classical theory and the revolutionary

theory. According to the classical theory, trade unionism is the organized expression of the needs, wishes, aspirations and attitudes of the working class.

A union

functions collectively to protect and promote the interests of its members within a given socio-economic system. The neo-classisists believe that a unionâ&#x20AC;&#x2122;s function is not only to press for improvement in the living standards of its members but also to involve itself in various wider issues which indirectly affect workersâ&#x20AC;&#x2122; living standards such as imposition of direct and indirect taxes, raising of bank rate, etc.


revolutionary theory believes that trade unions are a reaction to the bourgeois class and in order to displace this class and bring about true freedom of the working class trade unions must bring about order in the society by violence and sabotage.

Need for Trade Unions In earlier times when industry was on a small scale and the few apprentices and craftsmen whom the master craftsmen employed usually lived with him, conditions of employment and any grievances were easily discussed individually or in small groups and quickly settled. Modern industry is very difficult. It is organized on a large scale, and the maintenance of close direct relations between employers and workers for the settling of differences is difficult. It is organized on a large scale, and the maintenance of close direct relations between employers and workers for the settling of differences is difficult. The status and security which workers had in earlier communities have gone, and in their place they need the protection of trade unions. Labour is much more mobile than in former times. The machinery and other capital used in industry have become more and more costly, and there is usually a great gulf fixed between the owner of the capital and the workmen who operate the machines. Such conditions have led almost inevitably to the formation of organizations first



by the workers and later by the employers, and to the working out of methods of securing workable agreements reconciling, a s far as possible the various interests involved. Some important reasons why workers organize themselves into a trade union are as follows: 1.

To Oppose Management: Workers often join unions in order to have a method of collectively resisting action of management. When employers cut wages or pay low wages; when working conditions are unsafe or too unpleasant; or when managers interfere in workers’ personal lives, workers may resist by joining unions. Through the union workers may petition management for changes and, if unsuccessful, they may resort to a concerted work stoppage – a strike.


To Participate in Union Activities: Workers may join unions to obtain certain health or insurance benefits, to participate in educational programmes, or to learn about their own business and occupation.

They may also join to engage in social or

community activities. 3.

To Exercise Leadership:

Some workers join unions as an outlet for their own

ambitions. They may aspire to leadership and find that the union offers a convenient vehicle. They may hope to get ahead by obtaining an office of the union. 4.

To Fall in Line with Others:

Many workers join unions simply because other

workers urge them to do so. They may be made to feel that they re traitors if they do not join. 5.

To Get Employment: Sometimes workers join a union because it is precondition to their getting employment.

This is know as the ‘closed shop’ system and was

prevalent in America till 1947 when it was outlawed. All of these reasons can be summarized in the following generalization. The worker is motivated toward union membership to the degree that he thinks it will satisfy his wants to reduce his dissatisfaction. The ties are strong when the expected want satisfaction is strong, and vice versa.

Objectives of a Trade Union Three important objectives of a trade union today are as follows: 1. To defend or improve the wages and working conditions of workers and to bring about a change in the economic order 2. To overthrow capitalism and to bring about a revolutionary and fundamental change in the political order. 3. To replace managerial dictatorship by workers’ democracy and to bring about a change in the social order. It does not, however, imply that the trade unions in every country pursue the objectives stated above. In fact, the extent of industrial development and the political and social conditions of a country have an important bearing the development of trade unions and their objectives.



Functions of Trade Unions For the attainment of the above objectives, trade unions perform two types of functions â&#x20AC;&#x201C; militant and ministrant.

Militant functions are strikes, boycotts and gheraos.

Ministrant functions are to give financial support to members during strikes and lockout and to provide other benefits to them. Militant functions can again be either intramural or extramural. The former include those welfare efforts of unions which are made within the factory premises (e.g., improvement in working conditions, regulation of hours of work, provision of rest pauses, adequate wages, sanitation, safety etc). The latter include those welfare efforts of unions which are made outside the factory premises (e.g., provision of education, recreational and housing facilities to workers). We list below the various functions of a trade union under these four heads. 1. Functions relating to members; 2. Functions relating to organisation; 3. Functions relating to the union; and 4. Functions relating to the society.


Functions Relating to Trade Union Members 1.

To safeguard workers against all sorts of exploitation by the employer, by union leader and by political parties.


To protect workers from the atrocities and unfair labour practices of the management.


To ensure healthy, safe and conductive working conditions.


To exert pressure for enhancement of rewards associated within the work only after making a realistic assessment of its practical implications.


To ensure a desirable standard of living by providing various types of social services â&#x20AC;&#x201C; health, housing, educational, recreational, co-operative, etc., and by widening and consolidating social security measures.


To guarantee a fair and square deal and social justice to workers.


To remove the dissatisfaction and redress the day-to-day grievances and complaints of workers.


To encourage workersâ&#x20AC;&#x2122; participation in the management of industrial organisation and trade union, and to foster labour-management and leader-follower co-operation.


To make the workers conscious of their rights and duties.


To impress upon workers the need to exercise restraint in the use of rights and to enforce them after realistically ascertaining their practical implications.


To stress the significance of settling disputes through negotiation, joint consultation and voluntary arbitrations, and not through adjudication.


To raise the status of trade union members in the industrial organization and in the society at large.



II. Functions Relating to Industrial Organisation 1.

To highlight industrial organisation as a joint enterprise between workers and management and to promote identity of interests.


To increase production quantitatively as well as qualitatively, by laying down the norms of production and ensuring their adequate observance.


To help in the maintenance of discipline.


To create opportunities for worker’s participation in management and to strengthen labour-management co-operation.


To help in the removal of dissatisfaction and redressal of day-to-day grievances and complaints.


To promote cordial and amicable relations between the workers and management by settling disputes through negotiation, joint consultation and voluntary arbitration, and by avoiding litigation.


To create favourable opinion of the management towards trade unions and improve their status in industrial organisation.


To exert pressure on the employer to enforce legislative provisions beneficial to the workers, to share the profits equitably, and to keep away from various types of unfair labour practices.


To facilitate communication with the management.


To impress upon the management the need to adopt reformative, and not punitive, approach towards workers’ faults.

III. Functions Relating to Trade Union Organisation 1.

To formulate policies and plans consistent with those of the industrial organisation and society at large.


To improve financial position by fixing higher subscription, by realizing the union dues and by organizing special fund-raising campaigns


To preserve and strengthen trade union democracy


To train members to assume leadership position


To improve the network of communication between trade union and its members.


To curb inter-union rivalry and thereby to help in the creation of unified trade union movement.


To resolve the problem of factionalism and promote unity and solidarity within the union.


To eradicate various types of ‘isms’ like casteism, regionalism and linguism within the trade union movement.


To keep away from advocating the adoption of unfair labour practice.


To save the union organisation from the exploitation by vested interests – personal and political.

HRM 11.

213 To continuously review the relevance of union objectives in the context of social change, and to change them accordingly.


To prepare and maintain the necessary records.


To manage the trade union organizations on scientific lines.


To publicize the trade union objectives and functions, to know people’s reaction towards them, and to make necessary modifications.

IV. Functions relating to society 1.

To render all sorts of constructive co-operation in the formulation and implementation of plans and policies relating to national development.


To actively participate in the development of programmes of national development, e.g., family planning, afforestation, national integration, etc.


To launch, special campaigns against the social evils of corruption, nepotism, communalism, casteism, regionalism, linguism, price rise, hoarding, black marketing, smuggling, sex inequality, dowry, untouchability, illiteracy, dirt and disease.


To enable unorganized sector to organize itself.


To create public opinion favourable to government’s policies and plans, and to mobilize people’s participation for their effective implementation.


To create public opinion favourable to trade union sand thereby to raise their status.


To exert pressure, after realistically ascertaining its practical implications, on the government to enact legislation conducive to the development of trade unions and their members.

Trade Unions Structure There may be three types of labour organisations. Viz., the craft union, industrial union and general union. 1.

A craft union is the simplest form of trade union. It is usually formed of workers belonging to the same craft, occupation or specialization no matter in what industry or trade they happen to be employed. Thus, electricians though working in different industries may form a union of electricians only. There may be separate unions for fitters, turners, carpenters, etc. The International Wood Carvers’ Association and the Indian Pilots’ Guild may be cited as examples of craft unions. A craft union has the following merits: i.

People belonging to the same craft or profession constitute a compact, wellknit, cohesive group. With their identical training and educational background these workers very soon develop similar perceptions and outlook and organising these workers in a group becomes relatively easier.


Craft union consisting of workers possessing some important skill enjoys superior bargaining position. strike.

Strike in

Their workers cannot be easily replaced in a

a craft union may paralyse the entire working of the


214 organisation. Hence, craft unions generally succeed in securing more favourable terms and conditions for their members. The main weaknesses of a craft union are; i.

It is often easier for an employer to break this type of union. When several occupational groups in an industry are independently organised and each has its own agreement, the employer has only to break one organisation at a time. Joint action by all workers, because of different agreements with different craft workers, becomes difficult.


With the advancement in technology, the traditional distinction among various crafts disappears. This destroys the very basis of a craft union. This is one reason why craft unions are generally found to oppose technological advances.


The craft unions are not likely to have a clear perspective of the needs of the working class as a whole. Moreover, these unions undermine the solidarity of worker’s movement.


An industrial union organises worker on the basis of industry rather than a craft. If the entire labour force of a cotton textile factory decides to form a union consisting of workers of different crafts, the union is called an industrial union. The Rashtriya Mill Mazdoor Sangh and the Girni Kamgar Union at Bombay belong to this type. The main strength of this type of union lies in the fact that it cuts across skill and craft distinctions of workers employed in an industry and attempts to vulcanize them into one union. This type of unions have the following merits: i.

They make negotiations easy. Employers are spared the trouble of bargaining separately with a number of unions established on a craft basis.

A single

agreement covers all workers of a particulars industry. ii.

They encourage workers’ solidarity. Industry – wide unions have a special appeal to the socialists and other radicals because by bringing both skilled and unskilled workers closer these unions make the task of solidifying the workers easy.


These unions are the need of the present times. In these days when mass production techniques have obliterated craft distinctions, industry – wide unions are the only logical answer. One important drawback of this type of union is that the skilled workers in it feel

that they are swamped by the unskilled workers and that in the negotiations with the employers their specific demands art not adequately taken care of. The result is that these dissatisfied workers soon form their separate union. 3.

A general union embraces all workers in its fold whatever their industry or craft may be. The jamshedpur Labour Union, whose membership includes worker engaged in different industries and crafts of Jamshedpur, is an example of a general union.


215 Unions in different countries have developed on different lines, depending on social and economic compulsions of industrialization, political and historical factors and the institutional framework of respective societies.

For example, in the U.K.

where union s grew out of the guild system, craft became the basis of workers getting together for collective action. In the US and USSR workers are members of local industrial unions most of which are affiliated to national unions covering an occupation or an industry. Unions in France, Italy and Belgium are divided mainly on the basis of religion.

The trade unions though it is now moving towards craft


WORKER PARTICIPATION IN MANAGEMENT Meaning: Worker participation in management is a concept shrouded with so much vagueness that for different people it has different meanings. For management it is joint consultation prior to decision-making; for workers it is co-decision-making or co-determination; for trade union leaders it is the ushering in of a new era of social relationship and for administrators it is merely the association of workers with management without assigning them any authority or responsibility. Now with standing these different views on worker participation, all agree that it is an essential step involving redistribution of power between the management and workers in the direction of industrial democracy. It should be remembered that the worker participation in management is not the same thing as participative management.

While worker participation in management refers to

Institutional and formal arrangements resulting into the creation of various participative forums to associate workersâ&#x20AC;&#x2122; representatives with management, participative management refers to a managerâ&#x20AC;&#x2122;s specific style in which he interacts with his people. It is his leadership pattern. Similarly, worker participation in management is not the same thing as collective bargaining. What distinguishes worker participation from collective bargaining is the element of mutual trust and information-sharing.

Collective bargaining is typically base on power

dynamics, pressure tactics and to some extent on non-sharing of information whereas worker participation in management is based on trust, information-sharing and mutual problemsolving. However, if collective bargaining refers to productivity bargaining and productivity agreements, one may regard it as a form of worker participation in management.

Origin and Growth The origin of the concept of worker participation in management can be traced back to the writings of Fabian Socialists headed by Sydney Webb who highlighted that economic and social disorders of industrially developing countries and stressed the need for unity and co-operation among partners of production. The concept received further impetus from the origin and growth of political democracy in many parts of the world. It came to be believed that political democracy could not survive unless economic and industrial democracies were



also achieved. Many writers advocated that just as people should have the right to choose their governments, the workers too should have the right to influence the managerial decisions, if not the right to choose the management.

Many writers in the field of

management emphasised the human side of enterprise and came to be collectively designated as the behaviouralists. In India, Mahatma Gandhi mooted the idea of worker participation in management through his concept of trusteeship. It was during the days of the First World War that the concept found its first practical application.

Faced by the twin problems of maintaining industrial peace and improving

productivity, the governments in many belligerent countries (such as Germany, Great Britain and France) persuaded management to establish joint committees for expeditiously resolving these problems through consultation. In the United Kingdom following the recommendations of the Whitely Committee a well-knit consultative system came into being. It consisted of works committees at the plant level, district councils at the district level and the joint industrial councils at the industry level. However, with the cessation of hostilities in 1918 and the onset of economic depression in 1921 the idea of joint consultation received a setback. The interest of the working class now shifted toward nationalization and centralized planning because these were considered to be the most appropriate remedies for economic stagnation and unemployment. Interest in joint consultation was again revived during the Second World War. The post-war period also proved favourable for the growth of this idea. Many countries (such as Federal Republic of Germany, Yugoslavia, France, Belgium, Bulgaria, etc.) passed laws to put their war-time consultative bodies on a permanent footing with the objective of expediting the task of reconstruction of their war-ravaged economies.

In some countries such as

Denmark, Sweden, Norway, etc., agreements were signed between the apex organisation of workers and employers to revive consultative bodies.

The idea gripped many hitherto

colonical countries also which on gaining independence impatiently sought to increase their productivity. It should be remembered that this widespread interest in the schemes of worker participation was to some extent the result of I.L.O.’s efforts also. In this context, three of its Recommendations adopted in 1952, 1976 need special mention. The 1952 Recommendation urged member – states to take steps to promote the process of consultation at the enterprise level either through voluntary agreements between the parties or through legislation or a combination of these methods. The 1960 Recommendation called on member – States to promote effective co-operation and consultation t the industry or nation al level. By the 1976 Recommendation the I.L.O.

urged member-States to establish a tripartite machinery for

consultations on various matters such as consideration of Government replies to International Labour Conference questionnaires, formulations of proposals to be made to various authorities, implementation of international labour standards, etc Today, the idea of worker’s participation has become institutionalized in several countries of the world. The schemes, however, widely vary form one country to another in



respect of range of subjects handled by participation machinery, in the degree of authority exercised with regard to these subjects, and in the methods of selection of workers’ representatives. Thus we have co-determination in Federal Republic of Germany at one extreme and mere joint consultation in Great Britain and India at the other extreme.

Objectives of Worker Participation The scheme has economic, psychological, social, ethical and political objectives. Its economic objective is to increase worker’s productivity. This is possible only through fullest co-operation between labour and management, for poor labour-management relations do not encourage the workers to give more than the minimum necessary to retain the job and that, in many cases, is all he gives. The psychological objective of the scheme is to raise workers’ level of motivation. This is made possible under the scheme through the satisfaction of his non-economic needs. Participation provides the workers with a sense of importance, pride and accomplishment, freedom and opportunity for expression, a feeling of belonging to the place of work and a sense of workmanship and creativity. Socially, the need for participation arises because modern industry is a social institution with the interest of the capital owner, the employer, the community and the workers equally vested in it. Participation forges ties of understanding between the two principal groups leading to better effort and harmony all round and its absence introduces a sullenness in behaviour which ultimately may flare up into a conflict with consequential suffering and inconvenience to the society in general. The ethical objective of participation is to develop workers’ free personality and to recognize human dignity.

The political objective of participation is to make the workers conscious of their

democratic rights on their work place and thus bring about industrial democracy as an adjunct to political democracy.

Factor Influencing Participation Several research studies have shown that the intensity of participation depends of four factors: i. The subject-matter of participation ii. The level of participation iii. The personal characteristics of the individuals who are asked to participate in the decisions-making, and iv. The extent of participation. 1.

Subject-matter of Participation: By and large, the workers’ interest in participation varies with the nature of issues involved in participation. Broadly speaking, there can be two types of issues: work-related and interest-related. Examples of work-related issues are safety, welfare, such as canteen, sports, water-supply, housing, etc. These are the simplest issues. Examples of interest-related issues are wages and sharing of productivity gains.

These are the most difficult issues. Workers show

greatest interest in the second type of issues.

HRM 2.

218 Level of Participation: Level of participation is another factor which determines the interests of workers in participation as such. Participation can take place at 3 levels in an enterprise – floor level, plant level and corporate level. In big enterprise there may be a fourth level also, i.e., the departnemtnal level, in between the shop-floor and the plant. Studies have revealed that most workers desire participation at the shop-floor level and not at higher levels because they feel that with their knowledge of the work place they can contribute best at that level only.


Personal Characteristics: Workers’ interest in participation is also influenced by certain personal or group characteristics.

For example, several research studies

have shown that both very low and very high levels of task-relevant maturity discourage participation.

Participation by extremely immature workers is like the

billing leading the blind. It is pooling of ignorance. On the other hand, extremely mature workers rarely participate. They resist “group think” because they prefer only the expert in an area to make the decisions. Thus, the effectiveness of workers’ participation in management increases as one moves from low to moderate levels of maturity and then begins to plateau and finally to decline as workers become high in task-relevant maturity. This is illustrated in the following figure.




Extent of Participation:



There are four degree of participation. These are


follows: i.

Communication, i.e., sharing of information with the management about all decisions taken it.


Consultation, i.e., exchanging the opinion and the views with the management before the decision are taken.


Co-determination, i.e., taking joint decisions with the management


219 iv.

Self-Management, i.e., enjoying complete autonomy right from decisionmaking to execution.

Worker Participation in Management in India There is now a growing realisation in several countries of the world that management is too important to be left to managers alone and that workers also should be allowed to participate in the field. In India, worker participation in management is one of the Directive Principles of State Policy embodied in Article 43-A of our Constitution. This Article which was inserted in the Constitution by the Constitution (42 Amendment) provides: The State shall take steps, by suitable legislation, or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organizations engaged in any industry. Several experiments have been made fro time to time to give effect to this constitutional imperative. A brief description of these experiments I their chronological order is given below.

Works Committee (1947) The first experiment began in 1947 when the Industrial Disputes Act was passed. The Act provides that in the case of an industrial establishment in which 100 or more workers are employed on any day in the preceding 12 months, the appropriate government may be general or special order require the employer to constitute in the prescribed manner a works committee consisting of representatives of employer and workmen engaged in the establishment, so, however, that the number of representatives of the workmen on the committee shall not be less than the number of representatives of the employer. The employersâ&#x20AC;&#x2122; representatives should be nominated by the employers and be those who are connected with the undertaking and have day-to-day contact with workmen. The workersâ&#x20AC;&#x2122; representative ought to be elected in the prescribed manner from among the workmen engaged in that undertaking in consultation with their trade union. If any, registered under the Trade Unions Act, 1926.

The procedure for election in the case of Central

Government has been laid down in the Industrial Disputes (Central) Rules, 1957. The main function of the Works Committee is to promote measures for securing and preserving amity and good relations between the employers and workmen and to that end, to comment upon matters of their common interest or concern and endeavour to compose any material difference of opinion in respect of such matters. The works committees are normally concerned with problems of day-to-day working of the undertaking and are not intended to supplant or supersede the union for the purpose of collective bargaining.

They are not

entitled to consider real or substantial changes in the conditions of service. Their task is only to smooth away friction that might arise between the workmen and management in the dayto-day work. The Committee constituted by the Indian Labour Conference in 1959 has drawn the following illustrative list of items which these Works Committees can deal with:

HRM 1.

220 Conditions of work such as ventilation, lighting, temperature and sanitation including latrines and urinals;


Amenities such as drinking water, canteens, dining rooms, medical and health services.


Safety and accident prevention, occupational diseases and protective equipment;


Adjustment of festival and national holidays;


Educational and recreational activities;


Administration of welfare and fine funds;


Promotion of thrift and savings; and


Implementation and review of decision arrived at in the meetings of works committees.

The items excluded from the purview of the committees are: wages and allowances, bonus and profit-sharing, rationalization and work-load, fixation of a standard labour force, programmes of planning and development, retrenchment and lay-off, victimization for trade union activities, retirement benefits, provident fund and gratuity, quantum of leave and holidays, incentive schemes and housing and transport services. Through at the end of 1996, 876 Works Committees covering 8.65 lakh workers (as against the required number of 1248) were operating in the central sphere, their number was extremely low in some States such as Gujarat, Kerala and Orissa.

Position of Works Committees in Some States Required to be formed

Actually formed

No. of establishments

No. of establishments






















Central Sphere




It is generally conceded that these committees have failed to deliver the goods. There are many factors which have led to the failure of these committees. These are as under:

HRM 1.

221 There is lace of interest among workers due to assignment of minor functions to the works committees and exclusion of issues such a wages and allowances, bonus, rationalization, retrenchment, lay-off etc, from the purview of these committees.


There is lack of competence shown by the workers’ representatives on these committees.


Some employers consider these committees as substitutes for collective bargaining and, therefore, bypass the unions. Hence the unions view these committees as a threat to their very existence and in such apprehension lose every interest in their constitution.


Some employers insist upon their prerogatives and consider it below dignity to sit on these committees with their employees.


Inter-union rivalries, absence of provision to hold the election of representatives by secret ballot or to recall a member who forfeits the confidence of the workers in general are also reasons responsible for the ineffectiveness of these committees.


The recommendations of these committees are advisory in nature and there is mostly delay in their implementation. There is no machinery to enforce the decisions of these committees. This also dampens the enthusiasm of the workers to make works committees successful.

The National Commission on Labour suggested the following measures for the successful functioning of the works committees: 1.

a more responsive attitude on the part of management,


adequate support from unions,


proper appreciation of the scope and functions of the works committees


whole-hearted implementation of the recommendations of the works committees, and


proper coordination of the functions of the multiple bipartite institutions at the plant level now in vogue The Commission added: “Even at the risk of repeating the obvious, we mention a vital point which requires to

be recognized. It is the creation of an atmosphere of trust on both sides. Unions should feel that management is not side tracking the effective union through a works committee. Management should equally realize that some of their known prerogatives are meant to be parted with. Basic to the success of such unit level committees is union recognition”.

Joint Management Council (1958) The second experiment in participative management began in 1958 with the establishment of joint management councils. These came into existence as a result of our acceptance of the socialistic pattern of society as the goal (1954); Indian Labour Conference recommendation to encourage participation of workers in industry (1955); the Industrial Policy Resolution statement that in a socialist democracy “labour is a partner in the common task of



development and should participate in it with enthusiasm” (1956); and the Second Five-Year Plan’s observation that for the successful implementation of the Plan “increased association of labour with management is necessary”. The immediate cause was the report of a Tripartite Study Group which was sent by the Government of India to some European countries in 1957 to study worker participation schemes in those countries. The Study Group recommended the setting up of Joint Management Councils in selected enterprises on a voluntary basis. th

The Indian Labour Conference approved this recommendation in its 15 session in 1957. It was decided that the joint management councils should consist of an equal number of representatives of the management and employees, not exceeding 12. The employees’ representatives should be nominated by the recognized trade unions. Further, the councils should be set up at the plant level on a voluntary basis is selected Industrial units. The criteria laid down for the selection of industrial units were; (i) the undertaking should employ at least 500 workers, (ii) it should have a well-established, strong and representative workers’ union affiliated to some central organisation, and (iii) the undertaking must be one with a good record of industrial relations. The essential functions of a joint management council are as under: 1.

The council is to be consulted by the management on administration of standing order, introduction of new methods of production and closure, reduction in or cessation of production


The council has the right to receive information, discuss and give suggestions on general economic situation, state of the market, production and sales programmes, organisation and general running of the concern, methods of manufacture and work, annual balance sheet and profit and loss statement and long-term plans for expansion, redeployment, etc.


The council is to be entrusted with responsibility in respect of administration of welfare measure, supervision of safety measures, vocational training, apprenticeship schemes, schedules of working hours, breaks and holidays and rewards for suggestions.

Issues relating to wages, bonus, etc., which are subjects for collective bargaining, are excluded from the scope of the councils. Individual grievances are also excluded from the purview of the discussion. Despite the useful purpose the joint management councils could serve, in many cases they are reported to be ineffective and their functioning unsatisfactory. The scheme is voluntary and has been adopted by only a limited number of undertakings in the public and private sectors. The reasons for their unsatisfactory working are as under:


Workers’ representatives on these councils feel dissatisfied with their role as decision-makers in respect of welfare activities only. They want to be given authority to share decisions on more important subjects of collective bargaining like wages and


223 bonus in which they say the worker are most keenly interested. To be asked to invest time and energy in discussing trivial matters, while important issues are forbidden, is infuriating.


Trade unions fear that the joint management councils by becoming alternative channels for articulating workers interests would weaken unions’ hold over the workers.


There is also an apprehension that the workers, not having the expertise for management, are likely to be at disadvantage vis-à-vis the management when complex matters are discussed


Management is often not prepared to give as much information to the workers as they need for proper decision-making.


Middle management and supervisions are generally hostile to workers participation because they resent their actions being questioned on the shop floor. The fact that the management sometimes sides with the workers’ representatives and reprimands the supervisors weakens their authority.


Employers who already have the system of consultation with the workers in the form of works committees and the recognized unions find the joint management councils in their present form quite superfluous.


There is inherent contradiction between the role of union leaders at the bargaining table where they can put all kinds of pressure on management and their role is members of a joint council when they must subordinate their sectional interests to those of an undertaking as a whole.


The absence of a representative union has made it difficult for the councils to work smoothly.

The majority view of the National Commission on Labour was that these joint management councils were yet another bipartite consultative forum at the plant level which served no useful purpose and therefore their functions could be amalgamated with the functions of works committees. disagreed with this view.

The INTUC members of the Commission, however,

They argued that whole the works committee was a statutory

requirement which was confined to minor problems of day-to-day nature arising in the course of working of a plant, joint management council was a voluntary arrangement and functioned on a much higher level with a far wider scope and higher objectives, beyond the reach of the works committee. They asserted that the upland of the joint management council is not just one more bipartite committee – statutory or otherwise. It represents a concrete agency to work out the basic philosophy (of trusteeship) propounded by Mahatma Gandhi,” they pointed out.

Workers’ Directors (1970)


224 Yet another experiment in participative management began in 1970 with the

launching of a scheme for the appointment of workers’ representatives on the board of directors of nationalized banks. The Nationalized Bank (Management and Miscellaneous Provisions) Scheme, 1970 was passed which required each nationalized bank to have one workers’ director on its board. He was to be appointed by the Central Government from out of a panel of 3 employees to be furnished by the representative union of that bank.


qualifications laid down for the workers’ representative directors were that he should have been in continuous service of one or more nationalized banks for a period of five years and should not reach superannuation age during his term of office as director which was to be 3 years. But a study of the working of this scheme in 1981 revealed that the scheme had not proved a success. In many cases workers’ directors were ill equipped to understand and deal with the intricacies of Board level matters or were in conflict with the board chairman. Their insignificant position on boards often reminded one of the following nursery rhyme: There was an ox, there was a flea, She was as small as small can be, And he was large, but gentle he, He ploughed, while on his ear sat she. A little bird looked on. Quoth he: “What are you doing, my little flea? She said, “We plough the fields. You see This is our job – the ox and me”.

The workers’ directors like the flea sat atop the management but how real their participation was one could easily guess. In fact, participation between two unequal could not succeed. Management never liked to share its privilege with the workers. It believed that the worker – director on the board meant losing a good worker and getting a bad manager. As a result, the Ministry of Finance, by a notification, removed these directors from the boards of all nationalized banks”.

Worker Participation Scheme (1975) The fourth experiment in participative management began on October 30, 1975 when the Central Government adopted through a resolution a new scheme of worker participation in management. This scheme was also voluntary like the 1958 scheme. The scheme covered all manufacturing and mining industries (whether in public, private or co-operative sector, including departmentally – run enterprises) employing 500 or more persons. The scheme provided for the setting up of shop councils at the shop and floor level and joint councils at the plant level.

Shop Councils The main features of the shop councils were as follows:

HRM 1.

225 Whether a joint management council already exists or not there shall be a shop council for each department or shop, or one council for more than one department or shop, considering the number of workmen employed in different departments or shops;


(i) Each council shall consist of an equal number of representatives of employers and workers; (ii) The employersâ&#x20AC;&#x2122; representatives shall be nominated by the management and must consist of persons from the unit concerned. (iii) All the representatives of workmen shall be from among; the workers actually engaged in the department or the shop concerned;


The employer shall decide, in consultation with the recognized union or the various registered trade unions or with workers, as the case may be, in the manner best suited to local conditions, the number of shop councils and departments to be attached to each council of the undertaking or the establishmentâ&#x20AC;?.


The number of members of each council or registered unions of workers in the manner best suited to local conditions obtaining in the until; the total number of members may not generally exceed 12.


All decisions of a shop council shall be on the basis of consensus and not by a process of voting, provided that either party may refer the unsettled matters to the joint council for consideration;


Every decision of a shop council shall be implemented by the parties concerned within a period of one month, unless otherwise stated in the decision itself and compliance report shall be submitted to the council;


Such decision of a shop council which have a bearing on another shop, or the undertaking or establishment as a whole will be referred to the joint council for consideration and decision.


A shop council, once formed, shall function for a period of two years. Any member nominated or elected to the council in the mid-term to fill a casual vacancy shall continue to be a member of the council for the unexpired portion of the term of the council.


The council shall meet as frequently as is necessary and at least once in a month;


The chairman of the shop council shall be a nominee of the management; the workermembers of the council shall elect a vice-chairman from amongst themselves.

Functions of the Shop Councils The shop councils were to attend to the following matters: 1.

Assistance to management in achieving monthly / yearly production targets;


Improvement of production, productivity and efficiency, including elimination of wastage and optimum utilization of machine capacity and manpower;

HRM 3.

226 Identification areas of low productivity and taking of necessary corrective steps at shop level to eliminate relevant contributing factors;


Study of absenteeism in the shops / departments and recommending steps to reduce them;


Safety measures;


Assistance in maintaining general discipline in the shop / department;


Physical conditions of working, such as, lighting, ventilation, noise, dust, etc., and reduction of fatigue;


Welfare and health measures to be adopted for efficient running of the shop / department; and


Ensuring proper flow of adequate two-way communication between the management and the workers, particularly on matters relating to production figures, production schedules and progress in achieving the targets.

Joint Council In every industrial unit employing 500 or more workers, there was to be a joint council for the whole unit. The main features of the scheme of joint council were as follows: 1.

Only such persons who are actually engaged in the unit shall be members of the joint council;


The council shall function for a period of two years;


The chief executive of the unit shall be the chairman of the joint council. There shall be a vice-chairman who will be nominated by worker-members of the council;


The joint council shall appoint one of the members of the council as its Secretary. Necessary facilities for the efficient discharge of functions by the discharge of functions by the Secretary shall be provided within the premises of the undertaking / establishment.


The term of the council, once formed, shall be for a period of two year; if, however, a member is nominated in the mid-term of the council to fill a casual vacancy, the member is nominated in such vacancy shall continue in office for the remaining period of the term of the council;


The joint council shall meet at least once in a quarter;


Every decision o the joint council shall be on the basis of consensus and not by a process of voting and shall be binding on employers and workmen and shall be implemented within one month unless otherwise stated in the decision itself.

Functions of Joint Council The joint council was to deal with matters relating to: 1.

optimum production efficiency and fixation of productivity norms of man and machine for the unit as a whole;


functions of a shop council which have a bearing on another shop or the unit as a whole;




matters emanating from shop councils which remain unresolved;


work planning and achieving production targets, more specifically, tasks assigned to a shop council at the shop / department level but relevant to the unit as a whole;


the development of skill of workmen and adequate facilities for training;


the preparation of schedules of working hours and of holidays;


awarding of rewards for valuable and creative suggestions received from workers;


optimum use of raw materials and quality of finished products, and


general health, welfare and safety measures for the unit or the plant.

The works committees, as prescribed under the Industrial Disputes Act, were to continue to function in addition to this scheme.

In 1977 this scheme was extended to commercial and service organizations in the public sector having 100 or more employees.

It was thought that this scheme was an

improvement over the 1958 scheme in the following respects: 1.

It provided for two-tier participation structure â&#x20AC;&#x201C; shop councils at the floor level and joint councils at the enterprise level.


The decisions of the shop council were mandatory and not merely advisory.


Functions of shop council were clearly defined eliminating the earlier confusion.


The scheme had the merit of flexibility because it could be adapted to local conditions.

This time also the success of the scheme was not very noteworthy. The scheme was found to suffer from the following drawbacks: 1.

The scheme did not provide for participation at the middle levels. Hence it was not suitable for large multi-product companies whose organisation structures consisted of several levels of management.


There was considerable overlapping in the functions of joint councils and works committees.

For example, both of them were to deal with safety measures and

holidays. 3.

It was not clear what these two bodies were supposed to do in their respective areas i.e., whether they had to make decisions, give suggestions, share information or assist management in implementing its decisions.


It was impractical to make the decisions of the shop council binding on management because sometimes it might not e possible for the management to implement them. For example, how could the management of a company carry out the decision of its shop council to install costly machinery for improving productivity if the resource position of the company was not good?

HRM 5.

228 The scheme provided an upper hand to the management in the matters of determination of the number of shop councils and their composition. The unions / workers were only to be â&#x20AC;&#x153;consultedâ&#x20AC;?.

New Scheme on Worker Participation (14983) In December 1983 the Government of India introduced a new comprehensive scheme of worker participation in management. The broad features of this scheme are as follows: 1.

The operation of this scheme has been restricted to central public sector undertakings only. Departmentally-run undertakings have been excluded from the new scheme. This is because Joint Consultative Machinery is expected to function in their case.

The Central Government has, however, addressed various State

Governments also to introduce the scheme in their State undertakings and to encourage the private sector to implement it. 2.

The scheme is to operate at the shop floor and plant levels. It provides for equal representation to both the parties at both levels. There is provision for Board-level participation also.


Different categories of workers such as skilled, unskilled, technical and non-technical, supervisory (foreman, charge man, etc) and non-supervisory are to be represented at both shop floor and plant levels. Managerial personnel are to be excluded.


The exact number of representatives is to depend on the size of the work force and is to be arrived at by the management in consultation with trade union leaders. The mode of representation of workers is to be determined through consensus.


Representation is to be given to women workers where they constitute 10% or more of the total work force.


The scheme has universal applicability irrespective of the number for workers employed. (Works committees envisaged 100 workers, JMCS 500, 1975 scheme 500 and 1977 Scheme 100).


The functions of participative forums at various levels have been made more elaborate. The forum at the shop floor level is to look into a wide range of functions such as production facilities, storage facilities, material economy, wastage control, hazard and safety problems, cleanliness, welfare measures and so on. The forum at the plant level is to look into the following functions:

Operational Areas Evolution of productivity schemes taking into account the local conditions; planning; implementation and review of monthly targets and schedules; materials supply and its shortfall;









encouragement to and consideration of suggestions; quality and technological improvements;



machine utilization and development of new products; matters not resolved at the shop level or concerning more than one shop; review of the working of the shop level bodies.

Economic and Financial Areas Profit and Loss statement, balance sheets, review of operating expenses, financial results, plant performance in financial terms etc.

Personnel Matters Absenteeism, special problems of women workers, initiation and supervision of workers’ training programmes, administration of social security schemes, etc.

Welfare Areas Implementation of welfare schemes, medical benefits and transport facilities, safely measure, sports and games, housing, township administration, canteen, control of gambling, drinking, indebtedness etc.

Environmental Areas Extension activities and community development projects, pollution control.

Both the shop and the plant levels forums will attempt to arrive at a decision by consensus; but where no consensus emerges, they will refer the matter to the next higher forum. AT the Board level the workers’ representatives will participate in all the functions of the Board. One of the special functions assigned to the Board would be to review the work of the shop and plant levels forums. This scheme also has failed to make much headway due to two important reasons, viz., (a) lack of consensus among union leader on the mode of representation, and (b) tendency of workers to discuss subjects which are outside the scope of a participatory forum, e.g., pay scales and wages.

Worker – Shareholders One more method of involvement of workers in industries is to make them shareholders in the company.

The workers are allowed to pay the purchase money in

convenient installments and are even granted loan for this purpose. It is, however, doubtful whether this type of scheme creates in the workers any sense of belonging or co-partnership. Experience of the working of the Payment of Bonus Act has shown that the payment of bonus to the workers has neither reduced industrial unrest nor has it created in the workers any sense of belonging. The trade unions in India do not seem to favour this scheme; while answering the questionnaire issued by the National commission on Labour, INTUC expressed its disapproval of the scheme thus: “Even if the workers are given some shares in the



company they will not be able to have any effective voice or participation in the management of the concern”.

AITUC said: “Such a scheme has no validity at all in public sector

undertakings where the shares are entirely owned by the State.

In the private sector, a

nominal shareholding by the workers cannot give them any say in management”.

Quality Circles A quality circle is a small group of 5 to 10 workers who volunteer ot meet regularly to solve problems affecting their work, e.g., how to improve quality, reduce production costs, raise productivity, improve safety, and so on. Typically, the group itself identifies a problem, analyses it, develops solution and presents the same to management. Management has the right to accept or reject the suggestion. The quality circle usually meets during company time once a week. The circle is given recognition for those of its suggestions which have been successfully implemented. A quality circle is distinct form other forms of participation which come from above either as a part of legislation or as a government or management scheme and are, therefore, resisted or given lip-service. This is what has happened to most of our earlier forms of participation. A quality circle is a voluntary participatory form. This means that if workers are not interested they are not forced to join. Quality circles were first developed in Japan in the early sixties (the first circle was registered in 1962). Today, these circles have spread to many other countries including India. Some organizations are attracted to these circles because they attribute Japanese success to them.

Some other organizations have gone in for these circles because they symbolize

modern participative management and this organisation swat to look modern. There are very few organizations in which these circles have been started because of their philosophy.

Worker Participation in Management in Tata Steel While it is too simple to say that worker participation is directly responsible for increase in productivity, it is true that it does that it does help in improving work culture and work output. Tata Steel provides a refreshing example of this. The company has a three-tier set-up: Joint Department Councils (JDCs) for each department of the works, Joint Works Council (JWC) for the entire works and Joint Consultative Council of Management (JCCM) at the apex. JDCs which meet twice a month study at their departmental levels several issues such as increase in productivity, elimination of waste, reduction of cost, promotion of welfare and safety, and so on. JWC reviews every month the working of JDCs. JCCM meets once in a quarter and considers questions referred to it by the JWC and advises management on economic and financial matters. As a result of this scheme the company has been able to achieve: (i)

plant performance of over 100% rated capacity consistently since 1976 – 77;


a ready-made forum for cross – fertilization and fast communication of ideas;3


a unique distinction of more than 50 years of harmonious industrial relations;

HRM (iv)

231 emergence of a carder of well-informed and enlightened trade union leaders from the grassroots level;


spirit of brotherhood and a high sense of commitment.

Some Issues for Consideration 1.

Integrated Scheme: From what has been said above it is now clear that there are at present several schemes of worker participation in management operating concurrently.

They are the works committees, joint management councils, the

schemes introduced in 1975 and 1977 and the scheme introduced in 1983. It is, therefore, necessary to ensure that these schemes do not overlap and that if one scheme is working satisfactorily it should be allowed to continue not withstanding the fact that a new scheme has been introduced. 2.

Mode of Representation:

Deciding the mechanism through which workers’

representative should be sent to various forums has been probably the most critical difficulty in the implementation of participation. Some people advocate nomination of workers’ representative by trade union functioning in an enterprise, some others advocate election by secret ballot. Former demand has come to be known as the single channel’ theory. The single channel argument is that the union constitutes the only possible channel for articulating workers’ interests, and that all employment relationships have therefore to be routed through the union.

Any form of direct

participation with employees is seen as an attempt to subvert the union. Thus Indian trade unions see the threat to their power not in participation per se but in the proposal that worker representatives to various forms be elected directly. 3.

Coverage: How wide a segment of industry should be brought within the purview of workers’ participation? Till now our schemes have been made applicable on the basis of a minimum number of workers. Should we continue the same? Or should we for the time being make the scheme applicable only to large organizations? We also need to keep in mind that with technological improvement organizations are reducing manpower wherever possible. Or, do we think of different schemes for different sizes of organizations?


Voluntarism or Legislation: We have seen that so far all schemes, other than the works committees and bank employee directors, have been based on the principle of voluntary implementation. Some people, however, feel that the implementation of this scheme should not be voluntary. It should be made compulsory legislation for all enterprises. But will this not run counter to the logic and culture of participation? Will legislation succeed in changing the attitudes?


Scope of the Forums: We have seen that so far the various participative forums under various schemes have been assigned only work-related issues to deal with. Interest-related issues have been kept outside their purview. This has adversely affected the functioning of these forums.

It is unrealistic to assume that any


232 meaningful discussion on work-related issues can take place without giving the workers’ representatives an opportunity to discuss their interest-related problems as well. We must also remember that the workers’ participation in management is a process that follows a cycle consisting of stages, such as information-sharing, consulting, joint decision-making and finally self-managing.

The objectives of

workers’ participation can be realized only by adopting the total process and not by limiting workers’ participation to one or two stages of the process. The reason is very clear. Each preceding stage raises expectations among workers to get entry into the succeeding stage. If workers are not granted entry into the succeeding stage their initial enthusiasm starts fading and they begin viewing participation as an act of manipulation. In the light of the above discussion it seems advisable to start with workrelated issues, follow the full process, i.e., information-sharing, consultation, joint decision-making and self-managemet and then expand the scope to include interestrelated issues. On the other hand, it is not easy to do so because both trade unions and employers tend to resist any attempt which threatens to usurp any of their functions. 6. Levels and Support-System: We have seen above that participation can take place at 3 levels – floor level, plant level and corporate level. These 3 levels are arranged in a system of hierarchy. Hence participation attempted at any one level is bound to effect the other levels also.


therefore, participation cannot be restricted to any particular level. It has been the common experience in several enterprises that when participation was introduced only at the corporate and shop-floor levels, the middle management got alienated and tried to sabotage the scheme. In view of this it is imperative to introduce participation at all levels with well-knit functional linkages in between. In addition to these linkages there should also be other support systems such as quality circles, suggestion schemes, grievance settlement machinery and so on.

These systems provide everybody in

general an opportunity to give vent to his latent urge for creativity and innovation and strengthen the participation scheme.

Grievance: According to Michael J.JUCIUS, the term “grievance” means “any discontent or dissatisfaction, whether expressed or not and whether valid or not, arising out of anything connected with the company that an employee thinks, believes or even feels, is unfair, unjust or inequitable.”

“Grievance is any dissatisfaction or feeling of injustice in connection with one’s employment situation that is brought to the attention of management.



” A Grievance is a feeling of dissatisfaction among the workers, working in an organisation a grievance may be expressed individually or collectively. “Grievance is simply a complaint which has been formally pressured in writing to a mgt representative or to union official in the language of labour relations from mgt angle”.

Explain the sources (or) Causes of Grievances:Grievances are caused by the behaviour and attitude of the employees:(I)Causes of Grievances of employees: 1) Causes of Grievance: - (a) Grievances of mistake in the calculation of wages of an individual employee. - (b) Grievances of rate of wages and salary not according to the job. - (c) Grievances in relation to financial incentives. - (d) Grievances in relating to the rate of bonus. - (e) Time of payment of wages.

(2)Causes of Grievance, related with working condition: •

(a)Non-availability of required material properties.

(b) Quality of material related grievance.

(c) Related with machines and equipments.

(d) Related with safety and security measures.

(e) Related with medical and health facilities.

(f) Related with general working conditions on the work.

(g) Grievance related with job classification.

(3)Causes of Grievances related with supervision: Related with •

(a) Method of supervision.

(b) Behavior of foreman or supervisors.

(c) Attitude or partiality.

(d) Page lists the disciplinary action.

(4) Causes of Grievances: Related with seniority, transfer, promotion and retirement. •

(a) Mistake of calculation of seniority’s order.

(b) Partiality in transfer.

(c) Partiality in promotions.

(d) Lay off.

(e) Related with retirement.


234 (f) Delay payment of retirement benefits, such as Provident fund and Gratuity, etc.

(5) Causes of Grievances: Related with collective bargaining: •

(a) Related in implementing the agreement of collective bargaining.

(b) Grievance of the violation of terms and conditions of such agreement.

(c) Grievance of wrong interpretation

(d) Grievance such as inability to solve the problems under the provisions of such agreement.

(6) Other causes of Grievances: •

(a) Grievances against the plans and policies of mgt.

(b) Grievance related with the rules regarding leave.

(c) Grievance of lack of co-ordination among different departs of the enterprise.

(d) Grievance of lack of co-ordination

(e) Grievance against the declaration of lack out by management.

II. Causes of Grievances of employers and management: They are also having complaints against their employees. (1) Causes of Grievances: Grievances against a particular employee. •

(a) Violation of the rules, discipline.

(b) Disobediences of orders.

(c) Absence from duty without any information.

(d) Misbehaviors.

(e) Non-co operation.

(f) Misbehaviors with other employees.

(g) Non-co-operation with other employees.

(h) Low poverty.

(i) Low quality of production.

(j) Wastages of leave the work incompletes.

(k) Lo leave the work incomplete.

(l) Not to handle machines and equipments properly.

(m) To waste the time.

(n) To inspire and motivate the other employees against management.



(2) Causes of Grievances related with the activities of labour. •

Non-fulfillment of commitments by labour unions.

To cause disturbances in the functions of management.

To Claim the employees and management.

To inspire employees against them get.

Disturbances in the disciplines.


To hold agitations against mgt.

No to co-operate in the settlements of Grievances.

CAUSES OF GRIEVANCE: I. GRIEVANCE RESULTING FROM WORKING CONDITIONS a) Improper matching of the worker with the job b) Changes in schedules or procedures c) Non-availability of proper tools, machines and equipment for doing the job d) Tight production standards. e) Bad physical conditions of workplace f)

Failure to maintain proper discipline

g) Poor relationship with the supervisor 2. Grievance resulting from management policy a) Wages payment and job rates b) Leave c) Overtime d) Seniority e) Transfer f)

Promotion, demotion and discharges

g) Hostility toward a labour union h) Lack of career planning 3. Grievance resulting from alleged violation of a) Collective bargaining agreement b) Central or state laws c) Past practice d) Company rules e) Management responsibility 4. Grievance resulting from personal maladjustment a) Over-ambition b) Excessive self-esteem c) Impractical attitude to life



HOW TO KNOW ABOUT GRIEVANCES? EXIT INTERVIEW Employees usually quit organizations due to dissatisfaction or better prospect elsewhere, exit interviews, if conducted carefully, can provide important information about employees’ grievances. GRIPE BOXES These are boxes in which the employees can drop their anonymous complaints. They are different from the suggestion boxes in which employees drop their named suggestions with an intention to receive rewards. OPINION SURVEYS Group meeting, periodical interviews with employees, collective bargaining sessions, are some other means through which one can get information about employees’ dissatisfaction before it turns into a grievance. OPEN DOOR POLICY Some organizations extend a general invitation their employees to informally drop in the manager’s room any time and talk over their grievances. EXPLAIN THE NEED OF GRIEVANCE PROCEDURE: Without an analysis of their nature and pattern, the causes of employee dissatisfaction cannot be removed. The per, mgr help the top management and line managers, particularly foremen and supervisors, in the formulation and implementation of the policies, programmes and procedures which would best enable them to hold employee grievances.

The grievance procedure is a problem salving, dispute, settling machinery which has been set up following an agreement to that effect or an employee makes and processes his claim that there has been a violation of the labour management by the company.

The grievance redressal procedure is a device by which grievance are settled, generally to the satisfaction of the trade union or employees and the mgt. This is important for labour relations. It is essential, whether a plant is an organized one or not. It enables mgt to detect any defects or flows in the working conditions or in labour relations and under take suitable is maintained, improve work honesty. Plan schedules would be shattered and the movable of the employees would be irretrievably impaired.

Improve uniformity- [Systematic grievance handling].

Explain the Grievance procedure model: In 1958-Indian Labour Conference was can held at this conference grievance procedure model was accepted.



Grievances should be presented to the immediate officer: Aggrieved employee should present his grievance to his immediate officer either in writing or orally. Such officer will take decision within 48 hours. If not the employee meets the HOD. Grievances should be presented to departmental held: He should take action within 3 days. If not the grievance is forwarded to grievances committee. Grievance should be presented to the Grievance committee: The committee should take decision within 7 days. If not the grievance is forwarded to grievances committee. Grievance should be presented to the mgt: Through labour union or himself within 7 days mgt should give suggestion. If not the grievance is forwarded to grievances committee. Grievance should be presented before arbitrations: They enquire collect both views after a careful examination of the problem, they give their decision, and the decision of arbitrators is binding upon both the parties. Formal agreement procedure created. Follow-up decision. Appeal before the suspending authority. If an employee grievance is related to suspension, he has a right to appeal the same incuse. Authority within 7 days of suspension including the leave days.


A satisfactory procedure must be adopted in all the enterprises to deal with these grievances a system and a procedure evolved to settle the grievance, in a organization is known as GHP.


The personnel mgr should take necessary steps to solve these grievances; per dept can be supplement and not a substitute system of Grievance Handling.

GHP: The following factors should be considered by the mgt while preparing the GHP:

(1) Various levels of mgt should be determined for the principles of handling grievances. (2) Size of grievance handling committee should be small. (3) Simple process and procedure. (4) GH amended from time to time according to the needs and requirements. (5) As possible, grievance should be settled at the last level of mgt. (6) Grievance should be presented before the competent authority who may take decision on the problem. (7) Settled at the per list.



GHP: 1) Preparation of grievance at lst level: Presented to the nearest head. 2) Second level to GHP, fifth and last level.

Explain the importance of GHP (or) advantages or merits or essentials or need of GHP: 1.

Method of bargaining out frustration or dissatisfaction employees. (GHP reduces the frustration and dissatisfaction.


Upward communication system in the enterprise: Thus mgrs of the enterprise get an opportunity to know the difficulties, problems, reactions and dissatisfaction of employees. Solve ego problems too.


Effective control: This procedure protects the employees against their exploitation by supervisors or managers.


Increase the morale: They feel that the supervisors and the mgrs are their guides and not the dictators.


Improvement in policies, programmes and strategies: The settlement of grievances helps in improving the plans and mangers come to know the defect of these plans and programmes. Thus, earliest settlement of grievance is essential of an enterprise. It is useful in improving the production and productivity of the enterprise by providing maximum satisfaction to the employees.

Describe in brief the principles of Grievance Redressal procedure. How will you measure the success of GRP? GRP (1) Principle of interviewing: •

The mgt should interview the employees in order collect the facts with regards to the grievances.

The interview should be confidential

Convenient atmosphere

Quite informal

Patient listening behaviors of employees

Mgr should adopt a flexible attitudes to the employees

Grievance should be noted

Inter should be closed in a cordial atmosphere

Mgrs should prepare a report on findings on the basis of interview.

GRP (2) Attitude on mgt towards employees: •

It should be encouraging so that the feeling of faith and trust may be developed among employees,

Factors of faith and trust may be developed among employees,



Factors the mgt should be the listen the problems

Create +ve attitude

Should apply jurisdiction

Should take all possible measures to settle these grievances at the earliest.

GRP (3) Responsibility of management: •

The settlement of problems is a primary responsibility

Mgt should find whether the problems is real, or imaginary

Routine nature.

Greeting trust among employees.

GRP (4) Long run principle: •

The mgt should consider long run interests of the enterprise which enterprising into an agreement with workers for the settlement of their problems. Some times short run case may create a problem in the long run.

So the decisions must be taken according to the long run needs of enterprise.

Measurement to express the Grievance Procedures: •

Encouragement to express the Grievance.

Level of settlement of Grievance.

Acceptability of Grievance.

Number of appeals.

Increase in the morale of employees.

Increase in respect of officers.


GRIEVANCE PROCEDURE / REDRESSAL OF GRIEVANCE PROCEDURE: Grievance procedure can be broadly classified under the following three broad categories •

Three steps procedure

Four steps procedure

Five steps procedure

Three steps procedure: Step 1: aggrieved worker with shop representative of the union take up the grievance with the shop supervisor. Step – 2: if the step no. 1 has failed the worker approaches the general manager along with plant representative of union.



Step-3: if step no.2 has also failed the matter is referred to arbitration by an independent agency Four and five step procedure: Similar steps are used in 4 steps and 5 steps methods, additional steps to take care of more number of persons and several plants incase of larger firms.


3-steps procedure

4- steps procedure

5 steps procedure


Step no: 1


Worker with shop rep.

Worker with shop rep of

rep. Of union

Of union





Shop supervisor

Shop supervisor

Shop supervisor

Union rep. Of plant

Work committee

Union rep of plant




G.M or owner


Manager IR

Local union leaders

Grievance committee

Vs chief executive




Step 2

Step 3





independent authority 4

Step 4

Director Arbitration

Regional rep union Vs Chief executive


Step 5


Model grievance procedure: a) Aggrieved worker present his complaint to officer designated by the; management and the case must be disposed off within 48 hours b) If the complaint is not disposed or the worker is not satisfied he can approach HOD and present his case by the representative of his department. HOD has to dispose the cases within 3 days c) If he is not satisfied he is free to request the HOD to forward his grievance to the grievance committee. The decision should be taken by the management with in 3 days d) If the decision is not satisfactory or not communicated within specified period he can appeal for revision with the help of union rep for decision within 7 days. e) If the worker still remained aggrieved management may refer the case to voluntary arbitration and the decision of the arbitrator is final.

Causes of indiscipline 1. Ineffective leadership, which cannot control, coordinates and motivates workers. 2. Low wages and poor working conditions 3. Lack of promotional opportunities


241 4. Absence of any code of conduct to regulate behavior 5. Lack of timely redressal of worker grievances 6. Unfair management practices 7. Drunkenness and family problems 8. Excessive work pressure.

Types of discipline Positive or self-discipline: This refers to an organizational atmosphere in which subordinates willingly abide by rules, which they consider fair. The techniques followed by the management to achieve this type of discipline include positive motivational activities such as praise, participation and incentive pay. Negative or punitive discipline: It is one in which management has to exert pressure or hold out that threat by imposing penalties on wrongdoers. When this pressure becomes increasingly severe each time a man is disciplined, it is called corrective discipline. ARGUMENTS AGAINST PUNISHMENTS It wastes lot of managerial time and effort They only temporarily suppress undesirable responses. They have undesirable side effects.

ESSENTIAL OF A GOOD DISCIPLINARY SYSTEM: KNOWLEDGE OF RULES: The employee must be informed clearly about what constitutes good behavior and the rewards that may emanate from it. All instructions should be clear and understandable. It is common sense that an employee will obey an instruction more readily if he understands it. The supervisor himself must know all the rules. PROMPT ACTION. All and misconducts- big or small – should be promptly enquired into. For example, a supervisor is most unwise to wait until lunch break before rebuking a worker for arriving late. Beat the iron when it is hot. FAIR ACTION An action in order to be fair must possess the following characteristics: 1. All violation – big or small – must be duly punished. 2. All individuals – big or small – should receive equal punishment for equal indiscipline. 3. Discipline must be uniformly enforced at all times. 4. All alleged violation should be fully inquired into. 5. The employee should always be given an opportunity to explain his action. WELL-DEFINED PROCEDURE.



The procedure to be followed to reach to a penalty decision should be carefully laid down. The appropriateness of a disciplinary action should be decided in terms of its effectiveness in correcting the employee. The accused employee should have the right to appeal to higher authorities. CONSTRUCTIVE HANDLING OF DISCIPLINARY ACTION Immediate supervisor should carry it out It should be taken in private After the disciplinary action has been taken the supervisor must assume a normal attitude towards the employee.

Kinds of punishment Punishments

Minor Punishments

Oral reprimand Written reprimand Loss of privileges Fines Punitive suspension

Major Punishments

Withholding of increments Demotion Discharge Dismissal












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IMTS Human Resourse Management (Human Resourse Management)