P.O.

Box 342-01000
Thika
Email: Info@mku.ac.ke
Web: www.mku.ac.ke

DEPARTMENT OF MANAGEMENT

COURSE CODE: HRM 311

COURSE TITLE: EMPLOYEE SOURCING

Instructional Material for BBM- Distance Learning

 COURSE OUTLINE
Contact hours: 42
Prerequisite: BBM 311

Purpose: To equip learners with knowledge and skills required for employee sourcing

Expected Learning Outcomes of the Course: By the end of the course, students should be able
to:-
i) Describe the recruitment and selection process
ii) Describe the methods of job analysis
iii) Appreciate the role of ethics in HR staffing

Course Content:
Recruitment and selection process in organizations; Methods of job analysis used in determining
requisite knowledge, skills, and abilities for job performance; Development of internal and
external recruitment strategies; Choice and validation of selection devices; Recruitment and
selection in both line and staff capacities; Ethical and legal considerations involved in staffing
decisions

Teaching / Learning Methodologies: Lectures and tutorials; group discussion; demonstration;

Individual assignment; Case studies

Instructional Materials and Equipment: Projector; test books; design catalogues; computer
laboratory; design software; simulators

Course Assessment
Examination - 70%; Continuous Assessment Test (CATS) - 20%; Assignments - 10%; Total -
100%

Recommended Text Books:

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i) Armstrong, M, (2003). A Handbook of Human Resources management Practice,
Kogan Pages, 8th Edition

ii) Cole, G.A (2002) Personnel and Human Resource Management, ELST, London

iii) Gupta, C.B, (2003), Human Resources Management. Sultan Chand & Sons; New
Delhi, 6th Edition.

iv) Nair, N.G and Latha, N (2001), Personnel Management and Industrial Relations.
Sultan Chand & Sons, New Delhi. First Edition.
v) Aswathappa,k.(2008).human resources management. Text and case. Tata MacGraw-
Hill, New Delhi. Fifth edition.

Text Books for further Reading:

i) Laurie Dicker (2006); Employee Relations, Allen & Unwin
i) Robins, S.P (2001), Organizational Behaviour. Prentice-Hall of India, New Delhi, 9th
Edition. PP.203.

ii) Singh, N. (2003). Organization Behaviour, Concept, theories and Practice. Deep & Deep
Publication, New Delhi
iii) Suri R.K Chhabia T.N (2003), Managing Human resources: Techniques and Practice,
vanity books, New Delhi.
iv) Wayne F. Cascio (2006), Managing Human Resources, Tata MacGraw Hill
v) J. Matthewman (2006), Human Resources Effectiveness, Jaico Publishing House

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 Course Content:

Week 1: Job analysis methods, Objectives, Methods, Job description, Job specification

Week 2: Job evaluation, Objectives, Methods

Week 4: Job pricing, Determinants of wages, Wage structures, Wage payment

Week 5: Processes of wage payment, Incentives plans

Week 6: Nature and scope of recruitment functions, Factors affecting recruitment , Recruitment
process in organizations;

Week 7:Sources of recruitment: internal and external, Recruitment strategies , Evaluation and
controls

CONTINUOUS ASSESSMENT TESTS (CAT)

Week: 8 Nature and scope selection, Selection policies, election factors

Week 9 &10: Selection processes, interviews,

Week 11: Selection tests, Reliability, validity

Week 12: validation of selection devices; Selection decisions, barriers

Week 13: Ethical and legal considerations involved in staffing decisions

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 TABLE OF CONTENTS
COURSE OUTLINE ...................................................................................................................... 2

COURSE CONTENT: .................................................................................................................... 4

TABLE OF CONTENTS................................................................................................................ 5

CHAPTER ONE: JOB ANALYSIS ............................................................................................... 6

CHAPTER TWO: JOB PRICING ................................................................................................ 23

CHAPTER THREE: RECRUITMENT........................................................................................ 43

CHAPTER FOUR: SELECTION................................................................................................. 50

SELECTION PROCESSES...................................................................................................... 54

CHAPTER: FIVE ETHICS IN HR STAFFING ...................................................................... 79

SAMPLE PAPERS ....................................................................................................................... 97

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 CHAPTER ONE: JOB ANALYSIS

Objectives
By the end of topic the learners should be able to:
a) Explain job analysis
b) Describe job descriptions and job specifications
c) Evaluate different jobs using job evaluation methods

Meaning and Scope of Job Analysis

Employees’ turnover is an acute problems in many industries because of:
1. Mismatch between expectation and reality of the nature of the work
2. Mismatch between responsibility and compensation package
3. Mismatch between requirements in the job and capabilities of the job holder
Hence a proper job analysis is required to correct these mismatches

Definition
Job analysis (J.A) is the process of determining the activities, duties, and responsibilities of a job
(job description), alongside with the desired attributes of the person who is most suitable to hold
the job (job specification), arranging jobs in hierarchical order in relation with each other (job
evaluation) for the purpose of fixing compensation (job pricing) (Latha Nair 2001)

JA involves two parts: statement of job to be performed and attributes of the person most suited
to do the job. The matching of these two parts calls for studies of job demands, its relationship
to other jobs, nature of the job, job conditions etc. Information is also required of the doer of the
job in terms of technical and personal capabilities

Job Analysis
Job analysis is the process of collecting job related information, with a view of using such
information for preparing job description and job specification.
Every job has certain components that constitute job details as follows:

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Element – an element is the smallest unit into which a job can be divided. For example
switching on the drill motor is an ‘element ‘ of the job ‘ drilling’
Task or function – is distinctive activity of a job which is meaningful. For example making a
hole in a given plate is a of drilling job.
Duty – is the number of tasks assigned to individual worker. The worker has obligation to do
such task.
Position – is a set of duties performed by an employee. Each position involves one or more
duties
Job –is a type of a position in an organization. A job is impersonal because it is an office
Job family – this classification of similar jobs under one family or job groups. These are jobs
that require similar skills from the employees. For example skilled labours, semi-skilled labours,
machinists operating different types of machines.
Occupation – is the classification of similar jobs found in an organization, base on well known
avocation or trades. For example, plumbers, engineers, teachers, accountants etc.

Purpose of job analysis

 to assist in man power planning
 to assist in recruitment and selection
 To help in fixing compensation fairly for each job
 to assess facilities and equipment requirement of each job
 to determine the qualification and experience required for each job
 to draw up training g and development programme
 to provide guideline for promotions and transfers
 to design work environment based on ergonomics
 To set up production standard
 To assist in work study and work measurement

Every job analysis requires certain mandatory information that aids in designing a
comprehensive job descriptions and job specification. These sets of information are;
 Identification of the job

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  Description of the activities involved in the job
 Definition of work environment - both physical and non-physical environment
 Lists of equipments/materials required for doing the job
 Work method
 Personal attributes
 Job relationships

Methods and Techniques in J.A

Following are most common techniques used in job analysis

1. Observation method – the analyst keenly observe the job understudy directly. Even
though the method gives the advantages of direct observation and in-depth understanding
of the job, it has the limitation of the worker being conscious of the analyst and in some
cases, observation is not possible e.g a doctor, R&D, managerial work

2. Recording method: Here workers are assigned the responsibility of recording their
activities during the performance of their jobs.
Advantages: it gives first hand information
Disadvantages: -It is not verifiable whether the employee faithfully writes down all his/her
activities, - inability to note employee attitude and that the information will not contain such
things as environment, posture, tools or workers relationship with supervisor

3. Interview method: this involves interviewing a number of workers doing the same job
and eliciting required information, individually or collectively. Differing views are
collected and collated.
Advantages.: The method gives accurate information
Disadvantages: Time consuming

4. Structured questionnaires – this method lists out various duties and responsibilities
associated with relevant jobs in questions structured in form of questionnaire to be completed by
the employees. Disadvantages; 1.No feedback or cross-questioning opportunity

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Disadvantages: 1.lack of direct opinion or personalized response

6. Special techniques: there are number of special techniques developed by different

universities.
a) Functional analysis- developed by department of labour (DOL) USA based on
dictionary of occupation titles (DOT) . The technique involves observation of jobs
and interviewing of employees concerning their jobs. The information obtained is
then compared with catalogue of DOT.
b) Position analysis questionnaire (PAQ) –developed by Purdue University USA.
PAQ involves 194 elements divided into 6 classifications of similar jobs. PAQ
helps managers to group jobs into “family of jobs”.

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Process of Job Analysis

Job analysis follows a standard step in its construction and implementation as illustrated in figure
1: Process of Job Analysis

Strategic choices
For example, extent of employee involvement,
details of analysis, frequency of analysis

Gather for example, using job analysis methods

information

Process
information

Job Uses of job description and job specification

description -training and development
-HR planning
-Performance appraisal
-Employee sourcing
Process Health and safety management
information -work scheduling
Career planning

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Job Description (JD)
Job description is the process of giving details regarding the job, its tasks, and elements, the
environment, the equipment required to do the job etc
There are no one standard way of writing a job description but there are 4 recommended guide
lines in writing a job description viz;
 Give clear, concise and readily understandable picture of the whole job
 Describe in sufficient details each of the main duties and responsibilities
 Indicate extent of direction received and supervision given
 Ensure that new employee understand and follow the job description

Job Specification (JS)

Once the nature of the job (job description) is decided, the next logical step is deciding on the
person who is most suited to do the job. Job specification is therefore, is a written document
indicating the appropriate characteristic of a suitable person who can man the job as defined in
the job description. JS contains desired attributes of a person who can successfully undertake the
given job. The following are key attributes required in a JS
 Biological data – gender, religion, age,
 Physical attributes –vision, stamina, height, weight
 Mental abilities – verbal abilities, quantitative abilities, analytical abilities, intelligence,
 Personality and aptitude –– values, attitude, beliefs,
 knowledge and skills – academic qualification, experience, professional skills, human
skills,

Job Evaluation (JE)

JE is described as an attempt to determine and compare the demand which the normal
performance of a particular jobs make on normal workers without taking into account the
individual abilities or the performance of the workers concerned.
This is the process of arranging job in a hierarchical order of the worth. This worth is in terms of
assessing and valuing the worth of a job in comparison with another job in the same
organization. This hierarchy is a function of levels of individual input to the organization and
levels of responsibilities

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Objective of Job Evaluation
Job evaluation has several objectives that include,
Securing and maintaining complete, accurate and impersonal description of each distinct job or
occupation in entire organization
 Establish a standard procedure for determining the relative worth of each job
 To determine a fair rate of pay which is equitable in relation to other jobs in the industry
 Provide factual basis for the consideration of wage rate for similar positions in the
industry
 Provides information for decision making on such matters as employee selection, training
development

Methods of Job Evaluation

There are four popular methods of job evaluation. They are explained as under:
a) Ranking method
b) Classification (Grading) method
c) Factor comparison method
d) Point rating method

a) By and large these four methods are extensively used for evaluating jobs of workers and
supervisors. The first two methods (Ranking and classification (Grading) are qualitative
methods whereas the other two (Factor comparison method and point rating method) are
quantitative methods. It may also be remembered that the criteria used for job evaluation
of worker’s job are to be necessarily different from that of Managers and Supervisor’s
job. Hay’s method is recommended for the job evaluation of managerial cadre jobs.
These methods are briefly discussed under the following paragraphs.

Ranking Method
Ranking of job is normally done by an “Expert Committee” formed by the organization. This
committee consists of representatives from management and employees. This committee may
also consist of a certain number of experts either as permanent members or co-opted members on

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as-required-basis. Here the jobs are ranked as a “whole job” instead of breaking them into parts.
Following steps are involved:

 Formation of expert team or individual: This team is entrusted with the task of ranking.
The team members are called Assessors.
 Selection of jobs: Cluster of jobs may be segregated for ranking. For example jobs may
be broadly clustered together such as “Administrative job”, “Clerical Jobs”, “Manual
work”, “Machine Operators”. etc.
 Ranking by department: In this step separate cards are prepared where in brief
description of the job is written down. Later these cards are shown to the supervisors and
managers of such departments and their views of ranking in terms of importance (or
difficulty) are obtained. Where the differences between jobs are very narrow, operation
techniques like “paired comparison” or “Forced Decision Matrices” can be used.
 Job Slotting: This is the method of integrating “departmental ranking’ and converting
them into the “organizational ranking’. Here the jobs between the two departments are
compared to one another and inserted in such a way as to take out one list out of two.
Repeat this till all departments are covered and compared and a single integrated list for
the entire organization is developed. This method is called “Job-slotting”.

Advantages:
 Simple and easy to understand.
 Faster and inexpensive.

Disadvantages:
 Subjective and influenced by personal bias.
 Specific job requirements are not taken into account.
 Ranking does not give indication of actual differences between job, in terms of
“difficulties or responsibilities”.

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Classification (Grading) Method
This method is made popular by Civil Services and it is used mostly for administrative jobs.
Here different “grades” or “classes” of jobs are predetermined based on certain criteria such as
skill, knowledge, responsibility etc. Even though, initially grading method is envisaged by Civil
Services for administrative and clerical jobs, later this concept became popular and extended to
defense services, marketing, sales and managerial cadre jobs. This method is applicable for
workers, supervisors and managerial jobs. For example in Kenya the following are the
classification methods used.

Government Department: job groups, A, B, C………. are used for all cadres in an ascending
order.
Public Sectors (Public universities):
job grades: 1, 2, 3,…4: used for support staff
Job grades : A, B,C ……….F: used for technical staff
Job grades: 11, 12, 13, ……….18: used for teaching and managerial staff

The following are steps involved in classification method:

a) Prefix the Grade / classification.
b) Prepare Job description.
c) Identify key jobs in each grade / class.
d) Allocate all jobs in each grade / Class based on criteria.

Advantages:
 Simple and easy to understand and flexible.
 New job can be easily fixed into pre-determined classes / grades.
 Easy to fix wages for jobs, since wage level for each grade is prefixed.
 Pay fixation in easy since grades / classes are a few even though number of jobs are
many.

Disadvantages:
 Classification is rigid and unsuitable for large organization.

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  Differences or difficulties between jobs within a grade are ignored.
 Unsuitable for modern jobs which emphasis skill and knowledge since grades does not
take into account special skill and merits.
 Description of grade is vague and allocation of jobs to various grades are subjective
without any scientific basis.

Factor Comparison Method

This is a quantitative and analytical method. This method is designed to overcome the
disadvantages of ranking and classification methods discussed above. In essence, this method
also rank the job. But here ranking is done based on objective criteria which are called factors.
In this method, each job must have a job description. Ranking of factors are made based on job
descriptions. As in the previous case here also, “Job Evaluation Committee” is formed.

Following steps are involved:

Step 1 – Select Factors: Common factors identified are, for example the following:
 Skill.
 Mental ability.
 Physical ability.
 Responsibility.
 Working condition.

Step 2 – Identify key jobs: Typically 15 to 20 key jobs are identified by the committee.

Step 3 – Rank the factors for the key jobs: In this step, the committee evaluates each factor
against the key job and assess their interest weightage and indicate them in the form of ranks as
illustrated in table 1: Factor – Comparison – Ranking Factors on Jobs

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Table 1: Factor – Comparison – Ranking Factors on Jobs
S Ranking of factors
factors
N Jobs Skill Mental Physical Respo Working
o. Ability Ability nsibilit Condition
y
1 Tool Maker 1 1 5 2 4
2 Assembler 3 3 2 1 3
3 Machinist 2 3 5 2 2
4 Electrician 2 4 3 4 3
5 Helper 5 5 1 5 5

As in the table above, we have considered Tool Maker `s key job and illustrated cases of 5 jobs.
The ranking of factors are shown against key jobs. In our illustration we have shown tool maker
having first rank in “skill” and “mental ability”, second rank in “responsibility”, fourth rank in
“working condition” and fifth rank in “physical ability”.

Step 4 – Pricing the key jobs:

Let us assume that committee has decided to treat “Tool Operator” as the key job and has fixed
pricing of Tool Operator as Ksh.14 per hour. This amount is now distributed among the factors
by the committee proportional to the ranking allotted to each factor. These figures are called
“rating of the ranks”. These rates, then become standards which other jobs in the organization
are ranked and rated. Please note ranking and pricing of separate key jobs are done
independently and “Rating the Rank” Table is also developed separately and independently for
each key job.

Step 5 - Job Pricing:

In this step the committee evaluates all other jobs and price them, in the organization, in
comparison with the “key job” selected in each area or department. In this case the following
sequence is observed.
 Ranking the factors in comparison with key jobs.

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  Rating the rank in terms of money value for each factor.
 Pricing the job by summing up the rating of rank for each factor.
Note the sequence followed in pricing other jobs, is in the reverse order of pricing the key jobs.
For example in the table below, pricing for Electrician for example is evaluated by converting
rank given in the table above to their respective values using standard values given in table
below, to their respective values using standard values given in table below. Sample calculation
of job pricing of electrician is given below in table 2
Table 2: Sample Calculation of Job Pricing
Factor Rank Rate
Skill 2 4.0
Mental Ability 4 1.5
Physical Ability 3 1.5
Responsibility 4 1.5
Working Condition 3 2.0
Total 10.5

Table 3:Job Pricing

S Job Skill Mental Physical Responsibil Working
Ability Ability ity Condition
N Designatio Wag Ran Rat Ran Rate Ran Rat Ran Rate Ran Rat
o. n e k e k k e k k e
Rate
1 Tool Maker 14 1 5 1 4 5 0.5 2 3 4 1.5
2 Assembler 13 3 3 3 3 3 2 1 4 3 2
3 Machinist 12 2 4 3 2 5 0.5 2 3 2 2.5
4 Electrician 10.5 2 4 4 1.5 3 1.5 4 1.5 3 2
5 Helper 6 5 1 5 0.5 1 3 5 1.0 5 0.5

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Table 4: Rating of Rank (applicable for a Given Key job)
S FACTORS R A T I N G O F R A N K
No. 1 2 3 4 5
1 Skill 5 4 3 2 1
2 Mental Ability 4 3 2 1.5 0.5
3 Physical Ability 3 2 1.5 1.0 0.5
4 Responsibility 4 3 2 1.5 1.0
5 Working Condition 3 2.5 2 1.5 0.5

Advantages:
a) Method is scientific being analytical and quantifiable.
b) Limited number of factors make this method simple and easy.
c) Jobs are compared with each other to obtain relative value.
d) Job pricing is directly obtained without intermediary points or weightages.

Disadvantages:
a) Using just five factors are not realistic.
b) Direct determination of rating shift the focus of Job Evaluation from “job worth” to “job
wages” in money value. This create bias.
c) Requires experts.

Point Rating Method

This is the most popular one. In this method, as in the case of a factor comparison method,
various factors are identified. Thereafter, each factor is subdivided into various “degrees”. This
is a departure from factor comparison method. Here allocation of degrees improves the accuracy
of comparison between jobs. In point rating method, points are assigned instead of money value
for each factor based on their degrees. Later these points are converted to money values.

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Steps of Point Rating Method
Step 1 – Job Clustering:
Group jobs into similar families having common nature and characteristics. This arrangement
assists realistic assessment of factors and comparison of jobs. For example Nair (2001) has
clustered 22 occupations in five groups as follows:
a) Business Group Jobs like salesman, office manager, etc.
b) Masculine Group Jobs like mechanic, etc.
c) Aesthetic Group Jobs like artist, author, interior, decorator, etc.
d) Service Group Jobs like social worker, doctors, etc.
e) Scientific Group Jobs like technician, scientist, etc.

Step 2 – Identification of factors:

Based on the family (cluster) of jobs, identify relevant factors which are common to these jobs.
Unlike factors comparison, there is no restriction on the number of factors. Normally number of
factors, do not exceed fifteen. There are rare cases, it might go as high as fifty. Following are
the consideration given for selecting the factors:
 Factors should be properly defined so that there is no duplication on overlapping.
 Factors having same rating for all jobs can be eliminated since such factors do not
differentiate jobs. One example is that of eliminating “working condition” as a factor if
all jobs are carried out under the same working condition.
 If a job is of highly repetitive in nature, like slotting, cutting Xeroxing, print, etc.
“monotony” can become a factor for comparison.

Step 3 – Assigning degrees to factors:

For the purpose of fine tuning the differences between jobs, each factor is subdivided into
different degrees. As for example a factor like “Education” can be subdivided into various
degrees like, “illiterate”, “High School level”, “Graduate”, “Post graduate” etc. Similarly a
factor like “experience” can be assigned different degrees like, “No Experience”, “less than 6
months”, “Between 6 months to 1 year”, “2 years”, etc.

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Step 4 – Fixing relative weightages:
All factors will not carry same weightages. This weightage varies from cluster to cluster,
committee of experts assign weightages. As for example a manual job carry higher weightage of
“physical ability” compared to “mental ability” and so on. These weightages are then converted
to percentages. These percentages are counted as points for first degree. Points for higher
degrees for the same factor are obtained by multiplying the first degree points by the
corresponding number, 2,3,4 etc. This is illustrated by the following example:
Let us consider a “salesman” job having five factors viz. education experience, effort,
responsibility and working conditions. Suppose the Experts Committee has assigned 300 points
as overall weightage which is distributed among these factors, as shown in the table 5.

Table5: Weightage
Points for Degrees
S Factors Weightage Percentage
No. Weightage 1 2 3 4
1 Education 30 10 10 20 30 40
2 Experience 60 20 20 40 60 80
3 Effort 90 30 30 60 90 120
4 Responsibility 75 25 25 50 75 100
5 Working Condition 45 15 15 30 45 60
Total 300 100 100 200 300 400

Percentage weightage against each factor is worked and shown in the next column in the above
table. These percentages now become points for “first degree” for each of such factor. Having
obtained points for first degree, the corresponding points for 2nd , 3rd and 4th degrees are obtained
by multiplying first degree points by numbers, 2,3 and 4 respectively. For details see the above
table.

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Step 5 – assign money value to points:
Expert Committee work out money value in terms of dollar/shillings per hour for a range of
points having grouped them into different classes/grades. An illustration is given in the table 6.
Table:6 Conversion Table of Points to Money Value:
Class / Grade Range of Points Rate Per Hour in Ksh.
1 50 – 100 1.05 – 1.30
2 101 – 150 1.25 – 1.50
3 151 – 200 1.45 – 1.70
4 201 – 250 1.65 – 1.90
5 251 – 300 1.85 – 2.10
6 301 – 350 2.05 – 2.30
7 351 - 400 2.25 – 2.50

Step 6 – Prepare Job Evaluation Manual

Job Evaluation manual is prepared by selecting a number of “Key Jobs” in each Department
/Area/Cluster. For each key job identify the relevant factors, their degrees and points. Key jobs
in Job Evaluation manual serve as example for future evaluation of all other jobs. Job-
Evaluation Manual become more effective if “Job Description” and Job Specification can be
redrafted in terms of factors identified for each cluster.

Step 7 – Rating Jobs

With the help of Job-Evaluation Manual and formula pre-determined for conversion of points to
money value, we can now prepare the rating for all Jobs by comparing them with key jobs.

Key terms
Job families,
Job description
Job specification
Occupations
Tasks

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 Review question
i) Define job analysis
ii) Explain the processes involved in job analysis
iii) Compare and contrast advantages and disadvantages of different job analysis
methods

Further reading
i) Nair, N.G and Latha, N (2001), Personnel Management and Industrial Relations. Sultan
Chand & Sons, New Delhi. First Edition.pp.190
ii) Aswathappa,k.(2008).human resources mmangement. Text and case. Tata MacGraw-
Hill, New Delhi. Fifth edition.pp105-2139

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 CHAPTER TWO: JOB PRICING

Objectives
By the end of topic the learners should be able to:
a) Describe the meaning of Job pricing,
b) Enumerate determinants of wages,
c) Explain different wage structures
d) Illustrate wage payment processes

Job Pricing (JP) is the process of attaching compensation to a position in an organization. Every
employee brings to an organization certain input in form of knowledge, skills and attitude
(competencies). These competencies are compensated both in material and kind to a
commensurate level matching the input. Job pricing processes considers three principle
components of the labour input, called 3Ps. 3Ps stands for:
Person- this includes the education, experience, expertise, attitude, etc that an employee bring to
the organization
Position – this includes responsibility position an employee holds in an organization. It is
important to compensate positions appropriately because it has direct influence over the
productivity of the other employees
Performance – this includes individual and group productivity in relation to other employees.

Principle Purpose of Job Pricing

Every attempts in pricing any job must consider the following principles
 Attraction of sufficient and suitable employees
 Retention of employees who have satisfactory Performance
 Rewarding of employees for effort, loyalty experience and achievement .
 fulfilling legal obligation/statutory requirement eg minimum wage, hardship allowance
 providing for incentive for employees
 keeping pace with inflation/cost of living
Determinant of Job Pricing levels

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1. The ability to pay: e.g.
- Profitability
- Adequate cash flow
- Sufficient return on investment
2. Prevailing wage rate - Comparability
It is also called going wage rate , or prevailing market rate. This is obtained through
wage survey in a given geographical locality/region or industry . Employers and unions and
staff compare their pay with similar players in the industry

3. Bargaining power/strength of trade unions e.g. use of Collective Bargaining Agreement

(CBA), strike, go-slows, mediations

4. Labour market conditions

 Employees paradise e.g. most European countries
 Employers paradise e.g. most third world countries
 Ideal conditions – situation where supply and demand of labour in a market is matching.
Such condition are mainly found in developed economies
 Stagnation – situation where supply and demand for labour is low as experienced in most
basket case countries

4. Existing differential or customs and practices,

Organization have their own culture of payment e.g world bank, UN systems, Microsoft,
IBM are known well payers
Encouragement of bonuses and over time by some organization increases levels of pay
Custom and practice- IT based firms, PR firms have tendencies of relative high
compensation
5. Labour legislations
National, regional or international laws may demand certain level of compensation for
certain common jobs for example, East African community, European union, etc.
Wages legislation for example, minimum wages, salaries for public servants,
constitutional office holders, allowances like hardship, medical etc

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 6. Cost of living/inflations
Wages/salaries should not only meet basic needs but also sufficient to keep one healthy
both in body and mind.
7. Attraction and retention intent
Wages/salaries should be competitive enough to attract and retain competent workforce
and reduce turnovers
8. Job requirements
- Difficult jobs and jobs requiring higher responsibilities often carry higher wages for
example C.E.Os, surgeons, space engineers etc
8. Union – management relations,
- may be influenced by friendly CBA
-supportive management philosophy and attitude may relatively increase wage levels
management.

Wage Payment Policies

Well-considered wage policies should address both the employees and employers needs and in
particular,
 Attract, retain, motivate sufficient number of suitable employees to meet
production needs
 Encourage optimum productivities from employees
 Ensure high level of quality output
 Recognize the value of jobs in relation to each other
 Enable employees to share in the growth and prosperity of the organization
 Ensure that labor cost is suitably controlled in relation revenues and other costs
Wages structures
Wages structure is the hierarchy of job grades or rates that compares jobs in terms of :
- Skills
- Responsibility
- Mental effort
- Physical effort
- Working condition etc

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Wage payment may be based on sub-factors, such as skills as illustrated below;

Skills sub-factors
 Education. 5%
 Training 5%
 Experience3%
 Initiative 8%
Skills 21%
(Source: USA, Department of Labour :2006 )

Types of wage payment systems

1. Time rate system

This a predetermined rate per hour per week plan. It is not based on effort made or result
obtained by the employ. This system is common in paying causal workers. However, allowances
are paid for example, for shift premiums, overtime etc,
This is the system which is in vogue from ancient times. Worker is hired for a given time and
paid for his labour. He is paid at the end of the time period. Here the payment is not conditional
to the output. In other words, wages are not linked to the productivity. This system is most
popular among “white collar” employees, supervisors and managers. Since workers are paid at
the end of the fixed period, this system inculcate a sense of security in them. Supervisors,
however must ensure the worker is not idling during the working hours fixed. This system is
also useful when types of jobs are of non-standard in nature. Year end annual increment, merit
increments, bonuses and promotion chances are means of motivation in this system.

$
Basic rate
Output/result
Figure 2: Time Rate System

Advantages:

26
 1. Management in control of the operation
2. Labour flexibility
3. Simple to operate
4. Labour cost can be controlled
5. Labour output can be predicted

2. Payment by result or piece rate

Payment directly tagged to output for example, number of items produced at an agreed rate per
item. Commonly used in sales, agency services etc
Here the payment is given to the employee in relation to his work output. This system is
popularly known as piece-rate system or incentive payment system. There are a number of
incentive payment systems. The difference between these systems are manifested by the
relationships as given below:
 Payment in the same proportions to output.
 Payment in proportion less than the output.
 Payment in proportion higher than the output.
 Payment in different proportion with different levels of output.

For details see next section where wage Incentive plans are discussed.
Earnings
$

Output/result
Figure 3: Piece Rate System

27
3. Combined time rate and piece rate

Bonuses earning on performance

$ Basic rate (guaranteed)

75%
Output/result
Figure 4: Combined time rate and piece rate

In this system the employee is assured of some base pay irrespective the output. In this
illustration 75% basic performance standard is guaranteed but the remaining 25% pay is
determined by employees direct output.

Advantage
 Employees are secured against bad times for example, during sickness, economic
fluctuation etc
 Competent employees may utilize their effort

4. Company-wide incentive schemes.

 Bonuses is paid to all employees on the basis of productivity achieved within the
organization as a whole
 It relies on group collaboration but does not encourage individual competition
5. Single status schemes
 This is a scheme meant to remove the discrimination between the manual workers and
white collar workers
 It is meant to create harmony in the work place and eliminate perceived inequities
 The workers enjoy similar privileges and working conditions for example, holidays
pays, etc

28
6. Skills – based pay (SBP)
 In the light of flexible working and just-in-time manufacturing systems as
expounded by Japanese work culture , several firms have introduced SBP
 Pay is linked to the skills that the employee have and can use at the work place
 The employees enjoy the advantages of multi-skills
 The organization enjoys reduced administrative costs and reduced turnovers.
 Given that employees are involved in member of jobs hence clarity of
requirement, standards & circumstances is vital

Theory of Wages
A sound wage policy addresses itself to questions such as adequacy of wages, fairness and
equity, performance, working conditions and compensation against inflation, and additional
commitment of employees. There are two dimensions to wage payments. These are internal and
external dimensions that influence wage payment

 Internal dimension involves

 capacity to pay,
 work content and context,
 wages sufficient to meet basic needs such as food, shelter, security and social
commitment etc
 External dimension involves
 supply and demand in labour market: Surplus and deficiency of labour is the
characteristics of labour market
 level of payment prevailing in similar jobs in other establishments.
Ethical consideration must prevail on employers and employees as to not to exploit
such situations.
 Labour legislations : national, regional or international laws and standards

Theory of wages is a branch of study which “analyze the supply and demand conditions of
labour” . The basic themes of theory of wages are as follows:

29
  Rationale of Wage level.
 The basis of Wage structure.
 The reasons for Wage Differentials.

Following are some of the important theories of wages:

 Subsistence Theory.
 Wage Fund Theory.
 Surplus Value Theory.
 Residual Claimant Theory.
 Marginal Productivity Theory.
 Bargaining Theory and
 Behavioural Theory.
Each of these theories are briefly discussed in subsequent paragraphs.

Subsistence Theory
This is proposed by David Ricardo (1772-1823). It says, “The labourers are paid to enable them
to subsist and perpetuate the race without increase or diminution.” This theory pre-supposes low
wages lead to decrease of labour force due to death, malnutrition and celibacy, whereas higher
wages increase their number due to better health, long life, more marriages and procreations. No
doubt, this theory is despised by many scholars in human resources. The theory is known as
“Iron Law of Wages:” Here payment is limited to subsistence level.

Wage Fund Theory:

This theory was propounded by Adam Smith (1723-90). As per this theory wage level is a
function of surplus fund available with the employer. Higher this fund, higher the pay, lower the
same, low the level of wages which may even touch the subsistence level. Here focus is on
employer and his capacity to pay.

Surplus Value Theory:

This theory was developed by Karl Mark (1849-83). Here the labour is considered as a
commodity for trade. The wages are considered as “Subsistence price” for the commodity viz.

30
the labour. It is pointed out that while the employer account “cost of labour” put up for
producing an item as part of price, fixed for the product, the labour was not paid the full amount
so collected from the customer and instead only a part is paid to them as wages, retaining the
remaining by the employer. Labour add value to the product.

Residual Claimant Theory:

Francis A. Walker (1840-97) Proposed this theory. According to this theory, four factors add
value to the product which is manufactured. These are land, capital, labour and
entrepreneurship. The revenue earned by selling product was first distributed among the three
factors viz. land, capital, entrepreneurship as compensation against their contribution. Whatever
remained was paid to labour as wages against their value addition. Thus labour is considered as
a “residual claimant”.

Marginal Productivity Theory:

This theory was developed by Phillips Henry Wicksteed (UK) and John Bates Clark (USA).
Here wages are determined by supply and demand of labour in the labour market. Accordingly
workers are paid what they are economically worth as assessed by the employer. Marginal
concept says that employer continue to employ labour as long as value addition by the marginal
worker is more than his cost; otherwise discontinue hiring and resort to changes in technology or
product mix. This results better return to employer and lesser wages to employees.

Bargaining Theory:
This theory was proposed by John Davidson. Here wages levels are determined by bargaining
power of employees and their union Vs. employers and their Associations. Relative strengths of
these forces determine all aspects of wages viz wage level, wage structure, individual fixation,
wage differentials and perks.

Behavioural Theories:
Many behavioural and social scientists like Simon, Dubin, Jacques and others have proposed
theories of wages based on behavioural aspects. Some of them are given below:

31
 a) Wage level: Wage level is fixed based on influence/power exercised by following forces
on management: size, prestige, power of union, contribution by employees, etc.

b) Wage structure: Wage structure is influenced by factors such as norms, traditions,

customs, good will, social pressure and specialists skill.

c) Motivation: Wages are best motivators of workers. Wages must satisfy a number of
needs identified by MASLOW and others like physiological, security, food and shelter,
social esteem, etc. Recognition through merit rating and increment through wages,
increase motivation.

Process of Wages Payment

Flow diagram of wage payment process is shown below. The flow diagram shows the stages in
wage determination processes:
 Wages legislation.
 Wages Survey.
 Wages Level.
 Job Evaluation.
 Wages Structure.
 Individual Fixation.
 Incentives.
 Wages Payment.

32
 Wages Survey

WAGES LEGISLATION WAGES LEVEL

JOB JOB EVALUATION JOB

DESCRIPTION SPECIFICATION

WAGES STRUCTURE

WORK / JOB MERIT RATING

WAGE FIXATION
STANDARD (EVALUATION)

WAGES
INCENTIVE PLAN INCENTIVE PLAN

Wage payment

INCENTIVE
PAYMENTS

WAGE PAYMENTS

Figure 5: Wage Payment Process

Wage Fixation
So far we discussed the problems of valuating a job, ignoring the individual who is employed in
the job. Ultimately it is the people who man the job. Having decided wages rate, the next step is
to find out the “individual rate”. There are two types of system where individual wage rate is
fixed:

33
  Flat rate.
 Merit rate.

Flat rate is the system where all individuals working in the same grade doing more or less similar
job, on time systems are paid the same amount. For them flat rate of increment viz, same
amount of increase is given at regular intervals, say, annually, or when substantial increase of
“cost of living” is registered. In this latter case also a flat increase is provided. Unlike flat rate,
merit rate is provided to reward an employee for his outstanding achievement such as the
following:
 Better performance which is more than average.
 Special qualification.
 Specialized training undergone.
 Outstanding achievement in areas like sports, arts, etc.

Merit increments are provided by placing him a few steps above base rate for the same grade
when salary (wage) rate has a range for such grades. Merit rate is in addition to annual
increment which is provided for in the wage structure at the end of each year of service.
Allowances are provided to all, in addition to merit increment. Wherever range of wage rate is
not available for a given grade, the merit increment is provided as a lump sum.

Merit Rating:
In all organizations there are some systems of evaluation of performance of subordinates. Merit
Rating is the name given to this process of evaluating performance of workers , also called
“performance appraisal” of employees. Other terms used are “efficiency rating”, “performance
rating”, “progress report”, “development report”, “service rating” and “ability rating”. All these
terms means the same. Very often performance appraisal or merit rating as it was popularly
known initially, is criticized being subjective, unsystematic and irrational. Systematic and
objective, appraisal is carried out by well known professionally run industries where the
supervisors are able to assess their workers more objectively. This is done by designing
appraisal method in such a way that subjectivity is reduced to the minimum.

34
Wage Differential:
We have come across cases where differences of wages exist between employees within the
organization, between wages of employees doing similar jobs in different industries or location.
This phenomenon is called wage differentials. Government often brings out legislation to reduce
the disparity between employees doing similar jobs at various industries and geographic
locations. Examples are ILO convention No. 100. “Equal Pay for Equal Work”
recommendations by various Government bodies and courts like “Fair Wages Committees” and
legislative measures like “Minimum Wages Act”, etc. yet wages differentials exist. There are a
number of reasons. These are broadly classified under the following three broad headings:
 Market factors.
 Occupational factors.
 Socio-economic factors.

Wage Differentials Due to Market Factors:

Labour market controls the supply and demand of labour which in turn, profoundly influence the
wages. Some of these are listed down here.
 Supply and Demand: When labour supply is in abundance the wage rates come down.
Where scarcity exists on specific skill which is called “scarcity differential”, wages level
of such jobs goes up. “Law of supply and demand” applies here.
 Regional Variations: Wages differentials are also caused by regional differences wherein
the going rate is different.
 Rural and Urban Differences: By and large the “cost of living” of urban areas is high
compared to rural areas. Secondly, employment opportunities in urban areas are more,
since it has more number of industrial and business establishments and activities. Hence
wage rate in urban areas are more compared to rural.
 Clusters and Geographic Concentrations: Industries are widely dispersed. Policies of
most of the Governments are also to disperse industries to rural areass to prevent urban
congestion and also for balanced growth of regional economy. Industries also establish
what is called “clusters” and “concentrations” which suit competitiveness. However, in

35
 remote areas industries find it difficult to secure sufficient number of skilled labour.
They are to be attracted by offering them higher wages. This is yet another cause of
wage differential.
 Differences between industries and firms: Wages level and structure vary between
industries. It also vary between firms within each industry. There are many reasons.
Some of them are given below:
o Capacity to pay.
o Established different wage standard in each industry.
o Nature of work.
o Working environment.
o Bargaining power of trade unions.

Wage Differentials Due to Occupational Factors:

We have seen Job Specifications is written down specifying attributes and achievement of person
most suitable to man a given job. Qualification, skill and experience of employees vary from
one another. Wages differ due to many factors such as the following:
 Levels of employment and responsibility.
 Educational qualification and specialized training.
 Knowledge and skill.
 Mental and physical ability.
 Seniority and merit.
 Trade and functional specialization and
 Conditions of employment.

Wage Differentials Due to Socio-economic factors:

Socio-economic factors profoundly influence wage levels. The following are some of the factors
responsible for the existing wage differentials:
 National economy in terms of GDP and GNP.
 Pre-Capital income of people.
 Number of educated unemployed.
 Social prejudices against taking up certain jobs and occupation.

36
  Practice of employing under aged persons and children who are paid much less
 Exploitation of illiterate and unorganized villagers, tribal persons and certain ethnic
groups by paying them less.

Wage Payment
Having completed the Job evaluation, merit rating and individual fixation of wages, the next
phase in wages and salaries administration is the system of wage payment. This phase consists
of the following steps:
 Wage payment policies.
 Wage payment systems.
 Wage incentive plans
o Blue collar workers.
o White collar workers.

Wage Payment Policies:

Research has identified the following four as the basic wage payment policies:
 Adoption of a fair wage level.
 Establishment of a fair wage differentials between the jobs.
 Use of proper standard of performance.
 Efficient administration of plans.

Various aspects covered under the above policies are listed below:
 General wage level must be at least equal to the level of similar Jobs in the community.
 Wage differential should be objectively assessed in terms of skill, ability, experience and
working conditions.
 Individual and group efforts which are above average must be rewarded by proper
incentive plans.
 Standard of performance fixed must be fair, reasonable and consistent.
 Lay down policies regarding working hours per day and working days per week etc,
which are fair and reasonable.

37
  Provide allowances for overtime, waiting time and idling time due to reasons beyond the
control of employees.
 Improve productivity through training and development.
 Secure cooperation and participation of employees by explaining wage systems policies
and plans and consulting them in regards to setting wage rates, performance standards
etc.

Wages Incentive Plans

Objectives
The organizational objectives of Wages Incentive Plans are to motivate the employees to
improve their performance on the following areas:
 Quantity of output.
 Quality of output.
 Optimum utilization of resources.
 Efficiency of operation.
 Innovation and creativity.

Key Principles
The following are the principles (characteristics) of a good wages incentive plans:
 Simple and easy to understand.
 Equity and fairness.
 Union –management agreement.
 Workers must be made to understand the plans.
 Time standard must be fixed.
 Method study must precede time standard.
 Reward must be proportional to the effort.
 There must be a minimum guaranteed payment.
 Complaints and grievances must be properly attended to.

38
  The scheme/plan once introduced must be tried out continuously for some length of time.
Do not change plans frequently.
Wage incentives plan are broadly categorized into two groups namely,
 Individual incentives plan
 Group incentives plan

Individual Incentives Plan

These category of incentives plans include,
 Halsey plan
 Rowan plan
 Gantt plan
 Bedaux plan
 Emerson`s efficiency plan

Halsey plan
 Under this plan minimum wage is assured
 Additional bonus is provided to workers who complete the job in less than the standard
time
 Bonus is a proportion of the saved time , which is fixed at 50%. The plan is also called
Halsey 50:50 plan
 Standard time is recorded from past time not from work study findings
Advantages
 Guaranteed minimum wage exist
 Simple and easy to execute
 Saves on costly work study
 Management share a part of the bonus on time saved

Disadvantages
 Workers recent on management sharing the bonus on time saved
 Time standard is not accurate since work study is not required
 Sufficient incentives is not given to faster workers

39
Rowan plan
 Under this plan minimum wage is assured like Halsey plan
 Additional bonus is provided to workers who complete the job in less than the
standard time using a ratio
Advantages
 Guaranteed minimum wage exist
 Since ratio is used errors arriving at standard time is minmzed
 Share of the management on the bonus is reduced
Disadvantages
 Workers recent on management sharing the bonus on time saved
 Sufficient incentives is not given to faster workers

Gantt plan
 This plan overcome the disadvantages cited in both Halsey and Rowan plans concerning
low incentives rate for faster workers. Bonus are given as follows,
 Slow worker – guaranteed min mum but no bonus
 Average worker – piece rate plus
20% bonus
 Faster worker – piece rate increased proportional to time saved
Advantages
 Minimum wage is assured
 Standard worker is paid 20% bonus
 Faster worker is paid at higher rate proportional to their output
 Part of the bonus is shared by the supervisor and organization

Disadvantages
 Workers recent sharing of bonus by the organization
 Disunity among worker because of differential pay between slow and faster workers

40
Bedaux Plan
 Minimum wage assured
 Standard time is fixed in standard minutes (I hour = 60 minutes)
 Bonus given for exceeding 60 minutes (standard time)
 Entire bonus is distributed between the workers and the supervisor in the ratio of 75:25

Emerson`s Efficiency Plan

Minimum wage is guaranteed
Workers are paid different bonus as per their efficiency level as shown in table 7.

Table 7: Percentage Bonuses

Efficiency 662/3 % and 662/3 % - At 90% 90- 100% At 100% Above
levels less 90% 100%
Bonus rate 0 0-10 10 10-20 20 Proportion
al to
increase

Group Incentive plan

Scalan plan
 This is a group incentive plan where the productivity of entire workforce is taken into
account
 Bonus is paid at a rate of 1% for every 1% increase in productivity
 Benefit is given to all employees except management
 Worker are paid part of the bonus earned in the same month and some reserve is kept
aside to take of fluctuations
 At the end of the year the balance of the reserve is also paid

Priestman Plan
Under this plan bonus is paid when output exceeds standard output or when an average output of
a worker shows an increase as compared to the performance of the last year

41
 Review questions
i) Write short notes on the following theories, wage fund, subsistence, bargaining
theories
ii) Explain different uses of incentives wage payment plans

Further readings

i) Gupta, C.B, (2003), Human Resources Management. Sultan Chand & Sons; New Delhi,
6th Edition. Pp.78
ii) Nair, N.G and Latha, N (2001), Personnel Management and Industrial Relations. Sultan
Chand & Sons, New Delhi. First Edition. Pp. 221-248

42
 CHAPTER THREE: RECRUITMENT

Objectives
By the end of the topic learners should be able to:
a) Explain the meaning of recruitment functions
b) Describe factors that affect recruitment processes
c) Enumerate various sources of employment

Definition
Recruitment is the process to discover the sources of man power to meet the requirements of the
staffing schedule and to employ effective measures for attracting that manpower in adequate
members to facilitate effective selection of an efficient workforce

Factors affecting recruitment:

 Endogenous
 Exogenous
Endogenous factors
1. Image of the organization eg MNCs, underworlds, CSR,
2. Image of the job – eg undertaker, software engineer
3. Size and growth potential of the organization eg future career prospect
Exogenous factors
1. Demographics.-Biographical e.g level of education sex ration, age etc
-Economic status – pa capita income, PDI, Infrastructure etc
2. Industrialization e.g culture of industries, geographic concentrating etc
3. Labour markets - Abundance of labour, right type of labour, labour laws etc

43
Theories of Recruitment
1. Objective Factor theory
-According to this theory choice of organization by a potential employee depends on
objective assessments of some tangible factors e.g pay and perks, location, opportunities for
career growth, nature of work.
2. Subjective factor theory
-According to this theory compatibility of individual personality with the image of the
organization is a decisive factor in choosing an organization for employment e.g
aggressiveness, innovation, etc
3. Critical factor theory
-In some situation potential employees lack information about an organization. Hence he/she
will be influenced by Critical factors he/she as observed during the interview and his/her
experience with the employees of the prospective organization e.g rude/polite interviewers,
or positive word of month from the employees.

Policies of Recruitment
1. To find and employee the best qualified person for the job
2. Retain the best and most promising ones.
3. Offer promising careers and security.
4. Provide facilities for personal growth on skills and knowledge
5. Provide opportunities for employment
6. Be compatible with public policies

Scope of recruitment policies:

 Organizing objectives e.g. right type and number
 Identification of recruitment needs e,g. age, skills, professional etc.
 Criteria for short listing e.g. academic, experience
 Sources of recruitment e.g. internal, external
 Cost of recruitment e.g. cost of advertising

44
Sources of recruitment
 Internal sources
 External sources

Internal sources
-Hiring acquaintances and relatives,
-dependants of existing staff e.g most Japanesee firms follow this method
-From employees on leaves, long courses (recall) and deputations
-By promotion and transfer of existing employees
-From those who left the organization (former employees)
-Form trade unions e.g in USA

Advantages
1. Good PR exercise and it improves the good will of the organization
2. Improves morale and motivation of the employees
3. Better career prospectus and opportunity for growth
4. Improves changes of better selection since the candidate is known to the employer
5. Chances of better performance since the employee a heady understands the objectives o
the organization
6. Less training cost

Disadvantages
1. In breeding
2. Limiting options for wider recruitment
3. Inhibit innovation and creativity
4. Encourages seniority instead of merit
5. Higher chances subjectivity.
External sources
1. Fresh graduates from the markets
2. Educated unemployed
3. Retired hands with experience and health

45
 4. Unscheduled areas e.g housewives, returned non-residents, ex-servicemen etc
5. Persons leaving competitor organizations.

Advantages
1. Increased knowledge and skill from external inputs
2. Injection of external blood to improve work, philosophy etc
3. Improves and sustains competitive advantage
4. No limitation to wide choice of right person and number.
5. Economical in the long run

Disadvantages
1. Costly initially
2. Causes brain drain due to fear of lack of growth potential
3. Higher probability of employee turnovers
4. Demoralization of existing employees

Recruitment methods

Choice of recruitment methods depends on:

1. Whether recruitment is internal or external
2. Cost implication
3. Effectiveness
4. Statutory requirement for example, CEOs are openly sourced

46
 Recruitment methods

Internal sources External sources

- billboards -direct method Indirect method

-Memos - scouting (personnel) -Advertisement
In-house magazines -word of mouth -
internet/webbsites
-professional clubs
-P.C data bank. -Casual callers
-employers` trade Association
-unsolicited applicants

Third party method

- Public employment agencies e.g public service
- Private employment firms KPMG , Experts
-Placement cells in colleges
-Trade unions
-Voluntary organizations
Figure 6: Recruitment Sources

47
Evaluation and Controls

Evaluation and controls are necessary as considerable cost is incurred in recruitment processes.
These cost includes:
 Compensation for recruiters
 Management and professional time spent on job analysis
 Cost of advertisement or other methods used in communication
 Cost of literature or documentation
 Cost of overtime and outsourcing while the position is vacant
 Cost of recruiting the actual candidates
It is important to validate the recruitment processes and methods
Processes: the recruitment process has the objectives of searching for and obtaining applicant
from job seeking in sufficient number and quality. Hence the process evaluation includes,
 Return rate of application sent out
 Number of the suitable candidate for selection
 Retention and performance of the selected candidate
 Cost of the recruitment process
 Time lapsed data
 Comments on image projected

Methods: evaluation of the methods include,

 Number of the initial enquiries received which resulted into completed application forms
 Number of candidate at various stages of recruitment and selection processes
 Number of the candidate recruited
 Number of the candidate retained in the job after 6 months

Key terms
Recruitment
Exogenous recruitment factors
Endogenous recruitment factors

48
 Review questions
i) Define recruitment
ii) What are the characteristic constraints on recruitment
iii) Discuss critical importance of recruitment function in an organization

Further readings

i) Armstrong, M, (2003). A Handbook of Human Resources management Practice, Kogan

Pages, 8th Edition pp. 128-131
ii) Nair, N.G and Latha, N (2001), Personnel Management and Industrial Relations. Sultan Chand &
Sons, New Delhi. First Edition.85-97
iii) Aswathappa, k.(2008).human resources management. Text and case. Tata MacGraw-Hill,
New Delhi. Fifth edition. pp 144-178

49
 CHAPTER FOUR: SELECTION

Objectives
By the end of the topic learners should be able to
i) Explain the importance of selection policies
ii) Illustrate Selection processes,
iii) Appreciate the importance selection interviews,
iv) Explain different Selection tests,
v) Explain importance of test reliability and validity
vi) List various Selection barriers

Definition: Selection is the process of choosing from among the candidates from within or
outside the organization, the most suitable person for the current and future positions.
Selection process is a form of prediction whether the applicant will perform or not.

Nature Of Selection

Selection is the process of picking individuals (out of the pool of job applicants)
with requisite qualifications and competence to fill jobs in the organization.
Selection is defined as a process of differentiating between applicants in order
to identify and hire those with a greatest likelihood to perform in the work
place.

Selection methods can be used within an organization for promotion or transfer, as well
as selecting applicants from outside the organisation. Recruitment and selection are the
two crucial steps in the HR process and are often used interchangeably. There is,
however, a fine distinction between the two steps. While recruitment refers to the
process of identifying and encouraging prospective employees to apply for jobs,
selection is concerned with picking the right candidates from a pool of applicants.

50
Recruitment is said to be positive in its approach as it seeks to attract as many
candidates as possible. Selection, on the other hand, is negative in its application in
as much as it seeks to eliminate as many unqualified applicants as possible in order to
identify the right candidates.

Selection As A Source Of Competitive Advantage

The role of selection in an organisation's effectiveness is crucial for at least, two reasons.
First, work performance depends on individuals. The best way to improve performance is
to hire people who have the competence and the willingness to work. Arguing from the
employee's viewpoint, poor or inappropriate choice can be demoralising to the individual
concerned who finds himself or herself in the wrong job. This instances are called job
mist. Emplyees who experience job misfit de-motivate the rest of the work force.
Effective selection, therefore, assumes greater relevance.

Second, cost incurred in recruiting and hiring personnel speaks volumes about the role of
selection. The cost of selection per employee vary with the level of hierarchy of the
individual in the organization. Consultants charge fees ranging from 20 to 50 per cent of
the first year's salary of an employee selected. Hence the higher the level of earning, the
higher the cost of selecting the employee. Costs of wrong selection are much greater.

Organisation For Selection

Until recently, the basic hiring process was performed in a rather unplanned manner in many firms.
In some companies, each department screened and hired its own employees. Many managers
insisted upon selecting their own people because they were sure no one else could choose
employees for them as efficiently as they themselves could. Selection processes is getting more
entralised and is handled by the human resource department or consultant firms.

Why Centralized Selection is Preferred?

51
 Centralized selection is preferred to decentralized selection processes because

i) It is easier for the applicant because they can send their applications to a single centralized
department/agency.
ii) It facilitates contact with applicants because issues pertaining to employment can be cleared
through one central location.
iii) It helps operating managers to concentrate on their operating responsibilities. This is
especially helpful during peak hiring periods.
iv) It can provide for better selection because hiring is done by specialists trained in staffing
techniques.
v) The applicant is better assured of consideration for a greater variety of jobs.
vi) Hiring costs may be cut down because duplication of effort is minimized.
vii) The process is more likely to be transparent

Ideally, a selection process involves mutual decision making. The company decides whether or
not lo make a job offer and how' attractive the offer should be. The candidate decides whether or
not the firm`s job offer fit his or her needs and goals. In reality, the selection process is highly one-
sided. When the job market is extremely tight, several candidates will be applying for a position,
and the firm will use a series of screening devices to hire the candidate it feels is most suitable.
When there is a shortage of qualified workers, or when the candidate is a highly qualified
executive or professional who is being sought after by several companies, the firm will have to
sweeten its offer and come to a quicker decision.

Selection polices
1. Centralized or decentralized e.g by HR department or recruiting firms
2. From within organization or outside organization
3. Fit a person-to-job e.g normal applicant. fit a job to a person e.g handicapped
4. Hire best available person
5. Reject poor candidates
6. Avoid `square peg in round holes`
7. Avoid job pirating from other organization
8. Dissuade job Hopping and job shopping by applicants

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 9. Follow labour laws of land e.g child labour, gender discrimination
10. Avoid discrimination e.g sex, race
11. Proper design of selection tests to make them objectives, job related and culture fair
12. Follow government regulation of selection eg security clearance for foreigners and
reservations

Criteria for formulation of selection policies

A selection policy formulation id a function of the following:

 Availability of sufficient qualified manpower
 Availability of job demands from industries
 Status of economic growth and development in the given economy

Figure 7: illustrate the relation that exist in the event different labour and market
conditions exist

Supply
High Low

Ideal Employees market

High

Demand

Employers market stagnation

Low

Figure 7: Relationship between Demand And Supply of Labour

Environmental Factors Affecting Selection

Selection is influenced by several factors. More prominent among them are:

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supply and demand of specific skills in the labour market,
 unemployment rate
 labour-market conditions,
 legal and political considerations,
 company's image,
 company's policy,
 Human Resources Planning strategic intent
 cost of hiring.
Firms consider these factors in a varying degrees because its effect also vary with other factors
such as size of the organization, the industry and prevailing socio-political environment in the host
countries.

Selection Processes

Selection is a long process, commencing from the preliminary interview of the applicants and
ending with the contract of employment. Figure 7.2 shows a generalized selection process.
In practice, the process differs among organizations and between different jobs within the same
company. Selection procedure for senior managers will be long-drawn and rigorous, but it is
simple and short while hiring shop-floor workers.

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 Selection process
Application

Screening

Application blanks

Selection tests

Formal interview

Work history

Opinion of references

Provisional selection

Physical/medical examination

Final interviews and employment

Preliminary Interview

The applications received from job seekers would be subject to scrutiny so as to eliminate
unqualified applicants. This is usually followed by a preliminary interview whose purpose is more
or less the same as scrutiny of applications, that is, elimination of unqualified applications. Scrutiny
enables the HR specialists to eliminate unqualified job seekers based on the information supplied in
their application forms. Preliminary interview, on the other hand, helps in rejecting misfits for
reasons, which did not appear in the application forms. Besides, preliminary interview, often called
'courtesy interview', is a good public relations exercise.

Selection Tests

Job seekers who pass the screening and the preliminary interview are called for tests. Different types of
tests may be administered, depending on the job and the company. Generally, tests are used to
determine the applicant's ability, aptitude and personality.

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Types of Selection Tests

Ability tests

This is also called achievement tests. It assist in determining how well an individual can perform
tasks related to the job. An excellent illustration of this is the typing test given to a prospective
employee for a secretarial job.

Aptitude Test

An aptitude test help determine a person's potential to learn in a given area. An example of
such a test is the General Management Aptitude Test (GMAT) which many business students
take prior to gaining admission to a graduate business school programme.

Personality Test

Personality tests are given to measure a prospective employee's motivation to function in a

particular working environment. There are various tests designed to assess a candidate's
personality. These are
 The Bernsenter Personality Inventory - which measures one's self-sufficiency, neurotic
tendency, sociability, introversion and extroversion, locus of control, and self-confidence.
 The Thematic Apperception Test (TAT)-which assesses an individual's achievement and
motivational levels.
 California Psychological Inventory (CPI),
 Thurstone Temperament Survey (TTS),
 Minnesota Multiphasic Personality (MMPI),
 Guilford-Zimmerman Temperament Survey (GZTS), assess specific personality traits

Interest Tests
Interest tests are used to measure an individual's activity preferences. These
tests are particularly useful for students considering many careers or employees
deciding upon career changes.

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Graphology test

Graphology test is designed to analyze the handwriting of an individual.

Graphology as a selection devise was first used by French priest, jean
Hippolyte Michon, in 1830. It has been said that an individual's handwriting
can suggest the degree of energy, inhibitions and spontaneity, as well disclose the
idiosyncrasies, and elements of balance and control. For example, big letters
and emphasis on capital letters indicate a tendency towards domination and
competitiveness. A slant to the right and moderate pressure and good legibility
show leadership potential. Employers usually consult graphologists to
supplement their usual personnel recruitment procedure. The modern science of
graphology owes its origins to the theory of space symbolism, which
proposes that a person uses a blank sheet of paper in exactly the same way
as he/she uses three dimensional space.

For instance, an individual who uses every inch of the paper will normally explore every
nook and corner of a new room he/she finds himself/herself in. Extending the analogy to
handwriting, graphologists intend that the way in which an individual's script uses space
reflects his/her interactions with others in real space and, thus, provides a clue to his/her
personality. Graphologists look to slant, speed, spacing, pressure, clarity, size, length of
upper extensions and size and length of lower loops of script to gauge one's personality.

Graphology as a selection devise has its merits as stated below.

 Measures the match between personality and job
 Suggests jobs that suit the candidate best
 Reveals characteristics that other tests cannot
 Gauges personality without candidate's awareness
 Insight can be validated by other measurements

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 As a selection technique, graphology has its demerits. Some of them are:
 Scepticism about accuracy of findings persist
 Lick of scientific basis discourages the use of this method
 Depends entirely on the analyst's interpretation
 Generalises without considering candidate's background
 Can be misleading if not validated by others tests.

Medical tests

Medical test reveal physical fitness of a candidate. With the development of technology, medical
test have become diversified. Drug tests help measure the presence of illegal or performance-
affecting drug Genetic screening identifies genetic predispositions to specific medical problems.
Medical servicing help measure and monitor a candidate's physical resilience upon exposure to
hazardous chemicals
5. Assessment center.
 Meant for managerial position
 Involves simulation of real work situation
 It uses interview, in basket exercise, group discussion, business games

Selection Tests tools

These are some of the commonly used selection test tools in human resources

Test Description
WAB Eliciting candidate's responses to specific questions
BIB Assessing candidate's responses to the background
TAT Gauging the need for achievement and power
SLC Assessing attitude towards importance of safety
Self-report Inventory Asking for short statements relating to personality
Thomas Profiling Identifying behavioural requirements for the job
PA Reference Inventory Behaviour in work place and general behaviour
Delbin Team Role Measuring ability to be a team player

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Gordon Inventory Measuring mental and personal profile
Myers-Briggs Indicator Understanding personality type
Meta Motivation Assessing personal and management style
David's Battery Assessing technical dexterity
Guifford-Zimmerman Gauging extent of temperamental adaptability
Minnesota Multiphase Identifying traits of aberrant behaviour
Kuder Preference Record Measuring occupational interests
16 PF Measuring personality factors
ISA Measuring verbal and mathematical' skills
Wonderlic Personnel Assessing analytical and verbal skills
Bennet Mechanical Measuring ability to understand
LGD Group discussion between sets of candidates
Work Sample Test of ability to handle functional problems

Choosing Selection Tests

Tests must be chosen based on the criteria of the following:

 reliability,

 validity,

 objectivity

 Standardization.

Reliability

This refers to standardization of the procedure of administering and scoring the test results. A
person who takes a test one day and makes a certain score should be able to take the same the
next day or the next week and make more or less the same score. An individual's intelligence, for
example, is generally a stable characteristic. So if we administer an intelligence test, a person

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 who scores 110 in March would score close to 110 if tested in July of the same year. Tests which
produce wide variations in results serve little purpose in selection.
Validity

Validity is a test which helps predict whether a person will be successful in a given job. A test
that has been validated can be helpful in differentiating between prospective employees who will
be able to perform the job well and those who will not. Naturally, no test will be 100 per cent
accurate in predicting job success. A validated test increases possibility of success.

There are three ways of validating a test. These are

Concurrent validity

This involves determining the factors that are characteristic of successful employees and then
using these factors as the yardsticks.

Predictive validity

This involves using a selection test during the selection process and then identifying the
successful candidates. The characteristics of both successful and less-successful candidates are
then identified.

Synthetic validity

This involves taking parts of several similar jobs rather than one complete job to validate the
selection test.

Objectivity

When two or more people can interpret the results of the same test and derive the same
conclusion(s), the test is said to be objective. This measure is meant to safeguard against frequent
influences of subjectivity in selection processes. The test evaluators' subjective opinions may
render the test useless. Subjectivity of this kind nullifies the purpose of objectivity and is the
reason why some tests are not valid.

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Standardization

A test that is standardized is administered under standard conditions to a large group of persons
who are j representatives of the individuals for whom it is intended. The purpose of
standardization is to obtain norms or standards, so that a specific test score can be meaningful
when compared to other scores in the group. When a test is standardized, it is administered to
a large number of people who are performing similar tasks.

Caution

Selection test results should serve as only one of several criteria in the selection decision.
Benefits of a validated test are obvious. In a given selection test individuals who score 40 may
and above be considered successful employees. Those who score less than 40 are considered
unsuccessful. A small number of workers who score below 40 are may turn out to be good
workers. Also, some applicants who scored above 40 may become less successful.

Principles of selection tests

1. Tests are used as supplement rather than substitute for other methods.
2. Test are better at predicting failure than success
3. Tests must be reliable
4. test scores are not precise measure because they are sample behaviour
5. Tests should not invade ones privacy
6. Test interpretation, administration, analysis require competent professionals

Employment interview

Selection interview is conducted both at the beginning and at the end of the selection process.
The emphasis here is on the latter.

Interview is a formal, in-depth conversation conducted to evaluate the applicant's acceptability.

It is considered to be an excellent selection device. Its popularity stems from its flexibility.
Interview can be adapted to unskilled, skilled, managerial and professional employees. It

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allows a two-way exchange of information, the interviewers learn about the applicant, and the
applicant learns about the employer.

Objectives of Interviews

Interview has at least three objectives namely:

 Helps obtain additional information from the applicant;

 Facilitates giving general information to the applicant such as company policies, ducts
manufactured and the like;
 Helps build the company's image among the applicants.

Shortcomings of Interviews

However, interviews do have shortcomings as highlighted

Absence of reliability

Absence of reliability is one limitation. No two interviewers offer similar scoring after
interviewing an applicant.

Lack of validity

This is because, few interviewers use standardized questions upon which validation studies can
be conducted.

Biases of interviewers

There are many errors that crop up and affect the quality of selections. This bias could emanate
from the similarity or halo effect between the interviewer and the interviewee.

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Types of interviews schedule

There are many types of interview schedules but the ones most commonly
used in selections are as follows:

One-to-one interview

Here there are only two participants—the interviewer and the interviewee.
This can be the same as the preliminary interview discussed earlier.

Sequential interview

The sequential interview takes the one-to-one a step further and involves a
series of interviews, usually utilizing the strength and knowledge base of each
interviewer. Each interviewer will ask each candidate questions in his/her
areas of expertise as the candidate move from one interview room to another

Panel Interview

Consists of two or more interviewers and the figure may go up to as s 15. Any panel interview is
less intimate and more formal than the one-to-one, but if handled well, it can provide a wealth of
information. If not handled carefully, the panel interview can make candidate feel ill at ease and
confused about whose question to answer and whom to address.

Types off Interview

Interviews can be of different types. The usual types are structured, unstructured, behavioural and
stress-producing as expounded under:

Structure of Interview

A predetermined checklist of questions, usually asked of all applicants.

Useful for valid results, and especially when dealing with large number of applicants. In a
structured interview, the interviewer uses a preset standardized questions which are put to all the
interviewees. This interview is also called 'guided' or 'patterned' interview.

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Unstructured
Few, if any, planned questions. Questions are made up during the interview. Useful when the
interviewer tries to probe personal details of the candidate to analyse why they are not right for
the job. In an unstructured interview, also known as 'unguided' or 'unpatterned' interview, the
interview is largely unplanned and the interviewee does most of the talking. Unguided interview
is advantageous inasmuch as it leads to a friendly conversation between the interviewer and the
interviewee and in the process, the latter reveals more of his or her desires and problems. But the
unpatterned interview lacks uniformity and, worse, this approach may overlook key areas of the
applicant's skills or background.

Mixed

A combination of structured and unstructured questions, which resembles what is usually done
in practice. A realistic approach that yields when comparable answers plus in-depth insights.

Behavioural
Useful to understand applicant's reasoning and analytical abilities under modest stress.
Questions are limited to hypothetical situations. Evaluation is based on the solution and
approach of the application
Stressful
A series of harsh, rapid questions intended to upset the applicant. It is useful for stressful jobs
such as handling complains
In practice, a blend of structured and unstructured questions is used by the interviewer while
interviewing the job seekers. This approach is called the mixed interview. The structured questions provide
a base of information that allows comparisons between candidates. But the unstructured questions make
the interview more conventional and permits insights into the unique differences between applicants.
Behavioural interviewing focuses on a problem or hypothetical situation that the applicant is expected to
solve. Often, these a hypothetical situations, and applicant is asked what she/he would do in the given
circumstances. This interview technique has a limited scope. It primarily reveals the applicant's ability to
solve the types of problem presented. Validity is more likely if the hypothetical situations match those found
on the jobs. When the job involves much stress, stress interview attempts to learn how the applicant will

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respond to the pressure. This technique is more relevant; in jobs involving stress, for example, in the police
force. Since stressful situations are usually only a part the job, this technique should be used along with
other approaches.

Common Interview Problems

Regardless of the type, several problems are inherent in interviews. Selection specialists must be
aware of these problems and need to be trained to overcome them.

a) Interviewers do not seek applicants' information dimensions needed for successful job
performance
b) They do not have a complete job description or an accurate appraisal of the critical
requirements.
c) Interviewers may make snap judgments early in the interview. Consequently, they block
out further potentially useful information.
d) Interviewers permit one trait or job-related attribute to influence their evaluation of the
remaining qualities of an applicant. This process, called the halo effect, occurs when an
interviewer judges an applicant's entire potential for job performance on the basis of a
single characteristic, such as how well the applicant dresses or talks.
e) Interviewers have a tendency to be swayed by negative information about the applicants.
f) Information from interviews is not integrated or discussed in a systematic manner If
several interviewers share information on an applicant, they may do so in a haphazard
manner. They do not identify job-related information or seek to examine any
conflicting information. This casual approach may save time and confrontation, but only
in the short run. In the long run, everyone in the company will pay for poor hiring
decisions.
g) Interviewers’ judgements are often affected by the pressure to favour a candidate or fill
the position, hence they lower the standards.

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 h) Interviewer's judgement regarding an applicant is often affected by the list of available
applicants. For example, a good person looks better in contrast to a group of average or
below-average applicants
i) There is the problem of different cues used by interviewers. Some interviewers may place
more weight on certain attributes than others, or they may combine attributes differently,
as they make their overall decisions. For instance, some interview may give emphasis to
educational experiences while others give weightage to work experiences.
j) Sex, race and attitudes similar to those of the interviewer may lead to favourable
evaluations.

THE DO's of Interview

 Plan the interview

 Establish an easy and informal relationship
 Encourage the candidate to talk
 Cover the ground as planned
 Probe where necessary
 Analyze career and interests to reveal strengths,
weaknesses, patterns of behaviour
 Maintain control over the direction and time taken for the interview

THE DON’Ts of Interview

 Start the interview unprepared
 Plunge too quickly into demanding questions
 Ask leading questions
 Jump to conclusions on inadequate evidences
 Pay too much attention to isolated strengths
or weaknesses
 Allow the candidate to gloss over important facts
 Talk too much

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In addition to the do's and don'ts stated , a few more tips may be remembered so as to make the
interview more objective. One such guideline is the type of questions which the interviewer should ask.
Other guidelines for an effective interview are

 always use the structured form,

 evaluate the interviewee immediately after the interview,

 focus on traits that are most accurately assessed in the interviews,

 get the interviewee to talk,

 respect the reservation policy of the concerned government.

Sample Interview Questions from the Employer

 Openers
 May I see your resume?
 What can I do for you?
 Why are you interested in joining our company?
 What do you think you can do for us?
 What attracts you to us?
 Tell me about your experiences.
 What pay do you have in mind?

Regarding Motivation
 Is your present employer aware of your interest in a job change?
 Why do you want to change your job?
 What caused you to enter your job field?
 Why do you want to change your field of work?
 What would you like to be doing five years from now when you retire?
 What is the ideal job for you?
 If you had complete freedom of choice to be a great success in any job field, which

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 would you choose? Why?_

Regarding Education
 Describe your educational qualifications.
 Why did you choose your major?
 What was your class standing?
 What extra-curricular activities did you take part in?
 What honours did you earn?
 What were your average grades?
 Did your grades adequately reflect your full capability? If not, why?
 What courses did you like best/least and why?
 Have you had any special training for this kind of
job?

Regarding Experience
 Why should I hire you?
 How do you fit the requirements for this job?
 Who has exercised the greatest influence on you? How?
 What duties performed in the past have you liked best/least and why?
 What are your greatest strengths/limitations for this job?
 What are the strongest limitations you have found in your past supervisors?
 Which supervisor did you like best and why?
 What kind of people appeal most/least to you as work associates?
 How many people have you supervised? What types?

 What are your greatest accomplishments to date?

 What equipment can you work on?
 Why have you changed jobs so frequently?
 Have you ever been fired or asked to resign?
 Describe the biggest crisis in your career.
 What were you doing during the period not covered in your resume?
 Why were you out of work for so long?

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  What was the specific nature of your illness during the period of your extended
hospitalisation?
 Why did you leave your previous jobs?
 Could I see samples of your work?

Regarding Pay
 What is the minimum pay you will accept?
 What is your pay record for the last five years?
 Why do you believe you are qualified for so much more?
 We can't pay the salary you ask for. Would you be willing to start lower and work towards
that figure?
 What do you expect to be earning five years from now?

Reference and Background Checks

Many employers request names, addresses, and telephone numbers or references for the purpose of
verifying information and, perhaps, gaining additional background information on an applicant.
Although listed on the application form, references are not usually checked until an applicant has
successfully reached the fourth stage of a sequential selection process;. When the labour market is very
tight, firms sometimes hire applicants before checking references.

Previous employers, known public figures, university professors, neighbours or friends can act as
references. Previous employers are preferable because they are already aware of the applicant's
performance, but, the problem with this reference is the tendency on the part of the previous
employers to over-rate the applicant's performance just to get rid of the person.
Companies normally seek letters of reference or telephone references. The latter is advantageous
because of its accuracy and low cost. The telephone reference also has the advantage of soliciting
immediate, relatively candid comments, and attitudes can sometimes be inferred from hesitations
and inflections in speech.

Reference checks serve two important purposes. One purpose is to gain insight about the potential
employee from the people who have had previous experience with him or her.

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The second purpose for reference checks is to assess the potential success of a prospect. Who else
can give an objective assessment of an individual than his or her previous employer or a person known
to him or her?
But one should guard against the following while considering to employ a prospect:
1. The prospect is likely to approach those persons who would speak well about him or her.
2. People may write favourably about the candidate in order to get rid of him or her.
3. People may not divulge the truth about a candidate, lest it might damage or ruin his or her
career.

Selection Decision

Selection decision is the most critical of all the steps in selection . The other stages in the
selection process have been used to narrow the number of candidates. The final decision has to be
made from the pool of individuals who pass the tests, interviews and reference checks.
The final decision indeed becomes a daunting task when there are a large number of job-seekers
lined up for final selection.
The views of the line manager will be generally considered in the final selection because it is
he/she who is responsible for the performance of the new employee. The HR manager plays a
crucial role in the final selection.

Selection Process Decision Making

Decision
Select reject
Correct Type I error
Good (Right) Rejecting right

Performance Type II error Correct

Poor Selecting wrong Rejecting wrong

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Every selection process has four possible outcomes of a selection decision.
 'True positive' ('high hit'/accepting good performer) - selection the good
performer
 'true negative' ('low hit/rejecting poor performer`) – rejecting the poor
performer
 `false positive error` (accepting poor performer) - a decision is made to hire an
applicant based on predicted success but failure results.
 'false negative error' (rejecting good performer)- an applicant who would have
succeeded is rejected based on predictions of failure. In either case, selectors will
have erred.

A company with a false positive error incurs three types of costs. The first type is incurred
while the person is employed. This can be the result of production or profit losses, damaged
company reputation, accidents due to negligence, absenteeism, and the like. The second type of
costs is associated with the training, transfer or terminating the services of the employee. Costs
of replacing an employee with a fresh one. Costs of hiring, training and replacement constitute the
third type of costs. Generally, the more important the job, the greater the cost of the selection
error.

In the case of false negative error, an applicant who would have succeeded is rejected
because of predicted failure. Most false negative errors go unnoticed except when the applicant
belongs to a reserved category and files a discrimination charge. Costs associated with this type of
error are generally difficult to estimate.
A careful selection will help a firm avoid costs associated with both false positive error as well as
false negative error.

Physical Examination

After the selection decision and before the job offer is made, the candidate is required to undergo
a physical fitness test. A job offer is, often, contingent upon the candidate being declared fit after

71
the physical examination. The results of the medical fitness test are recorded in a statement and
are preserved in personnel records. There are several objectives behind a physical test.

 To detect if the individual carries any infectious diseases.

 The test assists in determining whether an applicant is physically fit to perform the work.

 The physical examination information may be used to determine if there are certain physical
capabilities which differentiate successful and less successful employees.

 Medical check-up protects applicants with health defects from undertaking work that could
be detrimental to themselves or might otherwise endanger the employer's property,

 The examination will protect the employer from workers' compensation claims that are
not valid

Job Offer

After the physical examination, the next step in the selection process is job offer to those
applicants who have crossed all the previous hurdles. Job offer is made through a letter of
appointment. Such a letter generally contains a date by which the appointee must report on duty.
The appointee must be given reasonable time for reporting. This is particularly necessary when
he or she is already in employment, in which case the appointee is required to obtain a relieving
certificate from the previous employer. Again, a new job may require movement to another city
which means considerable preparation and movement of property.
The company may also want the individual to delay the date of reporting on duty. If the new
employee's first job upon joining the company is to go on training, the firm may request that
the individual delays joining the company until perhaps a week before such training begins.
Naturally, this practice cannot be abused, especially if the individual is unemployed and does not
have sufficient finances.
Decency demands that the rejected applicants be informed about their non-selection. Their
applications may be preserved for future use, if any. It needs no emphasis that the applications
of selected candidates must also be preserved for future references.

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Contracts of Employment

After the job offer has been made and the candidates accept the offer, certain documents need
to be executed by the employer and the candidate. One such document is the attestation form. This
form contains certain vital details about the candidate which are authenticated and attested by
him/her. Attestation form will be a valid record for future reference.
There is also a need for preparing a contract of employment. The basic information that
should be included in a written contract of employment will vary according to the level of the job,
but the following checklist sets out the typical headings:
1. Job title.
2. Duties, and responsible
3. indicate the immediate supervisor
4. Date when continuous employment starts and the basis for calculating service.
5. Rate of pay, allowances, overtime and shift rates, method of payments (as applicable)
6. Hours of work including lunch break and overtime and shift arrangements.
7. Holiday arrangements:
 Paid holidays per year.
 Calculation of holiday pay.
 Qualifying period.
 Accrual of holidays and holiday pay.
 Details of holiday year,
 Dates when holidays can be taken.
 Maximum holiday that can be taken at any one time.
 Carryover of holiday entitlement,
 Public holidays.

8. Sickness arrangements:
 Pay for time lost.
 Duration of sickness payments,
 Deductions of national insurance benefits
 Termination due to continued illness.
 Notification of illness (medical certificate).

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  Length of notice due to and from employee.
 Grievance procedure (or reference to it).

9. Disciplinary procedure (or any reference to it).

10. Work rules (or any reference to them).
11. Arrangements for terminating employment.
12. Arrangements for union membership (if applicable).
13. Special terms relating to rights to patents and designs, confidential information and restraints
on trade
after termination of employment.
14. Employer's right to vary terms of the contract subject to proper notification being given.

Contracts of employment serve many useful purposes namely,

 Such contracts seek to restrain job hoppers,
 to protect knowledge and information that might be vital to a company's performance.
 to prevent competitors from poaching highly valued employees.

Great care is taken to draft the contract forms. Often, services of law firms are engaged to get the
forms drafted and finalized. Most employers insist on agreements being signed by newly hired
employees. But high employee turnover sectors such as software, advertising and media are more
prone to use such contracts.

The drawback with the employment contracts is that it is almost impossible to enforce them. A
determined employee is bound to leave the firm, contract or no contract. The employee is prepared
to pay the penalty for breaching the agreement or the new employer will provide compensation. It is
for this reason that some companies have scrapped the contracts altogether. In public sector
organizations such contracts are replaced with terms and condition of service

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Concluding the Selection Process

Contrary to popular perception, the selection process will not end with executing the employment
contract. There is another step of reassuring those candidates who have not been selected. Such
candidates must be told that they were not selected, not because of any serious deficiencies in
their personalities, but because their profiles did not match the requirements of the company. They
must be told that those who were selected were done purely on relative merit.
There are also candidates who fail to show up. These are the individuals who passed through the
selection rigour, receive employment offers, but fail to report to duties. many competent individual
sits on multiple job offers, picks up one and disappoints the remaining employers. 'No Show ups' is
the consequence of ever increasing job offers. Too many jobs are chasing too few competent
people.
No shows cost money. Most senior level searches take anywhere between four to seven months
from getting the mandate to finalizing the candidate. The search firms get paid by companies at
different stages of selection process. When the candidate backs out, it means starting all over
again Time as well as cost overruns for the companies and search firms. It is additional cost for
the companies and for the search firms. It is also loss of face, business and trust.

Evaluation of Selection Programme

The broad test of the effectiveness of the selection process is the quality of the personnel hired. A
firm must have competent and committed personnel. The selection process, if properly done,
will ensure availability of such employees. How to evaluate the effectiveness of a selection
programme? A periodic audit is the answer. Audit must be conducted by people who work
independent of the HR department. The areas to be covered by the valuation and questions to be
answered in a systematic evaluation are as under:

1. Analysis of the programme

 Is the selection programme consistent with the HRM theory and practice?
 Have well-defined selection policies and procedures been developed?
 Are the employment policies consistent with the public policy?
 Do the wage levels, fringe benefits, and level of employee satisfaction within the
organization have a beneficial effect upon the ability to attract and retain good employees

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2. How adequately are the programme and its procedures communicated to those involved in and
affected by It?
3. How is programme implemented?
 Have those, entrusted employment carried out the the process with adequately trained
personnel

4. Feedback
 How many persons have rejected the company as a poor place because of
lowages?

5. Analysis of results
 How well do hose hired perform on the job?
 What percentage of those who applied are hired?
 What contribution does each of the selection tools (i.e. tests, interviews, medical examinations,
etc.) make to the programme?
 How well do the predictions from each of the selection tools correlate with job success?
 Have these selection devices been properly validated?

Assessment Centres

One special method of selection increasingly used in modern days is the assessment centre. An
assessment centre is not a physical location but an approach to selecting managers based on
measuring and evaluating their ability to perform critical tasks. Assessment centre method is
employed to fill managerial positions from within or to hire fresh graduates as management
trainees.
An assessment centre may last from two to five days, during which time a group of candidates (usually
6 to 12) takes a series of work sample tests and other selection devices, such as various interviews,
tests, exercises and feedback sessions. During the assessment centre schedule, these candidates may
undergo experiential exercises, group decision-making tasks, case analyses, individual employment
tests, role playing exercises and other methods for assessing their potential skills and abilities,

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 A panel of line managers drawn from different departments acts as evaluators whose feedback shall
be decisive in making selection decision

Barriers to Effective Selection

The main objective of selection is to hire people having competence and commitment. This
objective is often defeated because of certain barriers. The impediments which check effectiveness of
selection are perception as under:

 Fairness,

 Validity,

 Reliability

 Pressure

Perception

Our inability to understand others accurately is probably the most fundamental barrier to selecting
the right candidate. Selection demands an individual or a group of people to assess and compare the
respective competencies of others, with the aim of choosing the right persons for the jobs. But our
views are highly personalized. We all perceive the world differently. Our limited perceptual ability
is obviously a stumbling block to the objective and rational selection of people.

Fairness

Fairness in selection requires that no individual should be discriminated against on the basis of
religion, region, race or gender. But the low numbers of women and other less-privileged sections of
the society in middle and senior management positions and open discrimination on the basis of age
in job advertisements and in the selection process would suggest that all the efforts to minimize
inequity have not been very effective.

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Validity

Validity, as explained earlier, is a test that helps predict job performance of an incumbent. A test that
has been validated can differentiate between the employees who can perform well and those who will
not. However, a validated test does not predict job success accurately. It can only increase
possibility of success.

Reliability

A reliable method is one which will produce consistent results when repeated in similar
situations. Like a validated test, a reliable test may fail to predict job performance with precision.

Pressure

Pressure is brought on the selectors by politicians, bureaucrats, relatives, friends and peers to
select particular candidates. Candidates selected because of compulsions are obviously not the right
one Appointments to public sector undertakings generally take place under such pressures.

Key terms
Ability tests
Aptitude tests
Halo effect
No shows

Review questions
i) What is selection? Why is it important to an organization?
ii) Explain various types and importance of employment tests
iii) Why should an organization evaluate a selection programme?

Further readings
i) Nair, N.G and Latha, N (2001), Personnel Management and Industrial Relations. Sultan
Chand & Sons, New Delhi. First Edition.pp 97-117
ii) Aswathappa,k.(2008).human resources management. Text and case. Tata MacGraw-
Hill, New Delhi. Fifth edition.pp170-190

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 CHAPTER: FIVE ETHICS IN HR STAFFING

OBJECTIVE

By the end of the chapter the learner should be able to:

i) Explain meaning ethical

ii) Describe implication of Hr ethics on organization performance
iii) Describe ways and means of improving ethical standards in an organization 

Ethics Defined

Ethics refer to the study of good and evil, right and wrong, and just and unjust actions. Business
ethics is same in principles with other tenets of ethics, right and wrong dimensions, just and
unjust practices etc. Ethics is understood from societal point of view. Societies culture
determines what is ethical and unethical because individuals anchor their conducts in culture of
the group to which they belong

Ethical Dilemmas

Unethical practices in business related world were found even in our ancient culture. Not only
rates of interest were exorbitant (60 per cent, 120 per cent and 240 per cent) but were charged
differently to different customers. Debtors were imprisoned or enslaved by creditors until they
paid off their debts. There were instances of debtors committing suicide who were unable to bear
the harassment by creditors

Several ethical dilemmas confront an HR manager. The ethical dilemmas arise from three
sources namely

 Face-to-face ethics,
 Corporate policy ethics,
 Functional-area ethics

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Face-to-face Ethics

These arise mainly because there is a human element in most business transactions. For example,
a purchasing agent of a company develops personal relationship with the sales representative
who sells supplies to the company. They may address one another on first name basis, have
lunch together, and talk often on the phone. A company's best customers may be well-known to
people in the production department as it helps to ensure that the company's products fit the
customer needs.

Because business is composed of these human transactions, it should not be surprising that face-
to-face ethical dilemmas arise often.

It is likely that the quality assurance man overlooks a minor defect and approves a lot delivered
by a supplier because of the personal relationship that the two enjoy. It is also not unlikely that a
supervisor over-rates the performance of an employee because of the similar relationship that
exists between the two.

Corporate policy Ethics

Companies are often faced with ethical dilemmas that affect their operations across all
departments and divisions. Following conflicting situations are typical:

i) Your R&D department has modernized one of your products. It is not really 'new and
improved'. But you know printing these statements on the package and using it in
advertisement will increase its sales. What would you do?
ii) You are interviewing a former product manager who just left a competitor's company.
You are thinking of hiring him. He would be more than happy to tell you the competitor's
plans for the coming years. What would you do?
iii) You have a chance to win a big account that will mean a lot to you and your company
assistant recommends sending a colour television set to his home. What would you do?
iv) You produce an anti-dandruff shampoo that is effective with one application. The
purchasing agent hinted that he would be influenced by a gift. Your assistant says that the
product would turn over faster if the instructions on the label recommended two
applications. What would you do?

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 v) You work for a cigarette company and till now you have not been convinced that
smoking cigarettes causes cancer. A recent report has come across your desk that clearly
establishes the connection between smoking and cancer. What would you do?

Another issue relates to the consequences of employment contraction in labour intensive

basic industries because of the improved methods of production. Modern technology has
replaced older methods of production which has in turn resulted in hundreds being rendered
jobless. The issue therefore is—global economic competitiveness or local social-
psychological stability?

The ethical burden of deciding corporate policy matters normally rests upon a company's HR
management. The HR managers and directors are responsible for making policies and
implementing them too. The ethical content of their policies can have enormous impact
throughout the company. It can set an ethical tone and send right signals to all employees as
well as external stakeholders.

Functional-area Ethics

Functional areas of a business are likely to confront ethical issues. Accounting is a critical

function of any business. Accounting statements reveal to the manager and owners the
financial soundness of a company. Managers, investors, regulating agencies, tax collectors,
and trade unions rely on accounting data to make decisions. Honesty, integrity and accuracy
are absolute requirements of the accounting functions. Professional accounting organizations
have evolved generally accepted accounting standards (GAAPs) whose purpose is to establish
uniform standards for reporting accounting data. When they are followed, these standards
ensure a high level of honest and ethical accounting disclosures. Rarely are they followed in
factories.
Ethical dilemmas crop up in purchasing departments where strong pressures are felt to obtain
the lowest possible prices from suppliers and where suppliers too feel a similar need to bag
lucrative contracts. Bribes, kickbacks, and discriminatory pricing are temptations to both the
parties.

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 Marketing is another area of ethical issue. Pricing, promotions, advertising, product
information, relation between the ad agencies and their clients, and marketing research have
potential areas of ethical dilemmas.
Then there is the area of today's sophisticated communication technology which is grossly
abused or misused to realize one's ambitions.

HR Ethical Issues

Ethical issues abound in HR activities. Areas of ethical misconduct in the personnel function
include employment, remuneration and benefits, labour relations, health and safety and others
as shown in figure 8

Figure 8: HR Ethical Issues

Cash and Incentive Plans

These include base salaries, annual incentive plans, long-term incentive plans and executive
perquisites.

Base Salaries: The HR function is often presumed to justify a higher level of base salaries, or a
higher percentage increase than what competitive practice calls for. In some cases, pressure is

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exerted to reevaluate the position to a higher grade for the purpose of justifying a larger-than-
normal increase.

Annual Incentive Plans : The HR manager is often forced to design and administer top-
management incentive plans, at higher rates than what the individuals deserve. A common
rationale presented to the HR executive for bending the rules is the fear of losing the outstanding
executives, if higher incentives are not paid.

Long-term Incentive Plans: Just as with annual incentive plan, many HR executives have the
responsibility of designing and administering the firm's long-term incentive plans, but in
consultation with the CEO and an external consultant. Ethical issues arise when the HR
executive is put to pressure to favour top management interests over those of other employees
and investors.

Executive Perquisites: Executive perquisites make the ethical stand of the HR executive difficult
because their cost is often out-of-proportion to the value added. The responsibility of
administrating these programs falls on the HR executives who must live with the excesses that
often are practiced.

Performance Appraisal

Performance appraisal lends itself to ethical issues. Assessment of an individual's performance is

based on observation and judgment. HR managers are expected to observe the performance (or
understand the potentials) in order to judge its effectiveness. Yet, some HR managers assign
performance rating based on unrelated factors (for example, the employee is not loyal to the
rator, or the ratee belongs to a different community or religion).
Ethics should be the cornerstone of performance evaluation, and the overall objective of high
ethical performance reviews should be to provide an honest assessment of the performance and
mutually develop a plan to improve the ratee's effectiveness.

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Race, Gender, Age and Disability

The practice of treatment of employees according to their race, ethnic origin, sex, or disability
have largely been stopped. A framework of laws and regulations has evolved that has
significantly improved workplace behaviour. The threat of litigation and the attendant costs have
spurred employers to introduce several programmes designed to train managers and supervisors
to avoid discriminatory practices. No enterprise today would dare to publicly state that it denies
minorities, women, and the disabled opportunities for employment, remuneration, and growth
prospects different from those given to others. In this environment the role of HR function is to:
1. Monitor the principles and norms of the enterprise to ensure that they reflect the values
of the society as expressed in its laws.
2. Monitor the selection, reward, development, and appraisal systems to ensure that they are
consistent with the principles and norms.
3. Vigorously pursue violations and, when necessary, vigorously work to defend
the enterprise against unfounded allegations.

Job Discrimination
Job discrimination refers to making adverse decisions against employees or job applicants
based on their membership in a certain group. Three tests decide whether a decision is
discriminatory or not:
(i) Decision is based on the group membership and not on individual merit,
(ii)Decision is the result of prejudice, or false stereotype, and
(iii)Decision somehow harms those it is aimed at.

The most common discriminatory practices having ethical implications are I

Individuals can intentionally discriminate out of personal prejudice or on the basis of stereotypes.
For instance, request from women to work in production department may be rejected on the basis
that they do not understand machines. Second, organisations can also discriminate. For example,
a company has a policy not to place women in supervisory positions because "men in the
company do not want to receive orders from females."

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Discrimination on grounds of sex or race that violates people's basic moral rights and mocks the
ideal of human moral equality. Workplace harassment, particularly of women, is a workplace
discrimination

How are discriminatory practices unethical? Discrimination is unethical because it violates a

person's basic moral rights. Kantian theory, for example, holds that human beings should be
treated as ends and never used merely as means. Thus Kantian principle implies that each
individual has a moral right to be treated as a free person equal to any other person, and that all
individuals have a correlative moral duty to treat each individual as a free and equal person.

How to correct discrimination?

Experts have suggested series of corrective interventions, popularly called affirmative actions.
Affirmative actions include hiring people purely on job-related considerations giving due
representation to reserved categories, equal pay for equal work, offering job promotions on the
basis of performance and treating all employees fairly. Some of the affirmative actions are
mandatory also for example 30% rule in Kenya for female employment. Hiring a minimum
number of people belonging to disadvantaged sections, for example, is a legal requirement, so
also equal pay for equal work.

The role of IHR manager in ensuring that affirmative actions are in place is better understood in
the implication than making it explicit.

Privacy Issues

Privacy refers to protecting a person's private life from intrusive and unwarranted actions. The
employee believes that his or her religious, political, and social beliefs as well as personal life-
style, are private matters and should be safeguarded from being snooped or analyzed. Exceptions
are permitted grudgingly only when job involvement is clearly involved. For example, it may not
be inappropriate to intrude into an employee's private matters if it is suspected that he or she

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discusses with a competitor, through e-mail messages, the specifications of a newly developed
product not yet launched into the market.
Five areas pose ethical dilemmas to employers pertaining to privacy of employees or job
applicants are

Information technology: A firm's need for information particularly about employees while-on-
work may be at odds with the employees' privacy. There are regulations prohibiting third-party
interception of e-mails without prior authorization, but interception by insiders m not covered by
any law, and no absolute privacy exists in a computer-based system. Employees are viewed on
close-circuit TV, phones are tapped, and computer files are read without his or her knowledge or
consent. Such intrusions do breach the privacy of employees and constitute an ethical dilemma
for the HR practitioner.

AIDS testing: AIDS has become a major public health problem and AIDS epidemic now affects
all segments of the world population.
For the HR manager the disease raises two issues. Whether a new hire be subject to AIDS test?
What treatment should be meted out to an employee who is affected with the disease? Opponents
of AIDS testing argue that new hires should not be tested for the presence of HIV because it
would be an invasion of privacy. They also argue that the available tests are frequently inaccurate
and the tests do not reveal whether a person having AIDS antibodies will ever develop the
disease. With regards to the HIV/AIDS, firms do not discriminate against the HIV positives.

Whistle-blowing. Like the blowing of a whistle by a referee to indicate violations of the rules on
a playing field, whistle-blowing in a business setting refers to disclosure by former or current
organisation members of any illegal, immoral, or illegitimate practices involving their employers.
Employees either make organisational misconduct public or inform it to top-level officials of the
company.
Whistle-blowing has both defenders and opponents. Those defending whistle-blowing point to
the fraudulent activities detected. Opponents of whistle-blowing however cite the hundreds of
unsubstantiated cases, often used by disgruntled workers seeking to blackmail employers.
How is whistle-blowing an ethical issue? Generally, employees are not expected to speak against
the' own employers because there is public interest in allowing firms to operate without

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harassment from insiders. Company information is generally considered to be proprietary and
private. If employees, based o their personal points of view, are freely allowed to expose issues to
the public, the company may be thro into turmoil and be unable to operate efficiently. On the
other hand, there may be situations in which society's interests override those of the company.
Drug testing. Whether an employer tests its employees drug usage requires a delicate balance
between the right of the employer to protect its interests and the ri of the employee to be free
from wrongful intrusions into his/her personal affairs. As a rule, employer has right to drug test if
drug usage impacts employees' job performance. Otherwise, employer has no basis testing.

How does drug testing assume an ethical dimension? If the information obtained from drug
testing relevant to the job, subjecting an employee to such a test assumes legitimacy and becomes
an acceptable component of employer-employee relationship. Where information obtained from
drug testing is irrelevant to the job, it amounts to invading an employee's personal life.

Genetic testing. This testing is an attempt to use the science of genetics to understand the links
between one's inherited characteristics and certain illnesses. Genetic testing can occur two
different forms: genetic screening and genetic testing. Genetic screening is used to identify
persons to are susceptible to certain genetically based illness. The goal of screening is to single
out individuals or groups of people who have certain genetic traits. Genetic monitoring, on the
other hand, is used to identify substances that are capable of causing damage to the genetic
make-up of people.

The goal of monitoring is to single out not people but harmful substances.
Genetic testing makes sense for businesses. Fewer disabled workers means reduction costs
caused by illness, absenteeism, health insurance, worker's compensation turnover. Genetic
testing has ethical dimension in as much as it can be held against job seekers or discriminate
against some employees. In addition, it gives way to social stigmatization of people with genetic
defects. When screening uncovers a genetic abnormality, the individual tends to feel morally
defective, cursed or damned. For instance, individuals in our society inflicted with leucoderma
are being stigmatized.

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Safety and Health

Suffice it is to state that much of industrial work is hazardous. This is because of the extensive
use of high speed and noisy machinery, production processes requiring high temperature, an
increasing reliance on chemical compounds, and the nature of such works as construction,
underground and under-water tunnelling, drilling and mining. Accidents, injuries, and illnesses
are likely to occur under these circumstances. Over the past decade, new categories of accident
and illness have emerged, including the fast-growing job-safety problem of office injuries. Stress
from the rising productivity pressure and escalating job demands can cause cumulative trauma
and disorder, such as the wrist pain which is sometimes experienced by super-market checkers,
meat cutters, or keyboard operators. The number of health problems attributed to the use of video
display terminal and computer keyboards and to tasks requiring repetitive motion have increased
by ten folds in the last decade.
Modern business establishments are obviously full of hazards to safety and health. At the same
time there is controversy surrounding the issues relating to safety and health. It may be asserted
that nobody, including an employer, has a right to cause injury to the physique of another or
damage his/her health. This assertion stems from the fact that health and safety are the two things
that are highly valued. If anything can be said to be intrinsically good, it is health and safety.
Except in the most extreme circumstances, life is better than death, health is better than illness
and body integrity is better than injury. Besides this intrinsic value, health and safety also have
significant instrumental value. In other words, they are very useful for acquiring other lings of
value. Whatever one desires, being healthy and safe will improve one's chances for satisfying
that desire.

Workers have an inalienable right to earn their living free from ravages of job caused death
disease and injury. Philosophers have offered strong defences of the right to be free of the
infliction of cancer on the job. Behind this contention lies the idea that people need rights to
protect them from, unreasonable health hazards at places where they earn their living. If the
market does not satisfy this right to safety on the job, then the government must intervene in
order to protect it

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Restructuring and Layoffs

Restructuring activities in the past several years, and the lay-offs that have resulted and it cannot
be considered unethical as such. Restructuring and consequent lay-offs have become relevant
because of poor management, but incompetence does not become unethical.
However, there are ethical implications in the process by which termination decisions are made
and actions taken. For example, if restructuring requires closing of a plant is chosen, the process
by which that plant chosen, how the news will be communicated, and the time-frame for
completing the lay-offs are ethically important. If conducted in an atmosphere of fairness and
equity and with the dignity of the affected individuals in mind, the action is ethical.
To start with, alternatives to lay-off may be tried before terminating services of employees.
Follow' are the most straightforward choices:
• Proportionally reducing work hours to spread the pain of reduced employment costs
across the entire work-force.
• Reducing wages for all employees (possibly weighted to so that the highest paid take
larger pay cuts to reduce the wage bill.
• Taking work previously outsourced (such as maintenance or subcontracting) back into the
organization.
• Building inventory when demand is slack.
• Freezing hiring to avoid making overstaffing worse.
• Having people do other things, such as defer maintenance and repair, training courses and
similar activities for which they were too busy when business was better.
• Refraining from hiring to meet peak demand, which makes reductions in employment
almost inevitable when demand falls.
• Encouraging people to develop new products, services, or markets so that their skills can
still be used by the firm.
• Putting production or staff people into sales to build demand.

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Employee Responsibilities

Rights of employees corresponds to the responsibilities which employees owe to their

employers. Responsibilities set ethical limits on their behaviour and rights establish limits of the
ethical behaviour of others.
Employees owe responsibilities to themselves and their own moral integrity, to their families, to
their profession, to the law and to society at large. Obviously, employees face many cases of
conflicting responsibilities in the workplace, as for instance, responsibility to one's employer
versus obligation to public safety, or responsibility to one's profession or to the employer.
Conflict also arises when the responsibility self or family clashes with the responsibility towards
employer. There are established principles which 'p the employee resolve such conflicts. For
example, public safety should override the interests of employer, and responsibility to one's
profession is more sacred than loyalty to the employer. The issue relating to self versus employer
is nothing but work-life balancing, an issue that is assuming increasing importance these days.

Managing HR Related Ethics

Many businesses are using managerial techniques that are designed to encourage ethical
behaviour. Some of the managerial interventions to ensure ethical conduct are :
Establing code of conduct
Pre-employment screening
Public source information
Whistle blowing system
Fraud training

The CEO should take the initiative in ensuring ethical standards in his or her organisation. In
addition, the top management must avoid adopting business strategies, schedules and reward
systems that place unreasonable pressure on employees

Code of ethics has become popular. These codes vary from book-length formulations to succinct
statements in one or two pages and express a general philosophy for managing conflicts. Nearly
95 per cent of the Fortune 500 companies have codes, and a trend is visible in the corporate

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sector all over the world. The code constitutes a primary-level, self-regulating character for
enlightened citizenship amongst business entities.

Ethics Committees

Many companies have ethics committees to advise on ethical issues. Such a committee can be a
high-level one comprising the board of directors, chaired by the CEO of the company.
The committees field questions from employees, help the company in establishing policies in
new or uncertain areas, advise the board of directors on ethical issues, and oversee the
enforcement of the code of ethics.

Ethics Hot Lines In some companies, when employees are troubled about some ethical issue but
may be reluctant to raise it with their immediate supervisor, they can call on the company's
'ethics hot line'. A member of the ethics committee receives the confidential call and then quickly
investigates the situation. Elaborate steps are taken to protect the identity of the caller, so as to
encourage more employees to report any such deviant behaviour. This technique is advantageous
in as much as the matter is settled internally, which is better for a company than to have a
situation where disgruntled employees take their ethical complaints to the media.

Ethics Training Programmes

Nearly all companies, which take ethics seriously, provide training in ethics to their managers
and other employees. In such training programmes, company personnel are made familiar with
the official company policy on ethical issues, and it is shown how those policies can be
translated into the specific everyday decision making. Often, simulated cases based on actual
events in the company are used to illustrate hot to apply ethical principles to on-the-job
problems.
Generally speaking, training in ethics is most effective when it is conducted by the company
managers themselves rather than external agencies. To make such a training effective, it is
important that it is steered away from abstract philosophical discussions and focuses on specifics
of the work environment of those attending.

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Corporate Culture and Ethical Climate

Corporate culture is a blend of ideas, customs, traditional practices, company values, and shared
meanings that help define normal behaviour for everyone who works in a company. Every
organisation has a culture which exercises considerable influence on employee behaviour.
Hewlett-Packard is well-known for a culture that stresses on values and ethics. Called the 'HP
Way' by employees, the most important values of the culture are confidence in and respect for
people, open communication, sharing of benefits and responsibilities, concern for the individual
employees, and honesty and integrity.
There are different types of ethical yardsticks, they are—egoism (self-centeredness),
benevolence (concern for others), and principle (respect for one's own integrity, group norms,
and society's laws). These ethical yardsticks can be applied to dilemmas concerning individuals,
one's company, or society at large. For example, if a manager approaches ethical issues with
benevolence in mind, he or she would promote friendly relations with employees, emphasise the
importance of team-play and co-operation for the company's benefit, and recommend socially
responsible courses of action. However, if the manager uses egoism to think about ethical
problems, he or she would more likely to think first of self-interest, promoting the company's
profit motive and would strive for efficient operations at all costs. A company's ethical climate
depends on the combination it has of these nine possibilities.
Corporate culture and ethical climate can put pressure on people to channel their actions in
certain directions desired by the company.

Improving Ethical Decision Making

Ethical decisions are difficult to make. They cannot be programmed like production and
inventory decisions. This section contains practical difficulties in decision-making and
guidelines which help managers in making a choice.

Difficulties in Decision Making

There are many reasons that can be. attributed to difficulties in decision-making in the ethical
context.

Managers face, as stated earlier, dilemmas in deciding on a course of action.

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 i) Managers confront situations where a distinction between facts and values has to be made
making ethical decisions.
ii) The good and evil exist simultaneously, in tandem, and are inter-related.
iii) Knowledge about the consequences of an action is limited. One of the principles of de
making is utilitarian. This implies that if an act results in the greatest good of greatest
numbers, it is take morally acceptable. This principle assumes that the consequences of
the act are defined.
iv) Antagonistic interests frequently use incompatible ethical arguments to justify their
interest
v) Some ethical standards vary with the passage of time.

vi) the early 21st century presents managers with newer and emerging ethical problems that
are not solved easily with traditional ethical guidelines. For example, modern ethical
theory has not yet developed an adequate principle for weighing human life against
economic factors in a decision.
vii) the growth of large-scale organizations in the 21st century gives new significance to
ethical problems such as committee decision-making that masks individual responsibility,
organizational loyalty versus loyalty to the public interest, and preferential hiring of
disadvantaged sections of society.
viii) Ethical behaviour is moulded from the clay of human imperfection.

Ways of Resolving Ethical Issues

The individual in business can take number of steps to resolve ethical problems.
1. He or she can consider three well-known principles to resolve an ethical issue: moral
idealism, intuitionism and utilitarianism. Moral idealism postulates that certain acts are
good and others are bad. Pursue those acts which are good and avoid the bad ones. Moral
idealism gives definite answer to ethical issues.
Intuition leaves it to the individual HR practitioner to sense the moral gravity of the
situation. If he or she feels that his or her motives are good and that they do not intend to
hurt anyone, he or she is taking an intuitive approach to morally difficult situations.

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 Utilitarianism seeks to establish the moral locus not on the act or the motives but on the
consequences. If the consequences represent a net increase in the society's happiness, or
at least not a decrease, the act is morally right.
Principles of the type described above help a manager in making a decision in ethically
difficult circumstances.

2. Consider some decision tactics that illuminate moral choices. One such device is to
engage in imaginary conversations with a hypothetical opponent as an antidote for
certitude. Have a debate with an intelligent person who takes a different view. Seek out a
more experienced, ethically sensitive person in the organisation to be your adviser.
Alternatively, write an essay in favour of a stand and then a second, to oppose it. Write a
case study in the third person about your situation. Try to apply ethical principles in
answers to questions raised by the case.

3. Write down pros and cons in the form of a balance sheet. The balance-sheet approach
helps decision making by presenting information in an organised way.

4. Sort out ethical priorities before problems arise. Prioritisation shall help consider
alternatives when one is not under stress.
Fifth, one should commit oneself publicly on ethical issues. He or she should identify
potential areas of ethical conflict and make clear his or her opposition to padding expense
accounts, stealing supplies from the company, bias in performance appraisal or unjust
laying-off of employees. Once the stand is made clear, employees will be less tempted to
approach with corrupt intentions.

5. Ethical perfection is illusionary. in a morally complex civilisation with profuse rules,

norms, obligations, and duties, like road signs that generally point in the same direction,
but sometimes do not. No method of decision making ends conflicts, no principle
penetrates unerringly to the good, and no manager achieves an ethical ideal.

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 But the HR practitioners cannot absolve themselves of their responsibility to ensure
ethical conduct. In fact, the special role of the HR function has resulted in significant
exposure to ethical challenges for the HR manager. As the function is integrated into the
strategic management of the enterprise, and the HR executive is routinely involved in the
process that deals with company-wide issues, the exposure to ethical issues grows.
As a result, the HR manager deals with more stakeholders than other functional
managers: the interests of the company, as seen from management's perspective; the
interest of the employees, where the HR manager historically has been expected to play
the role of advocate; and the interests of shareholders and other stakeholders.

Key Terms
Code of ethics
Ethical issues
Moral idealism
Utilitarianism

Review questions
i) Define ethics
ii) What is an ethical dilemma?
iii) Explain various HR ethics issues
iv) Propose various ways of managing ethics 

Further readings
i) Aswathappa,k.(2008).human resources management. Text and case. Tata MacGraw-
Hill, New Delhi. Fifth edition. Pp595-655

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Sample CAT

1. Different the terms and concepts of recruitment and selection (2 marks )

2. Identify and explain any 3 main job analysis techniques (6 marks)
3. Subjecting a prospective to a selecting test is equating that candidate to a
laboratory specimen. Discuss (10 marks )
4. Kenya`s affirmative action of 30% employment position for women is an
example of an unethical HR practices. Do you agree with this statement
(10 marks)

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SAMPLE PAPERS

SUBJECT: EMPLOYEE SOURCING

SUBJECT CODE: HRM 311

INSTRUCTIONS

Answer question ONE and any other TWO questions

QUESTION ONE

a). Different the following terms as used in job analysis

i) Duty
ii) Position
iii) Job
iv) Job family ( 2 marks)

b). Outline cardinal information that aid in designing a comprehensive job descriptions and job
specification (4 marks)

c). why do organizations find it necessary to draw up job description and job specification
before any recruitment and selection is done? (6 marks)

d). As a human resources manager, can you use assessment centre to test suitability of a
prospective computer technicians? Support your argument. (9 marks)

e). There are critical areas in human resources management that are susceptible to ethical
issues. Using practical examples identify and explain some of these areas of ethical concerns
( 9 marks)

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 QUESTION TWO

Research and practice have agreed on some commonly used methods in evaluating jobs. Identify
and explain some commonly used method by stating their advantages and disadvantages
(20 marks)

QUESTION THREE

Illustrate the process of wage payment. How do wage differentials affect levels and structures?
(20 marks)

QUESTION FOUR

Primarily, selection tests are used to determine the applicant's ability, aptitude and personality.
Discuss different selection tests and tools while highlighting special cautions. (20 marks)

QUESTION FIVE
Ethical issues and concerns in staffing functions are common challenges faced by human
resources management. Using practical examples describe some key ethical challenges in
recruitment and selection exercises. What are common barriers in observing prudent selection
practices. Propose practical ways of overcoming these barriers (20 marks)

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