Personnel Management (PM) in Organisations

An organization can be a manufacturing firm, an insurance company, a government agency, a social

organization, a hospital, a university, a public school system, or even a religious trust. Whatever be the
organization, it needs people to perform tasks.

The duties and responsibilities of each person differ significantly in an organization. Organizational
objectives are multiple, and each department strives to accomplish the departmental objectives to
achieve the business goals of the organization.

In order to achieve these goals, a well-run establishment needs to work out a set of rules and
regulations, policies, programmes, procedures, instructions, etc., common to all the departments. These
are developed to assist the members of the organization in accomplishing the organizational goals
effectively in a systematic manner.

It has already been said that people are the principal component of an organization, and one needs to
invest considerable effort in them. This is important for using the manpower effectively and efficiently.
Thus, managers need to plan, organize, lead, and control various activities. Personnel management is
concerned with the effective use of the skills of people. They may be salespeople in a store, clerks in an
office, operators in a factory, technicians in a research laboratory, or a software developer in an
information company. In a business, PM starts with the recruiting, hiring, and engaging of qualified
people, and directing and taking control of the problems and tensions that arise in working towards
established goals.

Functions of Personnel Management: Managerial, Operative and General Functions

Personnel management is the management of human resources in an organization and it is basically

concerned with the creation of harmonious working relationships among its participants and bringing
about their utmost individual development. All the functions of personnel management have a basic
objective to bring together expertise in a scientific way and to create attitudes that motivate a group to
achieve its goals economically, effectively and speedily.

Hence, the objectives of personnel department can be described as follows:

(i) Attracting and securing appropriate hands capable of performing effectively the organization’s
specific tasks;

(ii) Utilizing the manpower effectively; and

(iii) Generating maximum individual development of the people working in the organization.

The major objective of every organization is survival and growth. The various people at work put their
best efforts so as to achieve these organizational objectives. But during a period of time the organization
is deprived of the services of some of its employees because of various reasons such as death,
retirement, dismissal, disablement, turnover, etc. Therefore, these are to be replaced by new hands.

Moreover, as an organization grows, it requires more manpower. The function of a personnel

department is to assist with the acquisition, development and retention of the human resources
necessary for the success of the organization.
It effectively describes the process of planning and directing, development and utilization of human
resources in employment. In fact, personnel management undertakes all those activities, which are
concerned with human elements or relations as well as with material elements in an organization.
Whatever functions are listed therein, the main objective of these functions is to bring together
expertise in a scientific way and to create attitudes that motivate a group to achieve its goals
economically, effectively and speedily.

Every function in organisation includes a flow of inputs (materials, energy or information), and
transforming these into outputs (the product or services and waste). Functionally, “personnel
management” is the planning, coordinating, and controlling of a network of organisation and facilitating
work pertaining to recruitment, selection, utilisation, development of human resources. The function
include the most vital aspects of personnel management- leadership, justice determination, task
specialisation (job and organisation design), staffing, performance appraisal, training and development,
compensation and reward, collective bargaining, and organisation development.

A manager is one who exercises authority and leadership over other personnel. As a manager, the
Personnel Manager must perform the basic functions of management. The listing of major management
functions varies with the experts. Perhaps the original listing was that of Henri Fayol in General and
Industrial Management.

He proposed a sequence of planning, organizing, commanding, coordinating, and controlling. Luther

Gullick calls these functions as POSDCORB i.e. planning, organizing, staffing, directing, coordinating,
reporting and budgeting.

Broadly speaking, experts have generally classified the functions into two major categories, viz.,
managerial functions and operative functions. The functions of Personnel Management / Personnel
Manager / director are very comprehensive and varied and they are determined by such factors as the
size, nature and location of the organisation, business or industry, its short and long – term objectives,
the nature of industry and its product, market conditions, extent of competition among rivals, its social,
economic, cultural, political and legal environments the structure of the executive and administrative
officers, the mental make-up of personnel officers and the overall organisational philosophy of business.

The functions of personnel management are categorized under-

1 The Managerial Functions

2. The Operative Functions and

3. General Functions

A: The Managerial Functions:-

1. Planning

2. Organising

3. Directing

4. Co-Ordinating and Controlling.

B: The Operative Functions:-

1. Procurement

2. Development

3. Compensating

4. Maintenance

5. Integrating and

6. Separation.

C: General Functions:-

1. Employment

2. Promotion, Transfer and Termination

3. Training

4. Wages and Other Incentives

5. Service Activities and Collective Bargaining Employees Representation.

Whatever functions are listed therein, the main objective of these functions is to bring together
expertise in a scientific way and to create attitudes that motivate a group to achieve its goals
economically, effectively and speedily.

Function # 1. Managerial:

“Management is a multi-purpose organ which has three jobs, two of which are directly related to
personnel managing a business- ‘managing managers’ and ‘managing workers’ and the work.” Lawrence
Appley says that, “Management is the accomplishment of results through the efforts of other people.”
In the opinion of Harold Koontz, “It is the art of getting things done through people and with informally
organised groups.”

In our view, management may be thought of as the process of allocating an organisation’s inputs
(human and economic resources) by planning, organising, directing and controlling for the purpose of
producing outputs (goods and services) desired by its customers so that organisation objectives are
accomplished. In the process, work is performed with and through organisation personnel in an ever-
changing business environment.

Management is, thus, personnel administration. It is the development of the people and not the
direction of things. Managing people is the heart and essence of being a manager. Thus, a Personnel
Manager is a manager and as such he must perform the basic functions of management. He exercises
authority and leadership over other personnel.

His functions involve (what Luther Gullick calls) POSD CORB, i.e., planning, organising staffing, directing,
coordinating, reporting and budgeting the work of those who are entrusted with the performance of
operative functions. In other words, managers procure process and peddle, find and employ resources,
develop services, and find markets for their output.
i. Planning:

Is a predetermined course of action. According to Allen, “it is a trap laid to capture the future.” Terry is
of the view that “planning is the foundation of most successful actions of any enterprise.” Planning is the
determination of the plans, strategies, programmes, policies, procedures, and standard needs to
accomplish the desired organisational objectives. In fact, “planning today avoids crisis tomorrow.”

Planning is a hard job, for it involves the ability to think, to predict, to analyse, and to come to decisions,
to control the actions of its personnel and to cope with a complex, dynamic fluid environment. They
bridge the gap between where they are and where they want to go. For this purpose, they determine
personnel programmes well in advance.

The two most important features of planning are research and forecasting. These two are interrelated,
for forecast is possible only as a result of research. Personnel administration should be able to predict
trends in wages, in labour market, in union demands, in other benefits and in personnel policies and
programmes.

The task of forecasting personnel needs in relation to changes in production or seasonal variations and
the leveling out of differences in production is extremely important, both for employees and for
management. Therefore, planning or decision-making has to be undertaken much in advance of an
action so that unforeseen or anticipated problems and events may be properly handled. This is also
stressed by the saying- “Good managers make things happen.”

ii. Organising:

After a course of action has been determined, an organisation should be established to carry it out.
According to J.C. Massie, “An organisation is a structure, a framework and a process by which a
cooperative group of human beings allocates its tasks among its members, identifies relationships and
integrates its activities towards common objectives.”

This is done by designing the structure of relationships among jobs, personnel and physical factors. An
organisation is the wedding of authority and responsibility because, in its essentials, it consists of the
assignment of specific functions to designated person or departments with authority to have them
carried out, and their accountability to management for the results obtained.

It seeks to achieve the maximum return with minimum effort by decentralisation, whereby the power of
decisions is brought down as near as possible to the individual concerned. How far this can be done will
depend upon the top management’s philosophy and appreciation of the benefits of delegation and
decentralisation.

In the words of Drucker, “The right organisational structure is the necessary foundation; without it, the
best performance in all other areas of management will be ineffectual and frustrated.”

iii. Directing:

Directing the subordinates at any level is a basic function of the managerial personnel. According to
McGregor, “many managers would agree that the effectiveness of their organisation would be at least
doubled if they could discover how to tap the unrealised potential present in their human resources.”
Directing is involved with getting persons together and asking them (either through command or
motivation) to work willingly and effectively for the achievement of designated goals. Directing deals not
only with the dissemination of orders within an organisation units and departments, but also with the
acceptance and execution of these orders by the employees.

The decisions are taken by the top management, but only after consultation with the personnel
department. A review or checking of the safety installments, wage-rate ranges, disciplinary action and
general wage changes are all the responsibility of the personnel department.

Final action is taken only when the green signal has been obtained from it. However, securing
acceptance and execution generally requires a certain amount of motivation of individuals and groups.
Otherwise, the actual performance level may be well below that which is desired.

iv. Co-Ordinating and Controlling:

Co-ordinating refers to balancing timing and integrating activities in an organisation, so that a unity of
action in pursuit of a common purpose is achieved. In the words of Terry, “Co-ordination deals with the
task of blending efforts in order to ensure a successful attainment of an objective.” Co-ordination in the
management of personnel takes place at all levels, from the top management through to the supervisor
and those for whom he is responsible.

The personnel department has to co-ordinate the tasks of developing, interpreting and reviewing
personnel policies, practices and programmes, such as safety programmes, employee benefits, job
evaluation, training or development, and communication. These activities are generally put into
operation by and through the line people; but it is the personnel department which follows them
through, unifies them, and checks to see how they work.

Controlling is the act of checking, regulating and verifying whether everything occurs in conformity with
the plan that has been adopted, the instructions issued and the principles established. It is greatly
concerned with actions and remedial actions.

“It is not just score- keeping. It is not just plotting the course and getting location reports; but rather it is
steering the ship.” It is through control that actions and operations are adjusted to predetermined
standards; and its basis is information in the hands of the managers.

“By check, analysis, and review, the personnel department assists in realising the personnel objectives.
Auditing training programmes, analysing labour turnover records, directing morale surveys, conducting
separation interviews, interviewing new employees at stipulated intervals, comparing various features
of the programme with other organisation programmes in the area, industry and nation — these are
some of the means for controlling the management of personnel.”

This monitoring process provides management with actual performance information for comparison
with predetermined performance standards. If there are unavoidable deviations from the planned
performance, corrective action can be taken immediately. This last function of control closes the system
loop by providing feedback of significant deviations from the planned performance. The feedback of
pertinent information can affect the inputs or any of the management functions.

Though all the above functions are performed at all levels of management, the amount of time devoted
to each function varies for each management level. The top management performs planning functions
more than does the supervisory management. On the other hand, supervisors at the third rung of the
management pyramid devote more of their time to directing and controlling production.

Function # 2. Operative:

The operative functions of personnel management are concerned with the activities specifically dealing
with procuring, developing, compensating, and maintaining an efficient workforce. These functions are
also known as service functions.

i. Procurement Function:

The procurement function is concerned with the obtaining of a proper kind and number of personnel
necessary to accomplish an organisation’s goals. It deals specifically with such subjects as the
determination of manpower requirements, their recruitment, selection and place (comprising activities
to screen and hire personnel, including application-forms, psychological tests, interviews, medical check-
up reference calling), induction, follow-up, transfers, lay-offs, discharge and separation, etc.

a. Job Analysis:

Organisations consist of jobs that have to be staffed. Job analysis is the procedure through which the
Personnel Manager determines the duties and responsibilities of these jobs and the characteristics of
the people to hire for them.

b. Manpower Planning:

It is the process of deciding what positions the firm will have to fill and how to fill them. It is a process of
analysing the present and future vacancies that may occur as a result of retirements, discharges,
transfers, promotions, sick leave, leave of absence, or other reasons, and an analysis of present and
future expansion or curtailment in the various departments.

Plans are then formulated for internal shifts or cut-backs in manpower, for the training and
development of present employees, for advertising openings, or for recruiting and hiring new personnel
with appropriate qualifications.

c. Recruitment:

It is concerned with the process of attracting qualified and competent personnel for different jobs. This
includes the identification of existing sources of the labour market, the development of new sources,
and the need for attracting large number of potential applicants so that a good selection may be
possible.

d. Selection:

Selection process is concerned with the development of selection policies and procedures and the
evaluation of potential employees in terms of job specifications. This process includes the development
of application blanks, valid and reliable tests, interview techniques, employee referral systems,
evaluation and selection of personnel in terms of job specifications, the making up of final
recommendations to the line management and the sending of offers and rejection letters.

e. Placement:
It is concerned with the task of placing an employee in a job for which he is best fitted, keeping in view
the job requirements, his qualifications and personality needs.

f. Induction and Orientation:

Induction and orientation are techniques by which a new employee is rehabilitated in his new
surroundings and is introduced to the practices, policies and people. The new recruit is introduced to
the principles which define and drive the organisation, the mission statement and values which form its
backbone.

g. Internal Mobility:

It is the movement of employees from one job to another through transfers and promotions. Transfer
process is concerned with the placement of an employee in a position in which his ability can be best
utilised. This is done by developing transfer policies and procedures, counseling employees and line
management on transfers and evaluating transfer policies and procedures.

Promotion is concerned with rewarding capable employees by putting them in higher positions with
more responsibility and higher pay. For this purpose, a fair, just and equitable promotion policy and
procedure have to be developed; line managers and employees have to be advised on these policies,
which have to be evaluated to find out whether they have been successful.

ii. Development Function:

The development function is concerned with the personnel development of employees by increasing
their skill through training so that job performance is properly achieved. Drafting and directing training
programmes for all levels of employees, arranging for their on-the-job, office and vestibule training,
holding seminars and conferences, providing for educational and vocational counselling and appraising
employee potential and performance are undertaken under this function.

The development function is mainly concerned with three specific areas:

a. Training:

It is complex process and is concerned with increasing the capabilities of individuals and groups so that
they may contribute effectively to the attainment of organisational goals.

This process includes:

1. The determination of training needs of personnel at all levels, skill training, employee counseling, and
programmes for managerial, professional and employee development; and

2. Self-initiated developmental activities (formal education), during off-hours (including attendance at

school/college/professional institutes); reading and participation in the activities of the community.

Under this area, the training needs of the company are identified, suitable training programmes are
developed, operatives and executives are identified for training, motivation is provided for joining
training programmes, the line management is advised in matters of conducting training programmes,
and the services of specialists are enlisted. The effectiveness of training programmes has to be
evaluated by arranging follow-up studies.
b. Executive Development:

It is a systematic process of developing managerial skills and capabilities through appropriate

programmes.

c. Career Planning and Development:

‘Career’ may be defined as the occupational positions a person has had over many years. Career
Planning is the planning of one’s career and implementation of career plans by means of education,
training, job search and acquisition of work experiences.

Career Management is a process of helping employees to better understand and develop their own skills
and interests and to use these skills and interests most effectively both within the company and after
they leave the firm. Career Development is concerned with a lifelong effort on the part of an individual
aimed at fulfilling a person’s career ambitions, expectations leading to career success and fulfillment.

iii. Compensating Function:

The compensating function is concerned with securing adequate and equitable remuneration to
personnel for their contribution to the attainment of organisational objectives. Functions related to
wage surveys, establishment of job classifications, job descriptions and job analyses, merit ratings, the
establishment of wage rates and wage structure, wage plans and policies, wage systems, incentives and
profit-sharing plans, etc., fall under this category.

a. Job evaluation through which the relative worth of a job is determined. This is done by selecting
suitable job evaluation techniques, classifying jobs into various categories, and then determining their
relative value in various categories.

b. Wage and salary programme consists of developing and operating a suitable wage and salary
programme, taking into consideration certain facts such as the ability of the organisation to pay, the cost
of living, the supply and demand conditions in labour market, and the wage and salary levels in other
firms.

For developing a wage and salary programme, wage and salary surveys have to be conducted, wage and
salary rates have to be determined and implemented, and their effectiveness evaluated.

c. The incentive compensation plan includes non-monetary incentives which have to be developed,
administered and reviewed from time to time with a view to encouraging the efficiency of the
employee.

d. The performance appraisal is concerned with evaluating employee performance at work in terms of
predetermined norms/standards with a view to developing a sound system of rewards and punishment
and identifying employees eligible for promotions. For this purpose, performance appraisal plans,
techniques and programmes are chalked out, their implementation evaluated, and reports submitted to
the concerned authorities.

e. Motivation is concerned with motivating employees by creating conditions in which they may get
social and psychological satisfaction. For this purpose, a plan for non-financial incentives (such as
recognition, privileges, symbols of status) is formulated; a communication system is developed, morale
and attitude surveys are undertaken, the health of human organisation diagnosed and efforts are made
to improve human relations in the organisation.

The line management has to be advised on the implementation of the plan and on the need, areas and
ways and means of improving the morale of employees.

iv. Maintenance Function:

The maintenance function deals with sustaining and improving the conditions that have been
established. Specific problems of maintaining the physical conditions of employees (health and safety
measures) and employee service programmes are the responsibility of the personnel department.

Flippo rightly says, “The purpose of all of these activities is to assist in the accomplishment of the
organisation’s basic objectives. Consequently, the starting point of personnel management as of all
management must be a specification of those objectives and a determination of the sub-objectives of
the personnel function. The expenditure of all funds in the personnel department can be justified only
insofar as there is a net contribution toward company objectives.”

a. Health and Safety:

Personnel Managers must take care of all statutory provisions governing the health and safety of
employees. They must ensure a work environment that protects employees from physical hazards,
unhealthy working conditions and unsafe acts of other personnel. Through proper safety and health
programmes, the physical and psychological well-being of employees must be preserved and even
improved.

b. Employee Welfare and Social Security Measures:

Employee welfare includes the services, amenities and facilities offered to employees within or outside
the establishment for their physical, psychological and social well-being. Housing, transportation,
education and recreation facilities are all included in the employee welfare package. Managements
provide social security to their employees in addition to fringe benefits.

These measures include:

(1) Workmen’s compensation to those workers (or their dependents) who are involved in accidents;

(2) Maternity benefits to women employees;

(3) Sickness benefits and medical benefits;

(4) Disablement benefits/allowance;

(5) Dependent benefits;

(6) Retirement benefits like Provident Fund, Pension, Gratuity, etc.

v. Integrating Function:

The integration function, after the employee has been procured, his skill and ability developed and
monetary compensation determined, the most important, yet difficult of the personnel management is
to bring about an “integration” of human resources with organisation, and to cope with inevitable
conflicts that ensue.

“Integration” is concerned with the attempt to effect a reasonable reconciliation of individual, societal,
and organisational interests.

a. Grievance Handling:

A grievance is any factor involving wages, hours or conditions of employment that is used as a complaint
against the employer. Constructive grievance handling depends first on the manager’s ability to
recognise, diagnose and correct the causes of potential employee dissatisfaction before it converts into
a formal grievance.

b. Discipline:

It is the force that prompts an individual or a group to observe the rules, regulations and procedures,
which are deemed necessary for the attainment of an objective.

c. Trade Unions:

A Trade union is an association either of employees or employers or independent workers. It is a

relatively permanent body formed by workers, generally speaking, with the primary objective of
countering exploitation and harassment. It strives towards providing economic and social benefits to the
labour community. Trade unions have always played a powerful role in improving the lot of workers in
India, using aggressive bargaining tactics.

After 1990s, of course, there is a dramatic change in the thinking of both workers and management —
as both parties seem to have realised the need to get along with each other — instead of trying to
confront each other on every issue which was the practice previously — in order to survive and flourish
in a tough, competitive environment.

d. Collective Bargaining:

It is the process of agreeing on a satisfactory labour contract between management and union. The
contract contains agreements about conditions of employment such as wages, hours, promotion, and
discipline; lay-offs, benefits, vacations, rest pauses and the grievance procedure. The process of
bargaining generally takes time, as both parties tend to make proposals and counter-proposals. The
resulting agreement must be ratified by unions, workers and management.

e. Industrial Relations:

Harmonious industrial relations between labour and management are essential to achieve industrial
growth and higher productivity. When the relationship between the parties is not cordial,
discontentment develops and conflicts erupt abruptly. It is not always easy to put out the fires with the
existing dispute-settlement machinery, created by the government. Hence, both labour and
management must appreciate the importance of openness, trust and collaboration in their day-to-day
dealings.

W. R. Spriegal has divided the functions of Personnel Department into six categories:

Function # 1. Employment:
i. To cultivate and maintain adequate source of labour supply.

ii. To get information regarding job requirements and prevailing wage rates.

iii. To hire through the effective use of application blanks, tests, physical examination interviews and
checking references, records of supervisor approval.

iv. To maintain records of prospective employees, present employees and former employees.

v. To introduce the new employee to company policies and his supervision and to follow him up for an
early.

Function # 2. Promotion, Transfer and Termination:

i. To aid the establishment of times of promotion and to follow up, as far as possible in order to see that
company policies are followed.

ii. To aid in the establishment of company policies regarding transfers for the convenience of the
company and employee, to correct misplacement of employees, to increase flexibility of employees as a
part of a work stabilisation programme and to provide the necessary records to carry out the policies.

iii. To aid in the formation of policies regarding termination, as well as separation.

iv. To remove as much as possible the causes for discharges.

v. To check the cause of all voluntary separations to strive to remove the cause when possible and to
maintain adequate records at all separations.

Function # 3. Training:

i. To aid in the formulation of policies governing training of new employees, employees being upgraded
apprentices, and supervisors and in some cases to supervise same aspects of training.

ii. To provide for training in safety and company policies.

iii. To co-operate in the preparation of a special annual report for employee.

iv. To co-operate in promoting employee suggestions.

Function # 4. Wages and Other Incentives:

i. To collaborate with others or be responsible for wage plans.

ii. To write job specifications and evaluate all jobs.

iii. To participate in the formulation of policies, governing payment pension plans, profit sharing,
programmes, mutual savings, programmes credit unions etc.

Function # 5. Service Activities:

i. To supervise restaurants and recreation facilities.

ii. To provide counselling concerning personnel affairs.

iii. To publish the plant magazine.

iv. To engage in any activity not directly related to the work situation but designed to-improve morale.

Function # 6. Collective Bargaining Employees Representation:

i. To conduct union negotiations and to co-operate with union responsibilities.

ii. To co-operate with an employee’s club which is not on the union level

iii. To participate actively in handling grievances.

Functions of Personnel Management – Scope and Functions of Personnel Department of a Business

Organisation

The personnel department of a business organisation has to perform various functions, some of which
are vital and basic for the organisation. The operating of the organisation in the most prudent way for
the realisation of its goals is the essence of all the functions of personnel management.

Right from manpower planning, recruitment and selection, personnel management moves on with the
organisation with its functions and pursues an employee till his retirement and even still further to the
point where he settles his retirement benefits or starts getting the retirement benefits.

Therefore, truly speaking, the personnel management is with an employee from his birth in the
organisation till his death outside the organisation. We can quote here Edwin B. Flippo – “The personnel
function is concerned with the procurement, development, compensation, integration and maintenance
of the personnel of an organisation toward the accomplishment of that organisation’s major goals or
policies.”

Our National Institute of Personnel Management also indicated the personnel functions more or less on
this line. The National Institute of Personnel Management has considered all employment, Education &
Training, Wages, Joint consultation, Health and safety and Employee services and Welfare – as functions
of personnel management.

The activities of the personnel department, so to say, are spread over three areas – recruitment,
retainment and retirement. To these 3Rs of activities, various subsidiary functions crop up and upon the
successful management of all these functions depends the attainment of the goals of an organisation.

The functions of the personnel department may be classified as – (a) Staff functions (b) Service functions
(c) Functional activities and (d) Welfare activities.

To highlight the problems of the human resource by disseminating information to the line authorities
constitutes the basic function of the personnel department. This department, as a matter of fact, acts as
liaison between the workers and management. The personnel manager has to endeavour to create an
atmosphere where free exchange of ideas and information between the workers and the management
is possible.

Through the personnel department, the top management of the organisation will keep contact even
with the common workers. This department will carry on its activities to facilitate easy communication
from the top to the bottom; there will not be any difficulty, because of this department, in the matter of
expressing the views and feelings of the workers to the top management personnel – the line staff.
Thus, the personnel department of the personnel management will discharge its staff functions.
As to its service functions, the personnel department explores the sources of recruitment, selects the
best candidates and makes arrangements for their training. Merit rating, devising, suitable and
satisfactory method of promotion, and maintaining of workers’ discipline come within the purview of
the personnel department of an organisation.

It is also not a mean function of the personnel department to find out mutually satisfactory methods of
wage payments with incentive elements to ensure better labour-capital relation and higher productivity.
To provide for various retirement benefits and recreational facilities for the employees, at present have
become very important function of the department.

To ensure better service of the organisation, the personnel department is to maintain proper records
relating to employees and these activities can better be termed functional activities of the personnel
department.

The welfare activities meant for the benefit of the employees such as provision for first aid, general
medical services, and devices for minimisation of the risks of accidents are becoming more and more
important in the Welfare State.

Scope of Personnel Management:

Human resource management (HRM) traditionally referred to the organizational policies, practices,
norms, and systems that influence employee behaviour, attitudes, and performance. Today, HRM
practices are considered essential for achieving business objectives and goals.

With liberalization, privatization, globalization, and increased career opportunities, there are a number
of factors that have made the traditional approach to personnel management obsolete. The present
situation demands a complete, holistic, and strategic approach to HRM. An organization’s HRM strategy
must fit in the overall organizational strategy because it involves long-term implications.

The modern approach to management acknowledges the interest of the employees who are the major
stakeholders in an organization. Thus, a knowledge of the group dynamics is crucial for success. In
addition to the interest of the employees, process and performance are the other requirements.

An organization cannot function without the application of information technology, strategic manage-
ment, competency development, total quality management, leadership and team building, managing
change for success, etc. For all these processes to run smoothly, HRM has to manifest its importance.

However, with the introduction of HRM, the usual practice of personnel management (PM) cannot be
ignored. It is important to consider the various aspects of PM along with the new practices of HRM for
the organization to run smoothly.

To summarize, the various personnel management functions are as follows:

1. Preparing the job description

2. Recruiting and selecting personnel

3. Induction and placement

4. Classifying jobs and preparing wage and salary scales

5. Counselling employees

6. Dealing with disciplinary problems

7. Negotiating with labour unions and service union contracts

8. Developing safety standards and practices

9. Managing benefit programmes, such as group insurance, health, and retirement plans

10. Providing for periodic reviews of the performance of each individual employee, recognition of
his/her strengths and need for further development

11. Assisting individuals in their efforts to develop and qualify for more advanced jobs

12. Planning and supervising training programs

13. Keeping abreast of developments in the area of personnel management.

EMPLOYEE INDUCTION AND TRAINING

Induction training is offered to new employees when they join an organisation and usually includes:

1. A tour of the premises

2. Health and safety information

3. Specific training on any duties/skills required to do the job

4. Company policies such as holiday entitlement and absence procedures

5. Introduction to colleagues

Reasons for employee induction

1. Employees will settle quickly into the job

2. Takes time so reduces output

3. Employees will be made aware of important health and safety issues before starting the job

4. Employees will understand who the main personnel in the organisation are

On-the-job training

On-the-job training is training that is undertaken in your place of work. Businesses can carry out several
different types of on-the-job training:

1. Coaching

An experienced member of staff will work through a task step-by-step with an employee. The
experienced member of staff or ‘coach’ will support the employee through the learning process by
passing on their knowledge and skills.
2. Role play

Role-play involves acting out a scenario to see how an employee would perform under certain
conditions.

This will allow the employee to practise appropriate ways to deal with situations that may occur in the
workplace.

3. Job rotation

Members of staff can be rotated or moved through different jobs within the organisation so they acquire
a range of skills from each department or job role.

4. Shadowing

Shadowing is when an employee observes another employee working to gain a better understanding of
how they do their job. This is usually for a set period of time such as a few days.

5. Demonstration

Demonstration is when an employee watches a task or a particular process being carried out and then
attempts the task/process himself or herself.

On-the-job training has a number of advantages

1. Training is specific to the company’s needs

3. Work is not interrupted by staff who are attending training courses within the office

5. May be cheaper as internal training does not need to be paid for

4. Employees will feel more at ease

Disadvantages of on the job training

1. Concentration may be poor due to work interruptions

2. May pick up bad habits from other workers

3. Quality of training may not be as good

Off-the-job training

Off-the-job training is training that is undertaken outside the place of work. This training can take place
at many locations such as colleges or training centres. Colleges are formal places of learning where
employees can take a specific course. This may be through:

1. Day release

2. Evening classes

3. Distance learning
4. Training centres

A training centre is a location specifically designed for training. Staff are sent to training centres to learn
new skills.

Advantages of off the job training

Off-the-job training has a number of advantages:

a. Higher quality training usually delivered by experts

d. Higher levels of concentration as less interruptions are experienced

Disadvantages of off-the-job training

a. Cost of external training courses may be high

b. Productivity decreases due to time being spent away from the place of work

c. Employees may learn skills that are not relevant to the business

CAREER DEVELOPMENT

What Are the Different Types of Workplace Training?

Throughout your time at a company, you will likely encounter occasions when you need to learn or
adapt to succeed in your role. Workplace training enables you to gain the skills you need to perform
your duties while contributing to your organization. Depending on an employer’s needs and goals,
training can come in a variety of forms, ranging from orientation to safety training.

What is workplace training?

Workplace training is the process of developing knowledge, skills and efficiency in your job. Employers
conduct different types of training depending on their requirements, the urgency of their needs and the
availability of resources. As a new employee, you will likely participate in orientation programs to
familiarize yourself with the work environment and company culture. If you’re a senior employee, you
may be required to take up new responsibilities or stay up to date with the latest changes in the
industry.

Why is workplace training important?

When employees and organizations expand their knowledge and skills through workplace training, they
can perform more effectively in their jobs. Proper training can improve a variety of factors including
sales, teamwork and workplace safety.

Undergoing training could also make you more likely to get a promotion. By improving yourself through
training, you might also experience a sense of accomplishment, which can lead to increased job
satisfaction and motivation.

Workplace training is an effective way for organizations to boost productivity and maintain quality
standards. Well-trained employees can be more skilled in their jobs and less likely to make mistakes,
resulting in greater efficiency and effectiveness.
Employers can also use workplace training to target individual employees, teams or departments and fill
voids that result from the departure of team members or the creation of new roles. Organizations can
also provide different types of staff training to minimize shortages in various fields.

Types of Training

Training is an organized activity conducted to improve the performance of an employee and to bring
about a considerable change in the skills, knowledge, attitude, behavior for performing a particular kind
of a job. There are several types of training programs which are carried out in the different business
situations.

1. Induction or Orientation Training

Introducing a new employee to the organization’s environment comprising of a day to day functioning,
products, services, rules and regulations are termed as Induction or orientation training. The purpose of
such training is to reduce the nervousness of a new joinee, by making him accustom to the working
environment. It is also called as an orientation training, which means giving a fair idea to the new
employee about, what he is supposed to do in the organization.

Job Training: This training is job specific and is given to the employee who has to perform that job.
Under this training, the information about the machine, the process of production, methods to be used,
the safety measures to be undertaken, etc. are explained. Through this training, the employee develops
the confidence and the necessary skills, that enables him to perform his job effectively and efficiently.

Safety Training: The safety training is given to the employees so as to minimize the number of accidents
caused due to the handling of machines or other equipment. Under this training, the employees are
given the safety instructions on the usage of machinery and the other dangerous devices.

Apprenticeship Training: Under this training, the worker earns while learning. This training is generally
given to the technical staff, craftsmen, plumber, etc. who are required to work under the superior for a
relatively longer period, until he gains the expertise in that particular field.

Internship Training: Under this type, the educational or vocational institutes have an arrangement with
the industrial institutes to provide practical knowledge to its students.Sometimes, the companies also
offer the pre-placement offers to the trainees on the basis of their performance during their internship
program.

Refresher Training or Retraining: As the name implies, the retraining or refresher training is given to the
old employees with the purpose of improving their efficiencies. They are introduced to the new
methods and technologies that would result in the increased productivity and reduces the monotony in
their daily work.

Promotional Training: This training is given to the potential employees, who can be promoted to the
senior position in the organization. The promotional training is given in advance so that employee gets
accustomed to the new roles and responsibilities and do not get nervous at the time of promotion.

Remedial Training: This training is given in order to overcome the shortcomings in the behavior and
performance of old employees. Due to the invention of technology, the employees may resist to accept
the change and cause a disturbance in the organization.Therefore, such training is given to make them
understand the importance of change and its necessity in the operations of business. This training is
generally given by the psychological expert.

Some businesses may have several training programs, depending on their size, diversity and activities.
The following is a list of the most common types of learning and development programs:

1. Orientation

Almost every company has an orientation program, which can be formal or informal. This is usually a
one-time process for new employees and is usually conducted in your first week on the job. Typically
conducted by the human resources department, an orientation program seeks to educate you on a wide
range of topics, including:

i. Corporate culture
ii. Company mission, vision, and values
iii. Organizational structure
iv. Leadership team
v. Corporate policies
vi. Administrative procedures, such as computer logins and email setups
vii. New-hire paperwork
viii. Benefit plans
ix. Related: Guide to Company Culture

2. Onboarding

Orientation is usually part of a larger process called onboarding, a series of department-related training
sessions that occur over an extended time. This process is specifically designed to quickly enable you to
perform your role well. It typically starts immediately after you are hired and continues until you can
work independently.

The leaders of a department prepare the onboarding program to focus on achieving the department’s
goals and connecting them with the company’s objectives. Onboarding usually addresses these items:

i. Your needs as a new employee

ii. Access to information and skills
iii. Technical aspects of the job
iv. Improvement of work performance
v. Employee engagement
vi. Departmental goals

3. Technical skills development

Technical skills training is a basic component of employee education because it is a primary way for you
to develop the skills you need in your role. Employees who are already competent in their jobs can
undergo further training to gain new skills and stay current with the latest technologies and processes.
Some examples of technical skills that you can learn through this form of training include:

i. Content writing
ii. Social media management
iii. Data analysis
iv. Coding
v. Programming

4. Soft skills development

Your employer will want you to behave professionally and function well as part of a team. Soft skills
refer to personality traits that enable you to communicate and work cooperatively with co-workers and
customers. These skills are useful for both new and old employees, and they play a vital role in building a
respectful, collaborative and efficient culture within a company.

Examples of topics covered in soft skills training programs include:

i. Communication
ii. Problem-solving
iii. Teamwork
iv. Presentation
v. Leadership
vi. Time management
vii. Conflict resolution
viii. Work ethics

5. Products and services training

Products and services training may be a part of your onboarding program or a way for you to get
reacquainted with your company’s offerings. Your employer may also use this training when they
introduce new campaigns. This type of training provides information on different aspects of a product or
service, such as:

i. Options available
ii. Instructions for use
iii. Benefits
iv. Features
v. Care and maintenance
vi. Price
vii. Warranty

6. Quality training

Quality training commonly occurs in production-focused companies. This method trains you to ensure
that all products meet certain quality standards, which may be imposed by the company, industry or
third parties. In some cases, employees who complete a quality training program will receive
certification.

Quality training covers topics such as:

 i. Compliance with quality standards
ii. Quality control processes
iii. Product observation techniques
iv. Prevention and elimination of poor-quality products
v. Evaluation and improvement of a production system

7. Safety training

Safety training protects you from work-related injuries, and it is especially important for companies that
use toxic chemicals or other hazardous materials. This type of training also includes fire drills, evacuation
plans and workplace violence procedures.

Examples of topics discussed in a safety training program include:

i. Protective gear
ii. Safety best practices
iii. First aid
iv. Foodservice safety
v. Construction safety
vi. Asbestos

8. Team training

The purpose of team training is to enable the members of a team to build stronger relationships with
one another and work together cohesively. It empowers you to improve your decision-making, problem-
solving and team-development processes to achieve better results for your organization.

Team training typically occurs following the restructuring of a company, merger or acquisition. In these
situations, many employees will be working together for the first time, making team training an essential
process.

Some of the topics that employers discuss in team training include:

I. Improving communication
II. Creating a positive work environment
III. Improving team collaboration
IV. Increasing team productivity
V. Establishing good relationships with teammates
VI. Identifying and leveraging the strengths of team members
VII. Keeping teammates motivated

Regardless of the type of workplace training you undergo, it is important to view the program as an
opportunity for growth within the company. Do your best to take diligent notes, ask questions and
contribute as needed. With an open mind and eagerness to learn, you may develop new key skills during
your workplace training program.
EMPLOYEE PROMOTION IN ORGANISATIONS

When there are vacancies in an organization, they can be filled up by the internal or external candidates.
Though the organization prefers to fill up the vacancies by the external candidates through the selection
procedure, the internal candidates may also apply for post and may be tested and selected for higher
level job in the organizational hierarchy at par with external candidates. Is such upward movement of an
employee a promotion? Or it is purely selection? It is purely a selection. If the organization prefers to fill
a vacancy only by the internal candidates, it assigns that higher level job to the selected employee from
within through promotion tests. Such upward movement can be said as promotion.

Definition

“Promotion is advancement of an employee to a better job- better in terms of grater responsibility,

more prestige or status, greater skills and especially increased rate of pay or salary.” “The upward
reassignment of an individual in an organizational hierarchy, accompanied by increased responsibilities,
enhanced status and usually with increased income though not always so.”

Promotion is the re-assignment of a higher level job to an internal employee with delegation of
responsibilities and authority required to perform that higher job and normally with higher pay.

Conditions of promotion

Thus, the main conditions of promotion are:-

1) Reassignment of higher level job to an employee than what he is presently performing.

2) The employee will naturally be delegated with greater responsibility and authority than what he
has had earlier.

3) Promotion normally accompanies higher pay.

Promotion may be temporary or permanent depending upon the organizational needs and employee
performance.

Purpose of promotion

Organizations promote the employee with a view to achieve the following purposes:-

1) To utilize the employee’s skills, knowledge at the appropriate level in the organizational hierarchy
resulting in organizational effectiveness and employee satisfaction.

2) To develop competent spirit and inculcate the zeal in the employees to acquired the skills,
knowledge etc. required by higher level jobs.

3) To develop competent internal source of employees ready to take up jobs at higher level in the
changing environment.

4) To promote employee’s self development and make them await their turn of promotions. It
reduces labour turnover.

5) To promote a feeling of content with the existing conditions of the company and a sense of
belongingness.
6) To promote interest in training, development programmers and in team development areas.

7) To build loyalty and to boost morale.

8) To reward committed and loyal employees.

9) To get rid of the problems created by the leader of workers’ unions by promoting them to the
officer’ levels where they are less effective in creating problems.

Merit as a basis of promotion:-

Merit is taken to denote an individual employee’s skills, knowledge, ability, efficiency and aptitude as
measured from educational, training and past employment record. The merits of merit system of
promotion are:

1) The resources of higher order of an employee can be better utilized at a higher level. It result in
maximum utilization of human resources in an organization

2) Competent employees are motivated to exert all their resources and contribute them to the
organizational efficiency and effectiveness

3) It works as golden hand-cuffs regarding employee turnover,

4) Further it continuously encourages the employees to acquire new skill, knowledge etc. for all-
round development.

Disadvantages / Limitations of merit system of promotion

Despite these advantages the merit systems suffer from some demerit. They are:

1) Measurement or judging of merit is highly difficult.

2) Many people, particularly trade union leaders, distrust the management’s integrity in judging
merit.

3) The techniques of merit measurement are subjective.

4) Merit denotes mostly the past achievement, efficiency but not the future success. Hence, the
purpose of promotion may not be served if merit is taken as sole criteria for promotion.

Senior as a basis of promotion

Seniority refers to relative length of service in the same job and in the same organization. The logic
behind considering the seniority as a basis of promotion is that there is a positive correlation between
the length of service in the same job and the amount of knowledge and the level of skill acquired by an
employee in an organization. This system is also based on the custom that the first in should be given
first chance in all benefit and privileges.

Advantages of seniority as a basis of promotion are:

1) It is relatively easy to measure the length of service and judge the seniority.

2) There would be full support of the trade unions to this system.

3) Every party trust the management’s action as there is no scope for favoritism and discrimination
and judgment.

4) It gives a sense of certainty of getting promotion to every employee and of their turn of promotion.

5) Senior employees will have a sense of satisfaction to this system as the older employees are
respected and their inefficiency cannot be pointed out.

6) It minimizes the scope for grievances and conflicts regarding promotion.

7) This system seems to reserve the purpose in the sense that employees may learn more with
increase in the length of service.

Limitations of seniority as a basis of promotion

In spite of these merits, this system also suffers from certain limitations. They are:

1) The assumption that the employees learn more relatively with length of service is not valid as this
assumption has reverse effect. In other words employees learn up to a certain age and beyond that
stage the learning ability of the cognitive process diminishes.

2) It denominates the young and more competent employees and results in employee turnover
particularly among the dynamic force.

3) It kills the zeal and interest to develop as everybody will be promoted with or without
improvement.

4) Organizational effectiveness may be diminishes through the deceleration of the human resource
effectiveness as the human resource consists of mostly of undynamic and old-blood employees.

5) Judging the seniority though it seems to be in the theoretical sense. It is highly difficult in practice
as the problems like job seniority, company seniority, zonal/regional seniority, service in different
organizations, experience as apprentice trainee, trainee, researcher, length of service not only by days
but by hours and minutes will crop up.

Thus the two main basic of promotion enjoy certain advantages and at the same time suffer from
certain limitations. Hence, a combination of both of them may be regarded as an effective basis of
promotion.

Seniority-cum-merit

Management mostly prefers merit as the basis of promotion as they are interested in enriching its
human resources. But trade union favour seniority as the sole basis for promotion with a view to satisfy
the interests of majority of their members.

Hence a combination of both seniority and merit can be considered as the basis for promotion satisfying
the management for organizational effectiveness and employees and trade union for respecting the
length of service. A balance between seniority and merit should be struck and a new basis is to be
developed. There are several ways in striking the balance between these two basis viz:-
1) Minimum length of service and merit:-

Under this method all those employees who complete the minimum service, say five years, are made
eligible for promotion and then merit is taken as the sole criteria for selecting the employee for
promotion from the eligible candidates. Most of the commercial bank in India has been following this
method for promoting the employees from clerk’s position to officer’s position.

2) Measurements of seniority and merit through a common factor.

3) Minimum merit and seniority

In contrast to the earlier methods, minimum score of merit which is necessary for the acceptable
performance on the future job is determined and all the candidates who secure minimum score are
declared as eligible candidates. Candidates are selected for promotion based on their seniority only
from the eligible candidates.

Benefit of promotion

1) Promotion places the employees in a position where an employee’s skills and knowledge can be
better-utilized.

2) It creates and increases the interest of the other employees in the company, as they believe that
they will also get their turn.

3) It creates among employees a feeling of content with the existing conditions of work and
employment.

4) It increases interest in acquiring higher qualifications, in training and in self-development with a

view to meet the requirement of promotion

5) Promotion improves employee morale and job satisfaction.

6) Ultimately it improves organizational health.

Problems with promotion

Though promotions benefit the employee and the organization, it creates certain problems. They are 1.
disappointment of the candidates and 2. refusal of promotions etc.

Promotion disappointment to some employees are:-

1. Some employees who are not promoted will be disappointed when their colleagues with similar
qualifications and experience are promoted either due to favoritisms or due to lack of systematic
promotion policy.

2. Employee may develop negative attitude and reduce their contributions to the organization and
prevent organizational and individual advancement.

Reasons why some employees refuse promotion

There is a general tendency that employee accept promotion. But their are several incidents where
employees refuse promotions. These include

1. Promotion together with transfer to an upward place,

2. Promotion that level where the employee feels that he will be quite incompetent to carry out the job,

3. Delegation of unwanted responsibilities and

4. When trade union leader feel that promotion causes damage to their position in trade union.

The other problems associated with the promotion are:

5. Some superiors will not relieve their subordinates who are promoted because of their indispensability
in the present job and inequality in promotional in different departments, regions and categories of
jobs.

Promotion problems can be minimized though a career counseling by the superiors and by formulating a
systematic promotion policy.

Promotion policy

Every organizational has to specify clearly its policy regarding promotion based on its corporate policy.
The characteristics of a systematic promotion policy are:

1) It should be considered the sense that policy should be applied uniformly to all employees
irrespective of the background of the persons,

2) It should be fair and impartial. In other words it should not give room for nepotism, favoritism etc.,

3) Systematic line of promotion channel should be incorporated

4) It should provide equal opportunities fro promotion in all categories of jobs, departments, and
regions of an organization

5) It should insure open policy in the sense that every eligible employee should be considered for
promotion rather than a closed system which consider only a class of employees

6) It should contain clear cut norms and criteria for judging merit, length or service, potentiality etc.

7) Appropriate authority should be entrusted with the task of making final decision

8) Favoritism should not be taken as a basis for promotion

9) It should contain promotional counseling, encouragement, guidance and follow-up regarding

promotional opportunity, job requirement and acquiring the required skills, knowledge etc. it should
also contain reinforcing the future chances in the mind of rejected candidates and a provision for
challenging the managements decision and action by employee or union within the limits of promotion
policy.

Types of Promotion
As already noted, a promotion involves an increase in status, responsibilities and pay. But, in certain
cases, only the pay increases, and the other elements remain stagnant. In other cases, the status only
increases without a corresponding increase in pay or responsibilities. Depending on which elements
increase and which remain stagnant, promotions may be classified into the following types:

1) Horizontal Promotion:-

This type of promotion involves an increase in responsibilities and pay, and a change in designation. But
the employee concerned does not transgress the job classification. For example, a lower division clerk is
promoted as an upper division clerk. This type of promotion is referred to as upgrading’ the position of
an employee.

2) Vertical Promotion:-

This type of promotion results in greater responsibility, prestige and pay, together with a change in the
nature of the job. A promotion is vertical when a canteen employee is promoted to an unskilled job. The
concerned employee naturally transgresses the job classification.

3) Dry Promotions:-

1) Dry promotions are sometimes given in lieu of increases in remuneration. Designations are different
but no change in responsibilities. The promoted employee may be given one or two annual increments.

2) The employee will naturally be delegated with greater responsibility and authority than what he
has had earlier.

3) Promotion normally accompanies higher pay.

Promotion may be temporary or permanent depending upon the organizational needs and employee
performance.

EMPLOYEE SEPARATION: INTRODUCTION, FORMS, PHASES AND FACTORS

TABLE OF CONTENTS

Employee Separation: Introduction, Forms, Phases and Factors

Employee Separation – Introduction

Employee Separation – 8 Major Forms

Employee Separation – 2 Distinct Phases: Life Aspects and Professional Aspects

Employee Separation – Factors Responsible for Employee Separation (With the Measures to Reduce
Employee Separation)

Employee separation occurs when the employee ceases to be a member of the organisation. The
employment agreement between the employer and the employee comes to an end when the employee
leaves the organisation. Employee separation needs to be handled with sensitivity, discretion, and speed
so that exits can happen without injuring the sentiment and burning bridges with the employee. It
should not be forgotten that the employees are the most effective brand ambassadors for the company.

At the time of the separation, employees of an organization present an opportunity to glean and
assemble a wealth of valuable feedback and insights on the organizational strengths and weaknesses
during the process of engagement between the employer and the employee. Hence, it is important for
the personnel concerned with the separation management to carefully gather all this information. These
valuable insights about the organization can be collected from the departing employee through exit
interviews that would help the organization to reduce future attrition.

The separating employee has to return all property of the company that was under his/her custody. The
entire separation process should happen smoothly and the separating employee should never feel
harassed though he/she can become emotional at times. Soon after the exit interview, employees are
bid farewell. After separation, one can pursue his/her life in multiple ways of his/her choice; such as
joining another company, a social or philanthropic organization, work as an author of a reputed pub-
lishing house, and so on. Transition takes place after separation.

As per the Webster Dictionary, attrition is a reduction in the number of employees usually as a result of
resignations, retirement or death. The other term used for attrition is employee turnover.

Main Reasons for Separation of Employees from Employers

Employees leave the organisation for various reasons and some of the reasons are-

(a) compensation and benefits

(b) career prospects

(c) job related issues

(d) organisational functioning

(e) personal factors.

It should be noted that there are no readymade techniques or tools to prevent employee attrition.
Employee retention and engagement programmes have to become an important part of HR policies of
the organisation. In many progressive organisations, the employee who is leaving the job is treated well
and the amount due to him is settled without delay. The objective is to ensure that the employee leaves
the organisation with pleasant memories of his association with the company and he talks high about
the organisation and its HR policies. If the rate of separation is high, it is a sign of instability and it
adversely affects the normal working and profitability of the organisation. However, a moderate
turnover of employees is always good for the firm since new employees bring experience, new ideas and
new outlook with them.

Types of Employee Separation

There are two main types of employee separations based on the initiation of the employment
relationship termination. These two types of employee separations are as follow.

Voluntary Separation
When an employee terminates the employment relationship, then this form of employee separation is
known as voluntary separation. Voluntary separation is further divided into two categories.

a). Quits

b). Retirements

Involuntary Separation

When an employer of an organization ends the employment relationship with any employee, then this
employee separation is called involuntary separation. There may be several reasons for involuntary
separations like the employee does not fit with the requirements of a particular job or due to economic
necessity. Involuntary separation is further divided into the following categories.

a). Discharges

b). Layoffs

c). Rightsizing or downsizing

d). Managing Early Retirements

When an organization decides to downsize its operating scale based on certain circumstances, then its
first activity is to find different alternative options for the lay-offs. For this purpose, an early retirement
is a popular option.

Employee Separation – 8 Major Forms

Form # 1. Downsizing:

Due to thrust on modernisation, technological upgradation, competitiveness, cost effectiveness, high

quality products, delivery schedule, etc., many old and established industries are facing stiff competition
from not only newly set up modern industries with latest machinery and equipment but even by the
small-scale sector. Many of the traditional industries with obsolete machinery, high cost of production,
low quality, and low productivity and over staffing are compelled to take a close look at all aspects of
cost of production including utilisation of human resources.

Some of the age old industries like textiles, coal mines, steel, engineering units and even a few
multinationals are forced to adopt urgent measures to rationalise their manpower. Many companies are
compelled to go for a lean organisation structure by cutting down extra manpower at each managerial
level. Similarly, workers with knowledge and skills are preferred in sectors like IT, finance and insurance
industries.

The term downsizing means reducing the excess manpower by suitable measures and adjusting the
manpower as per the requirement of the organisation. Rationalisation of manpower of an industrial
organisation is an economic necessity. This is required not only for manufacturing and service
undertaking but even for offices of industrial and commercial establishments.

Reasons for surplus manpower in an organisation:

a. Outdated products and changes in consumer tastes and preferences

b. Continued sluggish market conditions

c. Technological obsolescence

d. Low labour productivity and high wage cost

e. Recession in the industry

f. Stiff competition

g. Restrictions on expansion/diversification on the existing units etc.

The HR department has to prepare a suitable downsizing plan in consultation with senior managers in
the organisation.

Factors considered in identifying employees for downsizing

Some of the factors considered for identifying employees under downsizing plan are:

(i) Age of the employee,

(ii) Educational qualification,

(iii) Knowledge, skills and attitude of the employee,

(iv) Past performance in the job,

(v) Physical fitness of the employee,

(vi) Willing to accept transfer/relocate,

(vii) Willing to undergo training to upgrade knowledge and skills etc. Voluntary retirement scheme, lay
off, retrenchment are some of the methods followed by companies to reduce manpower.

Right sizing of workforce means employing exact number of employees with require knowledge, skills
and attitude to perform the existing jobs in an organisation. Detailed analysis of external and internal
factors and job analysis are carried out to arrive at exact number of people required.

Form # 2. Voluntary Retirement Scheme (VRS):

Voluntary Retirement Scheme popularly known as Golden Handshake is one of the methods of reducing
surplus labour in an organisation. The scheme is not new to our industry. In fact some of the public and
private sector undertakings like Guestkeen Williams Limited have resorted to VRS for reducing their
workforce as early as in 1976.

It has gathered momentum since early 1990s. In India for example, a large number of companies like
ITC, ACC, Blue Star, Hindustan Lever, Crompton Greaves, Atlas Capco, Mahindra and Mahindra, Ciba
Geigy, Kirloskar, Sandoz, Pfizer, Batliboi, Hoechst, Commercial banks have introduced Voluntary
Retirement Schemes.

Under the scheme, the organisation announces a VRS and interested employees have to apply for
voluntary separation from the organisation. They are relieved as per the terms and conditions of the
VRS. One of the attractions of the scheme is that the amount payable under VRS scheme is eligible for
tax relief.

Compulsory Retirement or Iron Handshake:

HR department with inputs from line managers prepares a list of surplus employees and discharges
them from the service without providing additional financial benefits, other than the normal retirement
benefits due to the employees. Therefore, it is called compulsory retirement or ‘iron handshake’.

Requirements of Voluntary Retirement Scheme:

a. Situation analysis – VRS is introduced when it becomes a must for an employer to rationalise,
restructure and reduce the manpower and when he is unable to absorb the manpower in the same unit
or any of his subsidiary units and when he cannot retrench them.

b. Adequate homework – The management has to assess accurately the manpower requirements for the
next five years to arrive at surplus manpower in various categories and levels of employees.

c. Top to Bottom reorganization – Reduction of manpower includes workmen, clerical staff, executives
and managers in the organisation.

d. VRS scheme should be attractive enough to persuade a large number of employees to take advantage
of the benefits under the scheme and leave the organisation.

e. Voluntary scheme – It should be voluntary and open to all permanent employees. It should be open to
permanent employees who have put in minimum 5, 10 or 15 years of service with the company or who
have 5 to 10 years left with the company depending on the age and skill mix of the employees.

f. Terms and conditions of VRS are not negotiable.

g. Announcement of VRS scheme – The scheme should be introduced formally through a notice and
should be open for a period of say 1 to 3 months.

h. The acceptance of resignation should be communicated in writing.

i. The employee opting for VRS will also be eligible for all legal dues such as Gratuity, Pension, Statutory
bonus, Provident Fund, Leave salary etc.

j. The company has to educate the employees as how best to reduce the tax liabilities legally.

k. To create a favourable climate and to reduce bitterness, it better to organise a farewell function to
those who are leaving the company under VRS.

l. Companies can offer advice to VRS employees as to how they can utilise the funds for generating
income in the coming years.

Comments on VRS Scheme:

a. Many organisations have come out with attractive VRS schemes and good performers have opted for
the same. However, incompetent employees have not taken VRS and they continue to work in the
organisation.
b. Many employees who opted for VRS could not take up any income generating activities and they have
faced financial problems.

c. In industries such as textiles, steel, coal mines etc., poor and unskilled workers have been forced to
leave the job under VRS scheme and it has affected the life of thousands of workers.

d. Though VRS is voluntary, in many cases it has become CRS (Compulsory Retirement Scheme) to weed
out poor performers.

e. VRS (Golden Handshake) as a means of reduction of the manpower is an economic and business
necessity and it has a social and human angle.

f. The VRS should be introduced and implemented with a human touch and with full sense of social
responsibility. The human touch is necessary to make the obviously bitter pill less bitter if not a sweeter
one.

Form # 3. Lay-off

Lay-off is a temporary separation of an employee at the instance of an employer under specific situation.
Though it is temporary separation, sometimes, it turns out to be a permanent one, as production never
picks up a laid off workers are not reemployed in the organisation. The longer the period of lay-off, the
less the possibility that the individual will return to the organisation.

Causes for lay-off are:

a. Decline in sales,

b. Shortage of raw materials,

c. Market fluctuations,

d. Delays in production,

e. Displacement due to technology and

f. Surplus labour and high labour cost.

Three conditions are present in lay-off, i.e.:

a. No work is available for the employees,

b. No work situation is temporary and short term and

c. Management would like to recall the employees when work is again available. Therefore, lay-off is not
a termination which is a permanent severing of employment.

Lay-off creates problems for the management as well as the union. The management has to ensure
production as per plan. They would like to retain skilled and competent labour and the same time they
have to give utmost attention the morale of the affected employees. The union is concerned with
impartial ways to distribute the limited work among the members. Seniority is considered in layoff of
organised labour, other things such as ability and physical fitness being equal. In the case of unorganised
labour, the management retain good performers and lay-off those who are the least efficient.
Form # 4. Discharge:

Discharge is permanent separation of the employee from the payroll of the company frequently due to
some incompetence or offence by the employee. The reasons for discharge may be willful violation of
rules, insubordination, dishonesty, violent and aggressive acts, inefficiency, unauthorised absence from
duty for a long time, alcoholism etc. Discharge is the most stressful method of separation of an
employee.

The employee is considered to be unsatisfactory in performance or attitude. In the case of organised

employees, they can be discharged only for ‘Just Causes’, again they can appeal against such actions. It
should be used sparingly in exceptional cases. The punishment should not be out of proportion to the
offence.

Dismissal is the termination of the services of an employee as a punitive measure for some misconduct.
Discharge also means termination of the services of an employee but not necessarily as a punishment. A
discharge does not arise from a single irrational act.

Some of the points to be considered while discharging employees are:

a. Clearly list the reasons for discharge.

b. Inform the individual about the reasons for discharge.

c. The manager concerned should be familiar with the rules and regulations.

d. Discharge has to be administered by line managers.

e. There should be a clear cut procedure to settle the case of a discharged employee.

f. There should be provision for review of the discharged employee in the case of organised workforce.

g. If the employee is found to be incompetent, attempts should be made to find another position for
him/transfer of the employee could be considered.

In the case of executives and managers in private sector, they can be discharged for reasons such as low
sales, low production volumes, poor performance, misbehaviour, financial irregulatories etc.

Form # 5. Retrenchment:

HR function starts with recruitment and selection of employee and ends with separation of employee
from the organisation. Retrenchment is the permanent termination of an employee’s service due to
economic reasons such as surplus staff, poor demand for products, general economic slowdown etc.
Termination of services on disciplinary grounds, illness, winding up of business, etc., does not constitute
retrenchment.

As per Industrial Dispute Act (1947) of India, the employer has to give three months’ notice or pay
equivalent wages before the actual lay-off date. While retrenching workmen, the employer has to follow
the first-in-last-out principle. Further the employer has to get prior approval from Government before
retrenching workers.

Form # 6. Termination of Key Managers:

Of all forms of separations, the most difficult job is terminating the services of a person especially if he is
holding a senior position in the organisation. This is because the key person may have access to
confidential and sensitive documents and may have excellent support within the
department/organisation. Therefore the management has to do adequate homework before taking a
decision for terminating the services of such key people. Of course, the management may give some
time to the person so that he can find out employment opportunities elsewhere.

Some of the points to be considered are given below:

a. Free and frank discussion with the person whose performance is very poor.

b. Identify areas of weaknesses and prepare a plan for overcoming weaknesses.

c. Clearly indicate in writing that the services will be terminated if he does not make sufficient progress
as per discussions.

d. Closely monitor the progress shown by the person.

e. Document all the discussions for ready reference.

f. If the person does not show progress, resignation letter should be requested.

g. The affected person will be upset and may become verbally explosive. The manager has to remain
cool and calm.

h. The specific reason for terminating the services of the person should not be released to protect the
rights of the released person.

Form # 7. Pink Slip:

Pink Slip is an American term that refers to being fired or laid off from one’s job. It refers to American
practice of HR department of including a discharge notice in the employee’s salary envelope informing
him that his employment has been terminated. Receiving a Pink Slip has become a ‘Metaphor’ for
termination of employment in general. It is a slang term and refers to the notice issued for employment
termination or fired from the job.

Regarding the origin of the term, it appears to have started during those days when workers were paid
in cash and each week’s wages came in an envelope and anyone being laid off would find a notice
(reviled pink slip) in the envelope along with final wages. In those days, before trade unions came into
the picture, the pink slip arrived unexpectedly.

Many of the pink slips being given out today have little to do with individual performance and it is not
the end of the career. There are other employers looking for talent. With negative economic conditions
or market down trend, pink slip is not seen as a negative mark against a person. The employers are
concerned with knowledge, skills and attitude of the candidates.

Form # 8. Outplacement and Exit Interview:

(a) Outplacement – Under this programme, career guidance is provided to displaced employees to help
them in their search for a new job. Guidance is given on resume writing, answering questions during
interviews and job searching.
Outplacement activities are handled by third parties who are paid based on the number of outplaced
employees. Outplacement services include emotional support and assistance in job research.

(b) Exit Interview – Many companies conduct exit interviews with employees who are leaving the
organisation for whatever may the reason. The interview is conducted normally by HR manager to get
feedback from employee regarding the job, the boss, company policies and procedures etc.

Some of the questions asked during exit interview are — why do you leave the organisation? What did
you like most/least about the job and the company?, What do you think about your boss?, What are
your suggestions for development of Human resources in the organisation? Exit interview notes could
be analysed and company can take appropriate action wherever required.

Employee Separation – 2 Distinct Phases: Life Aspects and Professional Aspects

A separation has many more dimensions than just cessation of a regular job, and marks the end of a long
chapter in one’s life. Obviously, for an individual, this is the time for quick change, especially for those
who were at the peak of their careers and power status. For some, it might be a time of confusion,
uncertainty, and planning.

One of the choices for leaving the company could be to pursue purely life- related aspects, and have an
understanding of moving away from the professional realm or monarchy. Many options exist for a
professional after separation. Sometimes, individuals desire to be reengaged in same profession or
change tracks.

On the other hand, many prefer to lead a post-retirement life by sacrificing professional competence.
Studies in the West show that as many as 70 per cent of people would like to continue in some profes-
sion or another to keep them busy. Many even wish to continue their regular jobs.

The course of action depends on the preparations that enable the transition, life attitude, and
perceptions. Psychologically, retirement is one phase in the occupation, which leads either to personal
satisfaction and self-fulfillment with contribution to organization, society, family and self or job dis-
contentment, sense of low self-worth, or negative outlook to organization and society.

This ultimately leads either to positive or negative orientation to life. Either way, it reflects the life cycle
and the options possible for post-retirement life. The happiness one experiences or the attitude towards
others would largely depend on the outcome when one retires or separates from the career. It is usually
seen that positive people go for better options, while the not-so-happy ones either opt out or become
frustrated.

There exist two distinct aspects or phases after separation:

1. The life aspects, and

2. The professional aspects.

1. Life Aspects:

The most common life aspects are the following:

i. Catching up with friends and relatives

ii. Concentrating on one’s health

iii. Devoting more time for oneself and with the family

iv. Developing social networks

v. Engaging in more domestic and social roles

vi. Engaging in spiritual pursuits

vii. Planning for exploring various leisure pursuits

viii. Resting and relaxing.

2. Professional Aspects:

The most common professional aspects are as follows:

i. Accepting that regular salary income might cease

ii. Continuing professional credibility

iii. Developing different equations with the professional networks that has developed earlier

iv. Fading away of status with designation and roles

v. Feeling of frustration of lack of avenues to exhibit one’s talent and knowledge or freedom from job
demands

vi. Moving out of operational roles

vii. Moving out of regular professional networks

viii. Sensing that more time is available and activities have declined.

Employee Separation –Factors Responsible for Employee Separation

(With the Measures to Reduce Employee Separation)

1. Unavoidable factors such as job with better prospects, illness/accident, retirement, death and
marriage in the case of female employees.

2. Avoidable factors include lack of congenial working atmosphere in office/factory, lack of facilities and
amenities, ill treatment, no provision for training, rude behaviour of superiors etc. If workers leave due
to lack of good working conditions, it is a matter of anxiety and the management should look into the
problems and take appropriate action. High employee turnover affects the stability of the organisation
and therefore it is not desirable.

Employee turnover is expensive too due to the following reasons:

a. Cost of recruitment, selection and placement.

b. Training costs.

c. Loss of production due to delay in recruitment.

d. Time taken by employee to settle down in the job and become productive.

e. Overtime charges incurred to complete the work in the absence of regular.

f. Delay in meeting deadlines and delivery schedule.

Measures to Reduce Employee Separation:

1. Scientific recruitment and selection policy

2. Adequate training to meet the job requirements

3. Fair wages and incentives

4. Congenial working conditions

5. Job security and job satisfaction

6. Management should have equal concern for task and employee welfare

7. Merit based promotions

8. Effective industrial relations

Related Articles:

Forms of Employee Separation

Types of Employee Separation

Demotion: Necessity and Causes of Demotion of an Employee

The Costs of Employee Separation

Employee separation always results in some costs. The intensity of the incurring costs varies based on
the decision of the management that either the empty position of the separated employee is replaced
by a new employee or the position may be eliminated permanently. The following are the costs that are
linked with employee separation.

a). Recruitment Costs

b). Selection Costs

c). Training Costs

d). Separation Costs

Benefits of Employee Separation

On one hand, there are costs attached to employee separation, but on the other hand, there are some
resulting benefits too. The following are some of the Employee Benefits that are associated with
employee separation.

a). The labor cost is reduced

b). The employees who perform poorly, are replaced

c). The innovation is increased in the organization

d). The diversity is enhanced in the organization

Characteristics of Policies of Early Retirement:

There are two main features or characteristics of early retirements and which are as follows.

01- Early retirement is associated with some attractive package of financial incentives for those senior
employees to be retired before their estimated time.

02- The duration of the offering additional financial incentives for early retirement is short so that senior
employees make quick decisions & these incentives are no longer valid after the specified period.

Problem Avoidance with Early Retirements

When the early retirement decision is made by the management of the organization than the policies of
the early retirement should be designed carefully. Similarly, these policies should be properly
implemented and administrated.

If the policies of early retirements are not managed properly, then this would result in the creation of a
lot of problems. The management of the organization should treat their senior employees similar to the
treatment with other employees of the organization so that the senior employees do not feel any
discrimination.

Managing Lay-Offs

When an organization is unable to decrease its labor cost by any other method, then it is compelling to
employ the method of layoff. But before the application of the layoff method in the organization, the
management must ensure that they have employed other alternative methods of reduction in labor
cost.

Alternatives to Layoffs

Several methods can be used as alternatives to the layoff for reducing the labor costs in the
organization. The following are a list of these alternative methods.

1. Employment Policies

2. Changes in the Design

3. Pay & Benefits Policies

4. Training

5. Nontraditional Alternatives to Layoff.

6. Implementing a Lay-Off
The layoff should be implemented with great care and tact by the management because it can influence
the lives of hundreds of people. Certain issues should be considered before implementing layoff policies
in the organization. These issues are as follows.

1. The notification to the employees

2. Development of the criteria of layoff

3. The communication method with laid-off employees

4. Coordination with media relations

5. Maintenance of security in the organization

6. Reassurance to the employees who are survivors of the layoff.

Outplacement

The special programs that are designed by the human resource management of the organization for the
support of the separated employees to bear the emotional stress of their loss of job by assisting them in
search of a new job, is referred to as outplacement.

The Goals of Outplacement

The main purpose of outplacement is that it ensures the productivity of the employees in the
organization. There are certain goals of outplacement, which are as follows.

1- The laid-off employees face some moral problems so they are supported by the outplacement
programs of the organization so that they remain productive in the future.

2- Outplacement is helpful in the reduction of the litigation that can be started by the employees who
are laid off.

3- The laid-off employees are assisted in searching for new jobs that are comparable to the previous
one.

Outplacement Services

To achieve the goals of outplacement, outplacement services are provided by the management of the
organization. The following are the major services that are provided by the management in the shape of
outplacement.

1- The laid-off employees are supported emotionally.

2- The laid-off employees are assisted in the search for new jobs.