Retail Management F

Retail Management
This book is a part of the course by MITSDE, Pune.

This book contains the course content for Retail Management.
MITSDE, Pune
First Edition 2011
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No part of the content may in any form or by any electronic, mechanical, photocopying, recording, or any other
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alter the content whenever the need arises, and to vary it at any time without prior notice.
Index
Content .................................................................................................................................................................. II
List of Figures ..................................................................................................................................................... VI
List of Tables ............................................................................................................................................................ VII
Abbreviations ................................................................................................................................................... VIII
Case Study......................................................................................................................................................... 160
Bibliography...................................................................................................................................................... 174
Self Assessment Answers .................................................................................................................................. 177
Book at a Glance
I/MITSDE
Contents
Chapter I....................................................................................................................................................... 1
Human Resource in Retailing ..................................................................................................................... 1
Aim ................................................................................................................................................................ 1
Objectives ...................................................................................................................................................... 1
Learning outcome .......................................................................................................................................... 1
1.1 Introduction.............................................................................................................................................. 2
1.2 Objectives of Human Resource Management .......................................................................................... 2
1.3 HR Environment ...................................................................................................................................... 3
1.4 HR Procedures in Retail........................................................................................................................... 4
1.5 Retail and Customer Focus ...................................................................................................................... 5
1.6 Satisfaction and Sales People................................................................................................................... 5
1.7 Issues in Retail Human Resource Management ....................................................................................... 6
1.8 International Human Resource Issues...................................................................................................... 7
Summary ...................................................................................................................................................... 8
References..................................................................................................................................................... 8
Recommended Reading ............................................................................................................................... 9
Self Assessment........................................................................................................................................... 10
Chapter II ................................................................................................................................................... 12
Retail Organisation Design and Structure............................................................................................... 12
Aim .............................................................................................................................................................. 12
Objectives .................................................................................................................................................... 12
Learning outcome ........................................................................................................................................ 12
2.1 Introduction............................................................................................................................................ 13
2.2 Guidelines for Organisational Structure................................................................................................. 14
2.3 Types of Organisation Structure............................................................................................................. 14
2.4 Principles of Organising Retail Firm ..................................................................................................... 16
2.5 Process of setting up a Retail Organisation............................................................................................ 16
2.6 Creating Organisation Structure ............................................................................................................ 18
2.6.1 Organisation Structure of a Retail Store Chain/ Department Store ........................................ 21
2.6.2 Organisation of a National Retail Chain ................................................................................ 22
2.7 Retail Organisation Design Issues ......................................................................................................... 25
2.7.1 Centralisation versus Decentralisation ................................................................................... 25
2.7.2 Coordinating Merchandise and Store Management ............................................................... 26
2.8 Designing e-Store .................................................................................................................................. 27
2.8.1 Purpose and Scope of E-Store Design ................................................................................... 27
Summary .................................................................................................................................................... 28
References................................................................................................................................................... 29
Recommended Reading ............................................................................................................................. 29
Self Assessment........................................................................................................................................... 30
Chapter III.................................................................................................................................................. 32
Recruitment ................................................................................................................................................ 32
Aim .............................................................................................................................................................. 32
Objectives .................................................................................................................................................... 32
3.1 Introduction............................................................................................................................................ 33
3.2 Essentials of Recruitment Policy ........................................................................................................... 33
3.3 Recruitment Function ............................................................................................................................ 34
3.4 Sources of Manpower Supply ................................................................................................................ 35
3.5 Recruitment Process .............................................................................................................................. 38
3.6 Methods and Techniques of Recruitment .............................................................................................. 39
3.7 Factors Affecting Recruitment ............................................................................................................... 42
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3.8 Assessment and Improvement of Recruitment ....................................................................................... 42
Summary ..................................................................................................................................................... 44
References ................................................................................................................................................... 45
Self Assessment ........................................................................................................................................... 46
Chapter IV .................................................................................................................................................. 48
Selection ...................................................................................................................................................... 48
Aim .............................................................................................................................................................. 48
Objectives..................................................................................................................................................... 48
4.1 Introduction ............................................................................................................................................ 49
4.2 Difference between Recruitment and Selection ..................................................................................... 49
4.3 Recruitment and Selection Model .......................................................................................................... 51
4.4 Selection Strategy................................................................................................................................... 53
4.5 Selection Process.................................................................................................................................... 53
4.6 Recruitment and Selection Challenges................................................................................................... 62
Summary ..................................................................................................................................................... 64
References ................................................................................................................................................... 64
Self Assessment ........................................................................................................................................... 65
Chapter V.................................................................................................................................................... 67
Motivation and Morale .............................................................................................................................. 67
Aim .............................................................................................................................................................. 67
Objectives..................................................................................................................................................... 67
5.1 Meaning of Motivation .......................................................................................................................... 68
5.2 Objectives of Motivation........................................................................................................................ 68
5.3 Characteristics of Motivation ................................................................................................................. 69
5.4 Motivators .............................................................................................................................................. 70
5.5 Motivation Theories ............................................................................................................................... 71
5.5.1 Need Hierarchy Theory .......................................................................................................... 71
5.5.2 Douglas MeGregor’s Theory X and Theory Y ....................................................................... 72
5.5.3 Theory Z ................................................................................................................................. 72
5.5.4 ERG Theory ........................................................................................................................... 73
5.5.5 Herzberg’s Motivation- Hygiene Theory................................................................................ 74
5.5.6 Mc Cleland’s Theory of Needs .............................................................................................. 75
5.5.7 Expectancy Theory................................................................................................................. 76
5.5.8 Likert’s Sales Management Theory ....................................................................................... 77
5.5.9 Churchill, Ford and Walker Model of Sales Force Motivation .............................................. 78
5.5.10 Porter and Lawyer Theory.................................................................................................... 78
5.6 Essentials for Motivation ....................................................................................................................... 79
5.7 Role of Manager in Motivation .............................................................................................................. 80
5.8 Morale .................................................................................................................................................... 81
5.8.1 Types of Morale ..................................................................................................................... 82
5.8.1.1 Individual Morale .................................................................................................... 82
5.8.1.2 Group Morale .......................................................................................................... 82
5.8.1.3 Factors Affecting Morale ......................................................................................... 82
5.8.2 Evaluation of Morale ............................................................................................................. 83
5.8.3 Indices of Morale ................................................................................................................... 84
5.8.4 Measures to Improve Morale ................................................................................................. 84
5.9 Reward System ...................................................................................................................................... 85
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Summary .................................................................................................................................................... 86
References................................................................................................................................................... 86
Self Assessment........................................................................................................................................... 87
Chapter VI .................................................................................................................................................. 89
Staff Training and Development ............................................................................................................... 89
Aim .............................................................................................................................................................. 89
Objectives .................................................................................................................................................... 89
6.1 Introduction............................................................................................................................................ 90
6.2 Goals, Purpose and Aim of Training...................................................................................................... 92
6.3 Principles and Need for Training ........................................................................................................... 93
6.4 Training Philosophy............................................................................................................................... 94
6.5 Policy and Strategy of Training and Development ................................................................................ 94
6.5.1 Components of Training ........................................................................................................ 95
6.6 Types of Training ................................................................................................................................... 96
6.7 Training Cycle ....................................................................................................................................... 98
6.8 Features of Good Training ................................................................................................................... 101
6.9 Training Methods................................................................................................................................. 101
6.10 Management Development ................................................................................................................ 105
6.10.1 Goals of Management Development ................................................................................. 106
6.10.2 Aims of Management Development Efforts ...................................................................... 106
6.10.3 Principles of Management Development ........................................................................... 106
6.10.4 Techniques of Management Development ........................................................................ 106
Summary .................................................................................................................................................. 108
References................................................................................................................................................. 109
Recommended Reading ........................................................................................................................... 109
Self Assessment......................................................................................................................................... 110
Chapter VII .............................................................................................................................................. 112

Employee Retention ................................................................................................................................. 112
Aim ............................................................................................................................................................ 112
Objectives .................................................................................................................................................. 112
Learning outcome ...................................................................................................................................... 112
7.1 Introduction.......................................................................................................................................... 113
7.2 Need and Importance of Employee Retention ..................................................................................... 114
7.3 Analysis of Reasons for Staying or Leaving ........................................................................................ 115
7.4 Improving Employee Retention ........................................................................................................... 117
7.4.1 Flexibility Strategy .............................................................................................................. 118
7.4.2 Talent Management Strategy ............................................................................................... 118
7.4.3 Reward Strategy................................................................................................................... 118
7.5 Role of Motivation in Employee Retention ......................................................................................... 121
7.6 Role of HR in Employee Retention ..................................................................................................... 122
7.7 Role of Team Leaders and Supervisors in Employee Retention .......................................................... 124
7.8 Challenges in Employee Retention ...................................................................................................... 125
7.9 Recent Developments and Future Prospects ........................................................................................ 126
Summary .................................................................................................................................................. 129
References................................................................................................................................................. 129
Self Assessment......................................................................................................................................... 131
IV/MITSDE
Chapter VIII ............................................................................................................................................. 133
Employee Benefits and Health and Safety Measures ............................................................................ 133
Aim ............................................................................................................................................................ 133
Objectives................................................................................................................................................... 133
Learning outcome ...................................................................................................................................... 133
8.1 Introduction .......................................................................................................................................... 134
8.2 Employee Benefits ............................................................................................................................... 135
8.3 Health Measures ................................................................................................................................... 143
8.4 Safety Measures ................................................................................................................................... 149
8.5 Welfare Measures ................................................................................................................................. 154
8.6 Responsibilities of HR ......................................................................................................................... 155
Summary ................................................................................................................................................... 157
References ................................................................................................................................................. 157
Self Assessment ......................................................................................................................................... 158
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List of Figures
Fig. 1.1 Downward performance spiral ......................................................................................................... 3
Fig. 2.1 Structure of a retail store................................................................................................................. 15
Fig. 2.2 Tasks performed by a typical retail firm ......................................................................................... 19
Fig. 2.3 Retail organisation .......................................................................................................................... 20
Fig. 2.4 Product group retail organisation.................................................................................................... 20
Fig. 2.5 Location based retail organisation .................................................................................................. 20
Fig. 2.6 Typical retail organisation .............................................................................................................. 21
Fig. 2.7 Owner-manager retail structure ...................................................................................................... 21
Fig. 2.8 Organisation structure of a retail store chain .................................................................................. 22
Fig. 2.9 Organisation of a typical department store ..................................................................................... 23
Fig. 3.1 Advantages of E-recruitment .......................................................................................................... 38
Fig. 4.1 Relationship between recruitment and selection ............................................................................ 50
Fig. 5.1 Types of motivators ........................................................................................................................ 70
Fig. 5.2 Financial motivators ....................................................................................................................... 70
Fig. 5.3 Non-financial incentives ................................................................................................................. 71
Fig. 5.4 Maslow’s need hierarchy ................................................................................................................ 71
Fig. 5.5 Methods of conducting sales meetings ........................................................................................... 77
Fig. 5.6 Sales force motivation .................................................................................................................... 78
Fig. 5.7 Factors affecting morale ................................................................................................................. 82
Fig. 5.8 Methods of survey of morale .......................................................................................................... 83
Fig. 5.9 Indices of employee’s morale ......................................................................................................... 84
Fig. 6.1 Basic purposes of training .............................................................................................................. 92
Fig. 6.2 Aims of training .............................................................................................................................. 92
Fig. 6.3 Principles of training ...................................................................................................................... 93
Fig. 6.4 Components of training .................................................................................................................. 95
Fig. 6.5 Categories of training ..................................................................................................................... 96
Fig. 6.6 Categories of training based on structure ....................................................................................... 96
Fig. 6.7 Categories of training based on context ......................................................................................... 97
Fig. 6.8 Other types of training .................................................................................................................... 97
Fig. 6.9 Training cycle ................................................................................................................................. 99
Fig. 6.10 Basic training methods ............................................................................................................... 102
Fig. 7.1 Keys to comprehensive employee retention plan ......................................................................... 113
Fig. 7.2 Rules of an effective reward system ............................................................................................. 119
Fig. 7.3 Types and structure of rewards ..................................................................................................... 120
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List of Tables
Table 4.1 Recruitment and selection model ................................................................................................. 52
Table 4.2 Selection strategy ......................................................................................................................... 53
Table 4.3 Do’s and don’ts of exit interview ................................................................................................. 62
Table 5.1 Characteristics of motivation........................................................................................................ 69
Table 5.2 Integration of characteristics ........................................................................................................ 73
Table 5.3 Similarities between Maslow and ERG theories .......................................................................... 74
Table 5.4 Similarities between Maslow’s and Herzberg’s theories .............................................................. 75
Table 5.5 Distinction between Maslow’s and Herzberg’s theories ............................................................... 75
Table 5.6 The level of motivation ................................................................................................................ 77
Table 6.1 Various definitions of training ...................................................................................................... 91
Table 6.2 Training methods ........................................................................................................................ 104
Table 6.3 Benefits of training ..................................................................................................................... 105
Table 7.1 Looking at rewards holistically .................................................................................................. 119
Table.8.1 Entitlement to earned leave ........................................................................................................ 139
Table 8.2 Health promotion levels ............................................................................................................. 148
Table.8.3 Types of accidents ...................................................................................................................... 150
VII/MITSDE
Abbreviations
AARP - American Association of Retired Persons
AIDS - Acquired Immune Deficiency Syndrome
BHEL - Bharat Heavy Electrical Ltd.
BPO - Business Process Outsourcing
CEO - Chief Executive Officer
CFO - Chief Financial Officer
CGHS - Central Government Health Scheme
CMO - Chief Marketing Officer
COO - Chief Operations Officer
CSA - Customer Service Associate
DMM - Divisional Merchandise Manager
DTP - Design of Training Program
EAP - Employee Assistance Programmes
ERI - Employee Reliability Inventory
FTSs - Fortnightly Training Sessions
GAW - Guaranteed annual wage
GMM - General Merchandise Manager
GPF - Government Pension Fund
HMT - Hindustan Machine Tools
HRM - Human Resource Management
I.Q - Intelligence Quotient
ILO - International Labour Organisation
KRA - Key Result Area
MBO - Management by Objectives
MIS - Management Information System
MRO - Management by Objective
MWs - Monthly Workshops
NTCs - National Training Courses
OH & S - Occupational Health and Safety
OSHA - Occupational Safety and Health Administration
QWL - Quality of Work Life
RAI - Retailers Association of India
SVP - Senior Vice President
TAT - Thematic Aptitude Test
TME - Training Monitoring and Evaluation
TNA - Training Needs Assessment
TPD - Training Plan Development
TPI - Training Program Implementation
VIE - Valence, Instrumentality, Expectancy
VRS - Voluntary Retirement Scheme
VIII/MITSDE
Chapter I
Human Resource in Retailing
Aim
The aim of this chapter is to:
• explain Human Resource in Retailing
• identify the objectives of Human Resource Management
• discuss the HR procedures in Retail
Objectives
The objectives of this chapter are to:
• discuss the issues in Retail Human Resource Management
• recognise retail and customer focus
• explicate the HR environment
Learning outcome
At the end of this chapter, you will be able to:
• understand the procedure of Human Resource environment in retailing
• realise the international Human Resource issues
• comprehend the importance of customer satisfaction
1/MITSDE
Retail Personnel Management
1.1 Introduction
Human resources are the most valuable assets for any organisation, specially for a retailing outlet. Human resource
management is that part of management which deals with the procurement, the development, and the motivation
of human resources so as to attain organisational objectives. It aims at creating and maintaining organisation
climate conducive to such development. Edwin B. Flippo defines HRM as “the planning, organising, directing and
controlling the procurement, development, compensation, integration and management of personnel to the end that
organisational objectives are effectively accomplished.”
Retailing is a major employer today in India and all over the world. The human resource environment of retailing
has peculiar characteristics which are discussed below.
Retailing brings people together for mutual benefit in the market place. It is the most people-intensive, of all
industries.
Quite often, retailing is viewed solely as offering products for sale. However, The Limited believes that retailing
is service business whereby the customer and merchandise are brought together by highly motivated and qualified
sales personnel. Our success is based upon attracting, training, motivating and retaining qualified people throughout
the entire organisation.”
This energetic desire to serve both customers and people within the organisation holds true not only for successful
specialty stores, but also for all other types of retail businesses - from mass merchandisers to department stores. The
best retail managers emphasise the ultimate importance of a motivated and well-trained staff.
1.2 Objectives of Human Resource Management

A primary objective of human resource (HR) management is to build a basis for a sustainable competitive advantage.
This advantage is attainable since labour costs account for a significant percentage of a retailer’s total expenses.
Therefore, the effective management of employees can produce a cost advantage. Also, the experience that most
customers have with a retailer is determined by the activities of employees who select merchandise; provide
information and assistance, and stock displays and shelves. Thus, employees can play a major role in differentiating a
retailer’s offering from its competitor’s. Finally, these potential advantages are difficult for competitors to duplicate.
For example, Nordstrom employees are known to provide outstanding customer service. However, most retailers
are not able to develop the same customer oriented culture in their firms.
Another strategic objective of human resource management is to align the capabilities and behaviours of employees
with the short- and long-term goals of the retail firm. Retailers use several standard metrics to measure how they
are doing. One human resource metric is employee productivity- the retailer’s sales or profit divided by the number
of employees. Employee productivity can be improved by increasing the sales generated by employees, reducing
the number of employees, or both.
Whereas employee productivity is directly related to the retailer’s short-term profits, other measures of employee
attitudes, such as job satisfaction and commitment, have important effects on the long-term performance of the
retailer.
Committed employees are more motivated to assist the retailer in achieving its goals, such as improving the
satisfaction of customers and building customer loyalty. They also are less likely to leave the company. In addition
to using surveys to measure these employee attitudes, retailers also consider employee turnover as a behavioural
measure of employee commitment.
Employee turnover = Number of employees leaving their job during the year
Number of positions
2/MITSDE
If a store owner had five sales associate positions but three employees left and were replaced during the year, the
turnover would be 3/5= 60 percent. Note that turnover can be greater than 100 percent if a substantial number of
people are replaced more than once during the year. In our example, if the replacements for the three employees
that left also left during the year, the turnover would be 6/5=120 percent.
A failure to consider both long- and short-term objectives can result in the mismanagement of human resources and
a downward performance spiral, as shown in Exhibit 9–1. Sometimes, when retailers’ sales and profits decline due
to increased competition, retailers respond by decreasing labour costs. They reduce the number of sales associates in
stores, hire more part-timers, and spend less on training. Although these actions may increase short-term productivity
and profits, they have an adverse effect on long-term performance because employee morale and customer service
decline.
Financial performance
problems
• low profits
• high costs
Employee Response Retailer’s Response

• Decreased Motivation • Layoffs
and Effort • Freeze On Hiring And
• Poor Customer Service Promotion
• Lower Job Satisfaction • Reduced Training
• Greater Turnover • Salary Freeze
• Greater Use of Part-Time
Employees And More Outsourcing
Fig. 1.1 Downward performance spiral
1.3 HR Environment
Retail sector employs a large number of less educated, less experienced or inexperienced workers. In retailing, the
workers have to keep working long hours. Retailing also employs many part-time workers. These are the factors
which influence the HRM in retailing.
Retailing is the first opportunity to work for many high-school, and college students. Some enter retailing because
of the convenience factor; the retailer is near the residence of the employee. Some ‘retail jobs are routine such as
packing, wrapping, labelling, store clerks, etc. Even some sales jobs are routine. Some counters like check-out
counters do not require staff with great expertise. Such jobs have moderate job specifications. The hired persons are
raw youth. There is always a high employee turnover. Employees report late. Many absent themselves. The nature
of the work force creates these perennial problems.
Retailing is a tiring job, especially because of long hours, with no weekly offs. Retailers work sometimes in two
shifts. Many prospective employees do not dare to brave these odds.
3/MITSDE
Retailing is a visible job. The employees come in direct contact with the customers. Their training therefore should be
extremely well-planned. They must be taught to have a right attitude, impeccable manners, and cheerful disposition.
The employees must be well-dressed and presentable. Many mom-and-pop stores have employees who are shabby
in look.
Part-time employees must be managed properly. They tend to be laid-back in their attitude. They are late and absent.
They might quit the job at the drop of a hat. Customer traffic follows a particular pattern. It is heavier at certain
hours and certain days.
There should be a match between the number of people during peak hours and the manpower.
Retailing in short should emphasise recruitment and selection, training, compensation, packages, career planning,
employee appearance and motivation. The organised retailing industry has a workforce of 1.8 million people. Even
the present level of manpower is a challenge. Half the people employed are women. The Retailers, Association of
India (RAI), estimates that 2 million people will be required by 2008. That is twice the current level. As a rule of
thumb, in a typical mall or large format of operation, one person is required for every 250 sq. ft. of space. So, a 1
lakh sq. ft. mall will require 400 people on an average. It is estimated that 80 per cent staff is frontend entry-level
staff. The balance 20 per cent is back-room crew, managing merchandising, store operations and the like. According
to another study, by 2010, retail will employ 2 million people, of which 5 - 6lakh will be required in the organised
sector itself. Enam study estimates that 5 lakh employees will be needed in the organised retail sector, with an average
space of 275 sq.ft. per employee and the total operational retail space of 150-160 million sq. ft. by2010.
1.4 HR Procedures in Retail

The process of human resources comprises several interrelated activities: recruitment, selection, training,
compensation, and supervision. In applying the process, diversity, labour laws, and employee privacy should be
kept in mind.
Proper supervision is needed to sustain superior employee performance. A main task is employee motivation. The
causes of job satisfaction/dissatisfaction and the supervisory style must be reviewed.
Procedure involved in setting up a retail organisation

A retail organisation structures and assigns tasks, policies, resources, authority, responsibilities, and rewards to
satisfy the needs of its target market, employees, and management. There are five steps in setting up an organisation:
outlining specific tasks to be performed in a distribution channel, dividing tasks, grouping tasks into jobs, classifying
jobs, and integrating positions with an organisation chart.
Specific tasks include buying, shipping, receiving and checking, pricing, and marking merchandise; inventory control;
display preparation; facilities maintenance; research; customer contact’ and follow-up; and a whole lot more. These
tasks may be divided among retailers, manufacturers, wholesalers, specialists, and customers.
Tasks are next grouped into jobs, such as sales personnel, cashiers, inventory personnel, display personnel, customer
service personnel, and management. Then jobs are categorised by functional, product, geographic, or combination
classifications. An organisation chart displays the hierarchy of authority and the relationship among jobs, and
coordinates personnel.
Procedure of human resource environment in retailing

Retailers are unique due to the large number of inexperienced workers, long hours, highly visible employees, a
diverse workforce, many part-time workers, and variations in customer demand. There is a broad range of career
opportunities available to women and minorities, although improvement is still needed.
Recruitment generates job applicants. Sources include educational institutions, channel members, competitors, ads,
employment agencies, unsolicited applicants, employees, and Websites.
4/MITSDE
Personnel selection requires thorough job analysis, creating job descriptions, using application blanks, interviews,
testing (optional), reference checking, and physical exams. After personnel are selected, they go through pre-training
and job training. Good training identifies needs, uses proper methods, and assesses results. Training is usually vital
for continuing as well as new personnel.
Employees are compensated by direct monetary payments and/or indirect payments. The direct compensation plans
are straight salary, straight commission, and salary plus commission and/or bonus. Indirect payments involve such
items as paid vacations, health benefits, and retirement plans.
Procedure of various organisational arrangements utilised in retailing

Retail organisation structures differ by institution. Small independents use simple organisations, with little
specialisation. Many department stores use a version of the Mazur plan and place functions into four categories:
merchandising, publicity, store management, and accounting and control. The equal store format is used by numerous
chain stores. Diversified firms have very complex organisations.
1.5 Retail and Customer Focus

More than 75 per cent of employees of any corporate retailer are in consumer-facing duties. It makes retail a service
business. We come across retail staff who hesitates to make eye contact with the shoppers. It may be due to lack
of confidence and motivation. There are very few smiling faces. Right training will remove these shortcomings. A
customer service associate (CSA) should be interactive and be willing to help the customers. There should be basic
training in shelf-management, product identification and regular briefings on promotional schemes. Cashiers are
the staff at check-out points. The duties at the cash desk give exposure and understanding of store merchandise.
Store managers are like ship captains. They should identify the consumer touch points and sensitise the staff
about them. Resources should be shuffled between consumer touch points and back-office work. The Great Indian
Bazaar Survey 2008 puts the manpower requirements around 1.6 million employees by 2015. There are two issues
- retention of employees and availability. Though availability of manpower may not be a problem, equipping them
with requisite skills will be a challenging task. The assumption is 1 front-end customer associate per 250 - 300
sq.ft. internationally. It is assumed to be 250 sq. ft. for India. The support staff/ manager requirements are in line
with the global standards.
Year Employee requirement(cumulative)

2002 1,00,000
2007 3,25,000
2010 7,00,000
2015 1,600,000
1.6 Satisfaction and Sales People

When a customer enters a retail outlet, he expects to be treated well. What he dislikes most is indifference towards
him by the sales people. A sales person might continue placement of stock, dusting the counter, chit-chatting. He
ignores the customer. He avoids eye contact.
This is the most irritating. It leads to dissatisfaction. The customer shares his experience with many others. It ultimately
affects the retail outlet adversely. A salesman should not retreat into a shell on seeing a customer. A customer must
be greeted with warmth Shoppers do not like stock-outs, lack of parking space, but they tend to be lenient towards
such shortcomings. But they cannot be forgiving towards uninterested sales people. Young shoppers are more likely
to be dissatisfied. Maybe, they are more demanding. Consumer durables are to be sold by knowledgeable sales
people. Customers are most dissatisfied at these stores because sales people are not competent enough. Customer
psychology plays a role in service expectations. A particular customer may need lengthy sales talk. Another is
turned off when he is talked to. There should be a right balance between such service levels. Sales people should
be properly trained and sensitised to customer expectations. Customers should be guided to locate the products in
a large store. Technology is a great help. Hand-held devices should be kept showing the placement of the products.
There should be proper signs in the store to guide the customer. Consumer durable stores should have information
kiosks to supplement the sales people’s presentation.
5/MITSDE
1.7 Issues in Retail Human Resource Management

Human resource management in retailing is very challenging for several reasons.
First, it is difficult to achieve a delicate balance between the ability to satisfy the needs of employees, the ability of
HR professionals at the corporate offices to set policies, and the capabilities of store managers to implement those
policies. Second, retailers have increased their proportion of part-time employees in an effort to reduce expenses.
Third, as the U.S. population has become more diverse, so has retailers’ labour pool, making managing diversity
an important objective for HR professionals in retailing. Finally, retailers that have expanded beyond their home
country’s borders modify and adjust their HR perspectives, policies, and procedures.
Balancing the human resource triad

Retailers such as Home Depot, Wegmans, Men’s Warehouse, and the Container Store believe that human resources
are too important to be left to the human resource department. The full potential of a retailer’s human resources is
realised when three elements of the HR triad work together—HR professionals, store managers, and employees.
Human resource professionals, who typically work out of the corporate office, have specialised knowledge of HR
practices and labour laws. They are responsible for establishing HR policies that enforce the retailer’s strategy and
provide the tools and training used by store managers and employees to implement those policies.
Store managers are responsible for bringing the policies to life through their daily management of the employees who
work for them. The issues confronting HR professionals are discussed in this chapter. Finally, the employees also
share in the management of human resources. They can play an active role by providing feedback on the policies,
managing their own careers, defining their job functions, and evaluating the performance of their managers and
co-workers.
Expense control
Retailers must control their expenses if they are to be profitable. Thus, they are cautious about paying high wages to
hourly employees who perform low-skill jobs. To control costs, retailers often hire people with little or no experience
to work as sales associates, bank tellers, and waiters. High turnover, absenteeism, and poor performance often result
from this use of inexperienced, low-wage employees.
The lack of experience and motivation among many retail employees is particularly troublesome because these
employees are often in direct contact with customers. Poor appearance, manners, and attitudes can have a negative
effect on sales and customer loyalty. Research has shown that in some types of retail operations, a modest investment
in hiring more staff will result in a significant increase in sales. If customers can’t find a particular product on their
own, or if they can’t get an explanation of how it works or how it is used, the product probably won’t sell. One
method of controlling expenses is to utilise part-time employees, an issue discussed in the next section.
Part-time employees
Retailers’ needs for store employees vary depending on the time of day, day of week, time of year, and promotion
schedule. Retailers use computerised scheduling systems that are designed to boost service and trim costs by matching
staff size to customer traffic, hour by hour. These systems can factor the effects of store promotions, sporting events,
graduations, and even the weather to determine the right staffing for different hours and days. To minimise costs,
the systems suggest that retailers complement their full-time (40-hours-per-week) store employees with part-time
workers. Part-time employees are less expensive than comparable full-time employees. Further, they are usually
offered no health or retirement benefits and little job security. The growth of part-time staff in retailing has been
slightly outpacing that of full-time staff since 2000.
Utilising diverse employee groups

The changing demographic pattern will result in a chronic shortage of qualified sales associates. So, besides utilising
less expensive part-time labour, retailers are increasing their efforts to recruit, train, manage, and retain mature,
minority, and handicapped workers.
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Although young employees have traditionally made up the majority of the retail labour force, retailers have realised
that what these employees want out of their jobs and work environments is quite different from what their older
supervisors want and, therefore, that different approaches need to be used to manage them. They want more flexibility,
meaningful jobs, professional freedom, and a better work-life balance than older employees do. Younger employees
readily switch jobs if their expectations aren’t met, making employee turnover high.
To help ease the overall labour shortage and the perceived deficiencies of younger workers, retailers are increasingly
turning to older employees because they are more reliable, have lower turnover rates, and often have better work
performance.
Training costs are also lower for older people since they generally have had strong work experience. These advantages
of hiring older employees counterbalance any increased costs in missed days for medical problems. Home Depot
even offers winter work in Florida and summer work in Maine. By building relationships with groups such as the
American Association of Retired Persons (AARP), Home Depot helps people like military retirees find jobs.
1.8 International Human Resource Issues

The management of employees working for international retailers is especially challenging.
Differences in work values, economic systems, and labour laws mean that HR practices that are effective in one
country might not be effective in another. For example,
U.S. retailers rely heavily on individual performance appraisals and rewards tied to individual performance—a
practice consistent with the individualistic U.S. culture. However, in countries with a collectivist culture, such as
China and Japan, employees downplay individual desires and focus on the needs of the group. Thus, group-based
evaluations and incentives are more effective in those countries.
The legal/political system in countries often dictates the human resource management practices that retailers can
use. For example, in Spain, a company must pay 45 days’ salary for every year worked if it fires someone. In the
Netherlands, employers must get approval from the government to lay off employees. Governments in Colombia,
Venezuela, Japan, Korea, and China can also block layoffs.
The staffing of management positions in foreign countries raises a wide set of issues. Should management be local,
or should expatriates be used? How should the local managers or expatriates be selected, trained, and compensated?
For example, at the France-based hypermarket chain Carrefour, it is likely for a Brazilian to be managing a store in
China. In fact, Carrefour prides itself on grooming managers for global experiences.
The following sections of this chapter examine three important strategic issues facing retail HR professionals:
• The design of the organisation structure for assigning responsibility and authority for tasks to people and
business units.
• The approaches used to coordinate the activities of the firm’s departments and employees and motivate employees
to work toward achieving company goals.
• The programs used to build employee commitment and retain valuable human resources.
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Summary
• The planning, organising, directing and controlling the procurement, development, compensation, integration
and management of personnel to the end that organisational objectives are effectively accomplished.”
• The Human Resources Management (HRM) Diyision is headed by a Divisional Manager, who reports to the
Managing Director.
• An HR executive/manager is responsible for manpower planning selection, placement, human resource
development, promotions, transfers performance appraisals, compensation and benefits, time keeping, health
and welfare, administration, HR information systems, regulations and organisation.
• A primary objective of human resource (HR) management is to build a basis for a sustainable competitive
advantage.
• Employee productivity is equal to the retailer’s sales or profit divided by the number of employees.
• In applying the process of human resources, diversity, labour laws, and employee privacy should be kept in
mind.
• The five steps involved in setting up an organisation are outlining specific tasks to be performed in a distribution
channel, dividing tasks, grouping tasks into jobs, classifying jobs, and integrating positions with an organisation
chart.
• Employees are compensated by direct monetary payments and/or indirect payments.
• The direct compensation plans are straight salary, straight commission, and salary plus commission and/or
bonus.
• Indirect payments involve such items as paid vacations, health benefits, and retirement plans.
• As per the Mazur plan, functions are placed into four categories, viz, merchandising, publicity, store management,
and accounting and control.
• Retailers that have expanded beyond their home country’s borders modify and adjust their HR perspectives,
policies, and procedures.
• The full potential of a retailer’s human resources is realised when three elements,i.e; HR professionals, store
managers, and employees of the HR triad work together.
• Personnel selection requires thorough job analysis, creating job descriptions, using application blanks, interviews,
testing (optional), reference checking, and physical exams.
• Human resource professionals, who typically work out of the corporate office, have specialised knowledge of
HR practices and labour laws.
• They are responsible for establishing HR policies that enforce the retailer’s strategy and provide the tools and
training used by store managers and employees to implement those policies.
• Besides utilising less expensive part-time labour, retailers are increasing their efforts to recruit, train, manage,
and retain mature, minority, and handicapped workers
• Differences in work values, economic systems, and labour laws mean that HR practices that are effective in one
country might not be effective in another.
• The changing demographic pattern will result in a chronic shortage of qualified sales associates
References
• Managing Manpower [Online] Available at: <http://www.egyankosh.ac.in/bitstream/123456789/39074/1/Unit-3.
pdf> [Accessed 15 November 2011]
• Pearson Retail Management [Online] Available at: <http://wps.prenhall.com/bp_berman_
retail_11/126/32485/8316257.cw/-/8316259/index.html> [Accessed 15 November 2011]
• Chunawalla, S.A., 2009. Contours of Retailing Management, Mumbai, Himalaya Publishing House Pvt. Ltd
• Sharma, B., 2008. Strategic Retail Management, Jaipur, Book Enclave.
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• Introduction to Human Resource Management, [Video online] Available at: <http://www.youtube.com/watch?v=-
ryr7BVo_fs0.> [Accessed 15 November 2011].
• Human Resource Management-2, [Videoonline]Available at:<http://www.youtube.com/watch?v=NIkNO1tXJDQ>
[Accessed 15 November 2011].
Recommended Reading
• Levy, M. and Weitz, B. A., Retail Management, 8th ed., New York, McGraw-Hill Companies, Inc.
• Rudrabasavaraj, M. N., 2010. Dynamic Global Retailing Management, Mumbai, Himalaya Publishing House
Pvt. Ltd.
• Dolber, R., 2003. Opportunities in Retailing Careers, Blacklick, McGraw-Hill Professional Publishing.
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Self Assessment
1. Employee productivity is equal to the retailer’s sales or profit divided by
a. Products
b. Number of employees
c. Total expenditure
d. Total amount
2. The employee turnover equals to the number of employees leaving the job in the partiucalr year divided/against
the .
a. Number of positions
b. Total number of employees
c. Total profit
d. Total sale
3. As per the , functions are placed into four categories, viz., merchandising, publicity, store management,
and accounting and control.
a. Mazur plan
b. Large retail format
c. Equal store format
d. HR format
4. involves items such as paid vacations, health benefits, and retirement plans.
a. direct compensation plans
b. Indirect payments
c. direct monetary payments
d. straight commission
5. A primary objective of human resource (HR) management is to build a basis for a sustainable
a. Success
b. Profit plan
c. Retail profit
d. competitive advantage
6. Human resource professionals, who typically work out of the , have specialised knowledge of HR
practices and labour laws.
a. Departmental store
b. Merchandise shops
c. Corporate offices
d. Foreign offices
7. According to HRM (Human Resource Management) theory, the effective management of can
produce a cost advantage.
a. Products
b. Customers
c. Employees
d. Retailers
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8. Sometimes, when retailers’ sales and profits decline due to increased competition, retailers respond by decreasing
.
a. customers
b. number of products
c. total sales
d. labour costs
9. Which of the following is false?

a. HR policies enforce the retailer’s strategy and provide the tools and training used by store managers and
employees to implement those policies.
b. Differences in work values, economic systems, and labour laws mean that HR practices that are effective
in one country might not be effective in another.
c. Retailers that have expanded beyond their home country’s borders modify and adjust their HR perspectives,
policies, and procedures.
d. Labour costs always account for a very negligible percentage of a retailer’s total expenses.

a. Human resource management is that part of management which deals with the procurement, the development,
and the motivation of human resources so as to attain organisational objectives.
b. The experience that most customers have with a retailer is determined by the activities of employees who
select merchandise; provide information and assistance, and stock displays and shelves.
c. Employee productivity can be improved by reducing the sales generated by employees, increasing the
number of employees, or both
d. Before/while applying the processes for human resources; diversity, labour laws, and employee privacy
should be kept in mind.
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Chapter II
Retail Organisation Design and Structure
Aim
• define the meaning of retail organisation
• discuss the guidelines for organisational structure
• enlist the types of organisational structure
Objectives
• describe the principles of organising retail firm
• discuss the retail organisation design issues
• explain the organisation structure in retail
Learning outcome
• understand the process of setting up a retail organisation
• recognise the steps involved in creating organisation structure
• identify the purpose, scope and importance of e-store design
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2.1 Introduction
Every organisation whether big or small needs a organisational design and structure. The organisation structure is
a formal system through which a retail firm assigns tasks/ functions, policies, resources, authority, responsibilities
and rewards to achieve its goals and satisfy the needs of its target market. In fact, a firm cannot survive unless its
organisation structure satisfies the target market. As the size and variety increases the problem becomes complex.
The structure of an organisation is a formal system which identifies and determines the roles and functions of each
section and employee in achieving the goal of the organisation. It defines the authority as well as responsibility of
each employee and the activities to be performed by him. In general in retail sector these activities can be classified
as:
• Top Management
• Strategic management
• Merchandise management
• Store management
• Operations resources, i.e., administration and human resources
• Finance and Accounts
• Support functions, for example, marketing PR, advertising and accounts
Thus, anorganisationisaformalstructureofrolesandpositionsputinplacetoachievesomespecificgoals. Thestructureof

a retail organisation defines the role of employees and the way in which the organisation functions. There are certain steps
involved in designing an appropriate retail organisation structure to enhance a store’s ability to serve its target markets. To
design an effective retail organisation structure, managers/ owners must define store objectives, identify the tasks, classify
the tasks and jobs, and assign responsibilities and authority to various positions, and define the relation between them.
Organisations can have flat structures or vertical (tall) structures. A flat organisation structure has only one or two
levels of management, whereas a vertical organisation has more than two levels of management. The performance
of a retail sector is influenced by its organisation structure.
Independent stores, department stores and chain stores use different organisation structures to facilitate their operations.
Department stores use the basic Mazur plan with some modifications to design their organisation structure.
It is obvious that the performance of retail sector depends largely upon the effectiveness of this structure: Let us
examines the various types of organisation structures that which exist in retail sector.
While developing the organisation design has to be considered.

• Defining the organisational goal.
• Tasks to be performed. a number of aspects
• Determining the need for specialists in various areas.
• Selection and recruitment of right person.
• Designating various position and reporting relationship .
• Financial implications of the structure.
The increasing competition, increasing expectations of the customers, need to respond faster to consumer needs
and wants and pressures on costs and margins influence the decision regarding organisation structure. The role of
technology is also taken into account.
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2.2 Guidelines for Organisational Structure

• Fulfilling needs of target market
 There should be sufficient personnel to provide appropriate customer service.
 Store facilities are well maintained.
 Personnel should be knowledgeable and courteous.
 The specific needs of branch store customers met.
 Changing needs are promptly addressed.
• Needs of employee
 Positions are challenging and satisfying adequately.
 Orderly promotion program.
 Clear and open communication channels
 Employee participation in the decision making.
 Clear authority responsibility relationship.
 The line of authority should be traceable, i.e., chain of command be clear.
 Fair treatment with employees.
 Scheme of reward and punishment.
• Needs of management and organisation
 Process of selection and ability to retain competent
 Adequately defined personnel procedures and policies.
 Each worker need to report to only one supervisor.
 Operating departments have adequate staff support.
 Levels of organisation are properly developed.
 Goal of organisation are well defined and integrated.
 Absenteeism is low.
 A system to replace personnel in an orderly manner.
 Flexibility to adapt to changes in customers or the environment.
2.3 Types of Organisation Structure

As pointed out, various factors influence the creation of organisational structure which may be:
• Types and nature of products sold
• Scope and scale of operation, viz., local, regional, national or international.
• Type of departmentalisation, i.e., product wise or location wise.
• Thus, organisation structures vary from one retailer to another.
Organisation structure of small Stores/ Independent Retailers/ Single stores, etc.
In spite of increasing importance of organised retailing from departmental stores to big malls, still the small,
independent stores exist in almost every country but largest number are found in our country. The grocery shop,
the boutique, furniture, hardware, shoe store dairy shop, etc. are the examples of these stores. Normally in such a
store, one person is the owner cum manager. He is responsible for most of the aspects of retail operation. The family
members usually assist him. In a number of cases, a few sales persons are also engaged. If the size increases, the
external advisors and back office staff are also engaged in such stores. It must be remembered that such independent
stores need ‘not necessarily be small in size. In that case, the number of assistants increases. In such a situation,
the organisation structure is defined specifically and the duties and responsibilities are identified. The back office is
also engaged and the help of computer is also availed of. Mostly the decision maker is the owner relating to goals,
merchandising, pricing, advertisement, hiring of staff etc.
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Owner/Manager
Responsibilities
Owner Buying, Promotion, Sales, Manager
HR, Operational control,
General Management.
Back office staff Sales staff

External advisors Responsibilities Responsibilities
Lawyers, Chartered Accounting and Record Customer Service,
Accountant Bankers, etc Keeping, Data Entry, Selling Stock
Inventory control, Purchase Control, Display and
Orders, Time Keeping and Housekeeping.
Payroll, Facilities
Management.
Fig. 2.1 Structure of a retail store
Increase in the size and operation units by big stores is a common phenomenon. When the number of stores that
a retailer operates increases, the management becomes complex which affects the structure too. The Retail store
chains may operate in a city, regional, national or an international level. Such stores may be departmentalised on
the basis of functions or product lines. The number and type of personnel would depend on the size, nature and
area of operation. The structure is also changed accordingly since structure is determined by the tasks performed
by the retailing firm.
As back as 1927, a functional organisation structure for such stores has been suggested by Paul Mazur known as
“Mazur Plan.” (See Paul M. Mazur, Principles of organisation Applied to Modern Retailing.) He identified four
major functions of a retail store and proposed the structure around them. He considered that these four functions
are found in every retail organisation irrespective of the size. He identified these four functions.
Merchandising: This is one of the most important departments and its duties start with forecasting the merchandise
required, procuring the same, pricing it and ensuring availability in the store, etc.
Publicity: It includes various activities of marketing such as advertisement, sales promotions, public relations,
publicity, etc.
Operations: As the name suggests, activities like actual operations of the store, receiving, the goods, checking,
maintaining records and maintaining customer relations, etc
Control: It comprises several activities such as accounting, credit, regulation etc. The department of control is
responsible for looking after the assets and liabilities of the organisation. Subsequently, a number of other functions
such as supply chain management, logistics and Human Resource Management have been added to the above 4
functions.
A retail firm would want to structure and assign task, policies and resources in order to meet the ever-changing
needs of the firms target market, employees and management. Now, retail organisations have prioritised retention
and growth of employees within the organisation due to high attrition and demand for skilled work force. There are
a few steps that form the core of HR Practice in retail.
• Outlining the specific tasks among channel members and customers
• Grouping the tasks into jobs
• Classifying the jobs
• Finally integrating the position in the organisational charts
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The specific tasks mentioned above deals with a number of activities which a retail firm undertakes such as setting
prices shipping merchandise, logistics, research, marketing, customer interaction, sales, follow up services. According
to the needs, these tasks may be outsourced or divided among the retailer, manufacturer middle men and so on.
After the retailer determines the tasks which it would perform, they are grouped into jobs such as sales persons,
cashier, merchandisers, display personnel, store managers and marketing executives. Each organisation has a different
structure and culture hence the certain jobs could be clubbed as on. For example, the merchandise department would
deal with display as well as procurement.
The organisation structure is also formed on the basis of Product lines offered, for instance, appliances, jewellery, and
furniture and so on. Regional operations, i.e., the geographic departmentalisation. In such structure, the personnel
are responsible for activities in a certain region, state or nation. A combination of these may also be built by retailers
as per their needs. Thus diversified structure is also seen in the market. In such cases, the retailer operates more than
on retail chain in more than one market. Pantaloon group is a good example of diversified retailing. It should be
remembered that the organisation structure must ensure proper utilisation of manpower and healthy competition.
2.4 Principles of Organising Retail Firm

• Show interest for employees - Organisation must show interest for employees to keep employees work moral
high.
• Monitor its employees - Employee turnover, lateness and absenteeism should be monitored as it may indicator
to identify personnel problems
• Trace line of authority from top to bottom - The line of authority should be traceable from the highest to the
lowest position to know chain of command.
• Limit span of control - To avoid the worker conflict organisation should limit span of control.
• Empower employee - Organisations should focus on empowering employees where responsibility and authority
to make decisions. it will have the added benefit of increasing job satisfaction and employee morale.
• Delegate authority while maintaining responsibility - Since the supervisor can delegate authority, but still
responsible to get the work done.
• Acknowledge need of coordination and communication - Greater the number of organisational levels, longer
the time of communication and greater the coordination problem, hence organisation should recognize and
respond to the need.
• Acknowledge the power of informal relationship
2.5 Process of setting up a Retail Organisation

Process of setting up a retail organisation is outlined below:
• Identify the specific task to be performed in retail distribution channel - The tasks in a distribution channel
should be identified and provided for the adopted strategy mix, i.e., Buying merchandise, shipping merchandise,
receiving and checking merchandise etc.
• Dividing the task among channel members: However the task mentioned above does not needed to be performed
by the retailer. It can be divided among the retailer manufacturer or whole seller etc. The task should be carried out
only if desired by the target market and should be done by the member of distribution with best competence.
• Grouping the retailer task into jobs: The jobs are grouped after determining the task to be performed. It is
important that the jobs must be clearly structured. For an example displaying merchandising and customer
handling could be the job of sales personnel.
• Classifying the jobs - Here jobs are broadly classified into functional, product, geographic or combination.
• Developing an organisational chart - It is important to design the format of retail organisation in an integrated,
coordinated way. Taking the following into consideration a retailer devises organisation chart, which graphically
displays its hierarchical relationship.
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Consideration in Organisation Design
Considerations in developing Organisation Design: A number of factors need to be considered while developing
the organisation design:
Employee’s expertise and specialisation

Individual expertise and specialisation are considered while assigning the activities to him. An employee having
expertise in managing supply chain should be assigned that task only. Because of the specialisation in any area,
employee will be performing better by using his unique skills and training. This will enhance the productivity
Authority and responsibility:

It is necessary that responsibility and authority match to ensure efficiency. In case there is mismatch the performance
will be affected adversely. This many times becomes a difficult task because of conflicting considerations. For
example, specialisation and matching authority with responsibility may not go together.
Reporting Relationship
The reporting pattern and relationship are another important factor for consideration. The superior must have the
appropriate number of employees, i.e., subordinates to reporL Any deviation from the appropriate number will
reduce the effectiveness of the organsiation.If number of subordinates increases, the superior will not be able to
manage them properly and under utilisation of capacity is apprehended.
Retail strategy
Above all it is necessary that organisation structure must suit to the retail strategy. In an individual independent retail,
the structure will be different as compared to a retail store chain. In a high competitive market the strategy will be
different and the employees will be assigned different functions as compared to a non competitive location.
Degree of Centralisation
The decision making authority is significant in every organisation. The issue is to what extent the decision making
is centralised or decentralised. By Centralisation, we mean that the decisions are taken by the corporate managers
rather than by store, regional or area managers, in decentralised system the authority is assigned to lower levels.
Co-ordination of stores and merchandise

The organisational structural should be such that matches and establishes co-ordination between merchandise and
objectives of the unit. There should be co-ordination in all departments which is possible only when the organisational
structure provides adequate provisions for this.
The retail strategy should match with the structure. If the customers are price sensitive, the number of employees
need to be limited whereas in case of other customers, the organisation structure should provide for more managers
and decision making at the local store level.
Guiding Principles for organisation structure

Although it is difficult to identify an ideal or modal organisation structure, some basic guiding principles can be
suggested which should look after the -
Market needs
• The number of personnel appropriate customer should be adequate to provide appropriate customer service
• The personnel should be knowledgeable and courteous.
• Store facilities must be well maintained.
• The specific needs of branch store customers are met.
• Provision for addressing changing needs of the market.
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Management needs
• There should be no mismatch between structure and strategy of the retail organisation.
• The levels of organisation are to be properly developed.
• It should be relatively easy to obtain and retain competent personnel.
• The personnel policy and procedures be clearly defined.
Employee needs
• The positions must be challenging and satisfying enough.
• An orderly promotion program be provided.
• Employees should be able to participate in the decision making.
• Fair treatment of each employee.
• The channels of communication should be clear and open.
• Reward and punishment, i.e., stick and carrot policy should exist for motivation.
• The employees should be empowered to achieve the target.
Retailers need
• The cost should be minimum.
• The image improving techniques could be adopted easily.
2.6 Creating Organisation Structure

The first step in creating an organisation structure which will work for the retailer, is to define the various tasks/
activities that need to be performed. These can broadly be classified as:
1. Top management.
2. Buying and merchandising.
3. Store operations.
4. Administration and human resources.
5. Support functions, like advertising, marketing, PR and accounts.
The purpose of this classification is twofold. It helps the various tasks to be identified and it also helps in understanding
the roles to be played by people within the organisation. Fig 2.2 shows tasks that are typically performed in a retail
firm.
Strategic Management Merchandise Management Store Management

• Develop overall retail • Buy merchandise • Recruit, hire, and train store
strategy • Select, negotiate with, and personnel
• Identify the target market • evaluate vendors • Plan labour schedules
• Determine the retail • Select merchandise • Evaluate store and personnel
format • performance
• Place orders
• Design • Maintain store facilities
organisational Control merchandise inventory
structure Develop merchandise budget plans • Locate and display merchandise
• Develop private-label Allocate merchandise to stores • Sell merchandise to customers
merchandise Review open-to-buy and stock • Repair and alter merchandise
• Develop Internet/catalog Positions • Provide services such as gift
strategy wrapping and delivery
Price merchandise
• Develop global strategy • Handle customer complaints
• Set initial prices
• Take physical inventory
• Adjust prices
• Prevent inventory shrinkage
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Administrative Management
• Marketing
 Promote the firm, its merchandise, and its services
 Plan communication programs including advertising
 Plan special promotions and events
 Manage public relations
• Manage human resources
 Develop policies for managing store personnel
 Recruit, hire, and train managers
 Keep employee records
• Manage Supply Chain
 Receive merchandise
 Store merchandise
 Ship merchandise to stores
 Return merchandise to vendors
• Manage financial performance
 Provide timely information on financial performance
 Forecast sales, cash flow, and profits
 Raise capital from investors
 Select and manage locations (real estate)
• Visual Merchandising
 Develop and coordinate displays in stores and windows
• Management Information Systems
 Work with all functional areas to develop and operate information systems for merchandising, marketing,
accounting, finance, etc.
• General counsel (legal)
 Work with all functional areas to be in compliance with laws and regulations
Fig. 2.2 Tasks performed by a typical retail firm
Once these tasks have been identified, the management needs to take into consideration, its own requirements and
targets and how they can be achieved. It needs to consider the requirements of the target market and the needs of its
own internal customers, i.e., the employees. An organisation structure or an organisation chart is then developed,
after taking all these factors into consideration.
Defining the organisation structure enables the activities and tasks to be performed. Once this is done, the need for
specialists in various areas can be determined and this aids the human resources function of recruiting the right
people for the right job. It also helps define the responsibilities and authority of the various positions and the reporting
relationships which are necessary for the smooth functioning of the organisation.
With increasing pressures on costs and margins, rise in competition and the need to respond faster to consumer
needs and wants, organisations have been forced to question the need for layers within the hierarchy. Technology is
the key enabler for information on customers, sales and products, at a much faster pace. All these factors have led
to the emergence of flat organisation structures, which have many persons reporting to one manager.
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Organisation structure in retail

Organizing is an important management function which consists of dividing work-load or tasks into groups and
establishing authority-responsibility relationship amongst these. The end result is an organisation structure that
serves as a mechanism to realise the organisational objectives. Organisation structure is staffed by people who are
assigned the tasks. An effective structure satisfies the needs of the target market, employees and management. In
organisation, authority flows from top to bottom and responsibility or accountability flows from bottom to top. In a
retail organisation, the usual tasks are buying the merchandising, selling the merchandising, controlling the operations
and promoting the store and merchandise. There should be co-ordination amongst all these functions.
Organisation chart
The simplest possible organisation chart of a retailer groups the retail functions, and assigns these to respective
functionaries.
General Manager
Promotion Merchandise Human Operation Promotion

Manager Manager Resource Manager Manager
Manager
Fig. 2.3 Retail organisation
The organisational functions can be arranged into product groups, each in charge of a separate functionary.
Store Manager
Men’s Apparel Ladies Apparel Children’s Apparel Appliances Denim Garment’s

Manager Manager Manager Manager Manager
Fig. 2.4 Product group retail organisation
A multi-location store can have separate functionaries for each location
General Manager
Store Manager Store Manager Store Manager Store Manager

Location Location Location Location
A B C D
Fig. 2.5 Location based retail organisation
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General Manager
Promotion Merchandise Store Operations

Controller
Manager Manager Manager
Manager Manager Manager Manager Manager Manager Manager Manager

Location Location Location Location Location Location Location Location
X Y X Y X Y X Y
Men’s Ladies’ Denim

Apparel Apparel Apparel
Manager Manager Manager
Fig. 2.6 Typical retail organisation
Owner Manager
Merchandising Staff Operational Staff
Fig. 2.7 Owner-manager retail structure
2.6.1 Organisation Structure of a Retail Store Chain/ Department Store

When the number of stores that a retailer operates increases from one to more, the management becomes complex.
Retail store chains may operate at a regional, national or an international level. Depending on their area of operation,
they would require skilled personnel for various areas of operation. Such stores may be departmentalised on the
basis of functions or product lines that the retailer operates in.
In the year 1927, Paul Mazur recommended a functional organisation structure. It is popularly known as the ‘Mazur
Plan’. He proposed that the organisation structure should be built around four functions that arc important to retail.
These four functions are present in any retail organisation, regardless of its size. The four functions that he outlined
are:
• Control: This department is usually responsible for looking after the assets of the organisation and functions
like accounting; credit and control are a part of it.
• Publicity: Responsibilities include advertising, sales promotions, public relations, publicity, etc.
• Operations: Include responsibilities like the actual operations of the store, including receiving goods, checking,
maintaining records and customer relations.
• Merchandising: Duties of this department would start with forecasting the merchandise required, procuring
the merchandise, pricing it making it available at the retail stores. Over the years, functions like Supply
Chain Management, Logistics and Human Resource Management have been added to the basic structure as
recommended by Paul Mazur.
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CEO
Executive Assistant
General Manager
Head of Research Executive Assistant
Assistant general
Manager
Publicity Merchandising
Controller Store Manager
Manager Manager
Merchandising
Receiving and
Warehousing
Maintenance
merchandise
merchandise
merchandise
Advertising
Workroom
Marketing
Divisional
Divisional
Divisional
Customer
Displays
relations
manager
manager
manager
Expense
Records
control
control
service
Public
Credit
HR
Buyer Buyer Buyer
Sales people
Stock people
Sales people
Stock people
Stock people
Sales people
Fig. 2.8 Organisation structure of a retail store chain
Some retailers may decide to departmentalise the organisation structure on the basis of the various product lines
which are offered, like furniture, appliances, apparel, jewellery, etc; As stores expand to different regions, they may
use geographic departmentalisation, where personnel are responsible for the operations within a certain region, state
or nation. A retailer may use a combination of these types in the organisation structure.
2.6.2 Organisation of a National Retail Chain

In contrast to the management of a single store, the management of a retail chain is complex. Managers must
supervise units that are geographically distant from, one another. In the following sections, we discuss the organisation
structure of a typical retail chain.
The above figure shows the organisation chart of a typical department store. Overseeing and responsible for the
entire organisation is the chief executive officer (CEO). Reporting directly to the CEO is the president of global
operations, president of direct channels, and president of private-label operations. Also reporting to the CEO is the
senior vice president of merchandising, senior vice president of stores, and senior vice president of operations, plus
the chief marketing and financial officers.
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CEO
Private-Label President Direct Global Operations

President Channels President
SVP of SVP of SVP of

Merchandising Stores Operations CMO CFO
VP of
SVP of VP of Management Director of
Merchandise Merchandise VP of Real
Information Special
Manager Estate
Planning systems (MIS) Events
(GMM)
VP of General
Regional Supply Director of Counsel
Divisional Manager
Divisional Chain Advertising
Merchandise (Legal)
Planning
Manager
Manager
(DMM) VP of Human
Regional District Resources
Planner Managers
Buyers Planners Director of
Visual
Store Merchandising
Managers
Strategic Management Store Management

Merchandise Management Administrative Management
Fig. 2.9 Organisation of a typical department store
Merchandising Looking at the merchandising division, the senior vice president
(SVP) of merchandising works with buyers and planners to develop and coordinate the management of the retailer’s
merchandise offering and ensure that it is consistent with the firm’s strategy
The buyers in the merchandise division are responsible for determining the merchandise assortment, pricing, and
managing relationships and negotiating with vendors. Most retail chains have a set of planning positions parallel to
the buying positions supervised by a senior vice president of planning who is at the same level as the merchandise
managers in the buying organisation. The merchandising planners are responsible for allocating merchandise and
tailoring the assortment of several categories for specific stores in a geographic area.
As shown in the given figure, there are several levels of management in the merchandise division—general
merchandise managers (GMMs), divisional merchandise managers (DMMs), and buyers. Most large retailers have
several GMMs who are responsible for several merchandise classifications. Similarly, several DMMs report to each
GMM and a number of buyers report to each DMM.
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Stores
The senior vice president (SVP) of stores supervises all activities related to stores, including working with the regional
managers, who supervise district managers, who supervise the individual store managers. Store managers in large
stores have several assistant store managers who report to them (not depicted in Fig 2.9). One assistant manager is
responsible for administration and manages the receiving, restocking, and presentation of the merchandise in the
store.
Another is responsible for human resources, including selecting, training, and evaluating employees. A third is
responsible for operations such as store maintenance and store security.
Each region has regional planners who work as liaisons between stores in their region and the corporate planners to
ensure that the stores have the right merchandise, at the right time, in the right quantities. The stores division also
works closely with the real estate division (under the chief financial officer) to plan new stores and with those in
charge of visual merchandising, layout, and store design.
Operations
The chief operations officer (COO) oversees managers in charge of management information systems (MISs), supply
chain, human resources, and visual merchandising. The COO is also in charge of shrinkage and loss prevention and
the operation and maintenance of the physical assets of the firm, such as stores, offices, distribution and fulfillment
centers, and trucks(these functions are not reflected in Fig 2.9)
Marketing
The chief marketing officer (CMO) works with staff to develop advertising and promotion programs. Managers in
charge of public relations, annual events, credit marketing, and cause-related marketing initiatives also report to
the CMO.
Finance
The chief financial officer (CFO) works with the CEO on financial issues such as equity-debt structure and credit
card operations. In addition, the real estate division and general counsel (legal) divisions, headed by vice presidents,
report to the CFO.
Retailers vary considerably on how they organize their private-label development activities, international operations,
and catalog and/or electronic channel.
Fig 2.9 shows these activities as being performed by wholly owned subsidiaries with the presidents of three
subsidiaries reporting to the CEO.
Private Label
The private-label president is responsible for the conceptualisation, design, sourcing, quality control, and marketing
of private-label and exclusive merchandise. When the private-label organisation is a separate division, as in Fig
2.9, buyers in the merchandising division often evaluate the private-label merchandise offering as they would any
other vendor, and they are therefore free to accept or reject the merchandise offered. In some retail organisations,
decisions on what private-label merchandise is included in the retailer’s assortment are made by the merchandising
divisions and its buyers, and the ,sourcing and quality control are done by a VP of private-label development. In
either case, the managers involved with private-label merchandise work closely with buyers and planners to ensure
that the merchandise offered in each category is coherent.
Direct Channels
The president of direct channels is responsible for the selection and pricing of the merchandise assortment offered
through the catalog and Internet channels, the maintenance and design of the retailer’s Web site, customer call
centers, and the fulfillment centers that fill orders for individual customers.
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However, a number of multichannel retailers are integrating the operation of the Internet and catalog channels into
their store channel. At these retailers, the selection and management of the merchandise offered in all three channels
for a category is made by the same buyers, rather than separate buyers for each channel.
Global
The global operations president oversees retailing operations outside the home country. The size and complexity
of this operation is determined by the number of countries served and the number of stores within each country.
Regardless of size, many of the functions performed by the home-country operation are duplicated in the global
operations. For instance, the global organisation typically has merchandising, stores, and operations divisions. It
would also have vice presidents or directors in charge of marketing and finance.
2.7 Retail Organisation Design Issues

Two important issues in the design of a retail organisation are (1) the degree to which decision making is centralised
or decentralised and (2) the approaches used to coordinate merchandise and store management. The first issue
translates into whether the decisions about activities such as merchandise management, information and distribution
systems, and human resource management are made by regional, district, or store managers or by managers in the
corporate headquarters.
The second issue arises because retailers divide merchandise and store management activities into different
organisations within the firm. Thus, they need to develop ways to coordinate these interdependent activities.
2.7.1 Centralisation versus Decentralisation

Centralisation occurs when the authority for retailing decisions is delegated to corporate managers rather than to
geographically dispersed managers; decentralisation occurs when the authority for retail decisions is assigned to
lower levels in the organisation.
Retailers reduce costs when decision making is centralised in corporate management. First, overhead falls because
fewer managers are required to make the merchandise, human resource, marketing, real estate, information system,
and financial decisions.
Second, by coordinating buying across geographically dispersed stores, the company can achieve lower prices
from suppliers. The retailer can negotiate better purchasing terms by placing one large order rather than a number
of smaller orders.
Third, centralisation provides an opportunity to have the best people make decisions for the entire corporation. For
example, in a centralised organisation, people with the greatest expertise in areas such as management information
systems(MISs), buying, store design, or visual merchandise can offer all stores the benefit of their skills.
Fourth, centralisation increases efficiency. Standard operating policies developed at the corporate headquarters
are applied to the stores, allowing store managers to focus on their core responsibilities. For example, corporate
merchandisers perform considerable research to determine the best method of presenting merchandise. They provide
detailed guides for displaying merchandise to each store manager so that all stores have a consistent brand image
throughout the country. Because they offer the same core merchandise in all stores, centralised retailers can achieve
economies of scale by advertising through national media rather than more costly local media.
Although centralisation has advantages in reducing costs, its disadvantage is that it makes it more difficult for a retailer
to adapt to local market conditions. For example, Gainesville is located in central Florida, and thus the manager
in charge of the fishing category at the Sports Authority corporate office might think that the Gainesville store’s
customers primarily engage in freshwater fishing. But the local store manager knows that most of his customers
drive 90 miles to go saltwater fishing in either the Gulf of Mexico or the Atlantic Ocean.
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In addition to problems with tailoring its merchandise to local needs, a centralised retailer may have difficulty
responding to local competition and labour markets. Because pricing is established centrally, individual stores may
not be able to respond quickly to competition in their market. Finally, centralised personnel policies may make it
hard for local managers to pay competitive wages in their area or hire appropriate types of salespeople.
However, centralised retailers are relying more on their information systems to react to local market conditions. For
example, many retailers are now using merchandise and pricing optimisation techniques. With specialised software
packages, buyers can determine optimal pricing, markdowns, and size and quantity allocations on a store-by-store
or region-by-region basis.
2.7.2 Coordinating Merchandise and Store Management

Small, independent retailers have little difficulty coordinating their stores’ buying and selling activities. Owner-
managers typically buy the merchandise and work with their salespeople to sell it. In close contact with customers,
the owner-managers know what their customers want.
In contrast, large retail firms organize the buying and selling functions into separate divisions. Buyers specialize
in buying merchandise and have limited contact with the store management responsible for selling it. While this
specialisation increases buyers’ skills and expertise, it makes it harder for them to understand customers’ needs.
Three approaches large retailers use to coordinate buying and selling are
(1) improving buyers’ appreciation for the store environment,
(2) making store visits, and
(3) assigning employees to coordinating roles.
Improving Appreciation for the Store Environment

Some retailers have management trainees who work in the stores before they become buyers. Others utilize a
mixed career path in which managers are encouraged to float between mstore and corporate assignments. This store
experience helps corporate managers and buyers gain an appreciation for the activities performed in the stores, the
problems salespeople and department managers encounter, and the needs of customers.
Making Store Visits

Another approach to increasing customer contact and communication is to have buyers and other executives visit
the stores.
Every week, Terry Lundgren, Macy’s CEO, goes into several stores, calls the store managers on their cell phones,
and asks them to meet him on the selling floor. These unannounced visits don’t give the stores or their managers time
to prepare to answer questions or change anything on the selling floor, so he sees the stores just as the customers do.
The visits provide managers and buyers with a richer view of store and customer needs than they could get from
reading impersonal sales reports or talking on the phone.
Assigning Employees to Co-ordinating Roles

Some retailers, like TJX, maintain people in both the merchandise division (planners and allocators who work with
buyers) and stores who are responsible for coordinating buying and selling activities. Many national retail chains
have regional and even district personnel to coordinate buying and selling activities.
In addition to developing an organisation structure, HR management undertakes a number of activities to improve

employee performance, build commitment among employees, and reduce turnover.
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2.8 Designing e-Store
Definitionand Meaning
E-store design includes listing products or services for sale, providing product information including a product
description and price for each item, enabling users to move about the site, providing a method of ordering and
paying for merchandise, and generally listing broader company policies, such as security, privacy and guarantees
if given. Apart from providing information, it is also necessary to design in other features, such as graphics and, in
some cases, audio.
2.8.1 Purpose and Scope of E-Store Design

Simply put, e-store design is part of the retail mix that helps the e-retailer to market their business generally, and
more specifically, to sell merchandise. All elements of the retail mix have a role to play, but clearly having a place
to buy the merchandise is a fundamental part of the process.
There are some similarities to traditional (offline) retailing in which the shop and the way it is designed (including
infrastructure, layout and visual presentation) is a necessary part of the shopping (buying) process. Another similarity
to offline retailing is that store design has a broader purpose than just being a place to buy. Store design plays a
bigger marketing role in that different designs create different images. The store design might convey an image that
really reinforces the merchandise in a particular store, which makes it more likely that customers seeking that type
of merchandise will purchase something from that particular store.
So it pays both offline and online stores to invest in choosing the right store design that fits the image they want as
well as making it easy for customers to buy what they want. The e-retailer and the traditional retailer have to think
carefully about basic functional activities like layout movement and checkout, as well as more symbolic issues like
creating the right look and feel of the store.
Scope of e-store design includes layout, visuals, interactivity, information search engines, checkout facilities and
the posting of policies. Each of these elements needs to be specified, coded and made operational.
Importance of E-Store design for E-Retailers

We have al ready established that store design is important to both traditional retailers and on line retailers. The
reader may have already guessed that e-store design is relatively more important for online retailers and might even
be considered the most important part of their retail mix. Why?
The main reason is that store design has bigger scope with e-retailers. Store design in traditional offline retailing
is generally confined to the physical aspects of the store, such as the infrastructure and layout. The online scope of
store design is greater because it also includes what used to be covered by interaction with the salesperson. Almost
everything has to be covered by what is on the computer screen, so the e-store design is clearly a very important
domain. Additionally, areas like customer service and after-sales service that were separate departments in offline
retailing now have to be incorporated into the e-store design. This further increases the scope and importance of
e-store design.
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Summary
• The organisation structure is a formal system through which a retail firm assigns tasks/ functions, policies,
resources, authority, responsibilities and rewards to achieve its goals and satisfy the needs of its target
market.
• In general in retail sector these activities can be classified as Top Management, Strategic management,
Merchandise management, Store management, Operations resources, i.e., administration and Human Resources,
Finance and Accounts, Support functions e.g. Marketing PR, Advertising and accounts
• An organisation is a formal structure of roles and positions put in place to achieve some specific goals.
• The structure of a retail organisation defines the role of employees and the way in which the organisation
functions
• A flat organisation structure has only one or two levels of management, whereas a vertical organisation has
more than two levels of management.
• The guidelines for Organisational Structure involve fulfilling needs of Target Market, Employee and Management
and Organisation.
• Independent stores exist in almost every country but the largest number of independent stores is found in
India.
• As back as 1927, a functional organisation structure for such stores has been suggested by Paul Mazur known
as “Mazur Plan.”
• Merchandising is one of the most important departments and its duties start with forecasting the merchandise
required, procuring the same, pricing it and ensuring availability in the store, etc.
• Publicity includes various activities of marketing such as advertisement, sales promotions, public relations,
publicity, etc.
• Operations includes activities like actual operations of the store, receiving, the goods, checking, maintaining
records and maintaining customer relations, etc
• ‘Control’ constitutes a twofold purpose wherein it helps the various tasks to be identified and it also helps in
understanding the roles to be played by people within the organisation
• Defining the organisation structure enables the activities and tasks to be performed
• Defining the organisation structure also helps define the responsibilities and authority of the various positions
and the reporting relationships which are necessary for the smooth functioning of the organisation.
• Organizing is an important management function which consists of dividing work-load or tasks into groups and
establishing authority-responsibility relationship amongst these
• In organisation, authority flows from top to bottom and responsibility or accountability flows from bottom to
top.
• In the year 1927, Paul Mazur recommended a functional organisation structure which is popularly known as
the ‘Mazur Plan’.
• Mazur Plan’ proposed that the organisation structure should be built around four functions that arc important
to retail, viz., Control,Publicity,Operations and Merchandising:
• The chief operations officer (COO) oversees managers in charge of management information systems (MISs),
supply chain, human resources, and visual merchandising
• The chief marketing officer (CMO) works with staff to develop advertising and promotion programs.
• The chief financial officer (CFO) works with the CEO on financial issues such as equity-debt structure and
credit card operations.
• The private-label president is responsible for the conceptualisation, design, sourcing, quality control, and
marketing of private-label and exclusive merchandise.
• The president of direct channels is responsible for the selection and pricing of the merchandise assortment offered
through the catalog and Internet channels, the maintenance and design of the retailer’s Web site, customer call
centers, and the fulfillment centers that fill orders for individual customers.
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• The global operations president oversees retailing operations outside the home country.
• Two important issues in the design of a retail organisation are the degree to which decision making is centralised
or decentralised and the approaches used to coordinate merchandise and store management.
• Centralisation occurs when the authority for retailing decisions is delegated to corporate managers rather than
to geographically dispersed managers
• Decentralisation occurs when the authority for retail decisions is assigned to lower levels in the organisation.
• Three approaches large retailers use to coordinate buying and selling are improving buyers’ appreciation for the
store environment, making store visits, and assigning employees to coordinating roles.
• E-store design includes listing products or services for sale, providing product information including a product
description and price for each item, enabling users to move about the site, providing a method of ordering and
paying for merchandise, and generally listing broader company policies, such as security, privacy and guarantees
if given.
• E-store design is part of the retail mix that helps the e-retailer market their business generally, and more
specifically, to sell merchandise
• The prime reason why e-store design is relatively more important for online retailers and might even be
considered the most important part of their retail mix is because of the comparative bigger scope of the store
design with e-retailers.
References
• 2010. Retail Management[Online]Available at: <http://www.icmrindia.org/courseware/Retail%20Management/
Retail%20Organiz-Manage.htm>.[Accessed 15 November 2011]
• Mishra, A., 2010. Principle of Organizing Retail Firm [Online] (Updated 16 December 2010) Available at:< http://
www.mbanetbook.co.in/2010/12/principle-of-organizing-retail-firm.html> [Accessed 15 November 2011]
• Tiwari, R.S., 2009. Retail Management: Retail Concepts and Practices., Mumbai, Himalaya Publishing House
Pvt. Ltd
• Levy, M. and Weitz, B.A., Retail Management, 8th ed., New York, McGraw-Hill Companies, Inc.
• Retail Store Management Lessons - Category Management, [Video online] Available at: <http://www.youtube.
com/watch?v=xtGTFbm51zs>[Accessed 15 November 2011].
• 2010. Unit 2.2 - Organisation Structure, [Video online] Available at: <http://www.youtube.com/watch?v=akh
1sSMJSa8&feature=related>[Accessed 15 November 2011].
Recommended Reading
• Stanford, N., 2007. Guide to Organisation Design: Creating High-Performing and Adaptable Enterprises,
London, Profile Books/The Economist.
• Doherty, A. M. and Quinn, B. 2002. Retail franchising., Bradford, Emerald Group Publishing Ltd.
• Bhattacharyya, D. K., 2009. Organisational Systems, Design, Structure and Management, Mumbai, Global Media.
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Self Assessment
1. An is a formal structure of roles and positions put in place to achieve some specific goals.
a. Institution
b. Information
c. Organisation
d. Operation
2. The structure of a retail organisation defines the role of and the way in which the organisation
functions.
a. Consumers
b. Organisation
c. Employees
d. Management
3. includes various activities of marketing such as advertisement and sales promotions; etc.
a. Publicity
b. Merchandising
c. Operations
d. Control
4. helps in identifying the various tasks and also in understanding the roles to be played by people
within the organisation
a. Operations
b. Publicity
c. Merchandising
d. Control
5. is an important management function which consists of dividing work-load or tasks into groups
and establishing authority-responsibility relationship amongst these.
a. Marketing
b. Organising
c. Publicity
d. Control
6. A functional organisation structure suggested way back in 1927, for stores that are departmentalised on the basis
of functions or product lines that the retailer operates in, is known as
a. Paul Plan
b. Retail Organisation Design
c. Mazur Plan
d. Retail Organisation Structure
7. The is responsible for the conceptualisation, design, sourcing, quality control, and marketing of
private-label and exclusive merchandise.
a. chief operations officer (COO)
b. private-label president
c. global operations president
d. president of direct channels
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8. Which of the following is true?
a. Decentralisation occurs when the authority for retailing decisions is delegated to corporate managers rather
than to geographically dispersed managers
b. Centralisation occurs when the authority for retail decisions is assigned to lower levels in the
organisation.
c. The Operations department is usually responsible for looking after the assets of the organisation and functions
like accounting; credit and control are a part of it
d. The global operations president oversees retailing operations outside the home country.
9. is part of the retail mix that helps the e-retailer to market their business generally and more
specifically, to sell merchandise
a. E-store design
b. Retail Organisation Design
c. E-retail Design
d. traditional offline retailing

a. Defining the organisation structure enables the activities and tasks to be performed
b. A flat organisation structure has only one or two levels of management
c. A vertical organisation has more than two levels of management.
d. In organisation, responsibility flows from top to bottom and authority or accountability flows from bottom
to top.
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Chapter III
Recruitment
Aim
• define “recruitment”
• identify the importance of recruitment
• discuss the objectives of recruitment
Objectives
• discuss the essentials of a recruitment policy
• enlist the sources of manpower supply
• realise the importance of executive search in a dynamic business
Learning outcome
At the end of this chapter, you will able to:
• formulate a recruitment policy for an organisation
• understand the importance of recruiting people for the right job at the right time
• evaluate various sources of recruitment of employees (in the Indian context)
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3.1 Introduction
Recruitment is the development and maintenance of adequate manpower sources. It involves the creation of a pool
of available human resources from which the organisation can draw when it needs additional employees. Recruiting
is the process of attracting applicants with certain skills, abilities, and other personal characteristics to job vacancies
in an organisation. According to Denerley and Plumblay (1969), recruitment is concerned with both engaging the
required number of people, and measuring their quality. It is not only a matter of satisfying a company’s needs, it
is also an activity which influences the shape of the company’s future. The need for recruitment may arise out of
the following situations:
• Vacancies due to promotion, transfer, termination, retirement, permanent disability, or death.
• Creation of vacancies due to business expansion, diversification, growth, and so on.
Once the required number and the kind of human resources are determined, the management has to find the places
where required human resources are/will be available and also work out strategies for attracting them towards the
organisation before selecting suitable candidates for jobs. This process is generally’ known as’ recruitment. Some
people use the term ‘ recruitment’ for employment. These two are not one and the same. Recruitment is only one
of the steps in the entire employment process. Some others use the term recruitment for selection. These two terms
are different. Technically speaking, the function of recruitment precedes the selection function and’ it includes only
finding, developing the sources of prospective employees and attracting them to ,apply for jobs in an organisation,
whereas the selection is the process of finding out the most suitable candidate to the job out of the candidates attracted
(i.e., recruited). Formal definition of recruitment would give clear cut idea about the function of recruitment. Now,
we shall study recruitment in the” following lives.
Edwin B. Flippo defined recruitment as “the process of searching for prospective employees and stimulating them
to’ apply for jobs in the organisation.” These definitions can be analysed by discussing the processes of recruitment
through systems approach.
Objectives of recruitment
The objectives of recruitment are as follows.
• to attract people with multi-dimensional skills and experiences that suit the present and-future organisational
strategies
• to induct outsiders with a new perspective to lead the company
• to infuse fresh blood at all levels of the organisation
• to develop an organisational culture that attracts competent people to the company
• to search or head hunt/head pouch people whose skills fit the company’s values
• to devise methodologies for assessing psychological traits
• to seek out non-conventiorial development grounds of talent
• to search for talent globally and not just within the company
• to design entry pay that competes on quality but not on quantum
• to anticipate and find people for positions that do not exist yet
3.2 Essentials of Recruitment Policy

Policy formulation is an essential managerial function. It is a complicated process which may involve all levels of
employees. While formulating a policy, an attempt has to be made keeping in view the values and objectives of the
different groups involved so as to raise efficiency of working relationships in an organisation. Moreover, the policy
shall have to be in line with the employee requirements to attain the organisation’s objectives.
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Recruitment is essentially a process to discover and identify sources to obtain employees and to employ effective
measures for contacting those employees, which will be forming an efficient workforce. It will suffice to understand
that the recruitment programme involves five different elements, which include; a recruiting organisation, process
of recruitment, a forecast of man-power requirements, the development of man-power sources and techniques for
utilising these sources.
It is a vital function of personnel administration and is an essential pre-requisite for the effectiveness and success
of an organisation.
Recruitment policy states the objectives, and provides a framework for implementation of recruitment programme
in the form of procedures. A recruitment policy may include several issues such as promotion or transfer from
within the organisation (as quotas are usually fixed in government and public sector organisations as also quotas for
certain minority groups and relatives of employees). While the system is a function related to the personnel function,
in principle recruitment should remain a line-responsibility, who should have the final say in the acceptance of a
particular recruit, though, in consultation with the staff or personnel department.
The man-power managers have to constantly review and improve the methods of recruitment in view of the changing
times and demand as understood in other organisations. Asound recruitment programme necessarily involves appraisal
of each source and the techniques from the stand point of relative quality of personnel which it has provided.
The valuation procedures should consist of existing employees in terms of their jobs – success, evaluation of sources
from which good and poor employees, were recruited and the methods used in assessing the relative values.
Today tourism organisations, whether big or small, ought to spell out a clear recruitment policy within their
organisations. Adhoc measures like employing people on world of mouth recommendations, obliging some body
etc., are not good for organisational growth.
3.3 Recruitment Function

The function of recruitment is to locate the sources of manpower to meet job requirements and specification.
Recruitment forms the first stage in the process which continues with selection and ceases with the placement of the
candidate. Effective supply of varied categories of candidates for filling the jobs will depend upon several factors
such as the state of labour market, reputation of the enterprise and allied factors. The factors affecting recruitment
can be classified as internal and external. The internal factors include wage and salary policies, the age composition
of existing working force, promotion and retirement policies, turnover rates and the kind of personnel required.
External determinants of recruitment are cultural, economic and legal factors. Recruitment has been regarded as the
most important function of personnel administration. Unless the right type of people are hired, even the best plans,
organisation charts and control systems will be of no avail. A company cannot prosper, grow, or even survive without
adequate human resources. Need for trained manpower in recent years has created a pressure on some organisations
to establish an efficient recruitment function. It is not done wisely, every other management function suffers; costs
increase and bottlenecks get worse.
Recruitment, irrespective of the scale, is a function that needs to be handled with care. As one is not just recruiting
a person who can perform the task, one also needs to identify whether the person being appointed fits into the
organisations’ culture and philosophy of work.
Recruitment philosophy
The key issues in recruitment philosophy are:
• Whether to promote employees from within the organisation or to hire from outside for various vacancies at
all levels.
• Whether the emphasis will be merely filling of vacancies or hiring employees for long-term careers.
• Whether the depth of commitment is for seeking and hiring a diverse range of employees or narrowing the
field.
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• Whether applicants are viewed as commodities to be purchased or as customers to be wooed.
• Whether the recruitment process has ethical overtones in terms of fairness and honesty or the same is apparently
lacking.
• Whether the recruitment plan is guided by good human resource planning and geared to the strategy and values
of the organisation.
Recruitment purpose
The general purpose of recruitment is to provide a pool of potentially qualified candidates to meet organisational
need. Its specific purposes are to:
• Determine the present and future requirements of the organisation in conjunction with the personnel planning
and job analysis activities.
• Increase the pool of job candidates with minimum cost.
• Help increase the success rate of the selection process by reducing the number of, obviously, under-qualified
or over-qualified job applicants.
• Help reduce the probability that job applicants, once recruited and selected, will leave the organisation only
after a short period of time.
• Meet the organisation’s legal and social obligations regarding the composition of its workforce.
• Start identifying and preparing potential job applicants who will be appropriate candidates.
• Increase organisational and individual effectiveness in the short and long-term. Evaluate the effectiveness of
various recruiting techniques and sources for all types of job applicants.
Recruitment policy
Recruitment policy may involve a commitment to broad principles such as filling vacancies with the best qualified
individuals. It may embrace several issues such as extent of promotion from within, attitudes of enterprise in recruiting
its old employees, handicaps, minority groups, women employees, part-time employees, friends and relatives of
present employees. It may also involve the organisation system to be developed for implementing recruitment
programmes and procedures. A well considered and pre-planned recruitment policy, based on corporate goals, study
of environment and the corporate needs, may avoid hasty or ill-considered decisions and may go a long way to man
the organisation with the right type of personnel. A good recruitment policy must contain the following elements:
• Organisation’s objectives – both, short-term and long-term
• Identification of the recruitment needs
• Preferred sources of recruitment
• Criteria of selection and preferences
• The cost of recruitment and financial implications of the same
A recruitment policy in its broadest sense involves a commitment by the employer to:
• find the best qualified persons for each job
• retain the best and most promising of those hired
• offer promising opportunities for life-time working careers
• provide programmes and facilities for personal growth on the job
3.4 Sources of Manpower Supply

Once the job analysis is completed and the job specification or behavioural competencies are identified, the next
stage is to consider how to attract people who meet the requirements. A key decision is about whether to recruit
internally or externally. Each type of source has its advantages and disadvantages.
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Before an organisation actively begins recruiting applicants, it should have knowledge of the sources of supply and
methods of tapping them. The sources of supply do not remain constant but vary from time-to-time. The sources
of supply of manpower can be divided into two groups - internal and external sources. Internal sources relate to
the existing working force of an enterprise while external sources relate to the employment exchanges, colleges,
institutes, and universities. The particular sources and means by which workers are recruited vary greatly. It depends
upon management policy, the types of jobs involved, the supply of labour relative to demand, and labour market.
In deciding which recruitment source to use, consider: (a) the nature and size of the company; (b) the level of
vacancies to be filled up; (c) the number of vacancies to be filled up; (d) budget allocation; and (e) the time period
to fill the vacancy.
Internal sources: Internal sources are the most obvious sources. These include personnel already on the pay-roll of
an organisation, i.e., its present working force. Whenever any vacancy occurs, somebody from within the organisation
is upgraded, transferred, promoted or sometimes demoted. Internal recruitment seeks applicants for position from
among those who are currently employed. Promotions and transfers from among the present employees can be a
good source of recruitment. The use of internal search, on the whole, has some merits:
• It improves the morale of employees.
• The employer is in a better position to evaluate those presently employed than outside candidates.
• It promotes loyalty among the employees, for it gives them a sense of job security and opportunities for
advancement.
• It is less expensive and job openings can be filled more quickly.
• Internal candidates are more familiar with organisational policies and practices, and thus require less orientation
and training.
However, this system suffers from certain defects as well:

• It often leads to inbreeding, and discourages new blood from entering an organisation.
• There are possibilities that internal sources may “dry up”, and it may be difficult to find the requisite personnel
from within an organisation.
• As promotion is based on seniority, the danger is that really capable hands may not be chosen.
Internal recruitment can lead to problems, however, when a position becomes vacant, many employees may be
considered for that slot. The likes and dislikes of the management may also play an important role in the selection of
personnel. Usually, internal sources can be used effectively if the number of vacancies are not very large, adequate
employee records are maintained and employees have prepared themselves for promotions.
Because internal methods are often not sufficient to supply a suitable pool of applicants, most organisations make
use of external sources to attract potential recruits. External recruitment brings in individuals from outside.
External sources: Among the external sources are included the employment agencies, educational and technical
institutes, casual labour, trade unions, application files and other sources. External sources provide the requisite type
of personnel for an organisation, having skill, training and education up to the required standard. Since persons are
recruited from a large market, the best selection can be made without any distinction of caste, sex or creed. However,
this system suffers from what is called the “brain drain.” The advantages of internal recruitment are basically the
disadvantages of external recruitment.
Labour market considerations are very important in external search. A labour market is a geographic area within
which workers seek employment and employers recruit workers. It is the place where the forces of supply and
demand interact. A labour market tends to be unstructured for the most part; it is unorganised. The procedures by
which a company recruits workers and the methods by which workers go about obtaining jobs are highly variable.
Lack of labour mobility is still another characteristic of a labour market. One important reason for lack of mobility
is that the average working man possesses quite incomplete and inaccurate knowledge of job opportunities in his
labour market. Wage rate data are not generally made public.
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A labour market is characterised by a great diversity of wage rates for the same occupations. This variation in wages
for the same kind of work is caused by many factors. Principal ones are differences among the employers in their
ability to pay, productivity, and management attitude towards wage rates. Certain non-wage factors, such as greater
job security, may still attract and hold the employees.
An organisation must decide whether to recruit employees internally or externally. External recruitment is limited
primarily to entry-level jobs. Jobs above the entry level are usually filled with current employees through promotions.
Promotional opportunities lead to reduced turnover, increased job satisfaction, and better job performance.
Most organisations use a mixture of internal and external sources - promoting from within when qualified employees
are available and recruiting from external sources when new skills are needed or growth is rapid.
Modern source of recruitment

A number of modern recruitment sources are being used by the corporate sector in addition to traditional sources.
These sources are divided into internal and external. Internal source include employee referrals.
Employee referrals: Present employees are well aware of the qualifications, attitudes, experience and emotions of
their friends and relatives. They are also aware of the job requirements and organisational culture of their company.
As such, they can make preliminary judgment regarding the match between the job and their friends or relatives.
Hence, the HR managers of various companies depend on the present employees for reference of the candidates
for various jobs. This source reduces the cost and time required for recruitment. Further, this source enhances the
effectiveness of recruitment. HR managers offer various incentives and rewards including cash incentives to the
current employees for referring the best candidates.
Modern external sources: Walk in and consult in, head-hunting, body-shopping, mergers and acquisitions, tele-
recruitment and outsourcing.
Walk-in: The busy organisations and the rapid changing companies do not find time to perform various functions
of recruitment. Therefore, they advise the potential candidates to attend for an interview directly and without a prior
application on a specified date, time and at a specified place. The suitable candidates from among the interviewees
will be selected for appointment after screening the candidates through tests and interviews.
Consult-in: The busy and dynamic companies encourage the potential job seekers to approach them personally and
consult them regarding the jobs. The companies select the suitable candidates from among such candidates through
the selection process.
Head-hunting: The companies request the professional organisations to search for the best candidates particularly
for the senior executive positions. The professional organisations search for the most suitable candidates and advise
the company regarding the filling up of the positions. Head-hunters are also called ‘search consultants’.
Body shopping: Professional organisations and the hi-tech training institutes develop the pool human resources for
the possible employment. The prospective employers contact these organisations recruit the candidates. Otherwise,
the organisations themselves approach the prospective employers place their human resources. These professional and
training institutions are called ‘body shoppers’ and these activities are known as body shopping. The body shopping
is used mostly for computer professionals. Body shopping is also known as employee leasing activity. The leasing
firms employ the people and lease them for the use by various needy companies for payment of a commission.
Mergers and acquisitions: Business alliances like acquisitions, mergers, and take-overs help in getting human
resources. In addition, the companies do also have alliances in sharing their human · resources on ad-hoc basis.
It does mean that the company with surplus human resources offers the services of their employees to other
needy organisations.
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E-recruitment: The technological revolution in telecommunications helped the organisations to use internet as
a source of recruitment. Organisations advertise the job vacancies through the World Wide Web (www). The job
seekers send their applications through e-mail using the Internet. Alternatively, job seekers place their CVs in the
world wide web/internet, which can be drawn by the prospective employers depending upon their requirements.
Advantages of e-recruitment are as shown in the figure below.
Increased
effectiveness and
efficiency of
recruitment
Increased rate
Low cost of of collaboration
recruitment among the
per candidate recruiting
agencies
Advantages of
e-recruitment
HR professionals
Reduction in
can concentrate
time for
on strategic
recruitment
issues
Increase in the
selection ratio,
i.e., recruiting
more candidates
Fig. 3.1 Advantages of E-recruitment
Outsourcing: Some organisations recently started developing human resource pool by employing the candidates for
themselves. These organisations do not utilise the human resources, instead they supply HRs to various companies
based on their needs on temporary or ad-hoc basis. Various companies, rather than employing HRs, draw HRs from
these organisations on commission basis. This arrangement is called out-sourcing.
3.5 Recruitment Process

There are two dimensions of the recruitment process. One is that in all cases recruitment involves locating and
attracting adequate human resources to fill existing vacancies and the other is that recruitment is a critical management
activity. The right peoplc are the future of the organisation. No organisation can survive in the absence of human
resources.
Vacancies in an organisation occur through someone leaving or as a result of expansion. Recruiting a new employee
though may be the most obvious step when a vacancy occurs but some other options may also be appropriate
depending on the situational needs. Jobs may be rearranged so that the total amount of work in a section is done
by the remaining employees. Extra output can be achieved by using overtime. The work of the employee can be
mechanised, though it is not easily feasible to mechanise a single vacancy-replacing full-time jobs with part-time
jobs. Sub-contract the work and using another strategy is to use an agency is to provide temporary personnel, who
are not a permanent liability to the organisation.
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• Preparation for recruitment: Before you think of inviting people to apply for a job you have to decide
what types of persons are to be invited and what their characteristics should be. This calls for fixing the ‘job
specifications’ which may also be called ‘man specifications’. Job specifications are based on job description
which is decedent upon the nature and requirements of a job. Thus, job specification will be different for each
job. The various elements of job specification are explained below:
• Physical specifications: For certain jobs, some special physical features may be required. For example, for
assembly of a TV set or some other electronic equipment good vision is required, for a typing job you need
finger dexterity, for a heavy job you need a strong, heavy and thick-set body. The particular physical abilities and
skills necessary for a given job have to be specified. These may refer to height, weight, vision, finger dexterity,
voice, poise, hand and foot coordination, motor coordination, colour discrimination, age-range, etc.
• Mental specifications: These include intelligence, memory, judgement, ability to plan, ability to estimate, to
read, to write, to think and concentrate, scientific faculties, arithmetical abilities, etc. Different jobs require
different degrees of such abilities and the more important ones should be specified.
• Emotional and social specifications: These include characteristics which will affect his working with others, like
personal appearance, manners, emotional stability, aggressiveness or submissiveness, extroversion or introversion,
leadership cooperativeness, initiative and drive, skill in dealing with others, social adaptability, etc.
• Behavioural specifications: Certain management personnel at higher levels of management are expected to
behave in a particular manner. These are not formally listed but have to be kept in mind during the process of
recruitment, selection and placement.
3.6 Methods and Techniques of Recruitment

While recruitment sources indicate when human resources may be procured, the recruitment methods and. techniques
deal with how these sources should be tapped. Dunn and Stephens follow a three-tier classification of recruitment
method - direct, indirect and third party.
Direct methods: The most frequently used direct method is at schools, colleges, management institutes and university
departments. Usually, this type of recruiting is performed in co-operation with placement bureaus of educational
institutions providing assistance in attracting students, arranging interviews, and making available space and students’
resumes. The organisations have definite advantages through campus recruitment. First, the cost is low; second, they
can arrange interviews at short notice; third, they can meet the teaching faculty; fourth, it gives them an opportunity
to “sell” the organisation to a large student community seeking campus recruitment.
The campus recruiting information kit includes:

• general information about the organisation
• general information about the job
• an organisation chart
• conditions of service
• application form
• outline of the selection process
• date of the interview (if known)
• details of the selection criteria
• whether the candidates will be informed if they are not to be interviewed
• details of the interview expenses payable
In addition to managerial and supervisory positions, several organisations use travelling recruiters to recruit skilled and
semi-skilled employees from vocational schools and industrial training institutes. Sometimes, even unskilled workers
are also attracted by this method. Other direct methods include sending recruiters to establish exhibits at job fairs,
using mobile camps to visit shopping centres in rural areas and places where unemployed may be contacted.
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Indirect methods: The most frequently used indirect method or technique of recruitment is advertisement in
publications such as newspapers, magazines and trade journals as well as technical and professional journals. The
choice of media, place and timing of the advertisements and appeals to the reader, all determine the efficacy of
advertisements.
A useful advertisement has to give a brief summary of the job; a summary of the organisation covering product/
service, size, type of industry, profitability, expansion programmes; and an offer of compensation package.
A good advertisement has to be specific, clear-cut, reader-friendly and appealing. Ambiguously worded and broad-
based advertisements may generate a lot of irrelevant applications which would, by necessity, increase the cost of
processing them. In preparing an advertisement, therefore, lot of care has to be taken to ensure that self-selection
takes place among applicants. In other words, people meeting specific requirements should think of responding
to advertisement. A carefully worded sound advertisement can help in building the image of the organisation. The
advertisements should indicate information about the organisation and the job providing opportunity to the potential
candidates to contact the recruitment office in confidence.
Other indirect methods include advertising in the radio and television. Another method of advertising frequently
used is a notice-board placed at the gates of the company.
Third party methods: The most frequently used third-party methods are public and private employment agencies.
Public employment exchanges have been largely concerned with factory workers and clerical jobs. They also provide
help in recruiting professional employees. Private employment agencies provide consultancy services and charge
a fee. They are usually specialised for different categories of operatives, office workers, salesman, supervisory
and management personnel. They are typically used to recruit candidates for top management positions and other
positions that are difficult to fill. Other third-party methods include the use of trade unions.
Internet recruiting: Internet recruiting is an emerging field and therefore relatively few corporations have gathered
substantive data at this point. Companies are successfully attracting a high proportion on-line resumes, even for non-
technical positions, because increasing numbers of job seekers are turning to the internet. Job seekers are turning
to the internet because it simplifies the process of searching and applying for a position. Among companies that
actively recruit on the internet, three results are normally achieved: (1) lower recruiting costs; (2) faster recruiting
cycle; and (3) higher calibre recruits.
The internet is playing a more important role in recruitment. It advertises jobs and serves as a place to locate job
applicants. Websites can provide internet users with information on the type of work the company is involved in
and the job opportunities that are available. Interested parties can respond by e-mail. This has the advantage of a
quick turnaround time and reduces the amount of paperwork that would normally be associated with written job
applications. Further, the internet allows an organisation to reach a larger and broader range of applicants than
traditional methods. Internet recruiting is cheaper due to: (1) reduced direct costs of newspaper advertisements, job
fairs and head hunter fees; (2) reduced mailing costs; and (3) reduced workload for the HR department.
The arrival of the internet means that finding, assessing and hiring the right executives, no matter where they are,
is a reality not a dream.
It is important for recruiters to acknowledge the fact that adoption of e-recruitment is much more than just a
technology. It is about the recruitment system being able to attract the right candidate, the selection process being
based on sound and credible criteria, and the tracking process being able to integrate with existing systems. Online
recruitment is fast becoming a part of corporate strategy with increasing number of companies setting aside huge
budgets for it.
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Recruiters in an IT company, use software solutions for not only searching the best skilled candidates, but in the hiring
process also. Recruitment in IT organisations and BPO sectors are different from other traditional ones by ways of
selection and training. However, it is not correct to say that the internet is the only way to provide solutions more
quickly and at a reduced cost compared to traditional recruitment methods. The majority of companies involving in
active Internet recruiting believe that it helps them to attract better quality applicants, given that internet users tend
to be better educated and obviously more computer literate than non-users.
Recruiting older and disabled workers

Older workers are often mentioned as a possible solution to skill shortages. This group normally includes retires
who have widely differing needs and desires in regard to work. Some of them wanting full-time employment, others
seeking part-time work to keep them busy, renew social contacts, or supplement income, and still others seeking
new skills and personal growth. Employers sometimes value older workers because of their skills, flexibility, low
absenteeism, high motivation and loyalty, and ability to mentor younger workers.
If a disability does not interfere with a person’s ability to perform the essential function of the job, the employer
may not discriminate against the person. In fact, people with disabilities often make excellent employees, displaying
a high level of motivation and commitment, and possessing skills commensurate with those of the non-disabled
population.
Executive search
Executive search means a thorough analysis of the market and the virtual elimination of chance. It is a planned,
systematic and persistent campaign designed to determine and evaluate candidates’ proven ability, with the experience,
knowledge, specific skills and the personal qualities required. It requires detailed knowledge of the industrial, business
and functional areas from which to select a group of potential candidates. Further, needs of each candidate has to
be assessed against realistic definitions of the job itself, and of the individual best suited to fill it.
The recruitment of senior executives is one of the most important tasks facing management. As Henry Ford put it
‘in the final analysis, it is the quality of the management that determines the success, or failure, of an enterprise.’
From time-to-time, most employers face a deficiency of a suitably qualified managerial staff to meet the needs of
the growing organisation. The solution is almost invariably to recruit executives from outside the organisation. It
may turn out to be a complex, costly and time-consuming exercise to locate candidates with the required skills and
experience. Frequently, advertising and/or personal contact fails to locate the best talent and this precipitates the
demand for use of executive search or headhunting.
When filling top-level positions, many organisations use management consulting firms that specialise in the
recruitment of executive personnel. They find and screen candidates, check references, and present the most qualified
candidates. Hence, the choice of a suitable executive recruitment firm is crucial. An assignment is successful only if
there is a mutual understanding of the requirements of the job to be filled. If the specifications are not made clear or
shift a lot, a search can be prolonged and costly. The advantages of using search firms are several. Consultants can
operate tactfully and with discretion and avoid embarrassment to the client, company, and candidates and without
upsetting customer or competitive relationships.
Executive search is costly but well worth the investment when dealing with the selection of top management staff.
If the search firm is chosen wisely, company time and money will actually be saved. Today’s highly competitive
market ensures that most head-hunters charge similar fees and claim the same competence and professionalism in
undertaking assignments and evaluating candidates. Increasingly, however, it is the competence and credibility of
the individual consultant rather than the executive search consultancy itself that determines the client’s assessment
of the quality of the organisation.
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3.7 Factors Affecting Recruitment

The factors affecting recruitment can be classified as internal and external factors. The internal factors include wage
and salary policies, the age composition of existing working force, promotion and retirement policies, turnover
rates, the nature of operations involved, the kind of personnel required, the level and seasonality of operations in
question, and future expansion and reduction programmes. External determinants of recruitment are numerous
cultural, economic, and legal factors.
Thus, recruitment activity in different organisations differs with:

• The size of the organisation
• The employment conditions in the community where the organisation is located
• The effects of past recruiting efforts, which show the organisation’s ability to locate and keep good performing
people
• The working conditions, salary, and benefit packages offered by the organisation
• The rate of growth of organisation
• The level of seasonality of operations and future expansion and production programmes
• The cultural, economic and legal factors and so on.
3.8 Assessment and Improvement of Recruitment

The recruitment activity is supposed to attract the right people at the right time. It is concerned with attracting those
whose personalities, interests, and preferences will most likely to be matched by the organisation and who have the
skills, knowledge and abilities to perform adequately.
Many companies think that attracting and keeping staff is mainly a monetary factor. Rewards, perquisites and
incentives are the two basic factors that attract individuals to work for a company and these come in two forms:
(i) tangible (e.g., monetary) and (ii) intangible (e.g., training, career paths, working environment). However, in the
recruitment process, people usually place too much emphasis on the issue of salary, forgetting sometimes that it
is more important to find the right candidate for the job and that the process begins with using the correct hiring
methods.
Recruitment practices vary from one organisation to another. Some organisations resort to centralised recruitment and
some others to decentralised recruitment. Both the systems have their merits and demerits. Hence, the management
has to weigh both the merits and demerits of each system before taking a final decision about centralising or
decentralising the recruitment.
Apart from looking at qualifications and experience, other personality traits like eagerness to learn and adapt,
independence and creativity are just as important. Besides having a logical and analytical mind, they have to be
willing to try and not to be afraid of failure.
Normally, organisations do not face difficulty in finding adequate employees for manual, clerical, sales, and general
run types of work. But they often do have a problem in obtaining the professional and managerial talent they require.
The growing complexity and sophistication of technology has meant that increasing numbers of professionals and
managers are needed to run our modern enterprises. The long-run solution to the shortage of personnel in these fields
is for private organisations, government, and society in general to initiate programmes that will channel more young
men and women into these fields and to give more financial support to students and educational institutions. In the
short-run, the organisation faced with a shortage of qualified talent must resort to an aggressive recruiting effort
through such techniques as advertising, campus recruitment, and contacts with management consulting firms.
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Manpower managers must constantly review and improve methods of recruitment and sources of manpower supply.
Any method or source which is highly effective at present may prove to be quite ineffective later on in view of
changed situations. However, most managers fail to develop a long-range recruiting programme through careful
assessment. A sound recruitment programme necessitates appraisal of each source and each technique from the
standpoint of the relative qualities of the personnel it has provided. For each major category of jobs, the present
personnel can be evaluated in terms of job success. The evaluation procedure consists of assessing the existing
employees in terms of their job success, determining the sources from which “good” and “poor” employees come
from and that of the method used.
Manpower managers should also attempt to improve their recruitment system. The results assessment or problems
faced during the recruitment process may themselves indicate the need for improvement of the programme. Amethod
to improve recruiting is to look at the enterprise as a candidate would and taking appropriate measures to improve
its image. Further, recruitment activity should be integrated with the human resource plans of the organisation.
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Summary
• Recruitment is the development and maintenance of adequate manpower sources.
• Recruiting is the process of attracting applicants with certain skills, abilities, and other personal characteristics
to job vacancies in an organisation.
• Recruitment is only one of the steps in the entire employment process.
• Recruitment is defined as “a process to discover the sources of manpower to meet the requirements of the
staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate
effective selection of an efficient workforce.”
• Recruitment policy states the objectives, and provides a framework for implementation of recruitment programme
in the form of procedures.
• The function of recruitment is to locate the sources of manpower to meet job requirements and specification.
• Recruitment forms the first stage in the process which continues with selection and ceases with the placement
of the candidate.
• The factors affecting recruitment can be classified as internal and external.
• The internal factors include wage and salary policies, the age composition of existing working force, promotion
and retirement policies, turnover rates and the kind of personnel required.
• External determinants of recruitment are cultural, economic and legal factors.
• Recruitment has been regarded as the most important function of personnel administration.
• The sources of supply of manpower can be divided into two groups - internal and external sources where internal
sources relate to the existing working force of an enterprise while external sources relate to the employment
exchanges, colleges, institutes, and universities.
• Internal sources are the most obvious sources which include personnel already on the pay-roll of an organisation,
i.e., its present working force.
• Among the external sources are included the employment agencies, educational and technical institutes, casual
labour, trade unions, application files and other sources.
• A labour market is a geographic area within which workers seek employment and employers recruit workers;
a place where the forces of supply and demand interact.
• Modern external sources include walk in and consult in, head-hunting, body-shopping, mergers and acquisitions,
tele-recruitment and outsourcing.
• According to the two dimensions of a recruitment process; recruitment, in all cases involves locating and attracting
adequate human resources to fill existing vacancies and it (recruitment) is a critical management activity.
• The types of persons to be invited and their characteristics can be identified by fixing thc ‘job specifications’
which may also be called ‘man specifications’.
• Among companies that actively recruit on the internet, three results are normally achieved which are lower
recruiting costs, faster recruiting cycle and higher calibre recruits.
• Executive search means a thorough analysis of the market and the virtual elimination of chance.
• Executive search is a planned, systematic and persistent campaign designed to determine and evaluate candidates’
proven ability, with the experience, knowledge, specific skills and the personal qualities required.
• Rewards, perquisites and incentives are the two basic factors that attract individuals to work for a company
and these come in two forms, viz., the tangible (for example, monetary) and intangible (for example, training,
career paths, working environment).
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References
• Recruitment. Available at: <www.egyankosh.ac.in/bitstream/123456789/35590/1/Unit-10.pdf> [Accessed 15
November 2011]
• HR Management Guide. Recruitment Definition. Available at: <http://www.simplehrguide.com/recruitment-
definition.html> [Accessed 15 November 2011]
• Reynolds, D. H., Weiner, J. A., 2009. Online Recruiting and Selection: Innovations in Talent Acquisition. John
Wiley and Sons.
• Foster, M., 2002. Recruiting on the Web: smart strategies for finding the perfect candidate. McGraw-Hill
Professional.
• ACCA F1: Introduction to Recruitment Methods [Video Online] Available at: <http://www.youtube.com/
watch?v=LnShLqJq0oc [Accessed 15 March 2011].
• Staffing Process Improvement: Virtual Job Try out. [Video Online] Available at: <http://www.youtube.com/
watch?v=cNTJGkSV830> [Accessed 15 March 2011].
Recommended Reading
• Cartwright, S., 2005. Human Resource Management. Mittal Publications.
• Fisher, S. and Shaw, D., 2004. Human Resource Management, 5th ed., Tech Press, 2004.
• Arthur, D., 2006. Recruiting, Selecting, Interviewing and Orienting New Employees, 4th ed. AMACOM Div
American Management Association.
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Self Assessment
1. ______________ is the process of attracting applicants with certain skills, abilities, and other personal
characteristics to job vacancies in an organisation.
a. Recruitment
b. Employment
c. Retailing
d. Manpower
2. determinants of recruitment are cultural, economic and legal factors.

a. Internal
b. External
c. Modern
d. Traditional
3. A is a geographic area within which workers seek employment and employers recruit workers
a. Shopping mall
b. Super-market
c. Market
d. Labour-market
4. search means a thorough analysis of the market and the virtual elimination of chance.
a. Online
b. Traditional
c. Virtual
d. Executive
5. The function of recruitment is to locate the sources of ___________to meet job requirements and
specification.
a. jobs
b. rewards
c. manpower
d. recruiters
6. sources are the most obvious sources which include personnel already on the pay-roll of an
organisation or a part of its present working force.
a. Internal
b. External
c. Modern
d. Traditional
7. states the objectives, and provides a framework for implementation of recruitment programme in
the form of procedures.
a. Executive search
b. External determinants
c. internal factors
d. Recruitment policy
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8. The types of persons to be invited and their characteristics can be identified by fixing the .
a. no. of employees
b. recruitment policy
c. job specifications
d. external determinants
9. Which of the following statements is false?

a. The factors affecting recruitment can be classified as internal and external.
b. According to the two dimensions of a recruitment process; recruitment, in all cases involves locating and
attracting adequate human resources to fill existing vacancies
c. A recruitment process is considered to be a critical management activity.
d. Among companies that actively recruit on the internet, the results that are normally achieved comprise a
higher recruiting cost and lower calibre recruits.
10. external sources include walk in and consult in, head-hunting, body-shopping, mergers and
acquisitions, tele-recruitment and outsourcing.
a. Modern
b. Online
c. Traditional
d. Offline
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Chapter IV
Selection
Aim
The aim of the chapter is to:
• explain the selection and recruitment process
• enumerate the recruitment and selection objectives
• discuss the selection process and procedures
Objectives
The objective of this chapter is to:
• highlight the role of application blanks in recruitment process
• enlist various tests taken during the selection process
• explain the selection strategy
Learning outcome
At the end of the chapter, you will be able to:
• differentiate between recruitment and selection
• explain the different types of interview
• identify the limitations of selection tests
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4.1 Introduction
Selection is the process of examining the applicants with respect to their suitability for the given job, and choosing
the best from the suitable candidates. Thus, you will notice that this process is negative in nature as rejection of
candidate is involved.
The selection process involves choosing the best suitable applicant and rejection of other applicant. This can be
achieved by putting successive hurdles, which an applicant must cross. These hurdles act as screens designed to
eliminate an unqualified applicant at any point in the process. This technique is also known as the ‘successive
hurdles technique’.
Personnel Management expert Yoder, calls these hurdles ‘go, no-go’ gauges. Those who qualify a hurdle go to the
next level; those who do not qualify are dropped out. Not all selection processes, however, include these hurdles.
The complexity in this technique usually increases with the successive level and responsibility of the position to
be filled. Moreover, these hurdles need not necessarily be placed in the same order. Their arrangement may differ
from organisation to organisation.
The overall aim of the recruitment and selection process is to obtain the number and quality of employees that are
required by the organisation or business to achieve its objectives. Recruitment and selection involves identifying
and placing the right person in the right job. The recruitment and selection process is intended to:
• Ensure the appointment of the most capable person available to fill the position, taking account of merit and
employment equity principles:
 Attract high calibre applicants from both the public and private sectors
 Ensure a broad market coverage in advertising vacancies
 Promote a professional approach to executive selection.
 Determine present and future needs in terms of numbers and types of sales people
 Meet the organisation’s legal and social responsibilities regarding composition of the workforce
 Reduce the number of under qualified or overqualified applicants
 Increase the number of qualified applicants at a specified cost
 Evaluate the effectiveness of recruiting sources and evaluation techniques
• Most recruitment and selection systems will be simple, with stages that can be followed as a routine whenever
there is a vacancy to be filled, and which can be monitored and adapted in the light of experience. Systems
should be:
 Efficient - Cost effective in methods and sources
 Effective - Producing enough suitable candidates without excess and ensuring the identification of the best
fitted for the job and the organisation
 Fair - Ensuring that right through the process decisions are made on merit alone
4.2 Difference between Recruitment and Selection

Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the
organisation. It is often termed - positive- in that. Its objective is to increase the selection ratio, that is, the number
of applicants per job opening. The term ‘recruitment’ has been extended not only to cover the supply of a pool of
candidates for selection, but also those tasks associated with bringing the selected candidate into the organisation
through issuing the contract of employment for example. See the following figure.
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Selection is a later stage of the recruitment process, which involves choosing competent and qualified applicants
suited for the job. After recruiting a large number of job candidates, organisations must weed out the unqualified ones.
It is often termed -positive- in that, its objective is to increase the selection ratio, that is, the number of applicants
per job opening. Hiring through selection is -negative- in that, it attempts to eliminate applicants, leaving only the
best to be placed in the organisation. Recruitment is the activity that generates a pool of applicants, who have the
desire to get employed by the organisation, from which those suitable can be selected. Selection is the activity in
which an organisation uses one or more methods to assess individuals with a view of making a decision concerning
their suitability to join the organisation, to perform tasks which may or may not be specified.
Selection deals with choosing competent and qualified applicants. During recruitment, it is important to have a large
pool of qualified recruits. However, after having recruited this large number of job applicants, organisations must
weed out the unqualified ones and then select the very best remaining candidate(s) for the job. A well-designed
selection process will yield information about a candidate’s skills and weaknesses. The Human Resource specialist
must determine which selection tools are most appropriate for the purpose of selecting the best candidate. Put simply,
the main tools will be the kinds of questions that are asked of the applicants.
Recruitment Selection Recruitment
Job analysis, preparing interviews, Issue offer letter,

job description, person tests, make
specifications, assessment arrangements for
competency profile, centres, and induction,
etc. and references training and
advertising/ attracting mentoring
candidates, including
the arrangements for
selection
Fig. 4.1 Relationship between recruitment and selection
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4.3 Recruitment and Selection Model
The following table describes the Recruitment and Selection Model.
Principles Indicators Evidence

• Top management can explain the strategic
importance of recruitment and selection to the
organisation.
• Top management can describe specifications
that they have taken and are currently taking to
1. The organisation is support a strategic approach to recruitment and
committed to taking selection.
a strategic approach
to recruitment and • Top management recognise the benefits to
selection the organisation of recruiting and selecting
Commitment people with different skills, experiences, and
The organisation is fully ambitions, and this is reflected in their actions.
committed to taking a • People with recruitment and selection
strategic approach to responsibilities believe the organisation is
recruitment and selection genuinely committed to taking a strategic
in order to achieve its approach to recruitment and selection.
aims and objectives
• Top management can describe the policies and
strategies that they have put in place to make
sure that recruitment and selection is fair.
2. The organisation is
• People with recruitment and selection
committed to making
responsibilities can describe specific actions
sure that recruitment
that they have taken and are currently taking to
and selection is fair.
make sure that recruitment and selection is fair.
• People believe the organisation is genuinely
committed to making sure that recruitment and
selection is fair.
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3. The organisation is
clear about the people • The organisation can describe the people it
it needs to achieve its needs to achieve its aims and objectives.
aims and objectives and • * The organisation has clear targets for the
knows, whom it needs people it needs to recruit.
to recruit.
• The organisation has clear recruitment
priorities, which link to its aims and objectives
Planning 4. There is a clear reason at organisation and team level.
The organisation is clear for each recruitment
• The organisation can show how individual
about the people it needs decision, which is
recruitment decisions link to its aims and
to recruit to achieve its linked to achieving the
objectives.
aims and organisation’s aims and
objectives objectives. • People, who have been recruited recently, can
explain how their job helps the organisation to
achieve its aims and objectives.
5. The organisation has
a consistent approach • The organisation has a consistent approach to
to recruitment and recruitment and selection.
selection, which • People can explain what that approach is at a
is understood by level appropriate to their role.
everyone.
• The organisation can show that people
are recruited and selected in line with the
organisation’s approach to recruitment and
selection.
• The organisation recruits sufficient people to
6. People are recruited and achieve its aims and objectives.
selected effectively.
• The organisation selects people in line with the
criteria it has agreed for each position.
• People who have been recruited recently
Action and any unsuccessful internal candidates can
The organisation recruits confirm that the recruitment and selection
and selects people progress was fair
effectively and 7. People are recruited and
efficiently in order to selected efficiently.
improve its performance
• The organisation can
show that it recruits and
selects people using the
most cost - effective
methods and sources.
• The organisation
can show that
communication with
candidates is timely and
constructive.
Table 4.1 Recruitment and selection model
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4.4 Selection Strategy
Consideration of selection strategy emphasises on:
• Vacancy ratio (number of candidates available for the vacancy)
• The probable cost of appointing an unsuitable candidate as the two most relevant parameters. These may be
regarded as independent issues and can therefore be represented as the vertical and horizontal axis of a diagram
as follows:
A B
C D
Low High
Many Few
No. of applicants for vacancy
applicants for
Many A B
Vacancy
No. of
Few C D
Low High
Table 4.2 Selection strategy
Probable cost of selecting unsuitable candidates: Four situations -A, B, C, D are represented in the table above. Now
we consider probable solutions for each:
Situation A: In this situation, there are many applicants and the cost of wrong selection is low, e.g., little investment
is needed to train the recruits. The obvious strategy here would be to apply screening devices, such as application
blank, short interview etc., which involves minimum cost.
Situation B: In this situation, there are many applicants and the cost of wrong selection is very high. The right
selection strategy would be tests, medical examination and series of interviews to prevent wrong selection.
Situation C: Here, we find very few candidates but the cost of wrong selection is low; the strategy here would be,
take of them (if there are so many vacancies) and see how they turn out.
Situation D: Here, we find few candidates but the cost of wrong choice is very high.
There is no obvious strategy. The management has to depend upon experience for guidance.
4.5 Selection Process

Recruitment and selection are the two phases of the personnel practices and procedures complimentary to each other.
Recruiting consists of whatever activity is necessary to bring in enough applicants for specific positions so that
there is opportunity for real selection. Recruiting is done mainly through three common sources i.e., advertisement,
employment exchanges or private employment agencies, and present employees. In addition, educational institutions,
labour unions, casual applications and deputations are also utilised. After identifying the potential applicants, the
next step taken is to evaluate their experience and qualifications for making a selection. As has been quite often said,
selection is essentially a process of picking out the best suited personnel for the organisation’s requirements.
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However, the selection of unskilled labour or of semi-skilled labour for particular jobs does not cause much of
a problem and therefore, an elaborate selection procedure is not required for it. But for supervisory and higher
levels and specialist jobs, particularly in the public undertakings, private companies and industries, the need for a
sophisticated selection procedure has been felt and is now being introduced. The selection practices and procedures
vary from one organisation to another, depending upon the situation and needs of the organisation, as well as the
level on which the selection is made.
Generally, the selection activities will begin with an initial screening interview and conclude with the final employment
decision. Usually, the selection process consists of seven steps:
• initial screening interview
• completion of the application form
• employment tests
• comprehensive interview
• background investigation
• physical examination
• final employment decision
The Initial Screening or Preliminary Interviews is a sorting process in which prospective applicants are given the
necessary information about the nature of the job and also, necessary information is elicited from the candidates
about their education, experiences, skills, salary expected, etc. If the candidate is found to be suitable, he or she is
selected for further process and, if not, he or she is eliminated. This is initial screening and can be done across the
counter in the organisation’s employment offices. This is done by a junior executive in the personnel department.
Due care should be taken so that suitable candidates are not turned down in a hurry. Since this provides personal
contact for an individual with the company, the interviewers should be courteous, kind, receptive and informal.
When a candidate is found suitable, an application form is given to fill in and submit.
As for the remaining steps, they all form a part of the application scrutiny procedure undertaken while/before
selecting a candidate. For instance, you might have seen that sometimes applications are asked on a plain sheet. This
is done where no application forms are designed. The applicant is asked to give details about age, marital status,
educational qualifications, work experience and references. Different types of application forms may be used by the
organisation for different types of employees, e.g. one for managers, the other for supervisors and a third for other
employees. Some forms are simple, general and easily answerable, while others may require elaborate, complex
and detailed information. Reference to nationality, race, caste, religion and place of birth has been regarded as
evidence of discriminatory attitudes and should be avoided. An application form should be designed to serve as a
highly effective preliminary screening device, particularly, when applications are received in direct response to an
advertisement and without any preliminary interview. The application can be used in two ways:
• to find out on the basis of information contained therein as to the chances of success of the candidate in the job
for which he or she is applying
• to provide a starting point for the interview
It is often possible to reject candidates on the basis of scrutiny of the applications as they are found to be lacking
in educational standards, experience or some other relevant eligibility and traits.
Each of the above steps represents a decision point requiring some affirmative feedback for the process to continue.
Every step in the selection process tries to expand the organisation’s knowledge about the applicant’s background,
abilities and motivation, and it increases the information from which decision makers will make their predictions
and final choice.
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Selection Test
A test is a sample of an aspect of an individual’s behaviour, performance or attitude. It can also be a systematic
procedure for comparing the behaviour of two or more persons.
The basic assumption underlying the use of tests in personnel selection is that individuals are different in their job-
related abilities and skills and that these skills can be adequately and accurately measured. Tests seek to eliminate
the possibility of prejudice on the part of the interviewer or supervisor. Potential ability only governs the selection
decisions. The other major advantage is that the tests may uncover qualifications and talents that would not be
detected by interviews or by listing of education and job experience.
Types of Tests
The various tests used in selection can be put in to four categories:
Achievement or Intelligence tests: These tests are also called ‘proficiency tests’. They measure the skill or knowledge
which is acquired as a result of a training programme and on the job experience. They measure what the applicant
can do. These tests are of two types:
Test for measuring job knowledge: These are known as ‘Trade Tests’. These are administered to determine
knowledge of typing, shorthand and in operating calculators, and so on. These are primarily oral tests consisting
of a series of questions which are believed to be satisfactorily answered only by those who know and thoroughly
understand the trade or occupation. Oral tests may be supplemented by written, picture and performance types.
Work sample tests: These measure the proficiency with which equipment can be handled by the candidate. This is
done by giving them a piece of work to judge how efficiently one does it. For example, a tour executive would be
provided with an itinerary to do a complete costing of the tour.
Aptitude or Potential ability tests: These tests measure the latent ability of a candidate to learn a new job or skill.
Through these tests you can detect peculiarity or defects in a person’s sensory or intellectual capacity. These focus
attention on particular types of talent such as learning, reasoning and mechanical or musical aptitude. ‘Instruments’
used are variously described as tests of ‘intelligence’, ‘mental ability’, ‘mental alertness’, or simply as ‘personnel
tests’. These are of three types:
Mental tests: These measure the overall intellectual ability or the intelligence quotient (I.Q.) of a person and enable
us to know whether he or she has the mental capacity to deal with new problems. These determine an employee’s
fluency in language, memory, induction, reasoning, speed of perception, and spatial visualisation.
Mechanical aptitude tests: These measure the capacity of a person to learn a particular type of mechanical work.
These are useful when apprentices, mechanists, mechanics, maintenance workers, and mechanical technicians are
to be selected.
Psychomotor or skill tests: These measure a person’s ability to do a specific job. These are administered to determine
mental dexterity or motor ability and similar attributes involving muscular movement, control and coordination.
These are primarily used in the selection of workers who have to perform semi-skilled and repetitive jobs, like
assembly work, packing, testing, and inspection and so on.
Personality tests: These discover clues to an individual’s value system, his or her emotional reactions, maturity and
the characteristic mood. These tests help in assessing a person’s motivation, his or her ability to adjust to the stresses
of everyday life and the capacity for inter-personal relations and for projecting an impressive image of him or herself.
They are expressed in terms of the relative significance of such traits of a person as self-confidence, ambition, tact,
emotional control, optimism, decisiveness, sociability, conformity, objectivity, patience, fear, distrust, initiative,
judgement, dominance, impulsiveness, sympathy, integrity, and stability. These tests are given to predict potential
performance and success for supervisory or managerial jobs. The personality tests are basically of three types:
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Objective tests: These measure neurotic tendencies, self-sufficiency, dominance, submission and self-confidence.
Projective tests: In these tests, a candidate is asked to project his or her own interpretation onto certain standard stimuli.
The way in which one responds to these stimuli depends on his or her own values, motives and personality.
Situation tests: These measure an applicant’s reaction when he or she is placed in a peculiar situation, the ability
to undergo stress and the demonstration of ingenuity under pressure. These tests usually relate to a leaderless group
situation, in which some problems are posed to a group and its members are asked to reach some conclusions without
the help of a leader.
Interest tests: These tests are designed to discover a person’s areas of interest and to identify the kind of work that
will satisfy him or her. The interest tests are used for vocational guidance, and are assessed in the form of answers
to a well-prepared questionnaire.
Test construction: There are certain fundamental principles of test construction such as (a) validity, (b) reliability,
(c) standardisation, and (d) evaluation. Tests should have validity, i.e., they should actually measure what they
purport to measure. The validity of a test is determined by relationship between the test results and some criterion
of efficiency on the job. The coefficient of correlation has become the most widely employed index of validity (it is
a statistical index expressing the degree of relationship between two variables). By the reliability of a test is meant
the consistency with which it serves as a measuring instrument. No test is of value in personnel work unless it has
a high degree of reliability. The process of standardisation includes the scaling of test items in terms of difficulty
and the establishment of norms.
Limitations of selection tests

From the basic description of tests described above, one should not conclude that a hundred per cent prediction of an
individual’s on-the-job success can be made through these tests. These tests, at best reveal that candidates, who have
scored above the predetermined cut-off points, are likely to be more successful than those who have scored below
the cut-off point. Tests are useful when the number of applicants is large. The tests will serve no useful purpose if
they are not properly constructed or selected or administered.
Although written tests are designed to define a candidate’s interests, aptitudes and intelligence but they have long
served as a staple of employment screening. Their use has declined over past 25 years. Many tests have proved to
be discriminatory in their design and results, therefore, difficult to establish their job relatedness when they have
been subjected to judicial review. Moreover, tourism being a service industry, the interpersonal relationship is more
important and it can be judged only in the interview. Many big organisations in tourism first conduct tests and then
a series of interviews to choose the right candidate as a trainee. Therefore, using both the methods effectively.
Precautions in Using Selection Tests

Test results can help in selecting the best candidates if the following precautions are taken:
• Norms should be developed as a source of reference on all tests used in selection and on a representative sample
of people on a given job in the same organisation. This is necessary even though ‘standard’ tests are available now
under each of the above categories. Norms developed elsewhere should not be blindly used because companies
differ in their requirements, culture, organisation structure and philosophy.
• Some ‘warm up’ should be provided to candidates either by giving samples of test, and/or answering queries
before the test begins. Tests should first be validated for a given organisation and then administered for selection
of personnel to the organisation.
• Each test used should be assigned a weight age in the selection.
• Test scoring, administration and interpretation should be done by persons having technical competence and
training in testing.
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Interview
The interview is the heart of the employment process. The personal interview, along with the application blank,
continues to be used by almost every employer. Interviewing is considered to be the most useful selection method.
The interview is a conversation with a purpose. Its aim is to provide the candidate with information about the job
and the company and also to give the candidate a favourable impression of the company. There are three purposes
that may be served: obtaining information, giving information, and motivation. The employment interview should
serve each of these three purposes. It should provide an appraisal of personality by obtaining relevant information
about the prospective employee’s background, his training, work history, education and interests. Interview should
give information about the company, the specific job, and the personnel policies.
The interview should also help to establish a friendly relationship between the employer and the applicant and
motivate the applicant to work for the company, whereas, in practice, we find that interviews lack mostly in one
aspect or the other and fail to achieve these purposes. For instance, obtaining information is commonly found in
many interviews rather than giving information or motivating the prospective employees. It has been criticised
because of the scope for bias.
Interview content: Knowing what to discuss with an applicant is central to effective interviewing. The applicant’s
previous life history, education, work experience, and personal qualifications form the basic content of the
interview.
Personal qualities: This area includes the personal qualifications required in the position: physical appearance,
health, dress and grooming, voice quality, diction, vocabulary poise, alertness, and aggressiveness. Most of these
qualities are assessed by the interviewer’s observations rather than by the applicant’s answers to his questions.
Academic achievement: This area covers the type of schooling, quality of grades, class standing, social activities,
relationship with teachers, honours and awards, and athletic accomplishments. Questions in this area can provide
a good indication of an applicant’s initiative, independence, reliability, intellectual competence, and emotional
stability.
Occupational experience: This area emphasises not merely an applicant’s technical competence but also the
level of responsibility and skill he has attained in previous jobs, the position level and salary progression achieved,
and reasons for leaving former jobs. Questions in this area should focus at obtaining evidence of good judgment,
initiative, drive and energy, and ability to assume responsibility.
Interpersonal competence: This area includes the applicant’s ability to get along with others. It is not enough to
evaluate this area on the basis of the applicant’s behaviour during the interview. Specific questions must be asked
about his family history, leisure-time activities, hobbies, and community interests to ascertain his degree of social
adjustment.
Career orientation: This area covers the applicant’s career aspirations, his immediate and long-range goals, and his
potential for advancement. Answers to questions in this area form the heart of a managerial applicant’s qualifications.
The interview is the most indispensable tool, not because of its information potential, which is considerable, but
also because of its distinctly human aspects. It is a two way street. No applicant wants to be judged for a position
without an opportunity to discuss it face to face in a meeting with a company representative. The interview gives the
applicant the feeling that he matters and that he is being considered by a human being rather than by a computer.
Interview problems
Some of the typical problems are as follows:
• Interviewers do not seek applicant information dimensions needed for successful job performance. Often, they
do not have a complete job description or an accurate appraisal of the critical job requirements. In addition, the
interviewer often does not know the conditions under which the job is performed.
• Interviewers may make snap judgements early in the interview. Consequently, they block out further potentially
useful information.
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• Interviewers permit one trait or job-related attribute to influence their evaluation of the remaining qualities
of an applicant. This process, called the halo effect, occurs when an interviewer judges an applicant’s entire
potential for job performance on the basis of a single characteristic, such as how well the applicant dresses or
talks. Interviewers have a tendency to be swayed by negative information about the applicants.
• Information from interviews is not integrated or discussed in a systematic manner. If several interviewers share
information on an applicant, they may do so in a haphazard manner. They do not identify job-related information
or seek to examine any conflicting information. This casual approach may save time and confrontation, but only
in the short run. In the long run, everyone in the organisation will pay for poor hiring decisions.
• Interviewer’s judgements are often affected by the pressure to favour a candidate or fill the position, hence they
lower the standards.
• Interviewer’s judgement regarding an applicant is often affected by the list of available applicants. For example,
a good person looks better in contrast to a group of average or below average applicants.
• Some interviewers may place more weight on certain attributes than others, or they may combine attributes
differently, as they make their overall decisions. For instance, some interviewers may give emphasis to educational
experiences while others give weight age to work experiences.
Gender, race and attitudes similar to those of the interviewer may lead to favourable evaluation. Guidelines to
Interviewers: Some do’s and don’ts of interviewing are as under:
Do’s
• Use a quiet and comfortable place.
• Put the interviewee at ease.
• Be interested in the person as well as the job.
• Outline clearly the requirements of the job.
• Explain fully the conditions of employment.
• Tell about benefits, promotions, opportunities, and so on.
• Avoid certain types of questions.
• Encourage the applicant to ask questions.
• Guide the interview.
• Listen, let him talk freely.
• Be natural, use a conventional tone.
• Know when and how to close the interview.
• Announce your decision or explain your next step.
Dont’s
• To keep the applicants waiting.
• To build false hopes.
• To oversell the job.
• To interrupt the applicant or the interview.
• To rush through the interview.
• To repeat questions already answered on the application form
• To develop a “canned” interview approach.
• To pry into his personal life needlessly.
• To prejudge and reflect prejudices.
• To use a phony excuse for turning him down.
• To send him away with a bad taste in his mouth.
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Interview Techniques
The most commonly used interviewing techniques are briefly discussed below:
Preliminary interview: It is also called screening interview. The purpose is to decide through mutual information
sharing, whether a comprehensive interview is desired. In this interview, besides providing information about the
job and the organisation, preliminary information is sought on past work experience, education and motivation.
Most of those interviews are generally conducted by personnel people who, sometimes, involve people from the
areas where the applicant is finally going to be placed. This is usually done for jobs that are technical in nature.
Patterned interview: In this kind of interview what is to be asked is already structured and hence they are also called
structured interviews. Patterned interviews are a combination of direct and indirect questioning of the applicant
in conjunction with the application blank and are considered to be much more accurate than less standardised
interviews.
Non-directive interview: In this interviewing technique, there is a minimum use of direct questions. Questions
that can yield “yes” or “no” answers are avoided, and instead broad general questions are asked in the interview.
Such questions help in revealing the applicant’s real personality. It is felt that the more the applicant is allowed the
freedom to talk about himself, the more he will reveal his personality as it really is.
Stress interview: It is a deliberate attempt to create tension and pressure to observe how an applicant performs
under stress. Stress is induced by not allowing him to complete his answers or too many questions are asked in
quick succession. Some may react in a mature way by keeping their cool and yet try to answer the questions, others
might lose their cool and react sharply. The most important advantage of this interview is that it helps to demonstrate
important personality or characteristics which would be difficult to observe in tension-free situations. Such interviews
are useful in jobs where emotional balance is a key requirement.
Depth interview: The purpose of depth interview is to get total information on an applicant in order to develop a
comprehensive profile based on in depth understanding of his personality. This kind of interview is usually is very
time consuming because a lot of time is spent with the applicant to get detailed information on various core areas
of knowledge and skills of the job. Its major advantage, of course, is in getting a complete, detailed understanding
of the applicant. Its major drawback is the cost in terms of time. In any case it is not a usual method of selection.
Group interview: It is a recently developed technique. It offers some promise for the appraisal of leadership but it
lacks proper validity. A topic of discussion is assigned to the group of applicants and their performance is evaluated
by the observers. The observers’ main focus is to see whether any one of the applicants assumes leadership, how
this is done, and how it is accepted by other members of the group.
Panel Interview: Interviewing candidates by a single person may not be that effective as he cannot judge the
candidates in different areas/skills. Hence, most organisations invite a panel of experts, specialised in different
disciplines, to interview candidates. The great advantage of this interview is that it helps to coordinate the collective
judgment and wisdom of members of the panel. This type of interview is done usually for supervisory and managerial
positions.
The interviews for selection have advantages as well as limitations. On the positive side, it is possible to determine
from an interview whether or not the candidate is impressive and how he reacts in conversation. The personality
traits that can be demonstrated in an interview are responsiveness, alertness in conversation, manners, presence of
mind and poise. The limitations of interview are that the interviewer cannot judge from a man’s face such personality
and character traits as honesty. The employment interview can be made satisfactorily accurate if it is carried out
with sufficient care.
Post-employment interview evaluation

The selection committee should ask the following kinds of questions following the employment interview and prior
to the job offer to determine whether the applicant will indeed be the right choice.
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Work experience and history

• Does the applicant have the kind and amount of experience needed?
• Did the applicant remain on past jobs for a reasonable length of time?
• Does the applicant’s record show normal growth in responsibility and earnings?
• Does the applicant have sound reasons for leaving prior positions?
• Does the applicant’s work history indicate that he or she gets along well with others?
Professional and educational indicators

• Has the applicant achieved a desirable level of education?
• Has the applicant assumed positions of leadership in schools, social, or business activities?
• Does the applicant’s history indicate a willingness and ability to assume responsibility?
• Does the applicant’s background indicate resourcefulness, initiative, and ambition?
• Does the applicant appear to be an emotionally and socially mature person?
• Does the applicant express him or herself effectively?
Interpersonal communication skills

• Does the applicant have the ability to be self-critical and objective?
• Does the applicant reveal personal security and confidence in manner and attitude?
• Does the applicant seem sympathetic to the problems of others?
• Does the applicant have a sound estimation of his/her worth to the organisation?
• Does the applicant accept people as they are?
• Is the applicant tolerant or critical?
• Does the applicant accept others’ point of view?
Personal motivation and attitude

• Are the applicant’s ambitions and goals in line with the organisation’s goals?
• Does the applicant have a realistic view of his or her future?
• Does the applicant seem to be the kind of person who will grow in effectiveness?
• Does the applicant have sound reasons for wanting the position?
Physical examination
Certain jobs require unusual stamina, strength or tolerance of unpleasant working conditions. Aphysical examination
reveals whether or not a candidate possesses these qualities. A physical examination serves the following
purposes:
• It indicates whether a candidate is physically able to perform the job. Those who are physically unfit are
rejected.
• It discovers existing disabilities and obtains a record of the employee’s health at the time of hiring.
• It prevents the employment of those who suffer from some type of contagious diseases.
Reference checks
The use of references is common in most of the selection procedures, for it involves only a little time and money, and
minimum of effort. The procedure places reliance on the evaluation of former employers, friends and professional
personnel. Reference checks are made by mail or by telephone and occasionally in person, or by using a reference.
It is vitally important that references should indicate how long and in what capacity the referees had the contact
with the applicant. Some employers consider references-checking as an integral part of the total over-all selection
and assessment programme.
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The questions that are normally asked in any reference check are the following:
• What was the nature of his/her job?
• Whether the statement of earnings when he or she left the service is correct or incorrect?
• What did his/her superiors think of him/her?
Exit interviews
The exit interview is the final step in the employment procedure. It is conducted by the human resource department
during the terminating employee’s last day on the job. This interview often discloses departmental or job-related
problems. Its purpose is to:
• Try to uncover the real reason behind the quitting/_termination.
• Locate the probable reasons that contribute to turnover.
• Assure the departing employee of his rights and benefits.
• Part as friends.
Exhibit 2
Exit interview - Aide-memoire
• Relationships- Is there any indication that there was a poor relationship between the departed employee and
supervisor?
• If so, why? Is there any indication that the departed employee did not get on well with his colleagues? Why?
• Is there any indication of dissatisfaction concerning salary, fringe benefits, and so on?
• Conditions- Is there any indication of bad working conditions?
• Personal- Is there any indication of domestic or personal reasons for leaving? What are they?
• Promotion- Is there any indication that promotion or career development prospects have not been realised?
• Training- Is there any indication that the departed employee has not received appropriate training?
• Others- Are there other reasons for leaving?
• An exit interview, like any other interview, is a conversation with a purpose.
• During the exit interview, the employee will be permitted to express himself freely about the reasons for leaving.
Any misunderstanding that might have resulted in his leaving will be corrected. In most instances, a form is
used by the interviewer to record the substance of the interview. This interview often discloses departmental or
job-related problems, and serves as a storehouse of information.
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Exhibit 3
Some do’s and don’ts in exit interview
Don’ts
Do’s
• Listen 80% of the time instead of talking. • Defend your company against criticism or attacks.
• Rely heavily on non-directive techniques like • Justify actions which may have annoyed the
eye-contact employee.
• Listen for sensitive topics and feelings to be • Attack the departee’s views or choice of new
probed company or job.
• Cover all topics on the checklist while being • Convince the employee to change his mind about
flexible. leaving the job.
• Keep the interview constructive instead of • Counsel the interviewee about . career options or
eliciting woes his future.
Table 4.3 Do’s and don’ts of exit interview
4.6 Recruitment and Selection Challenges

Recruitment and selection allow management to determine and gradually modify the behavioural characteristics and
competences of the workforce. The fashion for team working, for example, has focused on people with a preference
for working with others as opposed to the individualist ‘stars’ preferred by recruiters in the 1980’s. Attention has
switched from rigid lists of skills and abilities to broader-based competences. In general there is greater regard for
personal flexibility and adaptability - a reorientation from present to future stability.
The tremendous competition creates challenges for management and recruiting personnel that are not easily met.
The greatest single recruiting problem that organisations face is getting in front of enough qualified prospects to
hit hiring objectives, and grow the organisation. For many organisations, the effective recruitment of new skills
required for changing business needs was a real issue that needed to be tackled during the hype surrounding the
dot-com start-ups. One of the key challenges was the need to entice people from attractive, smaller, innovative web
companies. A recurring theme throughout various cases the challenge of getting the right people, at the right time.
One of the prominent HR issues is to develop effective recruitment and retention schemes so as to secure talent
and keep staff motivated and loyal. The organisation must commit itself to the achievement of a number of critical
success factors in recruitment and selection if the best person is to be selected. These factors are:
The process must be systematic: This means it should be carried out in a logical fashion and consistently in line
with the organisation’s policies, systems, Human Resource Plan and with business objectives.
Fairness: Ethical and legal considerations must be complied with. The way in which recruitment/selection is carried
out says a lot about the organisation and prospective employees will be aware of the messages conveyed by the
way the process is managed.
Organisational culture will influence any ethical practices, which may be enshrined in a code or policy on ethics. A
key dimension is to act fairly within the law.
Efficiency: This means using the resources of time, money, reputation and human resources to best effect. Having
a systematic plan provides a blueprint for the exercise. Following factors are used to determine selection process
efficiency:
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Selection ratio
Selection ratio is the percentage of applicants who are offered a job. The smaller the selection ratio, the higher is
the hit rate.
Hit rate
Hit rate is the percentage of candidates hired who turn out to be acceptable job performers. It is determined by:
Base rate
Base rate is the percentage of persons in the applicant sample who would be acceptable performers, if hired randomly
without any screening.
Reliability
Having found and used the most fair, efficient and effective methods and techniques, which are valid, the employer
should be able to use them consistently over time. This means that using them on more than one occasion will
provide the employer with results that are consistent and comparable with the results arising out of use on the last
occasion.
Effectiveness
Obtaining the right person using the optimum resources available must be the paramount objective. Moreover,
ineffective recruitment can lead to a poor ‘fit’ between the employer and the new employee causing an induction
crisis and underperformance. Not selecting the best candidate is a waste of money and could cause financial losses
and otherwise to the employer. What is required therefore here is the optimum fit of the person, the organisation,
and the job.
Validity
In order to obtain the best ‘fit’ the selection devices used must be valid and reasonable. Any technique or method
used must provide the employer with accurate results. There is little point in using an interview technique that does
not enable the employer to select the best candidate. Furthermore, there is no point in paying for the use of expensive
selection methods, such as tests if they do not measure the attributes or skills or competencies that you wish to
measure in the candidates and those, which are relevant to the job. A selection method, which is valid, will measure
what it is supposed to measure. Selection Validity indicates how accurate the selection method is in predicting and
which applicants will be good job performers.
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Summary
• Selection is the process of examining the applicants with respect to their suitability for the given job or jobs,
and choosing the best from the suitable candidates.
• The selection process involves choosing the best suitable applicant and rejection of other applicant.
• The overall aim of the recruitment and selection process is to obtain the number and quality of employees that
are required by the organisation or business to achieve its objectives.
• For supervisory and higher levels and specialist jobs, particularly in the public undertakings, private companies
and industries, the need for a sophisticated selection procedure has been felt and is now being introduced.
• An important technique in selection is the use of application blanks in which the questions are structured and
determined in advance.
• These application blanks serve the dual purpose of providing preliminary information about the candidate and
aids the interviewer by opening up areas of interest and discussion.
• Using information on candidate’s past and present, forms a basis for making predictions about candidate’s
future behaviour.
• Test results can help in selecting the best candidates.
• Recruitment involves searching for and attracting candidates to fill job vacancies.
• Selection ratio is the percentage of applicants who are offered a job.
• It is vitally important that references should indicate how long and in what capacity the referees had the contact
with the applicant. Some employers consider references-checking as an integral part of the total over-all selection
and assessment programme.
• Placement involves deciding which jobs people are to be assigned after they have been hired.
• The exit interview is the final step in the employment procedure. It is conducted by the human resource department
during the terminating employee’s last day on the job.
References
• Recruitment and Selection [Online] Available at: <http://www.egyankosh.ac.in/bitstream/123456789/36110/1/
unit-2.pdf> [Accessed 15 November]
• Lakshmi, P., Study on the Recriutment and Selection at IVRCL Infrastrcutre & Projects Ltd [Online] (Updated
17 August 2010) Available at: <http://www.scribd.com/doc/36005137/Project> [Accessed 15 November].
• Engelen, T., Shephard, J. R. and Yang, W., 2010. Behind the Scenes of Science: A Gender Research on Professorial
Recruitment and Selection Practices, Amsterdam, Amsterdam University Press.
• Mamoria, C. B. and Gankar, S.V., 2009. Textbook of Human Resource Management, Mumbai: Global
Media.
• An Interview with Mike Moore: 8 Steps to Recruitment Success, [Video Online] Available at: <http://www.
youtube.com/watch?v=mI-2Q8UWCPA&feature=related> [Accessed 29 November 2011].
• Recruitment and Selection Process, [Video Online]Available at:<http://www.youtube.com/watch?v=9Gj8QFxNOss>
Recommended Reading
• Patel, V. and Rana, G., 2007.Personnel Management, Mumbai: Global Media.
• Armstrong, M., 2006. Strategic Human Resource Management : A Guide to Action, London: Kogan Page
Ltd.
• Williams, G. C., 1992. Natural Selection: Domains, Levels, and Challenges, Cary, USA: Oxford University
Press.
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Self Assessment
a. Selection is the process of examining the applicants with respect to their suitability for the given job or jobs,
and choosing the best from the suitable candidates.
b. The selection process involves rejecting the best suitable applicant and selecting of other applicant.
c. The overall aim of the recruitment and selection process is to obtain the number and quality of employees
that are required by the organisation or business to achieve its objectives.
d. Recruitment and selection involves identifying and placing the right person in the right job.
2. Recruitment and are the two phases of the personnel practices and procedures complimentary to
each other.
a. selection
b. rejection
c. vacancy
d. examination
3. An important technique in selection is the use of .

a. recruitment
b. selection process
c. application blanks
d. references
4. Which of the following application blank has the purpose to identify areas that would have to be further explored
in the interview to assess the suitability of the applicant to the job?
a. Preliminary application blanks
b. Comprehensive application blanks
c. Employment application blanks
d. Application Scrutiny
5. Match the following.

A. Includes providing information about the organisation, the job,
1. Information Gathering
and employment conditions to candidates
B. Using information on candidate’s past and present, forms a basis
2. Decision-Making
for making predictions about candidate’s future behaviour.
C. Using the predictions about candidate’s future behaviour forms a
3. Information Supply
basis for making decisions about whom to accept or reject.
D. Involves generating information about the organisation, the job,
4. Prediction
career paths, and employment conditions.
a. 1-D, 2-C, 3-D, 4-B
b. 1-C, 2-D, 3-A, 4-B
c. 1-D, 2-A, 3-B, 4-C
d. 1-B, 2-C, 3-D, 4-A
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6. Which of the following is not a type of test?

a. Achievement or Intelligence Tests
b. Aptitude or Potential ability tests
c. Personality Tests
d. Written test
7. Which of the following indicates how accurate the selection method is in predicting and which applicants will
be good job performers?
a. selection validity
b. selection ratio
c. hit rate
d. Reliability
8. is the percentage of persons in the applicant sample who would be acceptable performers, if hired
randomly without any screening.
a. Hit rate
b. Base rate
c. Selection ratio
d. Selection validity
9. Which of the following area covers the applicant’s career aspirations, his immediate and long-range goals, and
his potential for advancement?
a. Occupational experience
b. Interpersonal competence
c. Career orientation
d. Hit rate
10. Interviewers permit or job-related attribute to influence their evaluation of the remaining qualities of
an applicant.
a. one trait
b. two traits
c. seven traits
d. quality traits
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Chapter V
Motivation and Morale
Aim
• outline the concept of motivation and morale
• classify different theories of motivation
• discuss the characteristics of motivation
Objectives
• elucidate about motivation and morale
• state the importance of motivation
• enlist the characteristics of motivation
Learning outcome
• enlist the objectives of motivation
• explain factors affecting morale
• classify motivators
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5.1 Meaning of Motivation

Motivation is a psychic force that drives an individual towards goal realisation. It is a process of inducing the
individual’s desires towards goals. Human beings derive satisfaction when goal is realised. Both, financial and
non-financial factors motivate employees.
Motivating employees and driving their energy towards organisational goals have been a major question for managers.
A number of theories of motivation have emerged to answer this. These theories have focussed on different aspects
of human motivation. It is a known fact that motivation is a psychological concept. It inspires a person to intensify
his efforts for the achievement of certain objectives. It motivates a person in action and induces him to continue in
the course of action enthusiastically. It is described in a number of qualitative ways.
Various definitions of motivation:

• The Encyclopaedia of management has defined motivation as the degree of readiness of an organism to pursue
some designated goal, and implies the determination of nature and locus of the forces including the degree of
readiness.
• In the words of Dalton E. Mc Farland, ‘Motivation refers to the way in which urges, drives, desires, aspirations,
strivings needs direct control or explain the behaviour of human beings.’
• Koontz and O’Donnell stated that motivation is a general term applying to the entire class of drives, desires,
needs, wishes, and similar forces.
• Dubin referred motivation to the complex of forces starting and keeping a person at work in an organisation.
Motivation starts and maintains an activity along a prescribed line.
Motivation is something that makes the person to action and continues him in the course of action already initiated.
These definitions show that motivation has following characteristics:
• Motivation is an inner feeling and psychological aspect. However its reaction is physical.
• Motivation is a continuous process and contains system orientation.
• It stimulates human being to release his energy and the behaviour is directed to realise goals.
• Motivation can be positive or negative.
• It is complex and is influenced by many variables at a time.
5.2 Objectives of Motivation

The objectives of motivation put forth by psychologists and sociologists are the means of answering two basic
questions concerning human behaviour, i.e., why an individual is impelled to act and what determines the direction
of his actions. Let us discuss the views of some psychologists and Sociologists, who attempted to evaluate the
human behaviour in different contexts.
• According to Skinner motivation objectives exist to make an individual learn what may be regarded as positive
behaviour, i.e., desirable behaviour.
• Abraham Maslow observes that the objective of motivation is always to create a need for an individual. It is just
like the process of lower needs being satisfied and the higher needs gradually emerging (Hierarchy or Needs).
• Frederick Herzberg felt that the important objective of motivation is to provide opportunities to become a
better expert on one’s job, to handle more demanding assignments, to control one’s own work rather than be
supervised.
• Mclell opined that the objective of motivation is to create a strong desire in an individual, where he derives a
special kind of joy in successfully attaining an objective in accomplishing a task in facing up to a challenge
rather than monetary or other rewards.
• Victor Wroom thinks that motivation should work as a means of communication for increasing positive values
in the employees. Obviously the objectives of motivation are to increase efficiency by good performance.
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Motives are abundant and divergent. There is no single strategy that will motivate the employees forever and every
where. The motives for individuals to work are numerous.
5.3 Characteristics of Motivation

Some important characteristics of motivation which follow from the discussion of its determinants are:
Characteristic Description
There is no single economic drive which determines behaviour. As the

desires and goals of individuals differ, so do their motivations; one may do
Individuals differ in their
a job because it is remunerative, another may do it because it gives a sense
motivation
of achievement, or enables him/her to serve a cause which is dear to him/
her.
A person may work very well in one organisation and poorly in another
Motivation is highly
in the same position or type of the job. The performance may vary with
situational
working conditions and type of supervision.
Motivation of each individual changes from time to time even if he/she

may continue to behave in the same way. For example, a temporary worker
Motivation change may produce more in the beginning to become permanent. After being
made permanent, he/she may continue to produce more to gain promotion
and so on.
Needs and the way in which they are translated into action may vary
considerably from one individual to another. Different persons may also
react differently to successful or unsuccessful fulfilment of their needs.
One may feel frustrated if his/her need has not been met, but the other
Motivation is expressed may be motivated by his/her failure and redouble his/her effort to get his/
differently her need met (say, by writing and publishing additional scholarly articles
or books). Again one individual with strong security need may avoid
accepting responsibility for fear of failure and dismissal and the other with
a similar need may seek out responsibility for fear of being fired for low
performance.
It is difficult to explain and predict the behaviour of workers. Use of one

motivational device may not produce the desired result if it brings an
opposing motive into play. In a factory when a blue-green device was
Motivation is complex introduced to reduce eye strain, the output of male workers increased while
that of female workers decreased. It was found that the latter disliked this
change as the new type of light falling on them made them look simply
ghastly in appearance.
Table 5.1 Characteristics of motivation
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5.4 Motivators
Motivators are stimulants that drive individual into action. They are related to physical or psychological aspects of
human behaviour. Motivators are classified into financial or non-financial. They are described below:
Motivators
Financial
Motivators Motivators
Fig. 5.1 Types of motivators
Financial motivators
Financial motivators relate to money or any other benefits that can be converted or expressed into monetary unit. In
the present day context, money has become a means to satisfy the physical needs. It is an instrument of obtaining
social position and power. Thus, money has become a basic incentive for individuals. Wages, salaries, allowances,
bonus, financial incentives, commission etc. are financial motivators. These financial motivators motivate individuals
to join organisations. The financial package should motivate the present and prospective employees.
However, it should be borne in mind that money is not an end but a means of an end. It can satisfy both, physical and
safety needs. Interestingly, some people place a little emphasis on money irrespective of their possession. However,
certain people are continuously driven by the desire to acquire more money even if they have possessed wealth to
satisfy their basic needs. This may be to satisfy their desire for status, esteem and self-actualisation. This reveals
that money is an instrument by which a person can satisfy various types of needs. Even research supports use of
money in satisfying esteem and recognition needs too, as well as basic physiological needs.
The above discussion makes it clear that money is a motivator. Its role in motivation is unquestionable. However,
behavioural theories placed importance on non-monetary rewards and suggested that if money only motivates, there
could have been human machines and not human beings.
Wages Financial
Salaries Allowances Bonus Commission
incentives
Fig. 5.2 Financial motivators
Non financial motivators

General hypothesis is that financial incentives motivate employees for higher work. However, individuals have
variety of needs that they want to satisfy while working in organisations. People attach more importance to socio-
psychological needs that cannot be satisfied by money alone at higher level of managerial hierarchy. Thus, management
provides non-financial incentives to motivate people in the organisation in addition to the financial incentives.
However, the emphasis of nonfinancial incentives is to provide psychological and emotional satisfaction rather than
financial satisfaction. For example, receiving promotion in the organisation gives psychological satisfaction. This
is because one gets better status, more challenging job, authority etc., which has more value than getting more pay
by way of promotion. Some important non-financial incentives includes:
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Status Promotion Responsibility
Recognition Job security
Fig. 5.3 Non-financial incentives
5.5 Motivation Theories

Some of the most influential theories of motivation are as follow:
5.5.1 Need Hierarchy Theory

The needs theory was originated by Abraham Maslow and is popularly known as “Need Hierarchy Theory.” This
is one of the earliest and most popular models/theories of motivation. Maslow considered several needs to explain
human behaviour and proposed that these needs have a hierarchy, i.e., some needs are lower-order needs as compared
to other higher-order needs. He also proposed that unless the need at the lower level is satisfied, the higher-order
need will not be operative, and once the lower order need is satisfied, it will no longer motivate the person. Maslow
has proposed five main hierarchical levels of needs, as shown in the figure below:
Self-
Actualisation
Esteem
Social
Safety
Physiological
Fig. 5.4 Maslow’s need hierarchy
• Physiological needs: These are important needs for sustaining human life. Food, water, warmth, shelter, sleep,
medicine and education are the basic physiological needs which fall in the primary list of need satisfaction.
Maslow was of an opinion that until these needs are satisfied to a degree to maintain life, no other motivating
factors can work.
• Security or safety needs: These are needs to be free from physical dangers such as the fear of losing a job,
property, food or shelter. It also includes protection against any emotional harm.
• Social needs: Since people are social beings, they look for social acceptance. People try to satisfy their social
needs like affection, acceptance and friendship.
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• Esteem needs: According to Maslow, once people begin to satisfy their social needs, they want to be held in
esteem both, by themselves and by others. This kind of need produces satisfaction as power, prestige, status
and self-confidence. It includes both, internal esteem factors like self-respect, autonomy, achievements, and
external esteem factors such as status, recognition and attention.
• Need for self-actualisation: Maslow regards this as the highest need in his hierarchy. It is the drive to become
what one is capable of becoming; it includes growth, achieving one’s potential and self-fulfilment. It is to
maximise one’s potential and to accomplish something.
5.5.2 Douglas MeGregor’s Theory X and Theory Y

Douglas McGregor proposed two different motivational theories which are popularly known as ‘Theory X’ and
‘Theory Y’. Managers tend to believe one or the other and treat their employees accordingly. Theory X and Theory
Y are based on the following assumptions:
Assumptions of Theory X:
• Most people dislike work and avoid it whenever possible.
• They need to be directed, controlled and threatened with punishment in order to move them to work and achieve
organisational goals.
• An average person is lazy, shuns responsibility, prefers to be directed, has little ambition and is only concerned
with his own security. Most people avoid leading and want to be led and supervised. They are unwilling to accept
responsibility. Here, managers practice an autocratic management style and may use the threat of punishment
to induce employee productivity.
Assumptions of Theory Y:
• Work is natural to most people and they enjoy the physical and mental effort involved in working, similar to
rest or play.
• Commitment to goals and objectives of the organisation is also a natural state of behaviour for most
individuals.
• They will exercise self direction and self control in pursuit and achievement of organisational goals.
• Commitment to goals and objectives is a function of rewards available, especially the rewards of appreciation
and recognition.
• Many individuals seek leadership roles.
Managers who hold Theory Y assumptions treat their workers as responsible persons and give them more freedom
in performing their tasks.
5.5.3 Theory Z
Theory Z has received considerable attention as a theory of motivation in the recent years. It has originated from
Japanese management philosophy. Japanese management is characterised by the optimum use of human energy.
Some other notable features of Japanese organisations are increase in productivity, lower rates of absenteeism and
turnover and high degree of organisational commitment. William Ouchi and Alfred Jaeger have propounded the
theory. William Ouchi made an integration of characteristics of American organisations ‘Type A’ and Japanese
organisations ‘Type J’. The integrated theory is known as theory Z. Some specific characteristics of theory Z are
as follows:
• Selection, compensation and promotions: Selection of employees is considerably for a long time. The sources
of selections are schools, institutions and other organisations. People of all ages are selected. Selections are based
on job related formal education and specialised skills. Promotions are based on the productivity performance.
• Organisation structure: The organisation structure is hierarchical. It emphasises on moderate job specialisation
and decentralisation, job enlargement, quality circles and matrix form of organisation. Organisations are built
around groups.
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• Decision-making: Decision making is less centralised. Emphasis is on the informal and consensus opinion.
Verbal communication is encouraged. Written communication is used only to verify execution of decisions.
• Management systems: Management tries to harmonise individual and organisational goals to achieve a high
degree of goal congruence. Employees are considered as valuable assets. Employee’s inherent liking to work
and supervision is remote. Self-controls are exercised.
• Employee relationships: High concern is shown to employee and his welfare. Relationships are paternalistic
type. Employment is lifetime. Joint problem solving is followed by employer and employee.
• Human resources development: Potential skills are recognised. Job enlargement and career planning are given
due emphasis. Organisational socialisation, technical training, research and development are given priority.
Thus, theory Z advocates establishment of motivational oriented organisational culture with special emphasis on
employee development and participative culture.
Characteristics: Type A Organisations Type J organisations

Theory Z (American) (Japanese)
Decision Making:
Individual managers make
Emphasis on group participation Group decision making
decisions
and consensus
Responsibility: Shared collectively by the

Assigned on individual basis
Assigned on an individual basis group
Control:
Attention on informal controls Implicit and informal control.
Explicit and formal controls
and existence of explicit Based ontrust and good will
performance measures
Performance evaluation and

promotion of personnel: Very fast promotions. Job
Slower promotions. Emphasis hopping Very slow promotions.
on evaluation and training than
promotion
Career paths:
Very general .Job rotation and Very specialised career. Very general. Employees are
broad-based training is given to People stick to one area of allowed to learn all areas of
feel that they are suitable in part specialisation. operations.
of the organisation.
Concern for personnel: Concerned with whole life,

Concerned with work life
Concern for workers whole life business and social
Table 5.2 Integration of characteristics
5.5.4 ERG Theory

The ERG need theory, developed by Clayton Alerter, is a refinement of Maslow’s needs hierarchy. Instead of
Maslow’s five needs, ERG theory condenses these five needs into three needs. These three needs are those of
Existence, Relatedness and Growth. The E, R and G are the initials for these needs.
• Existence needs: These needs are roughly comparable to the physiological and safety needs of Maslow’s model
and are satisfied primarily by material incentives.
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• Relatedness needs: Relatedness needs roughly correspond to social and esteem needs in Maslow’s hierarchy.
These needs are satisfied by personal relationships and social interaction with others.
• Growth needs: These are the needs to develop and grow and reach the full potential that a person is capable
of reaching. They are similar to Maslow’s self-actualisation needs.
Similarity between ERG Theory and Maslow’s Theory of motivation:
Maslow ERG
Self-actualisation Growth
Self-esteem (upper level)
Self-esteem (lower level) Relatedness
Social
Safety Existence
Physiological
Table 5.3 Similarities between Maslow and ERG theories
5.5.5 Herzberg’s Motivation- Hygiene Theory

Fredrick Herzberg and his associates developed the “Motivation Hygiene Theory”, commonly known as the “Two
Factor Theory”. Herzberg advocated that there are certain factors that tend to be consistently related to job satisfaction
and on the other hand, there are some factors, which are consistently related to job dissatisfaction. These two factors
are described in detail as follows:
Hygiene factors: Hygiene factors or the maintenance factors do not motivate people, they simply prevent
dissatisfaction and maintain status quo. Such factors do not produce positive results but prevent negative results.
According to Herzberg maintenance, hygiene factors are:
• Company Policy and Administration
• Technical Supervision
• Inter-personal relations with Supervisor
• Inter-personal relations with peers
• Inter-personal relations with subordinates
• Salary
• Job security
• Personal life
• Working conditions
• Status
Motivational factors: These factors are basically related to the job. The motivational factors have a positive effect
on job satisfaction and often result in an increase in total output. Thus, these factors have a positive influence on
morale, satisfaction, efficiency and productivity. They are:
• Achievement
• Advancement
• Possibility of growth
• Recognition
• Work itself
• Responsibility
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The theory suggests that any increase in these factors will improve the level of satisfaction.
Similarities and distinctions between Maslows’ and Herzberg’s Theories Maslow’s theory of need hierarchy and
Herzberg’s two-factor theories are similar and dissimilar in certain respects. The following points of similarities
are observed in both the theories:
Similarity Description
Maslow and Herzberg’s theories have identified that motivation is a process
Nature of motivation
and it results in to performance.
Both the theories have considered the totality of needs. Herzberg considered
Human needs certain needs as motivators. Maslow considered the same needs as esteem and
self-actualisation.
Both the theories have considered that needs determine motivation and
Behaviour
motivation determines the behaviour of individuals.
Table 5.4 Similarities between Maslow’s and Herzberg’s theories
Both the theories of motivation provide a basic framework for understanding human motivation. The theories are
relevant in work group settings. However, the theories have not considered individual differences.
Differences Maslow’s Need Hierarchy Herzberg’s Two Factors Theory

Nature Descriptive Prescriptive
Arrangement of
Needs Sequential arrangement No sequential arrangement
Classification Higher order and Lower Order needs Hygiene and Motivators
Unsatisfied need causes behaviour and
Relationship Satisfied need causes performance
behaviour causes performance.
Motivation Satisfied need is not a motivator. Higher order needs are motivators
Financial benefits are not
Financial factors Pay and financial benefits are motivators.
motivators
Macro view and applicable to general Considers micro view and
Applicability
motivation. applicable to work motivation
White collar and professional
Relevance All individuals
workers
Table 5.5 Distinction between Maslow’s and Herzberg’s theories
5.5.6 Mc Cleland’s Theory of Needs

Harvard psychologist David McClelland used the Thematic Aptitude Test (TAT) to measure people in three
dimensions: the need for power, achievement, and affiliation.
Individuals with a high need for power take actions that affect other people’s behaviour and arouse strong emotions in
them. The need for power can be revealed in socially acceptable ways (demonstrating a socialised power orientation)
or in selfish ways (a personalised power orientation). Those with strong need for achievement enjoy competition
against some standard and unique accomplishment. High achievers like tasks that are neither simple (which anyone
could do) nor extremely difficult (where success depends more on luck than ability), but that challenge them to do
their best. People with a strong need for affiliation need to be liked and accepted. These individuals tend to establish,
maintain, and restore closer personal relationships with others.
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5.5.7 Expectancy Theory

Victor Vroom propounded the expectancy theory to explain motivation. It explains that motivation is a process of
eliciting a positive satisfaction. The central concept of the theory is that individual is motivated and the strength of
his action depends on close association between his preference to a specific outcome and the actual outcome. He
stated that motivational force is the sum of the product of valence and expectancy. The theory established relationship
between effort, performance and rewards.
• Effort-performance relationship: It is the probability perceived by the individual that exerting a given amount
of effort leads to performance.
• Performance-reward relationship: This is the degree to which the individual believes that performing at a
particular level will lead to the attainment of a desired outcome.
• Rewards-personal goals relationship: It is the degree to which organisational rewards satisfy an individual’s
personal goals or needs and the attractiveness of those potential rewards for the individuals.
These three relationships are referred to valence, instrumentality and expectancy. Thus, the theory is also known as
VIE theory of motivation. The concepts used in the theory are explained below:
Valence: Valence is the strength of an individual’s preference for a particular outcome. Every individual believes
that his effort leads to certain definite outcome. This is expected utility or value. The greater the strength or the
expectation of the outcome the greater would be the level of motivation. For instance, if an employee believes that
working hard and producing better leads to payment of bonus, he will work hard to get more bonus. Thus, valence
can be positive or negative. It is positive when employee has a strong preference to reward. It will be zero if he is
indifferent. Similarly, it will be negative if employee does not prefer to attain the outcome.
Instrumentality: Instrumentality refers to the strength of the belief about the certainty of outcome. Thus, it is the
expression of probability between performance and reward. This varies between ± 1. The performance reward
relationship is positive, in case of positive instrumentality and vice versa. Employee tries to estimate the probability
about the reward associated with performance. For example, instrumentality is high when employee feels certainty
of bonus. If he is doubtful about the payment of bonus, instrumentality will be low.
Expectancy: Expectancy is the belief that effort will lead to outcome and performance. Therefore, expectancy
determines the strength of performance rather than the outcome. It is based on self-efficacy. Employee with high
level of self-efficacy is more likely to believe that exerting effort will result in satisfactory performance. A high
level of self-efficacy has high expectancy, while low level of self-efficacy has low expectancy.
Persons suffering from low level of self-efficacy exhibit a phenomenon known as ‘imposter phenomenon’. This
means that individuals are capable, as they appear to be. They are afraid of their inferiority, which may be revealed
in public if they exert high effort. Imposters have low expectancy, as they believe that they lack the necessary
competence. Expectancy is evaluated as a probability which varies from 0 to 1. Zero is associated with complete
uncertainty. As the performance is assured, the expectancy rises and it will be high if the performance is certain. It
is interesting to note that both, internal and external environment influence expectancy. Other factors influencing
expectancy are: personality, self-efficacy, experience, learning and perception. Thus, motivation is also influenced
by these factors.
According to expectancy theory, motivation is the result of the sum of the product of valence, instrumentality and
expectancy. It can be stated in the form of following mathematical formula:
Motivation = Σ (Valence X Instrumentality X Expectancy)
It should be observed here that all the variables are multiplicative in nature. They are not additive. Therefore, the
following propositions can be made:
• Motivation is positive only when all variables are positive.
• Motivation is negative when all or any one of the variables is negative.
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• Motivation is zero even when any one of the variables is zero.
• Motivation is also low even when any one of the variables is low.
The relationship among various variables in the expectancy model and the impact on motivation can be shown in
Table 5.6 below:
Valence Instrumentality Expectancy Motivation

High High High Strong motivation
Low High High Moderate motivation
High Low High Strong avoidance
Low Low High Moderate avoidance
High High Low Moderate motivation
Low High Low Weak avoidance
High Low Low Moderate avoidance
Low Low Low Strong avoidance
Table 5.6 The level of motivation
Expectancy theory has brought new dimensions to understand motivation. Managers can motivate employees by
manipulating any one of the factors in a positive way and avoiding negative ways. However, expectancy theory has
introduced complex and critical variables, hence, its understanding is difficult.
5.5.8 Likert’s Sales Management Theory

Unlike Herzberg, Maslow and Vroom, Likert based his sales management theory on research that looked specifically at
the motivation of sales people. His research related different characteristics and styles of supervision to performance.
One of the hypotheses he tested was that the sales manager’s own behaviour provide a set of standards which, in
themselves, will affect the behaviour of their sales people. He found that there was a link. High performing sales
teams usually had sales managers who themselves had high performance goals.
His research also investigated the methods used by sales managers in the running of sales meetings. He further
studied that the group method of leading a sales meeting encourages problem-solving and stimulates communication.
Second, the more open style of meeting enables the sales manager to gain a greater understanding of the needs and
problems of the sales force. Finally, the group method promotes a feeling of group loyalty since it fosters a spirit
of co-operation. Thus, the research conducted by Likert suggests that to produce a highly motivated sales force,
the sales manager should have high performance goals and encourage analysis and discussion of salespeople’s
performance and problems through the group method of conducting sales meetings.
Sales manager
Sales people
Group method Monopolist

(interaction between (Little interaction
sales people) between salespeople)
Fig. 5.5 Methods of conducting sales meetings
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5.5.9 Churchill, Ford and Walker Model of Sales Force Motivation

Churchill developed a model of sales force motivation that integrated some ideas of Herzberg and Vroom. This
suggests that higher the salesperson’s motivation, greater the effort, leads to higher performance. This enhanced
performance will lead to greater rewards which will bring about higher job satisfaction. The circle will be completed
by the enhanced satisfaction causing still higher motivation.
The implications of this model for sales managers are as follows:

• They should convince sales people that they will sell more by working harder or by being trained to work
‘smarter’ (For example, more efficient call planning, developing selling skills).
• They should convince sales people that the rewards for better performance are worth the extra effort. This
implies that sales manager should give rewards that are valued and attempt to ‘sell’ their worth to the sales
force. For example, a sales manager might build up the worth of a holiday prize by stating what a good time
they personally had when there.
• They also found that the value of rewards differed according to salesperson type.
• Older salespeople who had large families valued financial rewards more. Younger, better educated sales people
who had no family or had small families show a tendancy to value higher order rewards (recognition, liking
and respect, sense of accomplishment).
Motivation Effort Performance Rewards Satisfaction
Fig. 5.6 Sales force motivation
5.5.10 Porter and Lawyer Theory

Porter and Lawler have developed more comprehensive model of motivation. This theory is also known as
performance-satisfaction theory of motivation. The model of motivation emerges based on the assumptions of
content theories of motivation. The content theories have assumed that satisfaction leads to performance and
dissatisfaction limits the performance of individuals. Porter and Lawler model is an out growth of Victor Vrooms’
model of motivation. The assumptions of Porter and Lawler model of motivation are as follows:
• Motivation is not equal to satisfaction or performance.
• Motivation, satisfaction and performance are independent variables but there exists some relationship.
• The relationships between motivation and satisfaction can be expressed diagrammatically rather than
mathematically.
• More than valence and expectancy, some more variables and the cognitive process plays a major role in
determining the motivation.
Motivation model suggested by Porter and Lawler is a multi-variable model and explains the complex of relationship
among motivation, performance and satisfaction. According to the model, motivation is the result of effort when
abilities, traits and role perceptions accompany it. Rewards and perception of rewards determine satisfaction of an
individual. Thus, Porter and Lawler model is concerned about the result of performance. It suggested that performance
leads to satisfaction. The concepts of the model are described below:
Value of rewards: Individual evaluates the reward that he is likely to receive after the performance of a task.
Perceived effort reward probability: Individuals place a probability of the reward for the effort. The perception
determines the effort. If individual perceives greater probability for the reward, his effort will be greater.
Effort: It is the effort individual intended to put in relation to the rewards perceived by him.
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Abilities and traits: Individual’s effort depends on his intrinsic ability and the characteristic traits possessed by
him.
Role perception: Role is the expected way of behaviour of an individual. The way he perceives his role in the
organisation determines his motivation.
Performance: It is related to the accomplishment of tasks or achieving the goals. Individuals who are properly
motivated show greater performance.
Intrinsic rewards: The reward that comes within the job is called intrinsic reward. It is received when the job is
performed. Recognition, esteem, responsibility etc. are intrinsic rewards.
Extrinsic rewards: The rewards that are received after the job is completed is known as extrinsic rewards. For
instance, salary, fringe benefits, incentives are some of the examples for extrinsic rewards.
Perceived equitable rewards: Individuals’ feeling that the reward is fair and equitable to the effort determines the
individual’s willingness to put forward his effort. A positive perception about the fairness of reward leads to greater
effort and vice-versa.
Satisfaction: This is the outcome of the process. It is the degree of contentment that individual feels about the job.
Satisfaction is an intangible aspect. It can only be measured in terms of expressions and emotions. If individual is
satisfied, he will show greater performance on the job. This model suggests that the organisation should evaluate and
redesign the policies relating to the motivation. It also suggests that the level of satisfaction and level of performance
are to be related to elicit greater performance on the job. Thus, the model is considered to have greater impact in
understanding the relationship between performance and satisfaction. The model suggests the following guidelines
for motivating the employees:
• Job placement: Individual’s abilities and personality traits should be matched with the requirements of the job.
A best fit between perceived attitudes and the job provides best motivation. Thus, the principle of right person
in the right job should be followed. A misfit de-motivates the employees.
• Job role specification: Organisations should provide clear communication to clarify the roles of employees. It
should be ensured that the employees have clearly understood their jobs, responsibilities, rewards and outcomes.
The expectations of the organisation should be communicated to the employees in a clear and unambiguous
manner.
• Job rewards: Employees should be made clear about the rewards they will receive from the completion of the
job. They should also value these rewards and perceive that the rewards are beneficial to them.
5.6 Essentials for Motivation

Motivation is a state of mind. High motivation leads to high morale and greater production. A motivated employee
gives his best to the organisation. He stays loyal and committed to the organisation. A sound motivation system in
an organisation should have the following essentials:
• Performance of the employee should be reasonably rewarded and should be duly acknowledged.
• If the performance is not consistently up to the mark, then the system must make provisions for penalties.
• The employees must be dealt in a fair and just manner. The grievances and obstacles faced by them must be
dealt instantly and fairly.
• Performance appraisal system should be very effective.
• Ensure flexibility in working arrangements.
• A sound motivation system must be correlated to organisational goals. Thus, the individual/employee goals
must be harmonised with the organisational goals.
• The motivational system must be modified to the situation and to the organisation.
• The management approach should be participative. All the subordinates and employees should be involved in
decision- making process.
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“Motivate yourself to motivate your employees” should be the managerial approach.
The managers must understand and identify the motivators for each employee.
The motivation system should involve monetary as well as non- monetary rewards. The monetary rewards should
be correlated to performance. Performance should be based on the employee’s action towards the goals, and not on
the fame of employees.
5.7 Role of Manager in Motivation

The key role of a manager is to hire self-motivated employees. Apart from this the manager has to create a positive
motivational climate in which employees are willing to take full responsibility for their own motivation. Some
innovative ways that a manager should follow to motivate the employees are:
Get to know every employee: It is virtually impossible for a manager to motivate his/her employees without getting
to know them. Whenever starting a new job, all managers should make a point of having an individual meeting with
each member of their staff. Similarly, if the manager does not know an employee’s strengths, he will be unlikely to
find the right role for them. These individual sessions are a great opportunity to encourage employees to contribute
their ideas.
Show respect by asking employees for their feedback: When management asks employees for feedback about
their management style and practices, they communicate respect and concern. In such an atmosphere, employees
are more likely to feel committed to their work and the company. Just as smart companies actively and continuously
solicit feedback from their customers to find out how well they are meeting their needs.
Give employees as much control as possible over their work: The more control and autonomy employees have
over their work, the more they are able to use their minds. When employees have a say in their work, and therefore
feel in control, they become more energised, enthusiastic, and productive.
Challenge them to improve the operation: One way for managers to make it clear that they welcome input and
suggestions is to give each employee a clear mandate in their work requirements and make recommendations for
improvements. This sets down a marker that all employees are expected to contribute their ideas. It is equally
important to comment on each employee’s efforts in this area at evaluation time.
Give employees who serve the customer, the power to please the customer:
If frontline customer service professionals have the power to please the customer, the predominant tone of their
interactions is one of appreciation and delighted surprise.
This creates a sense of pride and well-being, the emotional foundation of world class customer service.
The great idea award: It is also important to find a way to reward or recognise employees whose suggestions help
improve the operation. One option is to establish a great idea award and give the recipient a customised certificate.
Other options could be to give them a logo item, a cash award or even a day off (It will depend both, on what the
parent agency permits and what the employee values most).
Do not force employees to check their brains at the door: Few things kill the spirit more quickly than mind-
numbing work. Give employees the opportunity to think on the job. Encourage them to improve the work processes.
People who do the work usually have the best ideas about how to do it better. It makes work more enjoyable and
interesting. Create processes and rewards that encourage them to find out what customers want and then deliver this
critical information to key decision-makers.
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Don not forget the implementation: A crucial part of this whole equation is the actual implementation of the great
ideas generated by employees. Managers should put the person who suggested a great idea in charge of the actual
implementation. The initiator of an innovative idea usually has a sense of ownership and is highly motivated to see
their suggestion put into effect.
There are variations across organisations and individuals in the application of motivation. Even within the organisation,
there are variations at different levels in the managerial hierarchy. The commonly used approaches to motivate
employees are discussed below:
• Money is a powerful motivator: Money is a powerful motivator even in the modern day society. It is believed
that social status, position, power, prestige, recognition etc. are associated with money. Employees receiving
higher salary can lead luxurious life and commands respect from society. Organisations use financial incentives
to motivate employees. Some of the financial approaches to motivate employees include variable pay packages,
piece rate plans, incentives based on the performance, profit sharing plan, gain sharing schemes, skill based
incentive schemes, and knowledge based financial incentive plans and flexible benefits.
• Job redesign: Job redesign is one of the strategies to motivate employees in organisations. Some job redesign
techniques include: job enlargement, job enrichment and job rotation. Job enlargement is adding more tasks
and job responsibilities. Thus, providing an opportunity to employees to spend more time on the job and still
feel comfortable. Job enlargement motivates employees as they are allowed to perform variety of tasks. The
work modules are made meaningful. Job redesign allows scope for utilisation of abilities and provides feedback.
Job enrichment is enriching the jobs by adding motivators such as challenging goals, creativity and innovative
process, making it more exciting and incorporating growth opportunities in the job. This motivates employees
and provides satisfaction. Job rotation is another strategy. It involves changing the employees from one job to
another job.
• Quality of work life (QWL): Quality of work life is a relatively new concept that received attention of the
managers today. It has different meaning to different people. As a motivation technique, it includes: provision
of adequate and fair compensation and safe and healthy work environment, continuous effort of employees
development, provision of growth potentials in the job, protecting self esteem, creating a sense of identity, up-
keeping self respect, equity and dignity of employees and integration of job with family life.
• Management by objectives (MBO): Management by objectives is technique of allowing setting the goals by
participation and actively involving manager and subordinates at every level. This allows them to feel personal
responsibility and a sense of achievement.
• Performance appraisal: Performance appraisal is a technique of assessing the employee performance at regular
and continuous intervals in order to appraise their abilities. It helps in appraising the merits and deficiencies
of employee’s performance. This appraisal suggests feedback to employees and they are allowed to overcome
their deficiencies.
5.8 Morale
Though, the organisation’s focus is always on performance, based on wst-benefit approach, it was felt imperative
to consider the issue of morale in a wider perspective.
From the institutional point of view, the problem of employee’s morale is that of stimulating a feeling of togetherness,
a sense of identification with the job. It is more conducive to the achievement of institutional goals. It is important
because performance and efficiency of operation depends upon employee’s morale. To attain these high standards
of morale it is essential to enlist the feelings of employees and their abilities in the work. ‘Morale’ is an attitude
of satisfaction with desire to continue in and willingness to strive for the goals of a particular organisation. There
are two important elements. Firstly, that the individual shares the purpose which gives him enthusiasm, energy and
self-discipline. Secondly, the individuals have the responsibility to infuse the feeling of togetherness, a sense of
identification and his consideration for other members of the institution.
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Further, morale is viewed as ‘the capacity of a group to pull together persistently and consistently in pursuit of
common purpose’. This capacity is subjective and differs from person to person depending upon the people’s interest
in a particular work. This capacity is inherent in every individual and is seen in their attitudes towards particular
work.
5.8.1 Types of Morale

There are basically two groups of morale:
5.8.1.1 Individual Morale

The components of morale are still rather elusive, despite growing agreement upon several generalisations. One
of these generalisations is that the group climate must provide opportunity for individual self-expression or self-
accommodation by the members of the group. Another is that the occupational context must furnish outlets for the
individuals pride in his own workmanship. Still another and more important is that members of the group must find
it easy to accept the purposes and values of a group as their own so that they have a sense of belonging to the group
or identity with it. All these may be described as individualistic bases of morale.
5.8.1.2 Group Morale

Hawthorne studies point out that pride in group is an important component of morale.
Employees like to belong to be part of and be accepted by the group even where an employee dislikes the actual work
itself. He may have high morale, stemming from his pleasure of group with his group work. Where there is a well
integrated group, there would be high group morale, as well as individual morale. Since good supervision correlated
with good group morale, special attention should be paid to the training programme of supervisory staff. Whether
it is group or individual morale, it must be evaluated from time to time in the interest of the organisation.
5.8.1.3 Factors Affecting Morale

There are four factors which affect the morale of the employees in an organisation.
They are as follows:
The Organisation
Nature of Work
Supervisory Techniques
Fellow-employee’s interaction
Fig. 5.7 Factors affecting morale
The organisation
As practical matter morale is based upon the understanding that an employee’s future depends upon the success of
the organisation, and that the efficient service leads to high pay, job security, and promotions. Employee’s morale
cannot be exploited by authoritarian attitude of the organisation. Employee’s morale must be won through, sound
personnel policies. Through benevolent paternalism, employees can be made happy, loyal and grateful. To maintain
employee’s morale every organisation is required to ensure the following:
• A proper human relations programme
• Survey of employee’s attitude should be undertaken to initiate corrective action
• The findings of attitude surveys should be communicated to employees to gain their faith in the organisation
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• Free flow of information to and from the employees and among employees
• A reward system for good work
Nature of work
Employees want jobs that match their needs, values and personalities. Studies have shown that employees who
undertake a job that requires the use of skills derive a sense of competence from mastering. Employees will be
happy when they believe themselves to be competent in performing meaningful work. Since most employees strive
to master important activities of their lives, it is not surprising that mastery of skills performed on the job involved
a certain amount of pride. Work, for most people, is the most important activity which influences their self-esteem.
Tedious, boring and routine work will not contribute morale building.
Supervisory techniques
An important step in the morale-building program is to instil in supervisors the need for applying human relations
in supervision. Supervision must help the employees to enjoy the anticipation of future satisfactions of their drives
rather than the whim of the movement. The major failure of poor supervision is the failure of supervisor to understand
emotions. To boost up the morale, supervisor should be democratic and allow participation of employees in running
the departmental affairs. Supervisor should be fair and impartial in dealing with his assistants. He should also build
up the pride of the employee in his work by explaining its importance and giving recognition for good work. He
should learn to apply positive discipline, which corrects by showing right way and does not restrict the individual
employee who is being brought into line.
Fellow-employee’s interaction
In the socialisation process of the institution, co-employees interaction influences employee’s morale a lot. Formal
training, institutional rules and regulations may not be sufficient for the new entrants in understanding their role
expected by the institution.
Co-employee’s informal assistance, fraternity, cooperation will help the new comers in performing their work
assigned by the institution. Fellow-employee’s non co-operation, jealous attitude, carelessness create undesirable
work environment. A co-operative behaviour leads to high group morale.
5.8.2 Evaluation of Morale

Whether of an individual or a group, the level of morale must be observed and expressed largely in terms of complex
reactions. Most employers, who are concerned with employee morale, recognise the necessity for careful analysis
of all expressions of employee reactions. There are several methods of survey of morale. Some of the methods are
as under:
Attitude survey
Morale interviews
Spies and informers
Fig. 5.8 Methods of survey of morale
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Attitude survey
These surveys depend upon questionnaires, which are administered orally or in writing from any employees. By
answering these questionnaires, employee’s attitude towards a wide range of conditions are related to their work.
Analysis of their replies provides a guide to general levels of morale as well as more specific indications of their
likes and dislikes in the prevailing employment situation.
Morale interviews
By frequent and periodic interviews with employees, their morale can be assessed. In these visits, the interviewer
encourages the employee to speak freely and frankly in respect of his job, his supervisors, his fellow employees,
and any other conditions affecting his employment without any fear or hazard to his status in the organisation.
Spies and informers

Earlier, the employers used to hire spies and placed them in various departments for the specific purpose of finding out
what employees thought of their jobs and of working conditions in the organisation. After formation of employee’s
unions associations this practice was almost given up and it became outdated. Morale survey methods are varied
from one organisation to another. However, it all depends upon the nature of the work of employee, organisation,
authorities’ outlook, and size of the organisation etc.
5.8.3 Indices of Morale

Morale can be measured only indirectly. Following are some of the indices of employee’s morale:
Turnover: Sometimes greater turnover of

Absenteeism: Where there is high morale, labour may be included in the indices of poor
employees make efforts to be on time and morale. It may not be true in all cases. Young
avoid absence. A high rate of absenteeism employees in unskilled jobs have higher
indicates poor morale. turnover rate than older employees in higher
positions.
The indices of
employee’s morale
Output level: High level of output may

indicate high level of morale but the output may
be increased even by fear. The employees with
Grievances: Some grievances may arise out of higher level of morale may produce low output
poor morale. due to substandard tools or deliberate plan to
restrict output. These may not be the proper
measuring rods of morale. But the level of
output will also exhibit the level of morale.
Fig. 5.9 Indices of employee’s morale
5.8.4 Measures to Improve Morale

Morale is not static. It is subject to daily, or even to monetary fluctuations. It is also subject to long-term secular
trends. It is useful to think of long-term morale trends as responses to pressures and supports. Usually, policy on
morale seeks to develop and maintain high levels of morale among employees through appropriate means. Following
measures are suggested for morale building:
• Job satisfaction: The personnel policy should make jobs as interesting and satisfying as possible; it tends to
encourage a favourable and enthusiastic group action.
• Job training: Job training, orientation, education, apprentice training and a broad variety of general educational
efforts will help in building up employee’s morale.
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• Recognition of aspirations: Recognition of individual aspirations and goals, and definite provision of means
by which such goals can be achieved will go a long way in boosting morale.
• Unrest: A careful study must be made on various indices of employee’s unrest, with the ultimate objective of
constructive guidance and action.
• Counselling interviews: Counselling interviews help to discover the feelings of the employees.
• Opportunities: Providing opportunities like good promotional avenues, good working conditions, satisfactory
remuneration and other benefits for personal development.
• Relations: The supervisory staff should ensure, human relations, informal relations, fact finding and adopt
participative and employee orientated attitude.
• Facilities: Apart from the above measures, the facilities like, transport, housing, health, family welfare, children’s
education and other recreational facilities would also help in building up employee’s morale.
5.9 Reward System

Rewards are incentives for the work performance of the employee. Rewards may play an important role in employee
motivation. Motivation of employees’ is critical for the success of organisation. It refers to procedures, rules, and
standards associated with allocation of benefits and compensation to employees.
The reward system of an organisation should be capable of attracting the attention of employees and motivate them
to work. The rewards system generally consists of monetary incentives and non monetary incentives. The purpose
of monetary incentives is to reward the employees for excellent job performance through money.
Monetary incentives includes profit sharing, project bonuses, stock options and warrants, scheduled bonuses (e.g.,
Christmas and performance-linked), and additional paid vacation time. Traditionally, these have helped maintain a
positive motivational environment for employees. The purpose of non-monetary incentives is to reward the employees
for excellent job performance through opportunities. Non-monetary incentives include flexible work hours, training,
pleasant work environment, and sabbaticals.
The effectiveness of the system depends upon the combination of monetary and non monetary reward. Monetary
incentives usually encourage compliance and achievement of difficult targets instead of encouraging creativity,
innovation and foresight which are more important in the long run. Thus, employees are not able to express their
true talent and in the long run lose their creativity. In other words, employees are driven to do things just for the
monetary reward. This can disrupt or terminate good relationships between employees because they are transformed
from co-workers to competitors, which can quickly disrupt the workplace environment.
Another problem with monetary incentive is that it is given to circumvent a bigger problem for a short run. Sales
employees are given higher monetary incentives to compensate for poor management and poor products. Employees
are paid more for working in poor work environment. Monetary incentives can even drive the employees to falsely
reporting their achievements. Huge monetary incentives given to middle mangers are seen as a hook to retain
them which may make them work counterproductively. Though the monetary incentives have a better effect than
the non-monetary incentives in the short run, they may fail in the long run. Most of the non-monetary incentives
are intrinsic in nature. Intrinsic motivation is more effective as the impetus to work is from within. Employees
are working because they feel satisfied or fulfilled by the activity they undertake. Under these circumstances the
management can be regarded as more of a support than control. So managers should concentrate on balancing the
monetary and non- monetary incentives. This will ensure high motivational level of the employees which will get
reflected in their better performance at work.
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Summary
• Motivation is a psychic force that drives an individual towards goal realisation.
• Motivation arises from the needs and desires of individuals.
• Motivation of each individual changes from time to time even if he/she may continue to behave in the same
way.
• Motivators are stimulants that drive individual into action. They are related to physical or psychological aspects
of human behaviour.
• The key role of a manager is to hire self-motivated employees.
• According to Skinner motivation objectives exist to make an individual learn what may regard as positive
behaviour, i.e., desirable behaviour.
• Valence is the strength of an individual’s preference for a particular outcome.
• Expectancy theory has brought new dimensions to understand motivation.
• Job redesign is one of the strategies to motivate employees in organisations.
• There are basically two groups of morale namely individual morale and group morale.
• Rewards are incentives for the work performance of the employee.
• Monetary incentives include profit sharing, project bonuses, stock options and warrants, scheduled bonuses
(e.g., Christmas and performance-linked), and additional paid vacation time.
• The effectiveness of a system depends upon the combination of monetary and non monetary reward.
References
• Importance of Motivation, [online] Available at: <http://www.managementstudyguide.com/importance_of_
motivation.htm>[Accessed 8 December 2011 ].
• MOTIVATION AND MORALE, [pdf] Available at: <http://www.egyankosh.ac.in/bitstream/123456789/25313/1/
Unit-25.pdf>[Accessed 8 December 2011].
• Pradhan, S., 2006. Retailing Management, 2nd ed., Tata McGraw-Hill Education.
• Marquardt, R. A., James C., Makens, J. C. and Roe, G. R., 1983. Retail management: satisfaction of consumer
needs, 3rd ed., Dryden Press.
• Retail Excellence, [Video Online] Available at: <http://www.youtube.com/watch?v=Ys2ifEcGfq0>[Accessed
8 December 2011].
• RickSegel, 2009. Pump Up Your Retail Team, [Video Online] Available at: <http://www.youtube.com/
watch?v=eTjm-B8N-AM>[Accessed 8 December 2011].
Recommended Reading
• Mathis, R. L. and Jackson, J. H., 2011. Human Resource Management: Essential Perspectives, 6th ed., South-
Western College Pub.
• Levy, M. and Weitz, B., 2008. Retailing Management, 7th ed., McGraw-Hill/Irwin.
• Berman, B. and Evans, J. R., 2009. Retail Management: A Strategic Approach, 11th ed., Prentice Hall.
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Self Assessment
1. is a process of inducing the individual’s desires towards goals.
a. Motivation
b. Performance
c. Reward
d. Morale
2. Who amongst the following referred motivation as “being the way in which urges, drives, desires, aspirations
or strivings needs direct control or explainn the behaviour of human beings”?
a. Dalton E. Mc Farland
b. Koontz and O’Donnell
c. Dubin
d. Encyclopaedia of management
3. Which statement is true?

a. Motivators are the hindrance on the way of success.
b. Motivators are stimulants that drive individual into action.
c. Motivators are stimulants that drive individual into rest.
d. Employees are considered as invaluable assets.
4. Which of the following theory explains that motivation is a process of eliciting a positive satisfaction?
a. Mc Cleland’s Theory of Needs
b. Herzberg’s Motivation- Hygiene Theory
c. Expectancy Theory
d. Likert’s sales management theory
5. Which of the following theory is also known as performance satisfaction theory of motivation?
a. Porter and Lawyer Theory
b. Mc Cleland’s Theory of Needs
c. Herzberg’s Motivation- Hygiene Theory
d. Expectancy Theory
6. motivates employees as they are allowed to perform variety of tasks.

a. QWL
b. MBO
c. Job enlargement
d. Money
7. helps in appraising the merits and deficiencies of employee’s performance.

a. Morale
b. OWL
c. MBO
d. Performance aappraisal
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a. The occupational context must furnish outlets for the individuals pride in his own workmanship.
b. Where there is a well integrated group, there would be high group morale, as well as individual morale.
c. Organisations use financial incentives to motivate employees.
d. Tedious, boring and routine work will contribute morale building.
9. Match the following:

A. Encourages the employee to speak freely and frankly
1. Attitude survey
in respect of hisjob
B. Technique of allowing setting the goals by
2. Morale interviews participation and actively involving manager and
subordinates at every level
C. These surveys depend upon questionnaires, which are
3. High rate of absenteeism
administered orally or in writing from any employees.
4. Management by objectives D. Indicates poor morale
a. 1-D; 2-A; 3-B; 4-C
b. 1-C; 2-A; 3-D; 4-B
c. 1-A; 2-D; 3-B; 4-C
d. 1-A; 2-D; 3-C; 4-B
10. refers to procedures, rules and standards associated with allocation of benefits and compensation
to employees.
a. Rewards
b. Morale
c. Motivation
d. Performance
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Chapter VI
Staff Training and Development
Aim
• discuss the meaning, aim, and scope of training
• explain need and principles of training
• describe the features of good training
Objectives
• define training and development
• enumerate purposes and goals of training and development
• describe various methods of training
Learning outcome
• understand ways of evaluating training,
• recognise the role of a trainer
• learn how to design and administer a training program
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6.1 Introduction
In recent times, the importance of staff training has increased drastically. With liberalisation of economy, trends
towards globalisation, competitive pressures for the organisations have increased, calling for better quality of
products and services. In this environment of fast changing values and technologies, training and development has
an important role to play in enhancing performance standards.
For instance, a newly-selected person on placement undergoes what is called induction training. Here he is introduced
to the organisation, its objectives, the organisation structure, his own job and the role he is required to play and the
chain of command. He is also informed about the compensation package. Induction training is an orientation program
which is also called the pre-training. Later, training programs are designed on a continuous basis by identifying
training needs, setting the objectives of the training program, administering it to the trainees and evaluating it. Training
programs can last either for a short-period or for a long-period. Refresher training is always necessary to keep pace
with the changing environment. Training methodology consists of lectures in the classroom, participative sessions
and seminars, case studies, business games, demonstrations and hands-on experience. A trainer is a facilitator, and
the process of learning is emphasised more than the process of teaching. The teacher adapts to the learning process.
A trainee should feel a sense of achievement by undergoing training.
With the recognition of training as an important avenue for development, the scope and application of training
has considerably increased. While, largely, it still remains a key tool for enhancing job-related performance and
organisational effectiveness, its value is being increasingly acknowledged in engendering behavioural changes and
in developing life skills that lead to personal growth. Training equips an individual with the competencies that help
him/her to cope with the day-to-day problems of living, and to manage and improve interpersonal relations and
effectiveness.
Meaning of training
Training can be defined as a continuous and systematic development of knowledge, attitudes and skills amongst
all levels of employees as well as that of a company. Development refers to a long term educational process which
focuses on value orientation. It involves broader education and its purpose is long term development. Development
programs provide wider awareness among participants and provide scope for personal growth. Different scholars
have defined training in different ways. Some of these definitions are given in the following table:
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Scholar Definition
Dunn and Explains the meaning of training with reference to role performance and considers it as an
Stephens organisation’s efforts to improve an individual’s ability to perform a job or organisational role.
Jack Halloran A process of transforming and receiving information related to problem solving.
Dale S. Beach An organised procedure by which people learn knowledge and/ or skills for a definite purpose.
Megginson Training is concerned with providing an individual with the opportunity to learn what he or she
and Pedler needs in order to do their job more effectively.
Training is telling plus showing, plus supervising until the desired change is achieved in the
S.C Saxena
skill, attitude or behaviour.
The art of doing the job in a correct, effective, and efficient manner and said that it may even be
B. D. Kolekar
described as something which is necessary for everything.
Training is a systematic development of the knowledge, skills and attitudes required by employee
Abiodum
to program adequately on a given task of job.
Training can be defined as follows.

• Training is a systematic and planned process to improve the knowledge, skills and attitude
of employees.
Deb • Training provides a learning experience to employees to develop their abilities and improve
job performance.
• Training helps an organisation with human resource planning by making available competent
and motivated personnel.
Table 6.1 Various definitions of training
An analysis of different definitions of training reveals the following:

• Training is a systematic learning process.
• Training is a communication process.
• Training and education are not the same.
• Training results in changes in knowledge, skill and practice.
• Training improves employee’s productivity.
• Training helps the employees to achieve organisational goals.
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6.2 Goals, Purpose and Aim of Training

All training programs are conducted with specific aim and objectives in mind, because a lot of money is invested in
training programs. Basically, training means investment in human resources to enable them to perform effectively
and efficiently. The basic purposes of training are as follows:
Even out
Induction of Training of Refresher differences
new employees apprentices training among
employees
Training for Training for

promotion and Training for Training for
career better
change in jobs new jobs
development performance
Training for
Training for general
modernisation organisation
development
Fig. 6.1 Basic purposes of training
According to a group of experts, the objective of training is to increase productivity, improve quality of work; improve
knowledge, skill, attitude, and understanding; enhance the use of tools and machines; reduce waste, accidents and
overhead costs; and eliminate obsolete skills, technologies, methods, and capital management. The main aims of
training are outlined below:
To improve the performance of trainees so that he or she can

contribute to organisational goals and objectives.
To facilitate the overall professional development of

employees so that he/she is empowered.
To enable an employee to gear up for a changed plan and his/
her role in the organisation.
To develop specific skill and competencies as per the need of
the organisation.
To enable the employees to contribute over a certain bench
mark.
To improve the methods of work, quality of production/
service, morale of employees and productivity.
Induce a wider awareness amongst employees.
Bring down a reduction in machine breakdowns, cost of

maintenance, rejects and wastage, accidents, grievances and
manpower obsolescence.
Fig. 6.2 Aims of training
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6.3 Principles and Need for Training
Training is an inevitable necessity for any organisation in today’s globalised world. Training and development
function in an organisation has gradually become a major activity since the continued effectiveness and efficiency
of an organisation depends on the ability of its employees to produce at high levels of efficiency, and keep abreast
with their changing job-role demands. Training is basically a task-oriented activity aimed at improving performance
in current or future jobs. Training and development opportunities can be made available to an employee for a variety
of reasons. Thus, the need for training arises because of the following reason:
• The efficacy of an organisation depends directly on how well its employees are trained. The newly recruited
employees require induction training before they take up their work, while the experienced and already servicing
employees require in-service training to take up changes occurring in the organisation.
• Training is necessary to help and promote managers to prepare for advancement, to assist managers having
difficulties with their present job, to prevent managerial obsolescence, and to build morale in lower-level
managers by demonstrating management’s interest in them.
• Training has been a successful method of reducing accidents, reducing waste, and increasing quality.
• Training enhances knowledge, skill and attitude of the people working in an organisation. People welcome
training when they believe that the outcomes of their work would improve if they were to operate more skilfully
and that training can provide those skills.
However, training can produce good result and become effective, if it is based on the principles of training which
are as follows:
The Principle Principle of

of Goal Setting Individuality
The Principle The Principle

of Variation of Practice
Principles of
Training
The Principle The Principle
of Progression of Feedback
Fig. 6.3 Principles of training
• The Principle of Goal Setting: The training should be based on goals. If there is no goal or overall objective,
the training effort will be wasted. The objectives of the training should be behavioural in nature.
• Principle of Individuality: In any organisation, different individuals perform different work based on their
specialty and individual education. Therefore, there is a possibility that trainees would respond differently to
the same training. Further, requirement also varies from person to person depending on their characteristics,
personal commitment, and their level of maturity. Therefore, conditions and opportunities need to be created
so that each employee can learn specific job skills and competencies.
• The Principle of Practice: If employees do not get the opportunity to practice what they learn during training,
then the entire effort and resources invested in the training are wasted. Therefore, scope of practice must be
there for improving the performance through practice.
• The Principle of Feedback: Feedback is an important principle of training. No matter how successful the training
is in meeting objectives, its effect will decline with time, if reinforcement is not provided in the workplace
on a regular and consistent basis. Such reinforcement should be the function of the higher and middle level
managerial functionaries. Further, training needs to be conducted based on feedback.
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• The Principle of Progression: Training should be imparted in a progressive manner from simple to difficult in
a rationale and logical flow. It must address the basic skill requirements in the beginning and gradually move
to more complex skill and competency requirements.
• The Principle of Variation: Training should not be repetitious and it should be based on training needs. If it is
repetitious, then the trainees will lose interest in it. It is nothing but wastage of resources and time.
6.4 Training Philosophy

The training philosophy of an organisation expresses the degree of importance it attaches to training and development
of its human resources. The organisation with training philosophy realises that human resources are the key to
development of any organisation and organisational efficiency can be improved through effective training, which
can enhance the skill and competencies of their employees. Organisations conceive training as an investment that
will pay off.
They understand that although it is difficult to calculate the return on investment in training, yet, they believe that
the tangible and intangible benefits of training will more than justify the cost involved in training. Some of the
philosophies of training are as follows:
• Organisations should have a clear long-term view of the knowledge, attitude, and skill levels of competencies
that their employees need.
• Training should be relevant and based on the need. It should not be stereotyped and static.
• Training should be problem based with a mix of theory and practical application, so that trainees are not
bored.
• It should be action oriented training which stresses that training exists to get employees into action.
• Training should be related to the performance of an employee. A performance related training philosophy
specifically emphasises on performance and competence of the trainees.
• Training should be a continuous process and should not be a one-time affair.
• The training organisations should use various training methodology and aids in the training program.
6.5 Policy and Strategy of Training and Development

Every organisation should have a training and development policy. The policy should give everyone in the organisation
a sense of direction about various issues pertaining to training and development, such as
• What percentage of turnover profit should be devoted to training and development?
• Who should be trained?
• How many days of training per employee?
• Should the employee be paid during training?
• Whether training would be done within the plant or outside?
• Whether to use internal trainers or external trainers or a combination of both?
• How the training would be evaluated?
Each organisation should workout a training strategy to judiciously match and combine the human and material
resources, methods and course content of training, aids of training, target population and co-ordinate all of these to
achieve the goal of training. Where the judicious matching of various resources and methods are not done through
an appropriate training strategy, we find that various training resources go down the drain.
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6.5.1 Components of Training
There are six important components of training, which are:
Goal
Retraining Motivation
Components
of training
Opportunity
Follow up
to Learn
Opportunity
to Practice
Fig. 6.4 Components of training
• Goal: A training program must have a goal. The goal can further be subdivided into objectives. The objectives
of the training will indicate what type of subjects and training methods and technologies to be used in the
training program.
• Motivation: A participant’s motivation is a key element in a successful training program. Trainees must be
willing to invest time and energy to develop themselves. Motivated employees actively pursue learning to
improve their skills and competencies for improving their overall performance. Appropriate incentives like
training allowances and training link promotion will enhance the motivation of employees for training.
• Opportunity to learn: Organisations must provide the opportunity to learn to its employees. Without the
opportunity to learn, employees cannot improve their knowledge and skill and may not be able to contribute
significantly to the organisation’s productivity.
• Opportunity to practice: Employees must be provided with opportunity to try out their new knowledge and
skills at their workplace. For example, a person trained in computer accountancy, if given the job of maintaining
files instead, will not only lose interest, but also will not have an opportunity to practice his/her skill. A conducive
environment at the workplace allows employees to apply new knowledge and skills and further develop and
refine them.
• Follow up: Training is not alone time affair. No training program is complete without a follow up. Follow ups
provide an opportunity to the trainers to do away with difficulties that the trainees may experience.
• Re-training: After the follow up period, the training organisation will identify the gaps in training. The trainer
will then conduct re-training in these gaps so that the trainees are fully empowered to execute the skills that
they have been trained in.
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6.6 Types of Training

The types of training can be broadly categorised into following three heads:
Based on structure
Based on context
Other types of training
Fig. 6.5 Categories of training
Based on structure
The three main categories of training based on structure are as follows:
Fig. 6.6 Categories of training based on structure
• Structured training program: The structured training program is most commonly used by the formal education
system. In the structured training program, the structure of the training program is designed by the training
institution, considering its relevance to the type of trainees. The program are properly structured and covered
within the stipulated time period. These training programs are planned well in advance by convening an expert
group meeting held by the training coordinator of an institution.
In a few cases, the pre-designed training programs are discussed with the trainees after registration and their needs
are incorporated into the final training program. In other words, the training schedule is reformulated before the
training progress. Some new topics are adopted and some are deleted in the final training schedule. Likewise, the
guest faculty list also changes accordingly, based on the topic selected in the final list.
• Semi-structured training: The semi-structured training programs are formulated by keeping in view that the
training curriculum may be changed to suit the needs of the trainees during the course of a training program.
In such a training program, it is assumed that the trainees may not react immediately after the registration. He,
or she, reacts only when the training gets momentum. However, if the method of the training process is not
efficient enough, it may create confusion among trainees during the training program.
• Unstructured training program: In unstructured training programs, trainees themselves structure the training
program schedule with the trainer. In this type of training program, the trainer has to work hard and plays a
critical role for the effective implementation of the training program. Here, the objective of the program must
be clear to both the trainers as well as to the trainees. Remember that unstructured training programs can be
organised only for a group that has a manageable size.
Based on context
Training is contextualised when it is based on the experience of the clientele who needs training. Broadly, it comprises
three categories of training:
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Training based on Context
Orientation Induction Refresher

training training training
Fig. 6.7 Categories of training based on context
Orientation training: Provides general information about the organisational structure, service rules, code of conduct,
various facilities provided by the organisation, etc. After going through this training, the employees become fully
aware of the entire system of the organisation.
• Induction training: Is the training about the work that is to be performed by the employee. It is more professional
and completely job oriented as compared to orientation training. It instructs the employee his duties and
responsibilities, and shows how to perform them. Its objective is to prepare the employee to perform his job
effectively and efficiently.
• Refresher training: These trainings are conducted from time to time to keep the employee continuously updated
in their professional knowledge and skills. Since scientific advancements and developments are very fast, it
is essential for successful organisations to keep their employee informed and trained in such developments. It
ultimately helps organisations to increase their productivity and to improve the quality of output.
Other types of training
Direct Contact and Distance Training
Formal and Non formal Training
Centralised and Dispersed Organisation of Training
Fig. 6.8 Other types of training

• Direct contact and distance training: In direct contact training programs, trainers and learners work one on
one. This limits the number of participants in a program. The direct contact trainings are on campus training or
classroom training. Distance training can respond more realistically on the needs of large number of trainees,
and with the introduction of new technologies, is becoming increasingly important. Distance training can reach
participants wherever they are and spread new information widely. Distance training also has the advantage of
letting workers learn at their own pace, and greatly enhances the ability of different organisations to collaborate
in the development and delivery of training programs.
The rapid spread of electronic technologies such as video, closed circuit and responsive television, and rapid data
processing for virtually instantaneous feedback has made distance learning highly attractive. Multimedia methods
are, now days, used for the successful conduction of distance training.
Distance training of all kinds starts by combining the training needs of a particular group and preparing relevant
curricula for meeting these needs. Later steps include: preparing a series of modules to be used by an individual
or small groups of participants as progressively advanced learning experiences; preparing ways of reviewing the
progress of participants and giving feedback to them on what they have been able to learn well, and where they
need to improve further; supplementing cognitive learning with other methods; and reviewing the final learning
outcome.
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• Formal and informal training: Formal training takes place in a classroom situation with strict structured time
and curriculum schedule. Formal training system was traditionally the most visible and recognised system in
the labour market. By utilising a formal training syllabus one can tell precisely what he /she is going to learn
and how he or she is going to advance. As an alternative to training in formal programs at a particular place
or in a program set at a distance with a fixed syllabus, training can be planned and conducted through various
non formal modalities. Through action-research programs, for instance, participants can learn many things
in a planned way if, during or after their participation in the action, tutoring and supervision and also regular
evaluation and feedback based on their experiences are provided.
In the non formal modalities, the emphasis is on conscious, guided experiences. Many innovative devices are used to
convert routine experiences into learning opportunities and also to create new experiences from which participants
can learn. Plans are carefully made to ensure graded experiences and guidance. The mix of action and of learning
from it can be adjusted to an organisation’s needs.
For instance, if increased staff capacity has been decided upon as a major outcome, the number of participants with
little experience in the planned action can be high, and many more opportunities can be included in the program
for reviewing experiences and re-planning the program to ensure maximum learning. Non formal training avoids
rigidities of the classroom and is conducted in an open environment.
• Centralised and Dispersed Organisation of Training: Training modalities can also be differentiated along
organisational lines. In a simple centralised model, for instance, one institute is formally charged with planning
programs, staffing, and funding them, ensuring their conformity to standards and, often, selecting participants.
This pattern still predominates in developing countries with just sufficient training resources for one or two
central institutes. The central institute in this design initiates, guides, and supports all aspects of training.
At the other extreme are networks of largely autonomous training units, each responsible for its own training plans
and programs and for linking with other units as needed or desired. What and how participants learn in a chosen
field then depends on the dispersed model, on which unit they have joined. In, developing countries mixed models
are increasingly becoming common, in which a central institute sets frames of training, such as priority for training
objectives, general guidelines for methodologies and materials to be used, quantitative parameters for participants,
time, and costs. Subsidiary units do the detailed planning, staffing, and management, and contribute actively to
formulating and revising system-wide frameworks.
6.7 Training Cycle

Training cycle is an important aspect of training. It is defined as a series of steps or stages that comprise a complete
training program. Training cycle consists of five phases as described below:
Phase I: Training Needs Assessment (TNA)

The training needs are assessed at six levels of aggregation, namely:
• individual
• group
• organisational
• state
• regional
• national levels
A number of methods for training needs assessment are available for different levels of aggregation. Two critical
parameters usually circumscribe the training needs assessment (TNA) exercise. The first is the national priorities,
laid down by policy-makers and planners. The training needs have to be assessed within the ambit of national
priorities and programs. The second is trainees felt needs for training. It is essential to realize the trainees felt needs
for training.
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Fig. 6.9 Training cycle
Phase II: Training Plan Development (TPD)

After assessment of training needs (Phase I), appropriate training plans are required to be developed in the second
phase. A training plan is a manpower document developed on the basis of assessed training needs. It takes into
account the existing manpower stock, projects manpower needs for future and quantifies the training requirements.
On the basis of assessed training needs for each category of personnel to be trained, it indicates the dates, duration,
subject and the institution for training.
A training plan can be (a) short term, (b) long-term, or both. While an Annual Training Plan is an essential requirement
of sound training management, it is desirable that training plans are developed in, say, a 5 year framework. The
singular advantage of developing training plans in a 5-year framework is that management will have a reduced task
of undertaking an annual review only enabling it to devote more time to other aspects of training management,
which will enhance the value of training.
A training plan can be territorial (for example, National/State/District), sectoral (for example, agriculture, health,
education), project-related (for example, a comprehensive agricultural development project, which cuts across several
sectors), special plan (for example, training of new recruits to extension service), or a combination of these.
Phase III: Design of Training Program (DTP)

In the third phase, appropriate training programs are required to be designed after training needs assessment (Phase I)
and in accordance with the developed training plans (Phase II). Before undertaking the design of training programs,
however, it is essential to select an appropriate training institution for training.
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The starting point in the design of a training program is a statement of its objectives. The objectives should be
stated clearly and in simple, straight forward language. The use of jargon should be scrupulously avoided. The
objectives, not more than four or five in number, should clearly state the knowledge, skills, attitudes and attributes
(KSAAs), the trainee will acquire after the training and how will it be useful to the trainee in his job performance.
The statement of objectives should enable the trainees to have a clear idea about the relevance of training program
to his training needs.
The next step is the determination of an appropriate mix of various skills required by the trainees. Broadly, three
types of skills required are; technical, human and conceptual skills. The mix of these skills will be different for
different levels of participants. Weights can be attached to different skills for determination of mix.
Appropriate curriculum can be developed by following the ‘Concentric Circles Approach to Curriculum’. Under this
approach, there are three concentric circles, the inner circle (priority 1) of what must be known, the middle circle
(Priority 2) of what should be known, and the outer circle (priority 3) of what could be known. It is imperative that
the curriculum concentrates upon the inner circle of what must be known and does not drift to the outer circle of
what could be known, as it very often happens in practice.
The selection of an appropriate training method is the next step in the design of a training program. An array of
training methods is available suited to different training objectives and to different levels of personnel. As a general
rule, a mix of training methods is preferable to only one training method, and the entire program must have a
problem-solving practical orientation. Practical assignments and providing adequate opportunities to trainees for
interaction will enhance the utility of and receptivity of training.
Phase IV: Training Program Implementation (TPI)

In the fourth phase, the training programs are required to be implemented, after training needs assessment (Phase
I), development of training Plans (Phase II), and design of training programs (Phase III). Phase IV has two aspects:
(a) Training infrastructure, and (b) Actual implementation of training programs.
In its turn, the training infrastructure has also two aspects, namely (a) a network of training institutions for
meeting different training requirement of different levels of personnel, and (b) models and management of training
institutions.
The actual implementation of training programs is the responsibility of training institutions, or more precisely, the
Course Directors. Many training programs flounder due to poor implementation which usually reflects lack of or
inadequate preparation. Use of checklist and alertness to respond to an emergency (like non-appearance of a resource
person in time) can prevent occurrence of many avoidable mishaps. A wise word of counsel is not to take anything
for granted and to personally ensure that things are in order.
Phase V: Training Monitoring and Evaluation (TME)

In the last, i.e., the fifth-phase, training is required to be monitored and evaluated, after training needs assessment
(Phase I), development of training plans (Phase II), design of training programs (Phase III) and implementation of
training programs (Phase IV).
Training monitoring is relatively of greater practical importance than training evaluation. Training monitoring should
take place through well developed training monitoring indices like number of training courses planned and held
every month, number of seats planned and utilised, and State-wise allocation of seats and their utilisation.
Training monitoring is required to be undertaken at different levels of training implementation – from fortnightly
training sessions (FTSs)/ monthly workshops (MWs) to national training courses (NTCs). The training monitoring
indices will also differ from level to level. These indices should be regularly brought to the notice of top management
so that it can intervene to correct a situation. Different types of training evaluations are available like evaluation
for planning, process evaluation, terminal evaluation, impact evaluation and outsider evaluation. It is necessary to
keep ambitions modest in training evaluations. A two-party evaluation of training by trainers and trainees followed
by an annual review by the top management can considerably enhance the usefulness of training courses.
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6.8 Features of Good Training
Some features of a good training are briefly discussed below.
• Motivation is the basis good training. A good trainer must start his work by creating a feeling of need or want
in the trainee, since the actual willingness and desire to learn come from within the person. Basic needs, wants,
desire, motives, incentives, or urges have been classified, broadly, in four ways, below:
 The desire for security – Economic, social, psychological and spiritual security.
 The desire for new experience – Adventure, new interests, new ideas, new friends and new ways of doing
things.
 The desire for affection and response – Companionship, gregariousness and social mindedness; the need
for a feeling of belonging.
 The desire for recognition – Status, prestige, achievement and being looked up to. These are all powerful
motivating forces for learning.
• Good training requires specific and clearly defined objectives. The different aspects of the training objectivities,
namely the persons to be trained, the behavioural changes to be developed in them, the content or subject –
matter to which the behaviour is related and the real situation in which the changes are to take place must be
clearly spelled out in the training objectives.
• Good training must accomplish certain kind of educational changes in relation to the subject matter learned.
These may be changes in knowledge, or things known; changes in skills; changes in attitudes or feelings for or
ability to do things, including mental skills and manual or physical skills: points of view, etc., including changes
in interests, and changes in understanding.
• Good training requires effective learning situations which include five major elements: teacher; learner; subject
matter; teaching aids, and facilities or environment.
• Good training should provide an effective learning experience to the trainees.
• Good training requires a combination of training techniques. Training could involve oral, visual, audio – visual
and hands on practices.
• Training should be challenging and satisfying. To be challenging, the subject matter must be presented in the form
of problems for which the trainees should be encouraged to find solutions. Appropriate and timely recognition
should be given to the trainees’ achievements. Fear and ridicule have no place in the training process and their
use in a training program is usually an adverse reflection on the ability of the trainer.
6.9 Training Methods

Training can be conducted on the job as well as off the job.
• On the job training: An employee is placed on a new job, and made to learn new skills and habits in the
natural work environment through explanations, discussions, charts, diagrams, etc. by the supervisor or training
instructor.
• Off the job training: The training is put in a class room, conference room, vestibule or simulated (duplicated)
conditions. Stimulated conditions are used where on the job training can be expensive as well as can result in
injury and costly errors, such as destruction of valuable material or life (such as flying an aircraft).
• Some Basic Training Methods: Various training methods can be used, as shown below:
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LEARNER ACTIVITY
TRAINER ACTIVITY
Lecture Discussion Brain Storming Case In-basket Role Business Programmed

Method Method Method Method Method Play Game Instruction
Fig. 6.10 Basic training methods
If you observe the above given rectangle, you will find that the trainer activity decreases as one moves from left to
right and learner activity increases as one moves from left to right. It has been observed that more active the learner
more effective is the learning. We will now have a close look at each of the methods.
Method Description Limitations Good Practices
• Structure the
lecture
Useful to give • Give an outline at
knowledge on specific the beginning and
Difficult to know
topics and theories summarise towards
Lecture whether the
which can be used both the end. Maintain
method participants are
in small as well as large eye contact with
understanding
groups. all sections of
audience.
• Difficult to • Plan the

This method involves keep discussion discussion.
purposeful conversation on track. • Encourage shy
Discussion and deliberation about a
• Debate may go persons.
Method topic of mutual interest
out of control. • Control talkative
under the guidance of a
leader. members.
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Group of people sit
• Use visual display
together and generate
for suggestions
ideas regarding any May go out of
Brain generated.
topic, with suspended control if not well
Storming • Suspend judgement
judgement. Basic coordinated by a
Method of ideas.
assumption is that one facilitator.
idea leads to another and
group can come up.
A case is a faithful
reproduction of what • Writing case • Incomplete films
happened in an actual studies is can be presented
situation, a real life difficult. as cases, to
problem, names of • Not enough improve learner’s
people and places may case studies involvement.
Case
be distinguished. Pros are available to • A written or oral
Method
and cons of various represent real account of an
issues are discussed to life situations incident which
improve learning. There has actually
is no single correct occurred can be
solution to any case very effective in
problem. learning.
The in-basket is
a simulation of a
managers work load
on a typical day, to
In-basket see how the trainee
Method handles a sequence
of problem in a given
situation. The decision
making is followed
by a discussion, for
evaluation and feedback.
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A method of
human interaction • Helps • Very time • Presents a real
which involves focussing consuming and life situation with
realistic behaviour on attitudes expensive enough room for
in an imaginary or communication flexibility.
hypothetical situation. style. • Discusses both
The method is also • Enables micro- good points
known as socio-psycho teaching and bad points
Role Play drama. The situations for effective
generally chosen are discrimination.
salesman making • Uses a video
a presentation to a camera and use
customer, disciplining a the technique of
subordinate, conducting fractional replay.
a post appraisal
interview, selection
interview etc
A business game can be • High • It is difficult to • Processing

defined as a dynamic involvement of build a business of results and
sequential management learners. game. feedback should
decision simulation be quick to enable
exercise. Business game • Participants • Takes up
Business learn the considerable learning.
depicts organisational
Game
dynamics. The players lessons by amount of • Participants on
while playing the game themselves training time. their own should
experience various inter- under the right sum up what they
related factors of real influence of have.
life organisation. trainer.
This method involves • The trainee • Very difficult

presentation of bit by learns by and time
bit information - each himself. There consuming to
bit building upon is no need for prepare.
the previous bit and the presence of
a trainer. Bits of information
also a mechanism for
have to be arranged
presenting this series • The
Program in proper sequence,
of bits along with a programmed
Instruction otherwise it can be
system of evaluation instruction
confusing to the
for checking the gain in can reach
trainee.
knowledge of trainee. geographically
The trainee can move remote areas.
to the next bit after • Trainee
successfully learning the involvement is
previous bit. high.
Table 6.2 Training methods
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Benefits of training
Training of staff has the following benefits:
Benefit Description
Training on given in areas such as needs analysis, presentation and demonstration,
Enhanced skill
negotiation, objection handling, closing and relationship management will enhance skill
levels
levels, and lead to greater customer orientation.
Vroom suggests that motivation is dependent on a salesperson’s belief that increased
Improved
effort will lead to higher performance. Increasing skill levels through training should
motivation
strengthen that belief.
Improved self-
Training improves self-confidence, which has been shown to be related to improved
confidence
sales performance.
Training in self-management and journey planning should reduce costs.
Higher skills should mean fewer call backs to close the sale.
Reduced costs
Better use of technology should also reduce costs (e.g. using email rather than site visits
where appropriate).
Better meeting of customer needs and higher service levels should reduce the number
Fewer complaints
of customer complaints.
Lower staff Training shows staff that the company is willing to invest in them raising morale and
turnover loyalty.
Reduced
Well trained salespeople require less managerial support as they can manage their own
management
activities.
support
Higher job The confidence and success which accompanies higher skill levels developed during
satisfaction training leads to higher job satisfaction.
Higher sales and The result of the above advantages of training is that sales should be higher and costs
profits lower resulting in higher company profits.
Table 6.3 Benefits of training
6.10 Management Development

The management and leadership development process is flexible and continuous, linking an individual’s
development to the goals of the job and organisation. Leadership and management are two notions that are often
used interchangeably, but managers may not be necessarily leaders and leaders may lack managerial skills. However,
ideal effective manager should necessarily possess leadership skills and passion to lead, to motivate and support the
employees achieve personal and organisational goals.
Manager has the power, authority, and responsibility to evaluate, direct, manage, promote, and discipline their team
members. Management development covers the entire structured process by which managers learn and improve their
skills for the benefit of their employing organisations and themselves. Management development includes:
• Structured informal learning: Work-based methods aimed at structuring the informal learning, which will
always take place.
• Formal training courses of various kinds: From very specific courses on technical aspects of jobs to courses
on wider management skills.
• Education: This might range from courses for (perhaps prospective) junior managers or supervisors.
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6.10.1 Goals of Management Development

Every organisation has to continuously work to develop the potential of all their managers to enable them to face
the challenges arising out of rapid technological and social changes and increasing competition. To understand and
adjust to changes in socio-economic forces, including changes in public policy, concept of social justice, industrial
democracy, problem of ecology, problems of working environment, etc.
6.10.2 Aims of Management Development Efforts

IT ensure availability of required managerial manpower with required skills to meet the present and anticipated
future needs of the business. It also enables the managers to grow continuously to shoulder greater and greater
responsibility. The aims of management development at various levels:
• Top Management
 To understand the political, economical, social and technological forces operating in the environment.
 To broaden the vision regarding role and position, both within and outside.
• Middle management
 to appreciate the executive functions and responsibilities
 to bring about an awareness of broad aspects of management problems
 to develop leadership skills
 to learn problem solving skills
• Executive development
 To improve knowledge of business functions
 To increase proficiency in management functions
 To learn problem solving skills
Building a suitable organisational culture in the organisation is necessary for management development. The activities
of training, counselling, delegation and communication, the way people are treated, extent of delegation of authority,
opportunity for experimenting, risk taking, etc. makes a difference to management development.
6.10.3 Principles of Management Development

There is generally a gap between potential and actual performance. Through management development, potential can
be actualised. Management development can be achieved by carefully formulating objectives and working towards
actualising them. Development efforts are to continue throughout the executive’s career. Personal development can
be achieved by understanding self as well as others. Participation is essential for growth. Feedback from a superior
to subordinate and from a group to an individual is necessary for the recognition of short-comings and for keeping
oneself in touch with the progress that has been achieved.
6.10.4 Techniques of Management Development

Some selected techniques of management development are briefly discussed below:
• Coaching and Counselling: Superior officer becomes a mentor, helps to define learning goals, to learn how
others see their behaviour, learn new modes of behaviour which can be more effective in goal achievement.
• Life and Planning Activities: These activities help individuals to focus on life and career objectives, assessment
of capabilities and identify training needs.
• ‘T’ Groups: Training groups focussing and mirroring individual attitudes and values to create increased
awareness/sensitivity to emotional reactions in himself and others to learn consequences to his actions and
behaviour.
• Team Building Interventions: To help group of individuals to know what hinders individuals to work effectively
as a team, focus on improvement of interpersonal skills as well as clarify goals.
• Management by Objective5 (MRO): The superior and subordinate pairs across the board, continuously sets
goals and assesses achievement in harmony with major organisational goals.
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• Job Rotation: Individuals move from one job to another to experience the problems and opportunities in other
jobs.
• Job Enrichment: The job is enriched by adding higher levels of responsibility as well as improving task identity,
task variety, skill variety autonomy and feedback about results.
• Role Analysis Techniques: Role incumbent interacts with all the people occupying roles of concern to his role
(role set) and clarifies his as well as expectations of others and works out ways to meet expectations.
• Personality Development Workshops: The workshops provide insights about human behaviour, bettering
communication styles, etc.
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Summary
• Training can be defined as a continuous and systematic development of knowledge, attitudes and skills amongst
all levels of employees as well as that of a company.
• The objectives of training are to increase productivity, improve quality of work; improve knowledge, skill,
attitude, and understanding; enhance the use of tools and machines; reduce waste, accidents and overhead costs;
and eliminate obsolete skills, technologies, methods, and capital management.
• The principles of training include the principle of goal setting, individuality practice, feedback and variation
• The training philosophy of an organisation expresses the degree of importance it attaches to training and
development of its human resources.
• The six important components of training include goal, motivation, opportunity to learn, and opportunity to
practice, follow up and re-training.
• In the structured training program, the structure of the training program is designed by the training institution,
considering its relevance to the type of trainees.
• The semi-structured training programs are formulated by keeping in view that the training curriculum may be
changed to suit the needs of the trainees during the course of a training program.
• In unstructured training programs, trainees themselves structure the training program schedule with the
trainer.
• Orientation training provides general information about the organisational structure, service rules, code of
conduct, various facilities provided by the organisation, etc
• Induction training is the training about the work that is to be performed by the employee.
• Refresher training is conducted from time to time to keep the employee continuously updated in their professional
knowledge and skills.
• Formal training takes place in a classroom situation with strict structured time and curriculum schedule.
• The non formal training avoids the rigidities of the classroom and is conducted in an open environment.
• Training cycle is defined as a series of steps or stages that comprise a complete training program. It includes
training need assessment, training plan development, design of training program, training program implementation,
training monitoring and evaluation.
• Lecture Method is useful to give knowledge on specific topics and theories which can be used both in small as
well as large groups.
• Discussion Method involves purposeful conversation and deliberation about a topic of mutual interest under
the guidance of a leader
• In the brain storming method a group of people sit together and generate ideas regarding any topic, with
suspended judgement.
• A case is a faithful reproduction of what happened in an actual situation, a real life problem, names of people
and places may be distinguished.
• Role play is a method of human interaction which involves realistic behaviour in an imaginary or hypothetical
situation.
• A business game can be defined as a dynamic sequential management decision simulation exercise.
• Program instruction involves presentation of bit by bit.
• Management development covers the entire structured process by which managers learn and improve their skills
for the benefit of their employing organisations and themselves.
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References
• Staff Training and Development. [Online]Available at: http://vedyadhara.ignou.ac.in/wiki/images/e/e7/ET-
524A_B-1%28Unit_5%29.pdf [Accessed 8 December 2011]
• Waldron, M. W., Vsanthakumar, J. and Arulraj, S. Improving the organisation and management of extension,
[Online] Available at: < http://www.fao.org/docrep/W5830E/w5830e0f.htm> [Accessed 8 December 2011]
• Kansal, B. B., Rao, P. C. K., 2006. Preface to Management. Paragon Books, New Delhi.
• Noe, R. A., Employee Training & Development, 4th ed. Tata McGraw-Hill Education, 2008.
• 2011. EmployeeTraining Process,[VideoOnline] Available at: <http://www.youtube.com/watch?v=p1jmpMHgOPg>
[Accessed 8 December 2011].
• 2008. Retail Sales Training Video, [Video Online]Available at: <http://www.youtube.com/watch?v=QrHdbcLh0TY>
Recommended Reading
• Morris, J., 2009. Employee Training; A Study of Education and Training Departments in Various Corporations.
General Books LLC, 2010.
• Harrison, R., 2000. Employee development. Chartered Institute of Personnel and Developmen,.
• Collins, T. and Bruce, T., 1984. Staff Support and Staff Training, Tavistock Publications Ltd.
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Self Assessment
1. In training the employee is introduced to the organisation, its objectives, the organisation structure,
his own job and the role he is required to play and the chain of command.
a. induction
b. structured
c. semi-structured
d. unstructured
2. method of training is a method of human interaction which involves realistic behaviour in an

imaginary or hypothetical situation.
a. Lecture
b. Brain Storming
c. Discussion
d. Role play
3. method involves a group of people sitting together and generating ideas regarding any topic, with
suspended judgement.
a. Lecture
b. Brain storming
c. Discussion
d. Program instruction
4. Training is when it is based on the experience of the clientele who needs training.
a. Structural
b. contextualised
c. Non formal
d. Centralised
5. is defined as a series of steps or stages that comprise a complete training program.

a. Training philosophy
b. Training policy
c. Training cycle
d. Training needs
6. The of an organisation expresses the degree of importance it attaches to training and development
of its human resources.
a. Training philosophy
b. Training policy
c. Training cycle
d. Training principles
7. The training programs are formulated by keeping in view that the training curriculum may be
changed to suit the needs of the trainees during the course of a training program.
a. structured
b. semi-structured
c. unstructured
d. centralised
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8. In training programs, trainers and learners work one on one.
a. Induction
b. Orientation
c. Refresher
d. Direct Contact
9. State which of the statements is false

a. In a semi-structured training program, it is assumed that the trainees react only when the training gets
momentum.
b. There is always a single correct solution to any case problem.
c. ‘T’ Groups are training groups focussing and mirroring individual attitudes and values to create increased
awareness/sensitivity to emotional reactions in himself and others to learn consequences to his actions and
behaviour.
d. Refresher training is conducted from time to time to keep the employee continuously updated in their
professional knowledge and skills.
10. can be defined as continuous and systematic development of knowledge, attitudes and skills amongst
all levels of employees as well as that of company.
a. Training
b. Recruitment
c. Retailing
d. Human Resource Management
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Chapter VII
Employee Retention
Aim
• explain the need and importance of employee retention
• analyse the employee’s reasons for staying or leaving the organisation
• realise the role of an HR in employee retention
Objectives
• enlist the steps taken for improving employee retention
• discuss the importance of ‘motivation’ in employee retention
• explain the role of team leaders and supervisors in employee retention
Learning outcome
• identify the challenges in employee retention
• understand the qualities required by an organisation for better employee retention
• study the recent developments and future prospects in employee retention
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7.1 Introduction
Employee retention programme is a significant challenge for most companies today.
For many employers it is the most compelling problem they face. A key employee retention program will help the
employer to retain key employees and ensure their commitment to the organisation. An organisation must have a
comprehensive approach to attract and retain good employees so that quality customer service can be given. There
cannot be loyal customers without loyal employees. There are six keys to comprehensive employee retention plan,
which are as follow:
Boost retention
Value people with innovative
through a strong compensation and
organisational training
vision programmes
Retain people as Invest in

individuals, not
employees
groups Keys to
comprehensive
employee Approach retention
Have a planned
retention plan as a long-term and
approach
short-term strategy
Fig. 7.1 Keys to comprehensive employee retention plan
There are nine tips to help keep good employees:

• Beware of anything that can become an entitlement, because it can become expensive and you may not need
it.
• Develop processes by which people can increase their employability in the areas of competencies, skills and
intellectual growth.
• Use special projects as incentives or rewards.
• Have a positive corporate environment to foster employee development.
• Realise that retention of valued people is a long-term process, not a knee-jerk reaction.
• Create a consistent corporate culture in which managers communicate corporate vision and values uniformly
to employees.
• Build in rewards for supervisors and managers who keep good employees.
• Use exit interviews to obtain important data that will provide information about your organisation.
• Provide anonymous suggestion programmes to make workers understand the importance of their ideas.
Employee retention in literal terms refers to various policies and practices which let the employees stick to an
organisation for a longer period of time. Every organisation invests time and money to groom a new joinee, make
him a corporate ready material and bring him at par with the existing employees. The organisation is completely at
loss when the employees leave their job once they are fully trained. Employee retention takes into account various
measures so that an individual stays in an organisation for the maximum period of time.
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7.2 Need and Importance of Employee Retention

Employee Retention refers to the techniques employed by the management to help the employees stay with the
organisation for a longer period of time. Employee retention strategies go a long way in motivating the employees
so that they stick to the organisation for the maximum time and contribute effectively. Sincere efforts must be taken
to ensure growth and learning for the employees in their current assignments and for them to enjoy their work.
Employee retention has become a major concern for corporates in the current scenario. Individuals once being trained
have a tendency to move to other organisations for better prospects. Lucrative salary, comfortable timings, better
ambience, growth prospects are some of the factors which prompt an employee to look for a change. Whenever a
talented employee expresses his willingness to move on, it is the responsibility of the management and the human
resource team to intervene immediately and find out the exact reasons leading to the decision. Following are few
important reasons as to why retaining a valuable employee is essential for an organisation:
• Hiring is not an easy process: The HR professional shortlists few individuals from a large pool of talent, conducts
preliminary interviews and eventually forwards it to the respective line managers who further grill them to judge
whether they are fit for the organisation or not. Recruiting the right candidate is a time consuming process.
• An organisation invests time and money in grooming an individual and makes him ready to work and
understand the corporate culture: A new joiner is completely raw and the management really has to work
hard to train him for his overall development. It is a complete wastage of time and money when an individual
leaves an organisation all of a sudden. The HR has to start the recruitment process all over again for the same
vacancy; a mere duplication of work. Finding a right employee for an organisation is a tedious job and all efforts
simply go waste when the employee leaves.
• When an individual resigns from his present organisation, it is more likely that he would join the
competitors: In such cases, employees tend to take all the strategies, policies from the current organisation to
the new one. Individuals take all the important data, information and statistics to their new organisation and
in some cases even leak the secrets of the previous organisation. To avoid such cases, it is essential that the
new joinee is made to sign a document which stops him from passing on any information even if he leaves the
organisation. Strict policy should be made which prevents the employees to join the competitors. This is an
effective way to retain the employees.
• The employees working for a longer period of time are more familiar with the company’s policies,
guidelines and thus they adjust better: They perform better than individuals who change jobs frequently.
Employees who spend a considerable time in an organisation know the organisation in and out and thus are in
a position to contribute effectively.
• Every individual needs time to adjust with others: One needs time to know his team members well, be friendly
with them and eventually trust them. Organisations are always benefited when the employees are compatible
with each other and discuss things among themselves to come out with something beneficial for all. When a
new individual replaces an existing employee, adjustment problems crop up. Individuals find it really difficult
to establish a comfort level with the other person. After striking a rapport with an existing employee, it is a
challenge for the employees to adjust with someone new and most importantly trust him. It is a human tendency
to compare a new joinee with the previous employees and always find faults in him.
• It has been observed that individuals sticking to an organisation for a longer span are more loyal towards
the management and the organisation: They enjoy all kinds of benefits from the organisation and as a result
are more attached to it. They hardly badmouth their organisation and always think in favour of the management.
For them the organisation comes first and all other things later.
• It is essential for the organisation to retain the valuable employees showing potential: Every organisation
needs hardworking and talented employees who can really come out with something creative and different. No
organisation can survive if all the top performers quit. It is essential for the organisation to retain those employees
who really work hard and are indispensable for the system.
• The management must understand the difference between a valuable employee and an employee who doesn’t
contribute much to the organisation. Sincere efforts must be made to encourage the employees so that they stay
happy in the current organisation and do not look for a change.
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7.3 Analysis of Reasons for Staying or Leaving
An analysis of why people leave through exit interviews may provide some information but they are unreliable,
people rarely give the full reasons why they are going. The reasons why people remain with the organisation or may
want to leave it can be established through attitude surveys. These could segment respondents according to their
length of service and analyse the answers of longer-serving employees to establish if there are any common patterns.
The survey results could be supplemented by focus groups, which would discuss why people stay and identify any
problems. The retention plan should address each of the areas in which lack of commitment and dissatisfaction can
arise. The actions to be considered under each heading are listed below:
Pay
Problems arise because of uncompetitive, inequitable or unfair pay systems. Possible actions include:
• reviewing pay levels on the basis of market surveys
• introducing job evaluation or improving an existing scheme to provide for equitable grading decisions
• ensuring that employees understand the link between performance and reward
• reviewing performance-related pay schemes to ensure that they operate fairly
• adapting payment-by-results system to ensure that employees are not penalised when they are engaged only
on short runs
• tailoring benefits to individual requirements and preference
• involving employees in developing and operating job evaluation and contingent pay systems
Job design
Dissatisfaction results if jobs are unrewarding in themselves. Jobs should be designed to maximise skill variety, task
significance, autonomy and feedback, and they should provide opportunities for learning and growth.
Performance
Employees can be demotivated if they are unclear about their responsibilities or performance standards, are
uninformed about how well they are doing, or feel that their performance assessments are unfair. The following
actions can be taken:
• Express performance requirements in terms of hard but attainable goals.
• Get employees and managers to agree on those goals and the steps required to achieve them.
• Encourage managers to praise employees for good performance but also get them to provide regular, informative
and easily interpreted feedback.
• Performance problems should be discussed as they happen in order that immediate corrective action can be
taken.
• Train managers in performance review techniques such as counselling; brief employees on how the performance
management system works and obtain feedback from them on how it has been applied.
Learning and development

Resignations and turnover can increase if people are not given adequate opportunities for learning and development,
or feel that demands are being made upon them that they cannot reasonably be expected to fulfil without proper
training. New employees can go through an ‘induction crisis’ if they are not given adequate training when they join
the organisation. Learning programs and training schemes should be developed and introduced so that:
• it gives employees the competence and confidence to achieve expected performance standards
• it enhances existing skills and competences
• it helps people to acquire new skills and competences so that they can make better use of their abilities, take on
greater responsibilities, undertake a greater variety of tasks and earn more under skill- and competence based
pay schemes;
• it ensures that new employees quickly acquire and learn the basic skills and knowledge needed to make a good
start in their jobs;
• it increases employability, inside and outside the organisation
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Career development
Dissatisfaction with career prospects is a major cause of turnover. To a certain extent, this has to be accepted. More
and more people realise that to develop their careers they need to move on, and there is little their employers can
do about it, especially in today’s flatter organisations where promotion prospects are more limited. These are the
individuals who acquire a ‘portfolio’ of skills and may consciously change direction several times during their
careers. To a certain degree, employers should welcome this tendency. The idea of providing ‘cradle-to-grave’
careers is no longer as relevant in the more changeable job markets of today, and this self-planned, multi-skilling
process provides for availability of a greater number of qualified people. But there is still everything to be said
in most organisations for maintaining a stable core workforce and in this situation employers should still plan to
provide career opportunities by:
• providing employees with wider experience
• introducing more systematic procedures for identifying potential such as assessment or development centres
• encouraging promotion from within
• developing more equitable promotion procedures
• providing advice and guidance on career paths
Commitment
This can be increased by:
• explaining the organisation’s mission, values and strategies and encouraging employees to discuss and comment
on them
• communicating with employees in a timely and candid way, with the emphasis on face-to-face communications
through such means as briefing groups
• constantly seeking and taking into account the views of people at work
• providing opportunities for employees to contribute their ideas on improving work systems
• introducing organisation and job changes only after consultation and discussion
Lack of group cohesion

Employees can feel isolated and unhappy if they are not part of a cohesive team or if they are bedevilled by disruptive
power politics. Steps can be taken to tackle this problem through:
• teamwork – setting up self-managing or autonomous work groups or project teams
• team building – emphasising the importance of teamwork as a key value
• rewarding people for working effectively as members of teams and developing teamwork skills
Dissatisfaction and conflict with managers and supervision

A common reason for resignations is the feeling that management in general, or individual managers and team leaders
in particular are not providing the leadership they should, or are treating people unfairly or are bullying their staff
(not an uncommon situation). This problem should be remedied by:
• selecting managers and team leaders with well-developed leadership qualities
• training them in leadership skills and in methods of resolving conflict and dealing with grievances
• introducing better procedures for handling grievances and disciplinary problems, and training everyone in how
to use them
Recruitment, selection and promotion

Rapid turnover can result simply from poor selection or promotion decisions. It is essential to ensure that selection
and promotion procedures match the capacities of individuals to the demands of the work they have to do.
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Over-marketing
Creating unrealistic expectations about career development opportunities, tailored training programmes, increasing
employability and varied and interesting work can, if not matched with reality, lead directly to dissatisfaction and
early resignation. Care should be taken not to oversell the firm’s employee development policies.
7.4 Improving Employee Retention

The first two steps to take while developing an employee retention strategy are to find out:
• Why employees in hard-to-recruit groups are leaving
• What employee turnover among these groups is costing your organisation
Obtaining accurate information on reasons for leaving is harder. Where exit interviews are used it is best to conduct
them in a short time after the employees hand in their notice. The interviewer should not be a manager, who has had
responsibility for the individual, and who will not be involved in future reference writing. Confidentiality should
be assured and the purpose of the interview explained.
Alternative approaches involve the use of confidential attitude surveys, which include questions about intention to
leave and questionnaires sent to former employees on a confidential basis around six months after their departure. A
cost retention strategy can then be developed focusing on particular causes of turnover in the organisation. It is worth
considering the following elements, all of which have been shown to play a positive role in improving retention:
• Give prospective employees a ‘realistic job preview’ at the recruitment stage. Take care not to raise expectations
only to dash them later. Where possible invite applicants to work a shift on the job before committing
themselves.
• Make line managers accountable for staff turnover in their teams. Reward managers whose record at keeping
people is good by including the subject in appraisals. Train line managers in effective supervision before
appointing or promoting them. Offer re-training opportunities to existing managers, who have a poor record at
keeping their staff.
• Maximise opportunities for individual employees to develop their skills and move on in their careers.
Where promotions are not feasible, look for sideways moves that vary experience and make the work more
interesting.
• Ensure wherever possible that employees have a ‘voice’ through consultative bodies, regular appraisals, attitude
surveys, and grievance systems. This helps to ensure that dissatisfied employees have every opportunity to sort
out problems before resigning. Where there is no opportunity to voice dissatisfaction, resigning is the only
option.
• Wherever possible accommodate individual preferences on working hours. Be as flexible as possible in the
allocation of shifts. Where people are forced to work hours that do not suit their domestic responsibilities they
will invariably be looking for another job, which can offer such hours.
• Avoid the development of a culture of ‘presenteeism’ where people feel obliged to work longer hours than are
necessary simply to impress management. Evaluation of individual commitment should be based on results
achieved and not on hours put in.
• Provide as much job security as possible. Employees who are made to feel that their jobs are precarious may
put a great deal of effort in to impress, but they are also likely to be looking out for more secure employment
at the same time. Security and stability are greatly valued by most employees.
• Bend over backwards to ensure that you do not and are never seen to discriminate against employees on any
unfair grounds. A perception of unfairness, whatever the reality when seen from a management point of view,
is a major cause of voluntary resignations.
• While the over all level of pay is unlikely to play a major role unless it is way below the market rate, perceived
unfairness in the distribution of rewards is very likely to lead to resignations.
• Defend your organisation against penetration by head-hunters and others seeking to poach your staff. Keep
internal e-mail addresses confidential, train telephonists to spot calls from agents and to avoid giving them
useful information, refuse to do business with agents who have poached your staff, and enter into pacts with
other employers not to poach one another’s staff.
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7.4.1 Flexibility Strategy

The aims of the flexibility strategy should be to develop a ‘flexible firm’ (Atkinson, 1984) by providing greater
operational and role flexibility. The steps to be considered when formulating flexibility strategy are as follows:
• Taking a radical look at traditional employment patterns to find alternative to full-time, permanent staff. This
may take the form of segregating the workforce into a ‘core group’ and one or more peripheral groups;
• Outsourcing: getting work done by external firms or individuals.
• Multi-skilling: to increase the ability of people to switch jobs or carry out any of the tasks that has to be
undertaken by their team.
7.4.2 Talent Management Strategy

Talent management strategies deal with the processes required to ensure that the organisation attracts, retains,
motivates and develops the talented people it needs. It is sometimes assumed that talent management is only
concerned with key people – the high flyers. But everyone in an organisation has talent, and talent management
processes should not be limited to the favoured few, although they are likely to focus most on those with scarce
skills and high potential.
As a concept, talent management came in force when the phrase ‘the war for talent’ emerged in the 1990s. There
is nothing new about various processes that add up to talent management. What is different is the development of
a more coherent view as to how these processes should mesh together with an overall objective – to acquire and
nurture talent wherever it is and wherever it is needed by using a number of interdependent policies and practices.
Talent management is the notion of ‘bundling’ in action.
Components of talent management strategy

The components of talent management strategy are:
• developing the organisation as an ‘employer of choice’ – a ‘great place to work’
• using selection and recruitment procedures which ensure that good quality people are recruited who are likely
to thrive in the organisation and stay with it for a reasonable length of time (but not necessarily for life)
• designing jobs and developing roles that give people opportunities to apply and grow their skills and provide
them with autonomy, interest and challenge
• providing talented staff with opportunities for career development and growth;
• creating a working environment in which work processes and facilities enable rewarding (in the broadest sense)
jobs and roles to be designed and developed;
• providing scope for achieving a reasonable balance between working in the organisation and life outside
work;
• developing a positive psychological contract;
• developing the leadership qualities of line managers;
• recognising those with talent by rewarding excellence, enterprise and achievement;
• conducting talent audits that identify those with potential and those who might leave the organisation;
• introducing management succession planning procedures that identify the talent available to meet future
requirements and indicate what management development activities are required.
7.4.3 Reward Strategy

Reward can act as the ‘catalyst’ for improved performance and better productivity. But reward, as such, is not enough
and in any case, it is not a substitute for good management. Rather, it is a part of management. Certain basic criteria
are essential for rewards to be effective. These include:
• Reward should be quick.
• Reward should be significant.
• The goals and rewards must be known, understandable and attainable.
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• Reward must be distinctly and directly related to performance.
• Reward should be irrevocable.
• Reward should be compatible with job measurement.
If the reward plan is seen to be unfair and unrealistic, for example promotion on the basis of seniority or favouritism,
it may have a definitely negative effect as a motivator. For rewards to be effective they have to be generous and
significant as noted above, hence they must be structured to attain a proper balance of motivating people to purpose
and at optimum effort.
Two rules of an effective reward system are predictability and strategic alignment.
• Reward behaviour that is under employee’s control.
• Carefully align your reward system with the values, vision,

and mission of your organisation.
Fig. 7.2 Rules of an effective reward system
Surely, an individual’s evaluation of a job opportunity is based on more than just current pay. It also includes the
benefits that an organisation might offer, as well as the opportunities for learning and advancement of career. In
assessing the rewards being offered by an organisation to its current and prospective employees, it is important to
understand the relationship among these three important reward components. Look at the table below:
Pay Benefits Careers
• Overtime pay • Retirement • Skills enhancement

• Short-term Incentives • Health • Training/development
• Other lump sums • Paid time-off • Advancement/promotion
• Cash profit sharing • Income protection • Employment stability
• Long-term Incentives • Death benefits • Nature of work
 Performance plans • Work/life programs
 Equity • Other human resource policies
Table 7.1 Looking at rewards holistically
• Pay: Everyone, especially workers, know the importance of pay. It includes base pay plus additional compensation
in the form of incentives or bonus awards, stock options, and stock grants. Many HR professionals believe that
higher pay helps attract talent and reduce turnover. Organisations struggle to define “the right equation”: how
to pay the right people, the right amount, for the right reason at the right time.
• Benefits: Another key reward component is benefits, which like pay are measurable and can be valuable tools in
attracting and retaining the right employees. Benefit plans have changed remarkably in recent times as companies
move away from traditional pension plans. Newer programs like flexible benefits—allowing employees to
choose their own benefit choices—as well as casual dress and more flexible hours have become standard in
some industries. As benefits take on new characteristics, they become even more useful as a reward tool.
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• Careers: HR professionals, while trying to determine the right combination of pay and benefits, at times
neglect an important component which is careers. Careers represent the future value to employees of staying
with an organisation (i.e., what will they be paid and what jobs they will have). It is the opportunity to learn
and grow; in many cases, employees forgo higher current salaries and better benefits for the prospect of career
advancement.
It is important to note that a measured strategy which holistically looks at pay, benefits, and careers can become
a driving force toward realising an organisation’s business objectives. After all, just as “you are what you eat,”
organisations “become what they reward”. The following figure shows the different types and structures of
rewards:
Types and structure of rewards

Intrinsic
Rewards
• More responsible • More interesting work

• Opportunities for personal growth • Autonomy
• Participation indecision making • Task completion
Extrinsic
Financial Non-financial
Performance related Membership related Status rewards Social rewards
• Commission • Basic salary • Location of office • Praise
• Performance bonuses • Retirement benefits • Office furnishings • Compliments
• Merit pay • Car allowances • Assigned parking • Friendly greetings
• Incentive schemes • Medical aid • Own secretary • Dinner invitation
• Achievement awards • Thirteenth cheque • Public recognition • Pat on back
• Stock ownership • Subsidised canteen • Commendations • Social gatherings
• Share options • Vacation • Convenience services
• Profit sharing
• Work -life pro-
grammes
Fig. 7.3. Types and structure of rewards
How to create an effective total reward strategy?

Total rewards strategy is a plan for allocating reward resources in a manner that directs a business to successful
execution of its objectives. Designing a rewards strategy begins with the broadest view and understanding of the
concept of “total rewards”. This term includes all types of rewards, indirect as well direct, and intrinsic as well
as extrinsic. Employers today must use every means at their disposal competing for a talented workforce. Most
organisations appreciate that staff motivation is critical to the success of their business, but fewer appreciate the
crucial role that carefully constructed reward packages can play in this.
For many years, employee reward programmes were largely seen as a basic necessity to attract and retain competent
employees. Now, organisations have a broader understanding of what ‘reward’ means to employees and the definition
has expanded substantially to include the elements like compensation, benefits, careers, etc.
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What are the components of total rewards?
There is an increasing realisation that reward comprises more than just the tangible elements of pay and benefits.
Research has demonstrated that a wide range of factors collectively have a major impact on employee motivation
and performance. Factors that addresses the important question are:
‘Why should I work here?’ which includes: Working environment - Career opportunities - Personal / professional
development - Organisation reputation - Leadership and management style – Recognition, etc.
This is the Total Reward approach to reward management and it is essential that all these elements of working life
are underpinned by a consistent set of appropriate values and principles.
Total rewards in any organisation have four interlocked and directly related components, as outlined in the following
table. Two of them, total pay and a positive workplace, are at the foundation because how people are paid and how
they view the work environment are essential to attracting and keeping individuals. However, these two components
are not enough during times of stiff global competition and an imperative to grow profitably, and when companies
must understand the value the workforce brings to the table of organisation success. Businesses must also consider
providing the individual-growth component to make people increasingly valuable, and the component of a compelling
future such that people have opportunities to continue adding value to the organisation.
7.5 Role of Motivation in Employee Retention

Employee retention involves various steps taken to retain an employee who wishes to move on. An employee must
find his job challenging and as per his interest to excel at work and stay with the organisation for a longer period of
time. The management plays an important role in retaining the talented employees who are familiar with the working
conditions of the organisation and thus perform better than the employees who just come and go.
Motivation acts as a catalyst to an individual’s success. The team leaders and managers should constantly motivate
the employees to extract the best out of them. If an employee has performed exceptionally well, do appreciate him.
Simple words like “Well done”, “Bravo”, “Good”, “Keep it up” actually go a long way in motivating the employees.
The top performers must be in the limelight. The employees must feel indispensable for the organisation. It is
essential for the employees to be loyal towards their organisation to deliver their level best. A sense of belonging at
workplace is important for better output. Ownership of work only comes through motivation.
The superiors should send motivational emails to their team once in a week. Display inspirational posters, photographs
on the notice board for the employees to read and stay motivated. It is natural for an individual to feel low sometimes,
but the superiors must ensure to boost their morale and bring them back on track. No individual should be neglected
or criticised. If they fail to perform once, motivate them and give them another opportunity.
Organise various activities and events at the workplace. Ask each one to take charge of something or the other. Engage
the employees in productive tasks necessary for their overall development. The management must show its care and
concern for all the staff members. The employees must feel secure at the workplace for them to stay motivated.
Whenever any company policy is to be formulated, the opinion of each and every employee should be taken into
consideration. Invite all of them on a common platform and ask for their suggestions as well. Every employee must
have a say in the organisation’s guidelines as they are made only to benefit them.
Incentives, perks, cash prizes are a good way to motivate the employees. The employees who have performed well
consistently should be felicitated in front of all the staff members as well as the management. Give them trophies
or badges to flaunt. Ask the audience to give a loud applause to the employees who have performed well. This is
a good way to motivate the employees for them to remain happy and work with dedication for a longer duration.
Others who have not performed up to the mark also gear up for future. The names of the top performers must be
put on the company’s main notice board or bulletin board for everyone to see.
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Appraisals are also an important way to motivate the employees. The salaries of the performers must be appraised
at regular intervals. Career growth is an important way to retain the talented employees. Give them power to take
some decisions on their own but the management must have a close watch on them so that they do not misuse their
power.
Without motivation, it is not fair to expect the best out of the employees. No individual likes to leave an organisation
where he is being treated well.
7.6 Role of HR in Employee Retention

An organisation can’t survive if the top performers quit. It needs employees who are loyal and work hard with full
dedication to achieve the organisation’s objectives. It is essential for the management to retain its valuable employees
who think in favour of the organisation and contribute their level best. An employee who spends a longer duration at
any particular organisation is familiar with the rules, guidelines and policies of the organisation and thus can adjust
better. The human resource team plays an important role in employee retention. These roles are as follows:
• Whenever an employee resigns from his current assignments, it is the responsibility of the HR to intervene
immediately to find out the reasons which prompted the employee to resign. No one leaves an organisation
without a reason. There can be innumerable reasons for an employee to leave his current job. The major ones
being conflict with the superiors, lesser salary, lack of growth, negative ambience and so on.
• It is the duty of the HR to sit with the employee and discuss the various issues face to face. Understand his
problems and listen to his side of story as well. Remember the HR should not focus on conducting exit interviews,
rather more emphasis should be laid on retaining the employees.
• Hiring is a tedious process and it is really very difficult to recruit the right candidate and train him once again.
Do check the track record of the employee who wishes to move on. It is really essential for the management to
retain those employees who have the potential and are really indispensable for the organisation. If they leave
and join the competitors; the organisation would be at loss. If one feels that the employee is not very happy
with his team leader, try to shift him to a new team. If the employee feels his salary is not justified, try to give
him a hike but make sure he is worth.
• The HR person must ensure that he is recruiting the right employee who actually fits into the role. A right person
doing the wrong job would never find his job interesting and certainly look for a change. Make sure every
individual has been assigned responsibilities according to his specialisation and interest. The employees must
be clear with their KRAs from the very beginning. Every individual works for money and the HR must quote
a justified salary acceptable to the other person. Don’t compel anyone to join at a lesser salary. He might join
at that moment but would most likely quit after sometime. The hike should be on the present salary and must
match the market trends and the expectations of the individual.
• The human resource department must conduct motivational activities at the workplace. Organise various internal
as well as external trainings which help the employees to learn something extra apart from their routine work.
Make them participate in extracurricular activities important for their overall development. Encourage them to
interact with each other so that the comfort level increases.
• The HR must launch various incentive schemes for the top performers to motivate them. This way the employees
feel their importance for the organisation and strive hard to perform even better the next time. The employees
who show promise should be awarded with cash prizes, lucrative perks and certificates to make the individual
stand apart from the crowd. A friendly atmosphere is essential for the employees to feel safe and secure. Make
them participate in various management decision making.
• The HR along with the respective team leaders must monitor their team member’s performance to ensure whether
they are enjoying the work or not. The employees look for a change only when their job becomes monotonous
and does not offer any growth or learning. Job rotation can be one of the effective ways to retain employees.
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Steps for retaining best employee
The management must understand the difference between a dedicated employee and an employee who comes to
office just for the sake of fun. The employees who really are concerned about the organisation must be retained for
better output and a healthy environment at the workplace. Few steps to avoid talent drain are:
• Work should never become monotonous and must offer a new learning each day. An employee should
be able to upgrade his skills and enhance his knowledge at the workplace. Employees leave the organisation
whenever there are no chances of further growth. An individual must be made to do something which really
excites him and most importantly matches his background. The employees must be asked to accomplish the
tasks in the most innovative way for them to enjoy their work. No one should be asked to do anything out of
compulsion. The team leader must not force anyone to work. Let them accept assignments willingly. The moment
work becomes a burden for the employees, they look for a change.
• Every individual should enjoy privacy at workplace. The superiors must ensure that no employee interferes
in each other’s work. Team members sitting at adjacent desks should not overhear their colleague’s conversation
or check any confidential documents. These things lead to severe de-motivation and prompt an individual to
look for a change. Discussion is important but one should not irritate anyone. The team manager should also not
make his team member’s life hell. Just give them deadlines and ask them to complete the assignments within
the desired time frame. Motivate them to deliver their best but don’t be after their life. Remember everyone is
mature enough to understand that work comes first, and everything later.
• The seniors must be reachable to their subordinates in case of queries. The hierarchy should not be too
complicated and transparency in communication is important at all levels. Manipulation of truth should be strictly
avoided as it leads to severe misunderstandings and eventually conflicts. Employees look for a change when
there are unnecessary disputes at the workplace. The team leader once in a week must make sure to meet all the
team members on an open forum to address their concern. The meeting should not be made too formal. Everyone
should be allowed to bring their cups of coffee. Such interaction strengthens the bond among employees and
also avoids friction among individuals. It is essential to have a positive ambience at the workplace for people
to stick to it for a longer time.
• Every employee should be treated as one irrespective of his designation. Sexual harassment is against the law
and is a strict no at the workplace. The male workers should respect their female counterparts and make them
feel comfortable. Don’t ask any female employee to stay back late. Leg pulling, back stabbing, lewd remarks
must be avoided at the organisation to retain the employees.
• The management must formulate employee friendly policies. The employees must be allowed to take one
or two leaves in a month so that they get time to rejuvenate. Don’t call the employees on weekends. The human
resource department must take the initiative to celebrate birthdays of employees at the workplace. This way
people come closer, make friends, develop trust and are thus reluctant to go for a change. Major festivals should
also be celebrated at the organisation for employees to get attached to the organisation.
• Incentives, cash prizes, trophies, perks should be given to deserving employees to motivate them to perform
up to the mark every time. The salaries of the high potential employees must be appraised from time to time
as monetary dissatisfaction is one of the major reasons for employees quitting their jobs. The hard work of the
workers must be appreciated. The slow learners must not be criticised but should be inspired to gear up for the
next time.
• The performers must be made to participate in the decision making process. They should have a say in the
major strategies of the organisation for them to feel important and trust the management.
• Discipline is a must at the workplace. If the office timing is 9.30 am, every employee regardless of designation
must punch his card at 9.30 am sharp or before that. No relaxation should be given to anyone. Partiality is
something which does not work in the corporate world. It is important to maintain the decorum of the office to
make the organisation a better place to work.
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7.7 Role of Team Leaders and Supervisors in Employee Retention

Employee retention includes taking various steps to satisfy the employees so that they stay with the organisation
for a longer duration. Strong measures must be taken to retain the high potential employees who have spent a good
amount of time in the organisation and know it in and out. It is essential to retain the talented employees who are
loyal towards the organisation and can contribute effectively.
• The team leaders and the supervisors play an important role in employee retention: An employee quits his
job whenever he faces problems at the workplace and is not satisfied with his work. The job must be challenging
enough and the employees should learn something new every day for them to stick to it for a long time. It is
the responsibility of the team leader to ensure that the team members are contented with their work and share
a good rapport amongst themselves.
• The team members must be assigned responsibilities as per their specialisation, qualification, interests as well
as experience. The team members must find their job interesting for them to enjoy and work hard to achieve
the organisation goals. The KRAs must be formulated in the presence of the employees. Let them decide what
best they can perform. Problems crop up whenever there is a mismatch or the employees have to do something
out of compulsion. Don’t compel anyone to do something. Let them accept the responsibilities willingly. An
individual with an analytical bent of mind would not do very well in a marketing or branding profile. A wrong
profile is one of the several reasons as to why an employee looks for a change.
• An over burdened worker never finds his job interesting and would always be eager for a change. It is the duty
of the team leader to distribute the work equally among all the employees. The manager should not be partial
to anyone and treat all his members as one. He should not let negativity creep in the team. The superiors must
have a control on their subordinates and make sure they do not fight with each other. Nothing productive comes
out of disputes, rather it demotivates the individuals and prompt them to look for some another opportunity.
• Rules and regulations should be same for everyone. Avoid granting special favours to anyone.
• One should never fear his boss. Hitler approach does not work in the current scenario. A team leader should be
a role model for his team. The team managers should not be arrogant and avoid misuse of their position. He
should let all the team members participate in the decision making process. Every employee should have the
freedom of expression and no one should be left out or neglected. The team leader should trust and respect his
team members to expect the same from them.
• The team leader should be accessible to his team members. Employees feel demotivated when their queries
remain unsolved and there is no body to listen to them. When the team leader doesn’t have time for his team, the
employees crib among themselves and wish to move on. The team leader must make sure to be with his team
whenever required. He should support his team members always. Listen to their problems and try to provide a
solution. Make them feel that you are there for them. A little care is essential to make them feel safe and secure.
If you find any of the team members worried, intervene immediately. Minor problems left unattended can lead
to severe stress later, forcing employees to look for a change.
• The superiors must maintain transparency in communication. Every team member should get the same information
from their boss for them to remain satisfied and loyal towards the organisation.
• The team leader must appreciate those who perform well. Give them a pat on their back. The hard work of the
team members should never go unnoticed. The top performers must be given a special treatment to motivate
them further and expect the same from them every time. The employees who have not performed well should
also be asked to buck up for the next time.
• It is the responsibility of the team leader to bind his team together. Take your team out for lunch once in a
while for them to come closer to each other. Every individual expects peace at the workplace and looks for a
change only when there is unnecessary stress at work. The team leader must promote healthy competition at
the workplace.
• A team leader should mentor his team well. Employees are reluctant to go for a change when they have a good
boss.
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7.8 Challenges in Employee Retention
In the current scenario, a major challenge for an organisation is to retain its valuable and talented employees. The
management can control the problem of employees quitting the organisation within no time to a great extent but
can’t put a complete full stop to it. There are several challenges to it which are as follow:
• Monetary dissatisfaction is one of the major reasons for an employee to look for a change. Every organisation
has a salary budget for every employee which can be raised to some extent but not beyond a certain limit.
Retention becomes a problem when an employee quotes an exceptionally high figure beyond the budget of the
organisation and is just not willing to compromise. The organisation needs to take care of the interests of the
other employees as well and can’t afford to make them angry. The salaries of the individuals working at the same
level should be more or less similar to avoid major disputes amongst employees. A high potential employee
is always the center of attention at every workplace but one should not take any undue advantage. One should
understand the limitation of the management and quote something which matches the budget of the organisation.
An individual should not be adamant on a particular figure, otherwise it becomes difficult for the organisation
to retain him. Remember there is a room for negotiation everywhere.
• In the current scenario, where there is no dearth of opportunities, stopping people to look for a change is a
big challenge. Every organisation tries its level best to hire employees from the competitors and thus provide
lucrative opportunities to attract them. Employees become greedy for money and position and thus look forward
to changing the present job and join the competitors. No amount of counselling helps in such cases and retaining
employees becomes a nightmare.
• Individuals speak all kind of lies during interviews to get a job. They might not be proficient in branding but
would simply say a yes to impress the recruiter and grab the job. It is only later do people realise that there has
been a mismatch and thus look for a change. Problems arise whenever a right person is into a wrong profile.
An individual loses interest in work whenever he does something out of compulsion. The human resource
department should be very careful while recruiting new employees. It is really important to get the reference
check done for better reliability and avoid confusions later.
• Some individuals have a tendency to get bored in a short span of time. They might find a job really interesting
in the beginning but soon find it monotonous and look for a change. The management finds it difficult to
convince the employees in such cases. Individuals must also understand that every organisation has some or
the other problem and adjustment is required everywhere, so why not in the present organisation? It becomes
really difficult for the HR Department to find out what exactly is going on in the minds of the individual. An
individual should voice his opinions clearly to make things easier for the management.
• Unrealistic expectations from the job also lead to employees looking for a change. There is actually no solution
to unrealistic expectations. An individual must be mature enough to understand that one can’t get all the comforts
at the workplace just like his home. Individuals from different backgrounds come together in an organisation
and minor misunderstandings might arise but one should not make an issue out of it. An individual must not
look for a change due to small issues. One needs time to make his presence feel at the organisation and must
try his level best to stick to it for a good amount of time and ignore petty issues.
Effects of a poor employee retention

Employees are the major assets of any organisation. An organisation can’t survive if the individuals are not focussed
and serious about their work. The success and failure of any organisation depend on the hard work put by the
employees to achieve the targets of the organisation. It is a common observation that employees who spend a good
amount of time in the organisation tend to know more about it and thus contribute effectively. They develop a sense
of loyalty towards their workplace and strive hard to live up to the expectations of the management.
There are several reasons as to why an employee decides to move on. Monetary dissatisfaction, a negative environment
at the workplace, dirty politics, complicated hierarchies, lack of challenging work, poor supervision being the major
ones.
In the current scenario almost all the leading organisations are facing the problem of employee retention. Management
somehow fails to stop the high potential employees and thus face the negative consequences. It becomes really
difficult for the organisation to retain the employees who decide to quit for a better opportunity.
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Let us go through some of the after effects of poor employee retention:

• Every organisation invests its time and money in training a new joinee to bring him at par with the existing
employees. The organisation is at a complete loss when the employees quit all of a sudden. Hiring needs to be
done all over again and still there is no surety whether the new joinee would be apt for the profile or not? One
wrong person hired and the output of the entire team and eventually the organisation goes for a toss.
• Employees who spend a considerable amount of time in any organisation know it in and out and thus can perform
better. They are well familiar with the company policies and adjustment is never a problem. Employees who
come and go find it very difficult to settle down in a new environment and are thus always in a state of dilemma.
They are not able to perform up to their potential and eventually the work and the organisation suffers.
• Individuals who have the habit of changing jobs frequently never get attached to any particular organisation.
They just treat the organisation as a mere source of earning money. They are never serious about their work and
fail to accomplish the tasks within the desired time frame. It hardly matters to them whether the organisation is
performing well or not? In cases of poor retention policies, employees are just not bothered about the reputation
of their office and avoid taking initiative to do something new. The employees who are there for a long time in
the organisation are trustworthy and the management can rely on them anytime.
• When individuals leave any organisation, they are more likely to join the competitors. Sometimes they tend to
take confidential data along with them to create an impression in their new organisation. This way the plans of
the organisation get leaked even before implementation and they fail to do anything great. Employees must not
share any information with an external party in any manner what so ever.
• An organisation can’t perform well if the employees speak negative about it. It is essential to have a group of
loyalists who play an important role in furthering the brand image of the company.
• Employees working with an organisation for a long time never badmouth it and are somewhat emotionally
attached to it. People leaving in a short span always speak ill about their previous organisations. The loyalty
factor is almost zero and no one is ready to take ownership of work.
The HR department must take the initiative to discuss the several issues disturbing an employee and try to sort it
out as soon as possible. An organisation must work hard towards retaining those who really are important for the
organisation.
7.9 Recent Developments and Future Prospects

Online Testing:
Companies are extending the electronic recruitment process by conducting assessments, such as psychometric or
aptitude tests, online. The process significantly reduces the administrative overhead of distributing and collecting
written test papers though care needs to be taken in how feedback is given.
Broadband: The number of people who use Broadband to access the Internet is increasing.
Broadband access makes the transmission of live images via the Internet a feasible alternative to a conventional
video linking. For recruiting purposes Broadband enables the hosting of ‘live’ employee video profiles and virtual
office tours to illustrate life within the organisation and create engagement and commitment early in the recruitment
process.
This may also help to encourage on-line job hunters currently discouraged by frustrating waits for web pages to
download.
Conclusively, an effective recruitment strategy is essential to all organisations. There are no fundamental philosophical
differences between recruiting using ‘old media’, such as advertising in newspapers, and the ‘new media’ such as
online recruitment. Making use of technology has great potential to speed up the recruitment process, giving recruiters
more choice and flexibility in how they wish to fill their vacancies and attract talent.
The purpose of both is to fill a vacant position with the best candidate, cost-effectively and on time.
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Tiling online recruitment fully involves expertise in both the technology and the recruitment cycle, and many
organisations currently lack the resources or expertise to achieve this. But the technology has to be utilised effectively
and fully integrated into the recruitment strategy. The method chosen should be appropriate to the vacancy to be
filled.
Selection:
Once a sufficient pool of applicants has been recruited, critical decisions need to be made regarding applicant
screening.
To select means to choose. Selection is a process, by which the qualified personnel can be chosen from the applicants
by obtaining and assessing pertinent information about them. It is the process, in which candidates for employment
are divided into two classes - those who will be offered employment and those who will not (i.e., those who will
be rejected). Since more candidates may be turned away than hired, selection is frequently described as a negative
process, in contrast with the positive programme of recruitment.
Thus, unlike recruitment, selection is a negative process as it seeks to eliminate the least promising candidates
and to discover those that appear most likely to succeed. This process essentially aims at matching the applicants
with the job requirements and picking up the most suitable candidates. The choices are made by elimination of the
unsuitable candidates at successive stages of the selection process. Selection decisions can and do have significant
economic and strategic consequences for organisations, and these decisions need to be made with great care. Before
the application of any selection tools or criteria, the organisation needs to determine that the methods being employed
are both reliable and valid.
Reliability refers to the consistency of the measurement being taken. Ideally, the application of any screening
criteria should elicit the same results in repeat trials. For example, if an applicant is asked to take a pre-employment
test, the test should have consistent results each time it is administered to an applicant. Similarly, when different
interviewers evaluate an applicant’s ability to make spontaneous decisions, they should assess the applicant’s skill
level similarly. Consequently, in planning a screening process, the organisation needs to ensure that there is reliability
on two levels: across time and across evaluators.
Because many factors can impact assessment, 100 percent reliability is rarely, if ever, achieved. An individual might
score poorly on a test on a given day due to preoccupation with personal matters. Inter-rater reliability, which is the
correlation among different judges, who interview an applicant, is often low because these evaluators may bring
different perceptions and biases to the process. However, low inter-rater reliability is not always bad. A supervisor
might evaluate an applicant by using different criteria from those a subordinate might use. Such differences in
perception are important in getting a holistic assessment of a potential employee.
Low reliability is often the result of one of two types of errors in assessment. The first of these is deficiency error.
Much as the name implies, deficiency error occurs when one important criterion for assessment is not included in the
measure. For example, if the test for an applicant for an editor’s position did not attempt to measure the applicant’s
writing ability, deficiency error would be present.
The second type of error is contamination error. Contamination error is caused by unwanted influences that affect
the assessment. If an interviewer is under intense time pressure to complete other tasks and rushes the interview
process so that it is impossible to gather sufficient information on a candidate, contamination error would result.
Similarly, if a test measures knowledge, skills, or abilities that are not essential for the job and the evaluation of
these non-critical factors impacts the ratings for the more important dimension, contamination error would result.
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Reliability is a prerequisite for validity. A test cannot be valid without first being reliable. Validity refers to whether
what is being assessed relates or corresponds to actual performance on the job. It examines whether the skills,
abilities, and knowledge being measured make a difference in performance. Validity is critical not only to ensure
proper selection, but it also becomes the chief measure by which employers defend discrimination allegations in
court. Although no laws specifically require employers to the assess the validity of their screening devices, illustrating
that specific criteria are valid selection measures and are, therefore, job related is the major way for employers to
respond to such claims.
There are two types of validity that support selection criteria. The first is content validity. Content validity illustrates
that the measure or criterion is representative of the actual job content and/or the desired knowledge that the employee
should have to perform the job.
Content validity is determined through the process of job analysis. For example, in order to receive a real estate
license and work as a licensed salesperson or broker, an individual must pass an exam that tests knowledge of job-
related concepts, activities, and processes.
Content validity, in and of itself, does not guarantee successful performance on the job, and much as completing a
prerequisite course in a degree program does not guarantee successful completion of a later course.
The second validity measure is empirical or criterion-related validity. This measure demonstrates the relationship
between certain screening criteria and job performance. If individuals who obtain higher scores or evaluations on
these screening criteria also turn out to be high performers on the job, then this type of validity is established.
It is important to realise that reliability alone is not sufficient for determining the appropriate screening criteria. These
criteria must be valid as well. Validity not only ensures the best possible strategic fit between applicant and job, but it
also ensures that the organisation will have a readily accepted means of defending discrimination charges at hand.
Criteria cannot be valid that are not already reliable. Conversely, criteria can be reliable without being valid. It is
critical for decision makers to understand this difference and develop their screening criteria accordingly.
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Summary
• Employee retention in literal terms refers to the various policies and practices which let the employees stick to
an organisation for a longer period of time.
• The first two steps to take when developing an employee retention strategy are to find out why employees in hard-
to-recruit groups are leaving and what employee turnover among these groups is costing your organisation.
• The aims of the flexibility strategy should be to develop a ‘flexible firm’ (Atkinson, 1984) by providing for
greater operational and role flexibility.
• Talent management strategies deal with the processes required to ensure that the organisation attracts, retains,
motivates and develops the talented people it needs.
• Reward can act as the ‘catalyst’ for improved performance and better productivity.
• Two Rules of an effective reward system are predictability and strategic alignment.
• Practicability is regarded as the reward behaviour that is under employees’ control.
• Strategic Alignment involves carefully aligning your reward system with the values, vision, and mission of
your organisation
• Total Rewards Strategy is a plan for allocating reward resources in a manner that directs the business to the
successful execution of its objectives.
• Companies are extending the electronic recruitment process by conducting assessments, such as psychometric
or aptitude tests online.
• The online testing process significantly reduces the administrative overhead of distributing and collecting written
test papers though care needs to be taken in how feedback is given.
• Selection is a process, by which the qualified personnel can be chosen from the applicants by obtaining and
assessing pertinent information about them.
• Inter-rater reliability, which is the correlation among different judges, who interview an applicant, is often low
because the evaluators may bring different perceptions and biases to the process.
• Reliability refers to the consistency of the measurement being taken.
• Contamination error is caused by unwanted influences that affect the assessment.
• Validity refers to whether what is being assessed relates or corresponds to actual performance on the job.
• Content validity illustrates that the measure or criterion is representative of the actual job content and/or the
desired knowledge that the employee should have to perform the job.
• Empirical or criterion-related validity measure demonstrates the relationship between certain screening criteria
and job performance.
• Validity not only ensures the best possible strategic fit between applicant and job, but it also ensures that the
organisation will have a readily accepted means of defending discrimination charges at hand.
References
• After Effects of a poor Employee Retention.[Online] Available at: <http://www.managementstudyguide.com/
effects-of-poor-employee-retention.htm> [Accessed 9 December 2011].
• Armstrong, M., 2006. Strategic Human Resource Management: A guide to action. Kogan Page.
• Cascio, W. F., Werther, W. W., Davis, K. and Awad, E.M., 1993. Human Resource and Personnel Management,
McGraw-Hill, New York.
• Management Study Guide. Role of Team Leaders and Supervisors in Employee Retention. [Online] Available
at: < http://www.managementstudyguide.com/role-of-team-leaders-employee-retention.htm>[Accessed 9
December 2011].
• 2008. Employee Retention, [Video Online] Available at: <http://www.youtube.com/watch?v=enHTGyfCCy4>
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• 2010. Employee Retention Strategies, [Video Online] Available at: <http://www.youtube.com/watch?v=

dBmrSCawhc0> [Accessed 9 December 2011].
Recommended Reading
• Bhadury, B., 2000. Managing the Workforce, Response Books, New Delhi.
• Gray, E. R. and Smeltyzer, L. R., 1990. Management - The Competitive Edge, Macmillan, New York.
• Wilhert, S., 1979. Personnel Administration Handbook, Dartnel Corporation, Chicago.
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Self Assessment
1. refers to various policies and practices which let the employees stick to an organisation for a
longer period of time.
a. Employee policies
b. Employee retention
c. Employee selection
d. Employee referral
2. is often the result of one of two types of errors in assessment.

a. Low reliability
b. High reliability
c. Contamination error
d. Inter-rater reliability
3. refers to whether what is being assessed relates or corresponds to actual performance on the job.
a. Validity
b. Reliability
c. Motivation
d. Selection
4. is a process, by which the qualified personnel can be chosen from the applicants by obtaining and
assessing pertinent information about them.
a. Retention
b. Referral
c. Recruitment
d. Selection
5. refers to the consistency of the measurement being taken.

a. Validity
b. Reliability
c. Motivation
d. Selection
6. ____________ measure demonstrates the relationship between certain screening criteria and job
performance.
a. Content validity
b. Empirical validity
c. Inter-rater reliability
d. Reliability
7. Which of the following statements is true?

a. A test cannot be reliable without first being valid.
b. Conversely, criteria can be valid without being reliable.
c. Criteria cannot be reliable that are not already valid.
d. Validity ensures that the organisation will have a readily accepted means of defending discrimination charges
at hand.
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a. Selection is the process, in which candidates for employment are divided into two classes, i.e., those who
will be offered employment and those who will be rejected.
b. “Total rewards” includes all types of rewards, indirect as well direct, and intrinsic as well as extrinsic.
c. Where exit interviews are used it is best to conduct them, a short time before the employees hand in their
notice.
d. Practicability is regarded as the reward behaviour that is under employees’ control.
9. is caused by unwanted influences that affect the assessment.

a. Low reliability
b. High reliability
c. Contamination error
d. Inter-rater reliability
10. strategies deal with the processes required to ensure that the organisation attracts, retains, motivates
and develops the talented people it needs.
a. Employee retention
b. Employee management
c. Talent management
d. Talented employee
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Chapter VIII
Employee Benefits and Health and Safety Measures
Aim
• explain employee benefits
• discuss the purpose and importance of employee benefits
• identify the types of employee benefits
Objectives
The objective of this chapter is to:
• explain the pension scheme
• identify various health measures involved as a part of employee benefits
• list the safety measures
Learning outcome
• understand the employee benefits
• identify the welfare measures included as a apart of the employee benefits
• understand the purpose of employee benefits
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8.1 Introduction
Honest, professionally sound and contended employees are a critical element of any programme. It is thus of utmost
importance that the best brains in the country are attracted to the public services. They should not only be motivated
to enter the services but also serve in a professional and dedicated manner. This necessitates careful handling of all
the major parameters of employee work –life, from induction to retention.
From top to the bottom, centre to the periphery, it is employees that make the machinery of administration work.
Bacon, philosopher and administrator, has rightly said, “It is vain for princes to take counsel concerning matter, if
they take no counsel likewise concerning persons, for all matters are as dead images; and the life of the execution
of the affairs lies in the good choice of persons.” Therefore, the first and foremost task is to pay attention to the
administration of personnel, if we expect good performance from organisations.
Today employees expect their employers to provide work environments that are safe and healthy. However, many
employers once viewed accidents and occupational diseases as unfavourable by-products of work. This idea may
still be prevalent in many industrial settings in underdeveloped countries, the idea must be replaced with the concept
of using prevention and control to minimise or eliminate risks in workplace. Employers in variety of industries have
found that placing emphasis on health and safety pays off in a number of ways.
Good companies maintain safe working environments by making health and safety a top priority throughout the
organisation. Health and safety are important aspects of an organisation’s smooth and effective function. Good
health and safety performance ensures an accident - free industrial environment.
Companies seek to create common health and safety philosophies, strategies and processes. To ensure health and
safety consistency and promote an overall health and safety culture, leading benchmark companies coordinate key
strategies and activities through a centralised oversight department, such as corporate health and safety.
Awareness of Occupational Health and Safety (OH & S) has improved in India considerably. Organisations have
started attaching the same importance to achieve high (OH & S) performance as they do to other key aspects of
their business activities. This demands adoption of a structured approach for the identification of hazards, their
evaluation and control of risks.
Government of India believes that without safe and healthy working conditions, social justice cannot be achieved
and the attainment of safety and health at work is fundamental to economic growth.
Under the constitution of India the Directive Principles of the State policy provides:
• For securing the health and strength of workers, men and women and providing
• Just and humane conditions of work and maternity relief (Article 42)
On the basis of these Directive Principles, the Government of India declares its policy, priorities and strategies,
purposes through the exercise of its power. The formulation of policy, priorities and strategies in occupational
safety, health and environment at work places is not undertaken by national authorities alone but in some form of
consultation with the social partners, i.e., employees organisations, autonomous and voluntary organisations public
etc for agreement and involvement for ensuring set goals and objectives.
The changing job patterns and working relationships, the rise in self employment greater sub-contracting, out sourcing
of work and the increasing number of employees working away from their establishment and home work pose the
problem of management of occupational safety and health risks. New safety hazards and health risks will be appearing
along with the transfer and adoption of new technologies. In addition, many of the well known conventional hazards
will continue to be present at the workplace many years ahead till the risks arising from exposure to these hazards
are brought under adequate control.
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Meaning of employee benefits
The efficiency of employees depends substantially on the level of concentration of individual employees at work.
Desired state of mind can be attained only if the employees are satisfied and relaxed. This requires beneficial
measures both at the work place as well as at home, which can keep them relaxed and tension free. As a contented
workforce, employees would develop physical, mental, social and spiritual health and happiness, imminent for
success. Therefore, management must give priority to providing adequate measure of benefits to keep the employees
contended and well balanced in outlook. The benefits of welfare programmes are as follows:
• Efficiency in administration.
• Commitment among employees.
• Promote the productivity.
• Happy families.
• Harmonious relationship at the work place.
8.2 Employee Benefits

The concept of benefits is a dynamic one. Scope is a matter of interpretation in the context of forces which determine
societal equilibrium form values. These forces, nonetheless dynamic, may be grouped as, social, economic, cultural,
religious and political influence on ‘organisational climate’. The scope of employees’ benefits varies from time to
time, organisation to organisation and with different governments.
Terry L. Leap and Michael D. Crino (1990) observe that employee benefit programmes have become an integral
part of most compensation packages. Group life and health insurance programs, retirement programs, vacations and
holidays, prepaid legal plans, and dental and optical insurance coverage are among the types of employee benefits
commonly found in private and public sector organisations. Today, employee benefits comprise approximately forty
percent of the total compensation package.
A comprehensive array of employee benefits is generally believed to aid the organisation in attracting high-quality
employees as well as increasing the morale, job satisfaction and motivation of current employees. As employees
accumulate seniority in an organisation the employee benefit program may reduce turnover because of favourable
group insurance rates and pension vesting arrangements that “time” quality workers to the firm. Finally, employees
usually discover that benefits such as group life and health insurance are less expensive than they would be if
purchased individually from local insurance agents because of lower group insurance rates and employer subsidisation
of administrative costs and premium payments.
Examples of employee benefits

Employee benefits take the form of:
• Legally required payments: It includes
 Old-age, survivors, disability, and health insurance (commonly known as social Security)
 Workers compensation
 Unemployment compensation
• Contingent and deferred benefits: It includes
 Pension plans
 Group life insurance
 Group health insurance:
 Medical expense (hospitalisation and surgical)
 Disability income (short and long term)
 Guaranteed annual wage (GAW)
 Prepaid legal plans
 Military leave and pay.
 Jury duty and bereavement paid leave.
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 Maternity leave
 Child care leave
 Sick leave
 Dental benefits
 Tuition-aid benefits
 Suggestion awards
 Service awards
 Severance pay
• Payments for Time Not Worked: It includes
 Vacations
 Holidays
 Voting pay allowances
• Other Benefits:
 It includes
 Travel allowances
 Company cars and subsidies
 Moving expenses
 Uniform and tool expenses
 Employee meal allowances
 Discounts on employer’s goods and services
 Child care facilities
• Purposes of employees benefits
Some of the important purposes that can be served by encouraging staff benefits are:
 Identification and development of personal interest with the interest of the organisation.
 Achieving integration in organisational functioning
 Creating will and determination among members of the services for work improvement and innovation.
 Mobilising the available manpower for productive and useful activities in the organisation.
 Keeping the members of the organisation informed of latest developments in the sphere of employee
benefits.
 Organising informal clubs of youth, women, to serve as centres of discussion and expression of innovative
ideas.
 Providing an open forum for the employee to discuss problems and find indigenous solutions which may
be efficient and economical for the organisations.
 Encourage the employee to adopt modern changes which can accelerate the efficiency of the
organisation.
 Arranging extra curricular activities to generate social awareness through publicity.
Types of benefits
In addition to dearness allowance, house rent allowance, city compensator allowance; the following benefits are
also available. Let us discuss some of the important benefits in detail:
Fringe benefits
Fringe benefits refer to supplements to wages obtained by the employees at the cost of the employers. Fringe benefits
are also called wage extras, hidden payments, non wage labour costs and supplementary wage practices. The list
of fringe benefits covers numerous items such as pension and other agreed upon payments (employers share only)
legally required payments(employer’s share only)paid rest periods, lunch periods, etc. payments for time not worked
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and other items such as profit sharing payments festival or other special bonuses service awards, suggestion awards,
free meals, tuition funds etc. Thus fringe benefits embrace both voluntary and involuntary programmes. These
programmes are intended to improve employer employee relations, minimise excessive labour turnover costs and
provide a sense of individual security. Fringe benefits can be most effective if they are geared to the preferences of
the employee as determined by research programmes.
Fringe benefits have been described as welfare expenses, wage supplements, perquisites other than wages, sub
wages and social charges. Fringe benefits are also known as non pecuniary incentives that is visualising beyond
money wages.
Fringe benefits can be categorised as under (HR guide, 2005):

• Benefits without work: casual leave, earned leave
• Benefits protecting against hazards: provident fund, pension, gratuity and so on.
• Facilitative programmes to ease routine of life: working hours, medical allowance, leave, travel concession
and so on.
• Recreational programmes: sports, dramas, etc.
Definition of workman
Generally, government staff covered by the definition of “ Worker” as defined under section 2(1) of the Factories Act,
1948 and “ Workman as defined under section 2(s) of the Industrial Disputes Act , 1947, are classified as industrial
staff and who do not fall within these definitions are classified as non industrial staff. Industrial employees are
governed by labour laws. These give them substantial rights to form trade unions and to raise industrial disputes.
The non industrial employees are governed by the rules applicable to Central Government servants in general.
Industrial Disputes Act 1947

The Industrial Disputes Act 1947 was amended with effect from August 21, 1984 empowering the government to
keep their industrial establishments outside the purview of the act, which implies that the industrial workers will
have to recourse only to such of those rules as are applicable to other government employees for settlement of their
grievances. The notification issued initially for the establishment of the Central Administrative tribunal had excluded
the employees covered by the Industrial Disputes Act from the scope and jurisdiction of the Tribunal. However, by
a subsequent amendment of the Administrative Tribunals At, 1985(no. 13 of 1985) in 1986 the relevant clause was
deleted, thereby bringing the employees governed by the Industrial Disputes Act also within the jurisdiction of the
Administrative Tribunal.
Demands for parity

Industrial employees of the Central Government have always been demanding parity in matters of leave entitlement,
holidays, leave encashment and working hours with their counterparts classified as non-industrial employees. The
leave entitlements of industrial workers were also examined by the earlier pay commissions. While the first three did
not favour any increase in the leave entitlement of industrial workers in government, the fourth CPC recommended
parity in leave entitlement and its encashment between the industrial employees in the Railways and those in other
sectors of the central government. While the entitlements of industrial employees in the Railways to leave and its
encashment are on par with those of non-industrial workers in the central government. Their hours of work are
substantially more than those of other industrial workers. The government did not accept the recommendation of
the Commission. The matter was therefore referred to the Board of Arbitration in 1989. In terms of the award of the
Board(April, 1991) the prerequisite of 240 days service for grant any leave with wages and the restriction on carry
forward of leave only up to 30 days were removed. The maximum limit up to which leave could be accumulated
was also increased to 120 days.
Recent position
There is now complete parity between the industrial and non-industrial employees in matter of entitlement to and
accumulation of leave on half pay, extraordinary leave casual leave and certain special kinds of leave (maternity
leave and hospital leave). However, the entitlement of industrial employees to earned/annual leave is determined
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with reference to their length of service and ranges between 17 and 27 days in year, as against 30 days in a calendar
year to which all non-industrial employees are entitled. Further industrial employees can avail of earned leave only
on six occasions in a year, whereas there is no such restriction in respect of non industrial employees. On the other
hand, unlike non industrial employees holidays intervening during spells of leave of industrial employees are not
counted towards leave.
Difference between the two categories

The nature and scope of the duties and responsibilities of the two categories of employees are totally different, as
are their wage structure and terms and conditions of service as well as the nature of service s provided by them.
These two categories are subjected to different types of stresses, strains and hazards in the performance of their
duties. Industrial employees are entitled to certain other benefits like overtime allowance at twice the rates applicable
to their counterparts in the non industrial sectors, exclusion of Sundays and holidays intervening during spells of
leave, a higher age of superannuation etc. In the circumstances it may not be appropriate to consider in isolation,
disparities in` the matter of leave alone. The Board of Arbitration has refused in the past to concede absolute parity
in holidays and leave entitlement between industrial and non-industrial employees of the central government. All the
earlier central pay commissions, (CPCs) barring the fourth had also negated such demands. Besides, the changing
economic climate of the country also has to be taken into account while evaluating this demand. With the onset of
liberalisation, all government sectors, including the industrial sector, has to compete with the private sector directly.
Even at present, productivity and efficiency in the government sector cannot be considered to be of desired level. In
this milieu, any increase in the leave entitlement of industrial workers may lead to loss in production, thus placing
the industrial sector of the government at a further disadvantage in relation to the private sector.
Reduction of work hours

The hours of work prescribed for staff employed in industrial units are longer than those in the administrative offices.
However such a measure is necessitated on account of differences in the service conditions of the two categories of
workers. Workshop staff is governed by the provisions of the Factories Act, which permits up to 48 hours of work
in a week. The industrial staffs working in the central government are not worse off than their counterparts either
in the state owned public enterprises or in the private sector. The public enterprises as well as the industrial units in
the private sector follow the provisions of the factories act in regard to their industrial employees.
An analysis of the weekly hours of work in other countries would show that even in these countries the hours of
work prescribed for different categories of workers are not uniform. Industrial workers in Thailand work for as many
as 13 hours more per week than non industrial staff. Similar differences are also discernible in other countries like
Belgium, Canada, Israel, Japan, Malaysia, the Netherlands, Portugal, United States of America etc.
The question of ensuring uniformity in the working hours in all Government Establishments had been considered
by the Second, Third and Fourth Pay Commissions.
They did not recommend any uniformity as it was opined that work hours had evolved overtime in individual
organisation as per requirements and convention. It would not be advisable to tamper with any organisations’
schedule. The Fifth pay commission adopted two policy guidelines in this respect:
• Complete parity may not be justified
• Some revision could be suggested incorporating the best features of both the systems
• Changes may be so designed as to reduce absenteeism and improve productivity
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The following was recommended.
(a) Entitlement to Earned Leave

Indicated revisions have been recommended to be carried out:
Length of Service Present Leave Entitlement Revised Leave Entitlement

One to Ten Years 17 days 20 days
Eleven to Twenty Years 22 days 25 days
More than Twenty Years 27 days 30 days
Table.8.1 Entitlement to earned leave
This would represent an increase of three days over the present entitlements. Simultaneously, Sundays and other
holidays intervening during spells of leave should be counted as leave availed of by the employee and debited to
the leave account. These two measures would cancel each other out and not have any net impact on the whole leave
entitlement.
(b) Accumulation of earned leave

Industrial employees may be permitted to accumulate up to 300 days of earned leave on par with non-industrial
employees and to encash, out of the leave so accumulated, leave of up to 60 days earned by them during their entire
service, while availing of leave travel concession for travel anywhere in the country.
Leave that can be taken on any one occasion should be reduced in the case of non industrial employees from 180
days to 60 days as such leave is often abused by workers in the vent of undesired transfer and also for the simple
reason that such along spell of leave on one occasion is not required.
In the same vein, the maximum number of occasions on which earned leave can be availed of in calendar year by
non-industrial employees should also be reduced to six as in the case of industrial employees.
The above steps are expected to achieve the twin objectives of rough parity and also enhance productivity of industrial
employees as the proposed increase in the quantum of earned leave that can be accumulated combined with the
introduction of the facility of in service encashment of leave in addition to encashment on superannuation is likely
to reduce absenteeism and improve overall productivity.
Retirement benefits
Most of the employees join government service at a young age and retire at the age decided by the government.
The fifth central pay commission has fixed 60 years for retirement of central government employees and 62 years
for university teachers. Most of them serve the government for thirty to forty years till retirement. It becomes
incumbent on government to look after their retired employees when they are not in a position to work. They need
to be compensated during this period decently, so that they securely discharge their duties during active job span.
In fixing of the retirement age of employees, some of the important factors, which are taken into account, are life
expectancy, health and morbidity, labour market conditions, stage of economic development, financial implications,
social dimensions, etc. The age at which the productivity, efficiency and health of an employee begins to decline
can be considered as the appropriate age for retirement.
There are three forms of retirement benefits: (a) non- contributory: wherein the government is responsible for the
retirement benefit; (b) partly contributory: wherein the government and employee share the cost of retirement; (c)
wholly contributory: wherein the employees contribute. In India, there are two main schemes for retirement benefits
for employees, namely, the Pension scheme and the Contributory provident Fund.
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Pension scheme
The pension scheme involves cash disbursement to the retired employees in fixed monthly amounts. It provides
them a safe source of living as long as they survive. There is provision for extraordinary pension like injury pension
or family pension. The injury pension is paid to the employee in case of injury received in the course of duty while
family pension is payable to the widow or minor children or in some cases to the parents of an employee if he is
killed in the course of the discharge of his duties.
Central government employees on retirement are entitled to superannuation or retiring pension, retirement gratuity,
encashment of earned leave and the facility to commute up to 1/3 rd of their pension. The significant features of
retiring or superannuation pension are that it is non-contributory and is subject to future good conduct of the pensioner.
Pension can also be withheld under certain circumstances.
Pension is computed on the basis of length of qualifying service, reckonable emoluments and the pension formula.
There are also orders prescribing minimum and maximum pension. The rules and regulations governing the above
aspects are contained in the central civil services (pension) rules, 1972 (hereafter referred to as pension rules
which have been modified from time to time with a view to bring improvements in the pension benefits of the
employees).
As per article 366(17) of the constitution of India, pension means a pension, whether contributory or not, or any
kind whatsoever payable to or in respect of any person, and includes retired pay so payable, a gratuity so payable
and any sum or sums so payable by way of the return, with or without interest thereon or any other addition, of
subscriptions to a provident fund.
The Supreme Court of India has, in the landmark judgment of D.S. Nakara and others vs. Union of India, (AIR
1983, SC 130), clarified all the issues relating to pension. While examining the goals that a pension scheme should
seek to achieve, the Apex Court held that a pension scheme consistent with available resources must provide that
the pensioner lives are:
• free from want, with decency, independence and self-respect; and
• at a standard equivalent at the pre-retirement level.
The Court felt that since determining the minimum amount required for living decently was difficult, selecting the
percentage representing the proper ratio between earning and the retirement income was harder. We owe it to the
pensioners that they live and not merely exist. The Court also held that pension is neither a bounty nor a matter of
grace depending upon the sweet will of the employer. It is not an ex-gratia payment, but a payment for past services
rendered. It is a social welfare measure, rendering socio-economic justice to those, who is in the heyday of their life,
ceaselessly toiled for the employer, on an assurance that in their old-age, they would not be left in the lurch.
The Central fifth pay commission honoured the observations of the Honourable Court in the Nakara case. It needs to
be averred emphatically that pension is not in the nature of alms being doled out to beggars. The senior citizens need
to be treated with dignity and courtesy befitting their age. Pension is their statutory, inalienable, legally enforceable
right and it has been earned by the sweat of their brow. As such it should be fixed, revised, modified and changed
in ways not entirely dissimilar to the salaries granted to serving employees.
Central fifth pay commission started to build these bridges when for the first time in the history of the services, it was
suggested in their report submitted in October, 1994 that an interim relief be granted to pensioners. When no action
was taken on the same, it was followed up in their report presented in May, 1995 and suggested another instalment
of interim relief to pensioners. Fortunately, this time the government relented and granted both the instalments of
interim relief to pensioners. This established a principle and the grant of a third instalment to pensioners consequent
upon their report of August, 1996 evoked no surprise. It is hoped and trusted that this parity between the serving
employees and pensioners with regard to grant of interim relief is now firmly established and will continue.
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Kinds of pension
As per 1972 Central Civil Services Rules, the following are the different types of Pensions:
Superannuation pension: It is pension granted to a person who retires on attaining the age of superannuation or
compulsory retirement (rule 35) .
Retiring pension: It is pension granted to a public servant who retires voluntarily or is retired in advance of the
age of compulsory retirement by giving the prescribed notice and who on being declared surplus, opts for voluntary
retirement (rule 36).
Invalid pension: It is pension granted to a public servant who retires from service because of any bodily or mental
infirmity, which permanently incapacitates him for the service, if so certified by the appropriate medical authority
(rule 38).
Compensation pension: It is pension granted to a government servant who is discharged owing to the abolition of
his permanent post, while a suitable post of equal rank cannot be found for him or when such post is offered to him
but not accepted by him (rule 39).
Compulsory retirement pension: It is pension granted to a government servant when he is compulsorily retired
as a penalty (rule 40).
Compassionate allowance: When a government servant is dismissed or removed from service, he may if he so
deserves, be given compassionate allowance on a special consideration, as he forfeits on dismissal or removal, his
pension and gratuity (rule 41)
Extraordinary pension: The central civil service extraordinary pension rules provide for:
Disability pension: When he is permanently incapacitated on account of injury or disease attributable to government
service.
Family pension: To the widow and allowance to children if the death of the government servant is accepted due to
government service.
Reduction of pension for unsatisfactory service: Rule 6 provides for such reduction by the appointing authority after
giving opportunity to the employee to make his representation against the proposed reduction (Hidaytullah, 1986)
Proceedings can be instituted under Article 226 of the Indian Constitution in case of non compliance with the rules
on the part of government.
Quantum of pension
Quantum of Pension is based on the qualifying service of the government servant and his or her average emoluments
for six months immediately preceding the date of retirement. Pension under government is payable to those who
have rendered a minimum of ten years qualifying service.
With regard to the quantum of pension, there is no universally acceptable formula. Different countries give pensions
ranging between 50 and 100% of last pay drawn. Some consultants have suggested that 67% of last pay drawn should
suffice. The fifth pay commission felt that it would not be possible for government to fund this sudden increase in the
quantum of pension from 50% to 67%. It was therefore suggested that while retaining the government’s contribution
of 50% the balance should be funded by employee’s contributions. There would be some relief to pensioners by the
reduction of the period over which emoluments are averaged towards the end of the career from ten to six months.
Pensioners who have served the government for more than thirty three years would also benefit if 0.5% additional
pension is granted for every six months of additional service, over and above thirty three years.
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With regard to family pensions, fifth pay commission has retained the quantum of 30% of reckonable emoluments
as at present but this has been made uniform for all categories of employees. The ceiling has also been removed.
Fifth pay commission have attempted a major policy thrust, by suggesting a complete parity between past and present
pensioners, while recommending a modified parity between pre-1996 and post-1996 pensioners. The formula will
ensure total equity between persons who retired before 1996 and those who retired later. It also gives all pensioners at
least the minimum pension appurtenant to the post-1996 revised scale of pay of the post they held at retirement.
General / Contributory fund

Under this scheme there is a provision for employees to contribute to the provident fund to which government
contributes an equal share. The employee gets the money at the time of retirement and has also the facility to draw
loans out of it from time to time.
Gratuity
According to the definition in rule 3(1) of the 1972 central civil service rules, the term ‘pension’ includes gratuity
except when the term pension is used in contradiction to gratuity. Payment of Gratuity Act, 1972 provides for the
payment of gratuity to employees with five years continuous service working in factories, mines, oilfields, plantations,
and other establishments including piece-rate and seasonal workers where there are ten or more employees.
For the purposes calculating the period of employment, periods of maternity leave are included provided that the
total period of such maternity leave does not exceed twelve weeks. The Payment of Gratuity Act, 1972 is applicable
to factories, mines, oil fields, plantations, ports, railways, motor transport undertakings, companies, and to shops and
other establishments employing ten or more workmen. The act provides for payment of gratuity at the rate of fifteen
days wages for each completed year of service subject to a maximum of rupees two lakhs. In the case of seasonal
establishment, gratuity is payable at the rate of seven days wages for each season. The act does not affect the right
of an employee to receive better terms of gratuity under any award or agreement or contract with the employer.
Gratuity has also been unnecessarily subjected to three kinds of ceilings. First is the rate of gratuity which is half-a-
month’s emoluments for every year of service put in. This is subject to a second ceiling of 16.5 months, irrespective
of number of years of service. There is also a cash ceiling on top of the other two. The Fifth Pay Commission has
tried to bring about greater equity in the system, between past and present retirees by making two suggestions;
1) removal of the cash ceiling and 2) computation of gratuity on pay plus the Dearness Allowance on the date of
retirement.
The Fifth Pay Commission found considerable ad hocism in the treatment of employees dying while in service, with
different departments treating their employees through varying formulae. The pay commission has tried to bring
some uniformity in the ex-gratia rewards according to the nature of death in five different sets of circumstances,
with the amount reaching up to Rs. 7.5 lakhs.
Medical allowance
For pensioners not covered by the Central Government Health Scheme (CGHS), the Fifth Pay Commission suggested
a medical allowance of Rs. 100 per month. It has also recommended a comprehensive medical scheme, providing
complete health insurance both to employees and pensioners in non-CGHS areas.
Voluntary retirement
Currently we have a procedure for voluntary retirement. In the context of economic liberalisation and the need for
right-sizing the government machinery, the question of liberalising the provisions of the present Voluntary Retirement
Scheme (VRS) arose. After considerable thought and discussion the commission has evolved a two-pronged strategy
on voluntary retirement as under:
• Retain the existing VRS as it is, on a regular year round basis to take care of those who want to leave government
service of their own volition. Here, the assumption is that they have weighed the pros and cons of their decision
and have already lined up a job in all probability. For them, the normal provisions would be adequate.
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• Evolve a new special short-term Golden Handshake Scheme only for those who are identified by the government
as surplus. Here it is the government, which is taking the painful decision of sending such employees home,
although there may be no fault of theirs. The posts so vacated by the incumbents shall be abolished. The persons
identified as surplus would be entitled to the following benefits:
 Full commutation of pension by surrender of the right to receive monthly pension with an option to avail,
instead of commutation, up to the limit prescribed for employees retiring on superannuation and to receive
monthly pension.
 Ex-gratia amount of 1.5 months emoluments (Pay + DA) for each completed year of service or the remaining
years of service left before the normal date of retirement, whichever is lower. The weight age allowed in
qualifying service shall not count for the purpose of computation of ex-gratia amount. The employee shall
be given an option to receive the amount of ex- gratia and retirement gratuity either in lump sum or in the
shape of a monthly protection allowance, equivalent to the ex-gratia, gratuity and interest thereon at the
rate applicable to GPF accumulations, spread over 60 months. This allowance could help the employee to
pull on during the period of transition, by providing him with a substantial monthly income sufficient to
cater to his basic needs at least.
 Computation of pension and retirement gratuity by allowing a weight age of five years to the qualifying
service on the date of relief.
 Encashment of earned leave accumulated on the date of relief.
 Payment of accumulations in the general provident fund.
 Exemption of pension benefits including ex-gratia amount from Income Tax and Wealth Tax.
The purpose of providing pension and other retirement benefits to the employees by the government is to ensure
that during their service, they work without the fear or apprehension about meeting their old-age requirements. A
suitable compensation structure takes care of these material aspects of life, both while in the job and later on.
Most people in government service are oblivious of their personal finances, since there is a structured pattern of
savings, investments and accruals. The successive Central Pay Commissions have given adequate attention to the
interests of pensioners, both employees and their families. In addition, the landmark judgment of the Supreme Court
in Nakara’s case has firmly established the rights of pensioners to a decent pension in keeping with the changes in
the price index etc. Although pensioners are not a vocal and organised lobby unlike their serving colleagues, it is
the paramount duty of the State as the employer to give them their due in a dignified manner.
The union and state governments have provided many facilities to promote social, cultural and psychological
inputs in the lives of employees to keep them active, alert and enthusiastic. However, in practice, we find that only
a fraction of employees take advantage of the programs initiated by the government at the union and state levels.
We have to make the employees aware of these schemes so that they develop positive attitudes and feelings towards
their work. In modern times, most of the employees are stress prone and are inflected by drudgery of life leading to
evils like smoking, liquor consumption, etc. the purpose is to divert their interest to extra curricular activities both
within the working places and at home.
8.3 Health Measures

Health refers to general state of physical, mental and emotional well-being. A healthy person is free of illness and
injury. Health management practices in organisations strive to maintain the overall well-being of individuals.
Employees’ health problems are varied and inevitable. They can range from minor illnesses such as colds to serious
illnesses related to the jobs performed. Some employees have emotional health problems; others have alcohol or
drug problems. Some problems are chronic; others are transitory, but all may affect organisational operations and
individual employee productivity.
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The well-being of the employee in an industrial establishment is affected by accidents and by ill-health; physical as
well as mental. Ill health of employees results in reduced productivity, higher unsafe acts, and increased absenteeism.
A healthy worker, on the other hand, produces results opposite to these. In other words, healthy employees are more
productive, more safety conscious and are more regular to work. The worker who is healthy is always cheerful,
confident looking, and is an invaluable asset to the organisation.
A realisation of the advantage, which flow from a healthy workforce, has impelled much management to provide
health services to their employees, which vary from the simple provision of first-aid equipment to complete medical
care. Many progressive organisations maintain well-equipped dispensaries with full-time or part-time doctors and
full-time compounder/nurses. Unlike his/her counterpart of yester-years, who would take every precaution to protect
his horses against diseases but felt that the health of the human worker was his own business. The manager of today
is fully aware of the advantages of having a healthy workforce.
The protection of the health of the workers is a legal requirement too. Sections 11 to 20 of the Factories Act, 1948
deal with the health of workers.
Provisions of the Act:

• Factory to be kept clean and free from effluvium and dirt (S.11).
• Arrangements to be made for disposal of wastes and effluents (S.12).
• Adequate ventilation and temperature to be provided (S.13).
• Measures to be taken for prevention of inhalation or accumulation of dust and fumes (S.14).
• Standards for artificial humidification to be fixed (S.15).
• Overcrowding related injuries to health of workers to be avoided. 9.9/14.2 cubic metres of space must be
provided for each worker (S.16).
• Sufficient and suitable lighting must be provided in every part of the factory (S.17).
• Glased windows to be kept clean. Measures need to be taken for prevention of glare and formation of shadows
(S.17).
• Suitable points for wholesome drinking water must be provided. Drinking points to be legibly marked and
located away from urinals. Water needs to be cooled if the number of workers is 250 or more (S.18).
• Latrines and urinals to be separately provided for male and female workers. They should be well lighted and
ventilated (S.19).
• Sufficient number of spittoons must be provided. Whoever spits outside the spittoons shall be punishable
(S.20).
Job stress and burnout

Problems such as alcoholism and drug abuse sometimes result from stress, especially job stress. Here job-related
factors such as overwork, relocation, and processing with customers eventually put the person under such stress
that a pathological reaction such as drug abuse occurs.
A variety of external environmental factors can lead to job stress. These include work schedule, pace of work, job
security, route to and from work, and the number and nature of customers or clients. Even noise including people
talking and telephones ringing, contribute to stress.
However, no two people react to the job in the same way, because personal factors also influence stress. For example,
type personalities – people who are workaholics and who feel driven to always be on time and met deadlines –
normally place them under greater stress than do others. Job stress has serious consequences for both employer and
employee. The human consequences include anxiety, depression, anger and various physical consequences, such
as cardiovascular disease, headaches, and accidents. For the organisation, consequences include reductions in the
quantity and quality of job performance, increased absenteeism and increased grievances and health care costs.
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Reducing job stress
There are number of ways to alleviate stress. In his book “Stress and the Manager” Karl Albrecht suggests the
following ways to reduce job stress:
• Build rewarding, pleasant, cooperative relationships with colleagues and employees.
• Don’t bite off more than you can chew.
• Build an especially effective and supportive relationship with your boss.
• Negotiate with your boss for realistic deadlines on important projects.
• Learn as mush as you can about upcoming events and get as much lead time as you can to prepare for them.
• Find time everyday for detachment and relaxation.
• Take a walk around the office to keep your body refreshed and alert.
• Find ways to reduce unnecessary noise.
• Reduce the amount of trivia in your job; delegate routine work whenever possible.
• Limit interruptions.
• Don’t put off dealing with distasteful problems.
• Make a constructive “worry list” that includes solutions for each problem.
The employer and its human resource specialist and supervisors can also play a role in identifying and reducing job
stress. Supportive supervisors and fair treatment are two obvious steps. Other steps include:
• Reduce personal conflicts on the job.
• Have open communication between management and employees.
• Support employees’ efforts for instance, by regularly asking how they are doing.
• Ensure effective job-person fit, since a mistake can trigger stress.
• Give employees more control over their jobs.
• Provide employee assistance programmes including professional counselling.
• Reassess your goals in terms of their intrinsic worth. Are the goals you have set for your self attainable? Are
they really worth the sacrifices you’ll have to make?
• Think about your work. Could you do as good as a job without being so intense or by also pursing outside
interests?
Computer related health problems

The fact that many workers today must spend hours each day working with computers is creating health problems at
work. Short – term eye problem like burning, itching, and tearing as well as eyestrain and eye soreness are common
complaints among video display users.
Backaches, and neck aches are widespread among display users. These often occur because employees try to
compensate for awkward body positions. Researchers also found that employees who used video displays and had
heavy workloads were prone to psychological distress like anxiety, irritability and fatigue.
The following measures have been further recommended:

• Give employees rest breaks. The institute recommends a 15 minute rest break after two hours of continuous work
for operators under moderate work loads and 15 minute breaks every hour for those with heavy work loads.
• Design maximum flexibility into the work station so it can be adapted to the individual operator. For example,
use adjustable chairs with mid back supports and a video display in which screen height and position are
independently adjustable.
• Reduce glare with devise such as shades over windows, terminal screen hoods properly positioned, and recessed
or indirect lighting.
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• Give workers a complete pre-placement vision exam to ensure properly corrected vision for reduced visual
strain.
• Place the keyboard in front of the employee, titled away with the rear portion lower than the front.
• Place the computer mouse and mouse pad as close to the user as possible and ensure there are no obstructions
on the desk that impede mouse movement.
• Allow the user to position his or her wrists at the same level as the elbow.
• Put the monitor at or just below eye level at a distance of 18 to 30 inches from the eyes.
• Let the wrist rest lightly on the pad for support.
• Put the feel flat on the floor, or on the footrest.
Workplace smoking
Smoking is a serious problem for both employees and employers. Studies even shown that for some reason, smokers
have a significantly greater risk of occupational accidents than do non smokers, as well as much higher absenteeism
rates. In general, sometimes employee are less healthy than non-smokers, are absent more, make more and more
expensive claims for health and disability benefits and endangers co-workers who breathe smoking air.
Noise control
An age-old problem, and not effectively tackled till now, is the noise in industrial establishments. Noise made its
appearance in organisations when human started working on metal. As civilisation advanced, human discovered
more and more ways of having machines to do his/her work, and each new machine added to the problem. For quite
a number of years, noise was endured by all. But, in the recent past, the increasing use of machines of great speed
is telling upon the health of the workers.
Long exposure to excessive noise impairs the hearing of employees. The level and duration of noise and the exposure
that is likely to cause deafness varies from person to person. It is agreed that long exposure to noise in excess of the
prescribed limits makes one deaf.
Hearing loss is not the only effect of noise. Constant exposure to high noise levels can cause hormonal imbalances,
changes in blood circulation, dizziness, increase in respiratory rate, heartburn, sleep disturbances and fatigue.
Noise control methods

• It is impossible to eliminate noise from industrial establishments, as long as machinery is used in manufacturing
operations. However, noise control can help minimise harmful effects on employees.
• Controlling noise at its origin is the best method of reducing its harmful effects. Noise can be controlled at
its source by questioning the noise-producing elements by repairing or redesigning the machines: mounting
machines to reduce vibration or substituting noise producing elements with quieter ones.
• Considerable reduction in the level of noise may be achieved by providing enclosures for machines with specially
made covers or housing them in separate rooms. But a small opening is enough to produce heavy leakage of
noise. Care should, therefore, be taken to make the enclosure as full proof as possible. Where machines cannot
be enclosed, places which need quieter surroundings may themselves be enclosed, for example a works office.
Similarly, a machine transmitting vibration on a large scale may be isolated from the rest of the operations.
• The harmful effects of noise may be reduced by absorbing it. Ceilings and walls may be constructed with acoustic
materials to absorb sound. Empty space around the high noise-producing machine may be provided to absorb
the noise. High ceilings dissipate noise considerably.
• Where noise is excessive and other methods of noise control are likely to be ineffective, employees working
close to the source of noise may be given ear protection to prevent any impairment of their hearing capacity.
They may be provided with muffs, helmets, cotton and soft rubber, to be worn by them while on work. They
should be educated to wear the protection equipment, because the tendency with most workers is to ignore.
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Acquired Immune Deficiency Syndrome (AIDS)
AIDS is likely to cause considerable confusion and disruption in the workforce. When employees realise that they
are working with an infected worker, they demand that the hapless employee should be dismissed. If the management
discharges the employee, the law is violated, particularly in the US where individuals who have AIDS are protected
by federal, state and local laws. This protection generally comes in the form of protection against discrimination
and is based on the fact that the virus cannot be spread by casual contact.
Organisations are hard hit by additional costs – direct and indirect – when their employees contract the disease.
Direct costs are in the form of increased medical burden. Indirect costs result from loss of productivity when
employees refuse to work with an AIDS-infected worker. It is the responsibility of the government, business and
non-governmental organisations to create better awareness about the disease in the minds of the people.
Credit should go to central government undertakings, particularly HMT and BHEL, for initiating measure to prevent
AIDS. Teams of doctors from in-house Occupational Health Services visit plants and give lectures to employees on
AIDS prevention. Lecturers are held once or twice every year.
The following guidelines need to be followed to make the educational programme effective:
• Employees must be made to understand how AIDS is contacted. Understanding about the ways to contacting
AIDS will ensure that the activities do not occur at the workplace.
• Presentations to employees must be handled by professionals, preferably from experts. This is necessary as
the message presented is going to include sexual references which, if not handled properly, are likely to have
a negative impact on employees.
• All employees must attend the sessions.
Alcoholism and drug abuse

Alcoholism is a serious and widespread disease. It does not strike any particular group – alcoholism can strike
employees from the junior to the general manager.
The effects of alcoholism on the worker as well as work are serious. Both the quality and quantity of work decline
sharply. A form of “on-the-job absenteeism” occurs as efficiency declines. An alcoholic worker is more unlikely to
observe safety precautions while on the job or off the job. Morale of the other workers is likely to suffer as they are
required to do the work of their alcoholic peer.
Organisations employ three techniques to tackle alcoholism in workplaces. First is disciplining alcoholics. Where
disciplining fails, the alcoholic is discharged. Second is in-house counselling by the HR department, the company
doctor or by immediate supervisor. Finally, companies use outside agencies, psychiatrists and clinics to deal with
the problem of alcoholism.
Drug abuse is a recent phenomenon and is a serious one. Drug abuse is more evident among young employees
and is found across all job levels. Employees who are drug addicts are often much more difficult to detect than
alcoholics-liquor is easy to smell but not drugs. Drug abuse affects job performance. The problem of a drug addict
indicates his or her on-the-job behaviour.
As a result of the increased use of drugs in the workplace, more and more companies have begun to use some form
of drug testing for both job applicants and existing employees.
Drug testing is risky. An employer can be exposed to substantial liability for defamation for making a false accusation
of drug use. The following guidelines can help avoid the risk:
• Testing only applicants or employees whose jobs are considered safety specific or critical.
• Using only valid measures of drug use.
• Obtaining valid consent of the applicant or employee and then provide the examinee with the results of the
tests.
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• Maintaining strict confidentiality of test results.

• Organisations can use the same techniques (recommended to cure alcoholism) to be problem of drug abuse.
Violence in the work place

Violence in the work place, once an exception to daily work life, has become common these days. Those who are
at high risk are taxi drivers, police officers, retail workers, cashiers at petrol bunks, and people who work alone or
at night. Violent incidents include fist fights, shooting, stabbing and sexual assault.
Violence disrupts productivity; causes untold damage to those exposed, and costs employers millions of rupees.
Obviously, organisations should initiate measures to protect employees and physical resources. It is important that
companies concentrate on avoiding violence rather than simply dealing with it after it occurs.
The following will help companies avoid falling victims of violence:

• Hiring with caution. Pre-hire drug testing, detailed questions about previous employment, and criminal record
checks can go a long way towards violence-prone individuals.
• Develop a plan for preventing violence and for dealing with it when it occurs. Reporting requirements for
both violence and threats of violence should be an integral part of the plan. The plan should also be drawn by
employee participation and professionals who are experts in areas of violence assessment, counselling and law
enforcement.
• Establish a crisis-management team with the authority to decide and act quickly. This group will evaluate
problems, select intervention techniques, and co-ordinate follow-up activities.
• Train supervisors and managers in how to recognise aggressive behaviour, identity the warning signs of violence,
and resolve conflicts. Orient all employees towards assuring a violence free work environment.
Health promotion
Employers concerned about maintaining a healthy workforce must move beyond simply providing healthy working
conditions and begin promoting employee health and wellness in other ways. Health promotion is a supportive
approach to facilitate and encourage employees to enhance healthy actions and life styles. Health promotion efforts
can range from providing information and enhancing employee awareness of health issues to creating an organisational
culture supportive of employee health enhancements. Organisations engage in health promotion by encouraging
employees to make physiological, mental, and social choice that improve their health.
Level 1 Level 2 Level 3
Information and Awareness Lifestyle Wellness Organisational Health

• Brochures and materials • Wellness education • Benefits integrated with
• Health risk screenings programme programmes.
• Health tests and • Regular health classes. • Dedicated resources and
measurements • Employee assistance facilities.
• Special events and classes. programmes. • Continuous health
• Support groups promotion.
• Health incentives. • Health education
curriculum.
Table 8.2 Health promotion levels
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The first level is useful and may have some impact on individuals, but much is left to individual initiatives to
follow behaviours. Employers provide information on such topics as weight control; stress management indicator
that many employers have limited their efforts to the first level is that 93% of promotion program and 72% of them
offer health education and training programs. However, only 27% of the firms conducted health risk screenings
and appraisals. Even through such efforts may be beneficial for some employees. Employers who wish to impact
employees’ health must offer second level efforts through more comprehensive programmes and efforts that focus
on the life style “wellness” of employees.
Wellness programmes
Employers desire to improve productivity, decrease absenteeism. Wellness programmes are designed to maintain
or improve employee lifestyle. Early wellness programmes were aimed primarily at reducing the cost and risk of
disease. Newer programmes emphasise healthy lifestyles and environment, including reducing cholesterol and heart
disease risks and individualised exercise programmes and follow-up. Employer sponsored support groups have been
established for individuals dealing with health issues such as weight loss, nutrition, or smoking cessations.
Employee Assistance Programmes (EAP)

Organisations use it as a broad based response to health issues. It provides counselling and other help to employees
having emotional, physical or other personal problems. In such a programme employer contracts with a counselling
agency contact the agency, either voluntarily or by employer referral, for assistance with a broad range of
problems.
EAPs help employees with variety of problems. One survey of EAP counsellors found that the most common employee
issues dealt with were: (1) Depression and anxiety (2) Marital and relationship problems (3) Legal Difficulties and
(4) Family and children concerns other areas.
Commonly addressed as part of an EAP, it includes substance abuse, financial counselling and career advice.
Critical to employee usage of an EAP is preserving confidentiality. For that reason, employers outsource EAPs to
trained professionals, who usually report only the number of employees and services provided, rather than details
on individuals using an EAP.
Organisational health and culture

Employers both large and small may recognise that an organisational culture that emphasises and supports health
efforts is beneficial. Common to these employers is an integrative, broad-based effort supported both financially
and managerially. Development of policies and procedures supporting health efforts, establishing on- site exercise
facilities, and consistently promoting health programmes all contribute to creating a health promotion environment
throughout the organisation.
8.4 Safety Measures

An accident-free plant enjoys certain benefits. Major ones are substantial savings in cost, increased productivity,
and moral and legal grounds. Safety refers to protecting the physical well-being of people. The main purpose of
effective safety programmes is to prevent work-related injuries and accidents.
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Types of accidents
Accidents
Internal External
Major Minor
Fatal Disability
Temporary Permanent
Partial Total Partial Total
Table.8.3 Types of accidents
Causes of accidents
There are three basic causes of workplace accidents: (a) chance occurrences, (b) unsafe conditions, and (c) unsafe
acts on the part of employees. Change occurrences contribute to accidents but are more or less beyond management’s
control. We will therefore focus on unsafe conditions and unsafe acts.
Unsafe conditions and other work related factors

Unsafe conditions are one main cause of accidents. The mechanical and physical conditions cause accidents. They
include:
• Improperly guarded equipment.
• Defective equipment
• Hazardous procedures in, on or around machines or equipment.
• Unsafe storage: congestion, overloading.
• Improper illumination: Glare, insufficient light.
• Improper ventilation: Insufficient air change impure air source.
In addition to unsafe conditions three other work related factors contribute to accidents: the job itself, the work
schedule, and the psychological climate of the workplace.
Certain jobs are inherently more dangerous. For example, the job of crane operator results in about three times more
accident related hospital visits than does the job of supervisors. Similarly some departments’ work is inherently
safer. A book keeping department usually has fewer accidents than a shipping department.
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Work schedule and fatigue also affect accident rates. Accident rates usually don’t increase too noticeably during
the first five or six hours of the work day. But after that, the accident rates increases faster than the increase in the
number of hours worked. This is due partly to fatigue and partly to the fact that accidents occur more often during
night shifts.
Unfortunately some of the most important working conditions – related causes of accidents are not as obvious
because they involve workplace psychology. A strong pressure within the organisation to complete the work as
quickly as possible stresses employees and creates a poor safety climate. Accidents occur more frequently in plants
with a high seasonal layoff rate and where there is hostility among employees many garnished wages and blighted
living conditions. Temporary stress factors like high work place temperature, poor illumination and a congested
workplace also correlate with accident rates.
How to prevent accidents?

In practice, accident prevention boils down to two basic activities:
• Reducing unsafe conditions.
• Reducing unsafe acts.
Reducing unsafe conditions is always an employer’s first issue of defence. Safety engineers should design jobs to
remove or reduce physical hazards. In addition supervisors and managers play a role in reducing unsafe conditions.
A checklist or the self – inspection check can help identify and remove potential hazards.
Sometimes the solution for eliminating an unsafe condition is obvious, and sometimes it is more subtle. For example,
slips and falls at work are often the result of debris or slippery floor. Relatively obvious remedies for problems like
these include slip-reducing floor coatings floor more off spills. But perhaps less obviously, special safety gear can
also reduce the problems associated with otherwise unsafe conditions. For example, slip-resistant foot wear with
grooved roles can reduce slips and falls. Cut resistant gloves reduce the hazards of working with sharp objects.
Getting employees to wear personal protective equipment can be a famously difficult chore. Including the employees
in planning the program, reinforcing appropriate behaviors, and addressing comfort issues can smooth the way for
more widespread use of protective equipment. Wearability is important in addition to providing reliable barrier
protection and durability protective clothing should fit properly; be easy to care for maintain, and repair; be flexible
and light weight; provide comfort and reduce heat stress; have rugged constructed; be relatively easy to put on and
take off and be easy to clean dispose of and recycle.
Again, reducing unsafe conditions – by designing the job properly and having managers watch for hazards – should
always be the first choice. Then come administrative controls, such as job rotation to reduce long – term exposure
to the hazard. Only then turn to personal protective equipment.
Reducing unsafe acts – through screening training or incentive programs, for example, is the second basic way to
reduce accidents.
Causes of unsafe acts

• Reducing unsafe acts by emphasising safety
• Reducing unsafe acts through selection and placement
• Reducing unsafe acts through training
Most safety experts and managers know it is impossible to eliminate accidents just by reducing unsafe conditions.
People cause accidents with unsafe acts such as throwing materials using unsafe producers in loading, placing or
mixing by lifting improperly.
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While safe acts can undo even the best attempts to minimise unsafe conditions. For years psychologists assumed
that some employees were simply more accident prone than others and the accident prone people generally caused
more accidents.
Therefore, while some believe that most accident-prone people are impulsive, most experts today doubt that accident
proneness is universal that some people will have more accidents no matter what the situation. Instead, the consensus
is that the person who is accident prone on one job may not be so on a different job.
Various human traits do relate to accident proneness in specific situations. For example, accident prone drivers
performed worse in a test of motor skills than did drivers with fewer accidents and older adults with impaired vision
were at a higher risk for falls and motor vehicle crashes. People who were more fatalistic, negative and cynical were
more likely to exhibit violent behaviour in the job.
Reducing unsafe acts by emphasising safety:

It is the responsibility to set the tone so subordinates want to work safely. It is necessary to show by both word and
deed that safety is crucial. For example, supervisors should:
• Praise employees when they choose safe behaviors.
• Listen when employees after suggestions, concerns or complaints.
• Be a good example, for instance by following every safety rule procedure.
• Visit plant areas regularly.
• Maintain open safety communications – for instance, by telling employees as much as possible about safety
activities such as testing alarms and changing safety equipment or procedures.
• Link manager’s bonuses to safety improvement.
Reducing unsafe acts through selection and placement

Screening is another way to reduce unsafe acts. Here, the aim is to isolate the trait (such as visual skill) that might
predict accidents on the job in question, and then screen the conditions for this trait. Tests have distinguished
between those who do and do not have more car accidents, falls, and violent out busts studies suggests that a test
like Employee Reliability Inventory (ERI) can help employers reduce unsafe acts at work. The ERI purportedly
measures reliability dimensions such as emotional maturity, conscientiousness, safe job performance and courteous
job performance. While the findings of one study were not definitive, using the ERI in the selection process did
seem to be associated with reductions in work related accidents.
Reducing unsafe acts through training

Safety training is another way to reduce unsafe acts. This is especially appropriate for new employees. They should
be instructed safe practices and procedures, warn them of potential hazards, and work on developing safety –
conscious attitude.
Reducing Unsafe Acts through Motivation Posters, Incentive Programs and Positive Reinforcement:
Safety posters also help reduce unsafe acts. However, posters are not substitute for comprehensive safety programme;
instead employers should combine them with other techniques (like screening and training) to reduce unsafe conditions
and acts and also change them often.
Others use positive reinforcement programs to improve safety at work. Researchers introduced one program in a
whole sale bakery that takes wraps, and transports pastry products to retail outsets nation wide.
At the conclusion of training phase the employees were motivated to consider increasing their performance to the
new safety goal. For the following reasons: for their own protection, to decrease costs of the company and to help
the plant get out of last place in the safety ranking of the parent company.
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Management committee and safety
Telling supervisors to watch for spills and telling employees to work safely is futile if everyone in the firm believes
management isn’t serious about safety. Safety starts with top management commitment.
Everyone should see convincing evidence of top management commitment. This includes top management being
personally involved in safety activities; giving safety matters high priority in meetings and production scheduling;
giving the company safety officer high rank and status; and including safety training in new workers training ideally
“safety is an integral part of the system, woven into each management competency and a part of everyone’s day to
day responsibilities” In addition:
i. Institutionalise management’s commitment with a safety policy and publicise it. This should emphasise that the
firm will do everything practical to eliminate or reduce accidents and injuries. Emphasise that accidents and injury
prevention are not just important but of the utmost importance.
ii. Analyse the number of accidents and safety incidents and then set specific achievable safety goals.
Safety committees
Employees frequently participate in safety planning through safety committees, often composed of workers from
a variety of levels and departments. A safety committee generally meets at regularly scheduled times has specific
responsibilities for conducting safety reviews, and makes recommendations for changes necessary to avoid future
accidents. Usually at least one member of the committee comes from the HR departments.
Safety policies and discipline

Designing safety policies and rules and disciplining violators are important components of safety efforts. Frequently
reinforcing the need for safe behaviour and supplying feedback on positive safety practices also are effective in
improving worker safety. Such efforts must involve employees, supervisors, managers, safety specialists, and HR
staff members. Safety Policies and Discipline are further divided in to three types:
Safety training and communications

One may to encourage employee safety is to involve all employees at various times in safety training. Safety training
can be done in various ways. Regular sessions with supervisor’s managers and employees often are coordinated
by HR staff members. Showing videos, television broadcasts, and internet based resources all are means used to
conduct safety training.
To reinforce safety training continuous communication to develop safety consciousness is necessary. Merely sending
safety memos is not enough. Producing newsletters, changing safety posters, continually updating bulletin boards,
and posting safety information in visible areas also are recommended.
Employees safety motivation and incentive

To encourage employees to work safety many organisations have used safety contests work behaviour. Jewellery,
clocks, watches, and even vocation trips have been given as rewards for good safety records. Unfortunately some
evidence indicates that incentives tend to reinforce under reporting and “Creative” classifying of accidents. This
concern about safety incentives, raised by OSHA, is that employees and managers do not report accidents and
injuries so that they may collect the incentive rewards.
Inspection, accident investigation and evaluation

It is not necessary to wait for an OSHA inspectors to inspect the work area for safety hazards. Inspections may be
done by a safety committee or by a safety coordinator. They should be done on a regular basis, because OSHA may
inspect organisations with about – average lost workday rates more frequently.
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When accidents occur they should be investigated by the employer’s safety committee or safety coordinator. The
phases of accident investigation are four as follows:
• Review the scene
• Interview Employees / others
• Prepare report
• Identifying Recommendations
Closely related to accident investigation is research to determine ways of preventing accidents. Employing safety
engineers are having outside experts evaluate the safety of working conditions is useful. In many similar accidents
seem to occur in an organisational unit, a safety education training program may be necessary to emphasise safe
working practices. As an example, a publishing company reported a greater – than – average number of back injuries
among employees who lifted heavy boxes. Safety training on the proper way to lift heavy objects was initiated to
reduce the number of back injuries.
Organisations should monitor and evaluate their safety efforts. Just as organisational accounting records are audited,
a firm’s safety efforts should be audited periodically as well. Accidents and injury statistics should be compared
with previous accident patterns to identify any significant changes. This analysis should be designed to measures
progress in safety management.
8.5 Welfare Measures

Labour welfare services include all extramural and intramural welfare work, statutory and non-statutory welfare
facilities undertaken by the employers, government, trade unions or voluntary agencies. They also include social
security - measures which contribute to workers welfare such as insurance, provident fund, gratuity, maternity
benefits, workmen’s compensations, retirement benefits, etc.
Statutory welfare provisions

These are amenities that are to be provided necessarily to employees as per different legislators of the Government.
For example the Factories Act of 1948 in India covers areas including health, welfare, safety, working hours, annual
leave with wages and employment of women and children. Similarly, the Motor Transport Workers Act of
1961 mentions about restrooms, uniforms, washing allowance, medical facilities etc. for motor transport workers.
Similar, legislations exist in other areas like, mine workers, plantation workers, etc.
A considerable amount of emphasis has been laid on the provision of a canteen inside the workplace. The
International Labour Organisation (ILO) has laid certain guidelines in this regard which each country must follow.
The responsibility, in India, is on the State Governments for making rules to ensure provisions of a canteen in any
specified workplace or establishment employing 250 employees. Employees should be provided representation in the
management of canteens. It has been suggested that canteens should be run on cooperative basis and that legislation
should be amended to empower State Governments to make rules to meet the objective of nutrition.
The need for setting up creche was stressed way back in 193 1. The Factories Act in India lays down that in any
establishment with more than 50 women workers, a crèche should be provided and maintained for children below
six years in clean and sanitary conditions. The creche should be under the care of women trained in childcare. The
creche should have adequate accommodation, should be properly lighted and ventilated.
In India the State Governments are empowered to make rules in respect of standards, Development equipment and
facilities. Mothers should also be given time to feed their children at necessary intervals. There are also provisions
for appointing Labour Officer in large establishments, keeping in view your own organisation you should know
about the welfare legislations that cover your organisation.
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Voluntary Welfare Amenities
There are employers who have taken the lead and provided a wide variety of welfare amenities to their
employees:
Educational facilities
Economic and social progress is dependent on the quality of work force. Education plays a crucial role in motivating
and preparing the workers for constant change and development that should necessarily happen in industry. The
educated worker is naturally more receptive and responsible. Many organisations go a step further and extend
education facilities like fee reimbursement, books allowance, etc. to the children of the employees.
Transport facilities
The growth and expansion of industries has also increased the distance for the worker from his or her place of residence
to his or her place of work. Transport facilities for employees residing far from the workplace are essential to relieve
strain and anxiety. Such facilities will, no doubt, also provide greater opportunity for relaxation and reduce the rate of
absenteeism. For example Indian Airlines and Air India provide transportation to all their employees. The provision
of adequate transport facilities to workers is to enable them to reach their workplace without loss of much time
and without fatigue. In the offices where transport services are not provided, some conveyance allowance mutually
agreed upon between the employer and the employees are paid to the employees.” To encourage the employees to
have their own conveyance many employers advance loans for purchase of bicycles, scooters, cars, etc.
Recreational facilities
Recreation in the form of music, art, theatre, sports and games can play an important role in the mental and physical
development of your employees. The importance of recreation in creating a healthy climate for industrial peace
and progress has been emphasised by several study teams, committees and commissions. Trade unions could also
take the initiative and different agencies could combine their efforts to provide a minimum number of sports and
recreational activities to keep the labour force fit and healthy. Excursions can be organised, youth clubs can be
formed and holiday homes can be provided for your employees.
Other facilities
Many other types or facilities are provided to employees and they vary from organisation to organisation. For
example, an adventure sports tour operator would provide medical instance to the escorts or instructors, a hotel or
a resort may provide housing facility near workplace and free or subsidised lunch to employees, etc.
8.6 Responsibilities of HR
Following are the responsibilities of HR
Safety at workplace
The general goal of providing a safe and healthy workplace is reached by operating managers and HR staff members
working together. The primary health and safety responsibilities in an organisation usually fall on supervisors and
managers. An HR manager or safety specialist can help coordinate health safety programmes, investigate accidents,
produce safety program materials, and conduct formal safety training. However, department supervisors and managers
play key roles in maintaining safe working conditions and a healthy workforce. For example, a supervisor in a
warehouse has several health and safety responsibilities: reminding employers to wear safety hats; checking on the
cleanliness of the work area; observing employees for any alcohol drug, or emotional problems that may effect,
their work behaviour; and recommending equipment changes (such as screens, railing, or other safety devices) to
engineering specialists in the organisation.
Aposition becoming more common in many companies is that of safety/environmental officer. This combination may
make sense in situations where danger remits from chemical (or) other sources of pollution that may be hazardous
to both employers and the public or the environment. Because both safety and environmental responsibility require
working with the government agencies, putting someone in the job with the skills to deal with governmental agencies
and ensure compliance with a wide range of regulatory issues is a good choice.
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Awareness
Awareness can be created among the workforce by following methods:
• By providing forums for consultations with employers’ representatives workers representatives and community
on matters of National concern relating to safety, health and environment at work place with the overall objective
in creating awareness and enhancing National productivity.
• By encouraging joint – Labour Management efforts to preserve, protect and promote National assets and to
reduce injuries and disease arising out of employment.
• By maximising gains from the substantial investment in awareness campaigns by sharing experience and
learning.
• By including occupational safety and health at workplace in schools higher technical medical, professional and
vocational courses.
• By securing good Liaison arrangements with the International organisations.
• By providing medical criteria which will assure in so far as practicable that no employee will suffer diminished
health, functional capacity, or life expectancy as a result of his work experience and that in the event of such
occupational diseases having been contracted, suitably compensated.
• By providing for appropriate reporting procedures with respect to occupational safety and health to help achieve
the objectives and to accurately describe the nature of the occupational safety and health problem with a view
to carry out national project study, surveys to identify problem areas and pragmatic strategies.
There are many side affects, if we use even new computers like headaches, sniffles etc., some experts say it is all
because of poor ventilation, dust and fumes. It is found recently that new computers emit chemical fumes (which
however, diminish after running constantly for a week). And “Safe” office work is actually susceptible to many
other health and safety problems including repetitive trauma injuries related to computer use, respiratory illness
stemming from indoor air quality and high levels of stress, which are associated with a variety of factors, including
task design.
But even facts like these don’t tell the whole story. They don’t reflect the human suffering incurred by the injured
workers and their families or the economic costs incurred by employers.
In USA the Congress passed the “Occupational Safety and Health Act” in 1970 to assure so far as possible
every working man and woman in the nation safe and healthful working conditions and to preserve our human
resources.
The Act created the “Occupational Safety and Health Administration” (OSHA) within the Department of Labour.
OSHA’s basic purpose is to administer the Act and to set and enforce the safety and health standards that apply to
almost all workers in USA.
An occupational illness is any abnormal condition or disorder caused by exposure to environmental factors associated
with employment. This includes acute and chronic illness caused by inhalation, absorption, ingestion or direct
contract with toxic substances or harmful agents.
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Summary
• Today employees expect their employers to provide work environments that are safe and healthy.
• Health and safety are important aspects of an organisation’s smooth and effective function.
• The efficiency of employees depends substantially on the level of concentration of individual employees at
work.
• Fringe benefits refer to supplements to wages obtained by the employees at the cost of the employers. Fringe
benefits are also called wage extras.
• The age at which the productivity, efficiency and health of an employee begins to decline can be considered as
the appropriate age for retirement.
• The pension scheme involves cash disbursement to the retired employees in fixed monthly amounts. It provides
them a safe source of living as long as they survive.
• Pension is computed on the basis of length of qualifying service, reckonable emoluments and the pension
formula.
• Quantum of Pension is based on the qualifying service of the government servant and his or her average
emoluments for six months immediately preceding the date of retirement.
• The harmful effects of noise may be reduced by absorbing it.
• The effects of alcoholism on the worker as well as work are serious. Both the quality and quantity of work
decline sharply.
• Health promotion is a supportive approach to facilitate and encourage employees to enhance healthy actions
and life styles.
• There are three basic causes of workplace accidents: (a) chance occurrences, (b) unsafe conditions, and (c)
unsafe acts on the part of employees.
• Work schedule and fatigue also affect accident rates.
• A checklist or the self – inspection check can help identify and remove potential hazards.
• Organisations should monitor and evaluate their safety efforts.
• The general goal of providing a safe and healthy workplace is reached by operating managers and HR staff
members working together.
References
• Issues in Employee Health & Safety [Online] Available at: <http://industrialrelations.naukrihub.com/issues-in-
employee-health.html>[Accessed 8 December 2011].
• SAFETY AND HEALTH PROTECTION ON THE JOB, [pdf] Available at: <http://www.dir.ca.gov/dosh/dosh_
publications/shpstreng012000.pdf>[Accessed 8 December 2011].
• Martocchio, Employee Benefits, Tata McGraw-Hill.
• Stranks, J., 2010. Health and Safety at Work, 9th ed., Kogan Page Publishers.
• Dunlop, J., Why Are Employee Benefits So Important? [Video Online] Available at: <http://www.ehow.com/
video_5112535_employee-benefits-important_.html> [Accessed 8 December 2011].
• How and Why Employee Benefits are a must for todays workers!, [Video Online] Available at: <http://www.
youtube.com/watch?v=uv198eo3HWk>[Accessed 8 December 2011].
Recommended Reading
• Hopwood, D. and Thompson, S., 2006.Workplace Safety: A Guide for Small and Midsized Companies, 1st ed.,
Wiley.
• Martocchio, J., 2010. Employee Benefits, 4th ed., McGraw-Hill/Irwin.
• Beam, B. and Mcfadden, J. J., 2007. Employee Benefits, 8th ed., Kaplan Publishing.
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Self Assessment
a. Desired state of mind can be attained only if the employees are satisfied and relaxed.
b. A comprehensive array of employee benefits is generally believed to aid the organisation in attracting high-
quality employees as well as increasing the morale.
c. Fringe benefits embrace only voluntary programmes.
d. Fringe benefits can be most effective if they are geared to the preferences of the employee as determined
by research programmes.
2. What is the age limit fixed by the fifth central pay commission for retirement of central government
employees?
a. 62 years
b. 58 years
c. 60 years
d. 59 years
3. In which of the following form of retirement benefit is the government is responsible for the retirement
benefit?
a. partly contributory
b. non- contributory
c. half contributory
d. wholly contributory
4. is computed on the basis of length of qualifying service, reckonable emoluments.

a. Pension
b. Earned leave
c. Gratuity
d. Burnout
5. Match the following:
1. Superannuation Pension A. Pension granted to a public servant who retires voluntarily

B. Pension granted to a person who retires on attaining the age of
2. Invalid Pension
superannuation or compulsory retirement
C. Pension granted to a government servant when he is
3. Compulsory Retirement Pension
compulsorily retired as a penalty
D. Pension granted to a public servant who retires from service
4. Retiring Pension
because of any bodily or mental infirmity
a. 1-D; 2-B; 3-A; 4-C
b. 1-A; 2-C; 3-B; 4-D
c. 1-C; 2-B; 3-A; 4-D
d. 1-B; 2-D; 3-C; 4-A
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6. Which of the following act provides for the payment of gratuity to employees with five years continuous service
working in factories, mines, oilfields, plantations, and other establishments including piece-rate and seasonal
workers where there are ten or more employees?
a. Gratuity Act, 1972
b. Factories Act, 1948
c. Occupational Safety and Health Act, 1970
d. Industrial Disputes Act 1947
7. can be created by securing good Liaison arrangements with the International organisations.
a. Awareness
b. Welfare
c. Safety
d. Employee Benefit
8. is based on the qualifying service of the government servant and his or her average emoluments
for six months immediately preceding the date of retirement.
a. Retirement Benefit
b. Voluntary retirement
c. Fringe Benefit
d. Quantum of Pension
9. refer to supplements to wages obtained by the employees at the cost of the employers.
a. Fringe benefits
b. Retirement benefits
c. Earned leave
d. Employee benefits

a. The efficiency of employees depends substantially on the level of concentration of individual employees
at work.
b. The pension scheme involves cash disbursement to the active employees in fixed monthly amounts
c. Wellness programmes are designed to maintain or improve employee lifestyle.
d. Organisations use Employee Assistance Programmes (EAP) as a broad based response to health issues.
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Case Study I
Fashion and Retail Personnel’s new approach to staff motivation
The challenge
Fashion and Retail Personnel is a privately owned company specialising in recruiting for major retailers and
manufacturers throughout the UK and overseas covering both permanent and temporary positions from Graduate
through to Director levels.
Having been established for 15 years and with 30 staff, the Directors felt that a new approach to leadership and
management styles were needed to keep ahead in this ever-evolving fast paced field.
The manager of the Nottingham office and the Sales Director both felt that they needed a fresh approach to leadership
after numerous years in recruitment with the ultimate purpose of maximising sales and staff motivation.
The solution
The Extraordinary leadership programme was chosen as a training opportunity for the two key personnel. This was
a unique programme carried out over an 8-week period for 1 day every fortnight covering all aspects of leadership
and management.
The outcome
Throughout the 8-week period, different challenges were covered and subsequently implemented into the business
focussing on staff morale and motivation. Each session another topic was covered and then fed back to the sales
team with amazing results ensuring staff were focussing on their individual goals and recognising their own potential
and self-belief as well as understanding others in their teams.
Management implemented several of Innergys recommendations including a once a month work from home strategy
day which led to a reorganisation of staff incentives, salary structures and organisational structure creating a new
tier of management, which has had an extremely positive outcome with all staff, and has enabled the Director to
look more strategically at the business and recognise potential growth areas.
Management’s opinion
“Throughout my 17 years in recruitment and numerous training courses I found the Extraordinary leadership
Program to be by far the best I have ever attended. James’s passion, enthusiasm and delivery of the course was
superb and his ongoing support was greatly appreciated.
I will definitely be using Innergy for future training for my other managers and sales staff.
Innergy’s training is unique and inspirational and they actually work with you to achieve the right results for your
business.” Shelley Pinto Recruitment and Sales Director, Fashion and Retail Personnel.
Source: Fashion and Retail Personnel. [Online] Available at: <http://innergy.redbullet.co.uk/training/case-studies/

fashion-and-retail-personnel/> [Accessed 8 December 2011].
Questions
1. Which approach was chosen by Fashion and Retail to motivate employees?
Answer
Fashion and Retail Personnel opted for the ‘Extraordinary leadership programme’ as a training opportunity for
the two key personnel. This was a unique programme carried out over an 8-week period for 1 day every fortnight
covering all aspects of leadership and management.
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2. Whose recommendations did the company follow? How did it benefit them?
Answer
The company followed Innergys recommendations including a once a month work from home strategy day
which led to a reorganisation of staff incentives, salary structures and organisational structure creating a new
tier of management, which has had an extremely positive outcome with all staff, and has enabled the Director
to look more strategically at the business and recognise potential growth areas.
3. What does the Fashion and Retail specialise in?

Answer
Fashion and Retail Personnel is a privately owned company specialising in recruiting for major retailers and
manufacturers throughout the UK and overseas.
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Case Study II
Barista’s Recruitment and Training Strategy
Introduction
Barista coffee was establishes in 1999 with the aim of identifying growth opportunities in the coffee business.
Increasing disposable incomes and global trends in coffee indicate immense growth potential in one particular
segment. More significantly, they believe they have been quick to spot a latent need waiting to be trapped: Coffee
lovers seek a complete experience.
As of today, Barista exists in over 22 cities, and operates over 140 outlets nationally. In the last 2 years, Barista has
opened over 100 outlets in the country and with a new outlet opening nationally every 14 dates, Barista is currently
experiencing phenomenal growth. With outlets opening in Sri Lanka and Dubai, Barista is looking at potential
growth opportunities in Asia, making it highly competitive international brand.
Barista’s boom in growth has sparked of a greater need for more and more human resources. This poses a challenge for
Barista to ensure that their employees all across the country are well trained and provide consistent service at every outlet.
Position
Counter Staff:
Junior Executive (0-2 years experience)
Executive (1-3 years experience)
Senior Executive (3-5 years experience)
Field Staff:
Territory Manager
Area Manager
Regional Manager
Support Staff:
Marketing
Supply
Human Resources
Finance
Training
Table 1: Employee profile
The average age of Barista employee is 22. Most employees are in the 19-26 age groups. The break-up of the various
posts are given below:
Recruitment and selection

Barista currently opens a new outlet somewhere in the country every 10-12 days. The spurt of growth can only
be successful if they have the right people working for them. The high expansion means that more staff is needed
immediately at the Counter Staff and Field Staff Level. This is only possible is Barista uses the correct recruitment
and selection policy.
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Sources of recruitment
Barista’s main sources of recruitment are:
• Walk- ins
• Referrals
• Placement Agencies
Recruitment and selection process

Barista hires people for their counter staff from external sources, and follow the following process for
recruitment:
• Collection and review of Curriculum Vitae
• Personal interviews with H. R. Manager
• Personal Interviews with Area Manager/ Regional Manager.
Recruitment is usually done on a monthly basis, depending on the number of outlets and expansion taking place
in that month.
Training and development

To insure consistent employee performance, training and development policies are very important- even more so in
service sector organisations. Barista Coffee has a set, 14 days rigorous training procedure for each employee. With
training modules customised to fit the professional needs of each employee. In the case of their brew masters, the
training programs are drawn up and conducted by trainers who have been trained by Italian brew masters. Barista
has a Training and Development policy, which basically consists of two parts, Induction Training and Refresher
Training.
Induction training
Induction Training occurs when a new employee joins Barista. The employee is taught about the Barista culture,
what it means to be a Barista employee, the sort of attitude and behavior expected from him, and product and
technical training.
Refresher training
Refresher Training usually happens ones every two months, in the form of technical training and soft skills training.
This ensures that the employees are constantly aware of what is expected from them, and their required level of
performance.
Employee working hours

Barista employees work on an average for 9 hours, and there are usually 3 shifts per day.
Employee code of conduct

Barista employees are trained with regard to their code of conduct at the induction level. It is at this stage Barista
tries to infuse, what it refers to as key qualities for its employees: pleasant manners, polite behaviour and positive
attitude. The code of conduct of each employee is supervised everyday by territory managers.
Promotion policy
Barista prefers promoting from within, rather then externally. The amount of training and development programs that
go into developing an employee, they would like to harness that potential for higher posts. The current promotion
policy is based purely on performance.
Performance appraisal
Barista currently carries out performance appraisals every quarter of a year. Direct supervisors in most cases carry out
these appraisals. Currently Barista doesn’t have any other kind of appraisal programs like upward/ 360o appraisals.
Barista does conduct Exit Interviews though, and uses it to improve employee retention.
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Employee turnover and retention

Barista’s current rate of Employee Turnover is about 10 %. The company attributes this to the fact that some of
the employees in the 19-22 age group, look at this job as a temporary source of income, and have no long-term
commitment to Barista. To increase employee retention, Barista focuses on the following key aspects:
• Right hiring
• Right working environment
• Grievance handling and redressal
Source: Barista vs Café Coffee Day – A Comparative Study. [Online] Available at: <http://www.iipmthinktank.com/
functions/marketing/compartive.pdf> [Accessed 8 December 2011].
Questions
1. What is the standard employee profile adopted by Barista?
2. What is the average age of a Barista employee?
3. Explain Training and Development in detail.
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Case Study III
Recruitment and Selection Process: A Case Study of Hindustan Coca-Cola Beverage Pvt.Ltd, Gangyal,
Jammu, India
In this case, a study has been made about recruitment and selection process of Hindustan Coca-cola Beverage
Private limited, Gangyal in Jammu in India. The study indicates that although the company follows a well defined
recruitment policy. In most of the cases the company does compensate the employees for the expenses incurred by
them. It is also observed that the company has got all the databases fully computerised. All employees said that the
company hires consultancy firms or recruitment agency for hiring candidates. It can be said that in spite of some
odd factors, the company is doing well since establishment.
Index Terms—recruitment, selection, computerisation
Introduction
The term soft drink was originated to distinguish non-alcoholic beverages from hard liquor, or spirits. Soft drinks
are non-alcoholic carbonated or non-carbonated beverages, usually containing a sweetening agent, edible acids, and
natural or artificial flavours. Soft drinks include cola beverages, fruit-flavoured drinks, and ginger ale and root beer.
Coffee, tea, milk, cocoa and undiluted fruit and vegetable juices are not considered as soft drinks. A soft drink is a
beverage that does not contain alcohol; generally it is also implied that the drink does not contain milk or other dairy
products and that it is consumed while cold. The adjective soft specifies a lack of alcohol by way of contrast on the
term “hard drink”. The word drink, while nominally neutral, sometimes carries connotations of alcoholic content.
Beverages like colas, flavoured water, sparkling water, iced water, sweet tea, lemonade, squash and fruit punch are
among the most common types of soft drinks. While hot chocolate, hot tea, coffee, milk, tap water, juices and milk
shakes do not fall into this classification. Many carbonated soft drinks are optionally available in versions sweetened
with sugar or with non-caloric sweeteners.
In other words; “Any drink that is not hard liquor can be referred to as a ‘soft drink’; however, in this piece ‘soft
drink’ refers to carbonated, sweetened beverages also known as soda or soda pop”.
Motivations and slogans of Coca-Cola

• People: Be a great place to work where people are inspired to be Partners: Nurture a winning network of
customers and suppliers, together we create mutual, enduring value.
• Planet: Be a responsible citizen that makes a difference by helping build and support sustainable
communities.
• Profit: Maximise long-term return to shareowners while being mindful of our overall responsibilities.
• Productivity: Be a highly effective, lean and fast-moving organisation.
• Winning Culture: Winning Culture defines the attitudes and behaviours that will be required of us to make our
2020 Vision a reality.
• Live Values: Values serve as a compass for our actions and describe how we behave in the world.
• Leadership: The courage to shape a better future
• Collaboration: Leverage collective genius
• Integrity: Be real
• Accountability: If it is to be, it’s up to me
• Passion: Committed in heart and mind
• Diversity: As inclusive as our brands
• Quality: What we do, we do well
• Focus on the Market: Focus on needs of our consumers, customers and franchise partners
• Get out into the market and listen, observe and learn
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• Possess a world view

• Focus on execution in the marketplace every day
• Be insatiably curious
Objectives of the Company

To engage Coca-Cola in exploring the viability and options for using their distribution networks in developing
countries to distribute ‘social products’ such as oral rehydration salts (ORS) and related educational materials on
health, hygiene and sanitation.
• To help engage an appropriate international NGO, or NGOs, to partner with Coca-Cola at a global level and
local levels on this initiative.
• To support Coca-Cola and its partners in modeling different scenarios which combine Coca-Cola’s distribution
network with local health initiatives in order to achieve our aim.
• To support Coca-Cola and its partners in selecting the most promising scenarios as the basis for field trials.
• To support the international NGO, or NGOs, to engage local NGOs and local Health Institutions in order to
undertake trials linking this idea with local support infrastructure.
• To engage and inform as many people as possible, encouraging them to support this campaign, managing
expectations and offers of help and promoting constructive debate.
• To help gather and make available appropriate research reports and opinion in this area, and ensure that the
group and its supporters are well-informed.
Market share
Coca-Cola is a leading player in the Indian beverage market with a 60 per cent share in the carbonated soft drinks
segment, 36 per cent share in fruit drinks segment and 33 per cent share in the packaged water.
In Jammu and Kashmir

Carbonated soft drink segment- 54%
Packaged water- 10%- 15%
Fruit drink segment- 30%
Coca-Cola slogans:
2000 – Coca-Cola Enjoy
1993 – Always Coca-Cola
1990 – Can’t Beat the Real Thing
1989 – Can’t Beat the Feeling
1986 – Red, White and You
1982 – Coke Is It
1976 – Coke Adds Life
1971 – I d Like to Buy the World a Coke
1969 – It’s the Real Thing
1963 – Things Go Better with Coke
1959 – Be Really Refreshed
1944 – Global High Sign
1942 – It’s the Real Thing
1936 – It’s the Refreshing Thing To Do
1929 – The Pause That Refreshes
Profile of HCBPL Jammu
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History
J&K is a state with very diverse geographical and ecological environment. Mainly it has three provinces, i.e.,
Srinagar, Jammu and Ladakh. It has two plants, which are situated at Jammu City and Srinagar. Srinagar plant is not
in operation at present. Jammu plant is of Ground Field Plant (Not constructed by the company) (Other category of
plant is Green field plant – Constructed by the Coca-Cola company, for example, Dasna Plant). For Jammu Location
distribution is almost totally indirect and company has 78 distributors and more than 12500 customers all across the
length and breadth of J&K from Kathua to Jammu, Rajouri, Poonch, Doda, Kishtwar, Anantnag, Baramulla, and
Leh - Ladakh. Despite much of the supply chain function being centrally managed there is still vital importance
of local suppliers for Jammu Location. J&K being at the end of country’s north difficult accessibility’s additional
taxation is important issues for supply chain. There is definitely need of vendor development in case of supply of
many services and materials.
Brief description about Jammu unit:

This unit of Jammu was first started in 1973 under the ownership of Parle Soft drinks. In 1973 it was a FOBO. In
the series of takeover in India in 1998-99, Jammu Bottling Company was taken over and since then it is running
under the name “Hindustan Coca-Cola Beverages Pvt. Ltd., It is COBO plant fully owned by the company with an
installed capacity of 500 Bottles per Minutes.
The plant is spread in around 96,000 Square Feet area. This plant is capable of producing Returnable Glass Bottles
(RGB) and for market supply of PET, Cans and Tetra packs it depends on other Coca – Cola plants.
Number of distributors:
Year 2006 – 50
Year 2007 – 72
Year 2008 – 52
Year 2009 – 61
Year 2010 – 78
Number of outlets:
Year 2006 – 19525
Year 2007 – 20525
Year 2008 – 21600
Year 2009 – 22300
Year 2010 – 20,000
Number of cases sold:

Year 2006 – 25 Lakhs
Year 2007 – 28.6 Lakhs
Year 2008 – 24.9 Lakhs
Year 2009 – 33 Lakhs (plan)
Year 2010 - 78 Lakhs
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Brand wise market share (Jammu plant):
2008 2009
(%) (%)
Crush 1.0 1.0

Kinley Soda 2.0 1.0
Sprite 8.0 8.0
KinleyWater 10.0 10.0
Coca-Cola 13.0 12.0
Mazaa Mango 16.0 18.0
Thums Up 17.0 16.4
Fanta 17.0 17.0
Limca 17.0
Under finance manager, there are two area finance managers. Under Production Manager, there are Chemist persons
who look after the quality .Persons who look after the maintenance part.
Scope of study
The scope of study is to observe the degree of satisfaction levels of the employer as well as the employees towards
the process of recruitment and selection techniques adopted by the company. It will also show the deviations if any,
towards this affect that will be experienced in research. Apart from getting an idea of the techniques and methods
in the recruitment procedures it will also give a close look at the insight of corporate culture prevailing out there
in the organisation. This would not only help to aquanaut with the corporate environment but it would also enable
to get a close look at the various levels authority responsibility relationship prevailing in the organisation. Also the
stipulated time for the research is insufficient to undergo an exhaustive study about the topic assigned and moreover
the scope of the topic (recruitment and selection) is wide enough, so it is difficult to cover the entire topic within
the stipulated time.
Research methodology
The purpose of the methodology is to describe the research procedure. This includes overall research design, the
sampling procedure, the data collection method, and analysis procedure. Out of total universe 15 respondents from
coca-cola have been taken for convenience. The sample procedure chosen for this are statistical sampling method.
Here randomly employees are selected and interviewed.
Information collected was based on the questionnaires filled up by the sample employees. A help of various reference
books was taken under secondary method.
Primary data
• Questionnaire: Corresponding to the nature of the study direct, structured questionnaires with a mixture of
close and open-ended questions will be administered to the relevant respondents within the Personnel and other
Departments of the organisation.
Secondary data
• Organisational literature: Any relevant literature available from the organisation on the Company profile,
recruitment and selection procedures, Job specifications, department-wise break up of manpower strength and
the organisational structure.
• Other sources: Appropriate journals, magazines such as Human Capital, relevant newspaper articles, company
brochures and articles on www sites will also be used to substantiate the identified objectives.
168/MITSDE
Sampling plan and design
A questionnaire will be used for the purpose of research, to test the validity and effectiveness of the recruitment and
selection procedures within the organisation and to test the validity and effectiveness of the policies and procedures
within the organisation.
The basic rationale of Questionnaire is to ascertain the perception of the non-HR departments in terms of the validity
and effectiveness of the policies and procedures used by the organisation. It is also in line with the assessment of
any suggestions/recommendations that the respondents from these Departments might have in terms of the use of
an alternative source/device of recruitment and selection, than what already forms the current practice of the H. R.
Department.
Questionnaire would be administered to 15 respondents, holding a senior designation within the Personnel Department
of the organisation. It will also be administered to at least 15 respondents belonging to typical Departments within
the organisation and holding senior designations within their respective Departments.
Sampling element
For the purpose of administering the Questionnaire, the respondents would comprise of personnel holding senior
designations within the Personnel Department of the organisation. The respondents for the Questionnaire will also
be preferably being panel members of the Recruitment and Selection Board of the organisation. The respondents
would comprise of personnel holding senior designations within certain typical Departments identified within the
organisation, namely:
Stores
Finance
Operations
Sample Extent: The extent of the sample is confined to the Jammu operations of the HCBPL, specifically to the
Administration.
Sampling technique
Judgement Sampling would be used for the purpose of choosing the sample for the purpose of administering
Questionnaire. The identified expert would have a thorough knowledge about all the respondents within the Personnel
Department of the organisation. Thus his/her expertise would be incorporated in locating, identifying and contacting
the required respondents.
Again Judgement sampling would be effectively used in identifying the typical non - H. R. Departments within the
organisation and subsequently for the location and identification of suitable respondents for Questionnaire.
Analysis and findings

The analysis of the various sources of recruitment and selection devices is presented on the following pages.
The response entailed from the H. R. Department (as analysed from Questionnaire) represents current practice
within the organisation in terms of the sources of recruitment and selection devices used. The analysis of the
response entailed from all the other departments (as analysed from Questionnaire) forming the sample, represents
the perception of the respondents from these Departments in terms of the validity and effectiveness of the various
sources/devices of recruitment/selection (specific to these Departments).
The analysis further entails any suggestions/recommendations given by this non-H.R. Department (forming the
sample for administering Questionnaire), in terms of any recruitment source and/or selection device that should be
deployed by the organisation apart from what already constitutes current practice. The following points are taken
into consideration for the purpose of present analysis.
169/MITSDE
The procedure of Recruitment and Selection
200
No. of
employers 100
0
Coca-cola
Company
Figure 1
Figure 1 gives the details of recruitment and selection. 120 out of 120 employer’s accepted the fact that coca-cola
follows recruitment and selection procedure.
• External recruitment: the company compensates the employees for the expenses made by them
80
employers
60
no. of
40
20 yes
0 no
coca
cola
Figure 2
It basically depends on the post the candidate is applying for, in most of the cases the company does compensate
the employees for the expenses incurred by them.70 out of 120 employers said that the company compensates the
employees for the expenses made by them, while 50 employers said no. It can be seen from figure 2.
• Company hires consultancy firms or recruitment agency for hiring candidates
150
100
50
0
Coca cola
company yes
no
Figure 3
170/MITSDE
All 120 employers said that the company hires consultancy firms or recruitment agency for hiring candidates as
obvious from figure 4.
• The verification of the candidates to the given reference
Yes, 8
no. of employers
0 No, 4
100
0
0
Coca cola
company
Figure 4
80 out of 120 employers said that the references provided by the candidates are verified while 40 employers said
no.
• The total monitory expenditure the company spends on recruitment and selection procedure
80 Dabur
60
employers
40
no. of
20
0
below 10%- 20%- 30%
10% 20% 30% above
Producticity
Figure 5
20 out of 120 employers said that the company spends about 10%-20% of its total expenditure on recruitment
and selection. 70 out of 120 employers said that the company spends about 20%-30% of its total expenditure on
recruitment and selection.
While 30 out of 120 employers said that the company spends above 30% of its total expenditure on recruitment and
selection as obvious from figure 5.
• Company post positions on the job sites and internet searches
no. of employers
200
100
0
Yes No
Coca cola company
Figure 6
171/MITSDE
120 out of 120 employers said company posts positions on the job sites and internet searches. It can be seen from
figure
• Company maintains and manage candidate’s file including maintenance of database to ensure comprehensive
data collection of candidates.
150
no. of employers
100
50
0
Coca cola
Yes No
Figure 7
120 out of 120 employers said that company maintains and manage candidate’s file including maintenance of
database to ensure comprehensive data collection of candidate.
• The productivity of the employees get hampered due to his/her marital status.
50 out of 120 employers believe that the employee’s productivity gets hampered due to his marital status to a large
extent, while 30 out of 120 believe that productivity is somewhat affected, 30 out of 120 believes that marital status
does not affect the productivity of the employee and one employee did not had any answer . It can be seen from
figure 8.
60
40
20
0
To a Somewhat Does Cant
large affects not say
extent affects
Scale
Figure 8
172/MITSDE
• Interview methods used by the company
200
No. of
100
Employees
0
Direct stress computerized other
Scale
Coca-cola
Figure 9
200 out of 200 said the company follows direct interview method, as well as other method which includes unstructured
interview with the departmental head. And the 120 said the computerisation is followed by the company. This is
analysed in figure 9.
Conclusion
This is concluded from the above mentioned studies that the performance of the company is nice. 120 out of 120
employers said that company maintains and manage candidate’s file including maintenance of database to ensure
comprehensive data collection of candidates. 70 out of 120 employers said that the company spends about 20%-
30% of its total expenditure on recruitment and selection. 120 out of 120 employees’ accepted the fact that coca-
cola follows recruitment and selection procedure. It basically depends on the post the candidate is applying for, in
most of the cases the company does compensate the employees for the expenses incurred by them. 70 out of 120
employers said that the company compensates the employees for the expenses made by them, while 50 employers
said no. 120 out of 120 employers said that company maintains and manages candidate’s file including maintenance
of database to ensure comprehensive data collection of candidates. It can be concluded that this company is doing
very well in the area of soft drinks if it is compared with the other competitors.
(Source: International Journal of Innovation, Management and Technology, Vol. 1, No. 4, October 2010. Recruitment
and Selection Process: A Case Study of Hindustan Coca-Cola Beverage Pvt.Ltd, Gangyal, Jammu, India. Available
at: <http://www.ijimt.org/papers/77-M469.pdf> [Accessed 21 November 2011].)
Questions
1. What were the objectives of the Coca-Cola Company?
2. Note the analysis of the various sources of recruitment and selection devices in the following case study.
3. Discuss the scope of the above case study.
173/MITSDE
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Ltd.
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176/MITSDE
Self Assessment Answers
Chapter I
1. b
2. a
3. a
4. b
5. d
6. c
7. c
8. d
9. d
10. c
Chapter II
1. c
2. c
3. a
4. d
5. b
6. c
7. b
8. d
9. a
10. d
Chapter III
1. a
2. b
3. d
4. d
5. c
6. a
7. d
8. c
9. d
10. a
Chapter IV
1. b
2. a
3. c
4. b
5. a
6. d
7. a
8. b
9. c
10. a
177/MITSDE
Chapter V
1. a
2. a
3. b
4. c
5. a
6. c
7. d
8. d
9. b
10. a
Chapter VI
1. a
2. d
3. b
4. b
5. c
6. a
7. b
8. d
9. b
10. a
Chapter VII
1. b
2. a
3. a
4. d
5. b
6. b
7. d
8. c
9. a
10. c
Chapter VIII
1. c
2. c
3. b
4. a
5. d
6. a
7. a
8. d
9. a
10. c
178/MITSDE

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Chapter VII .............................................................................................................................................. 112

• explain Human Resource in Retailing

• identify the objectives of Human Resource Management

• discuss the HR procedures in Retail

• discuss the issues in Retail Human Resource Management

• recognise retail and customer focus

• explicate the HR environment

• understand the procedure of Human Resource environment in retailing

• realise the international Human Resource issues

• comprehend the importance of customer satisfaction

1.2 Objectives of Human Resource Management

Employee Response Retailer’s Response

Fig. 1.1 Downward performance spiral

1.4 HR Procedures in Retail

Procedure involved in setting up a retail organisation

Procedure of human resource environment in retailing

Procedure of various organisational arrangements utilised in retailing

1.5 Retail and Customer Focus

Year Employee requirement(cumulative)

1.6 Satisfaction and Sales People

1.7 Issues in Retail Human Resource Management

Balancing the human resource triad

Utilising diverse employee groups

1.8 International Human Resource Issues

9. Which of the following is false?

10. Which of the following is false?

• define the meaning of retail organisation

• discuss the guidelines for organisational structure

• enlist the types of organisational structure

• describe the principles of organising retail firm

• discuss the retail organisation design issues

• explain the organisation structure in retail

• understand the process of setting up a retail organisation

• recognise the steps involved in creating organisation structure

• identify the purpose, scope and importance of e-store design

Thus, anorganisationisaformalstructureofrolesandpositionsputinplacetoachievesomespecificgoals. Thestructureof

While developing the organisation design has to be considered.

2.2 Guidelines for Organisational Structure

2.3 Types of Organisation Structure

Organisation structure of small Stores/ Independent Retailers/ Single stores, etc.

Back office staff Sales staff

Fig. 2.1 Structure of a retail store

2.4 Principles of Organising Retail Firm

2.5 Process of setting up a Retail Organisation

Employee’s expertise and specialisation

Authority and responsibility:

Co-ordination of stores and merchandise

Guiding Principles for organisation structure

2.6 Creating Organisation Structure

Strategic Management Merchandise Management Store Management

Fig. 2.2 Tasks performed by a typical retail firm

Organisation structure in retail

Promotion Merchandise Human Operation Promotion

Fig. 2.3 Retail organisation

Men’s Apparel Ladies Apparel Children’s Apparel Appliances Denim Garment’s

Fig. 2.4 Product group retail organisation