SEMESTER II

Human Resource Management

UNIT NO.03
Development and Maintenance of Human Resource:
1. Objectives of HRD, challenges in HRD,
2. Performance Appraisal: Meaning, Need, Problems of Performance Appraisal,
3. Training and Development: Difference between training and Development, Methods of Training,
4. Career Planning:- Meaning, use of career planning,
5. Mobility of employees:- Internal and External, Succession Management
6. Wage and Salary administration: Factors affecting wage/ salary, objective of wage and salary
administration,
7. Employee Benefits- Principles of employee benefit program.

Human Resource Development :

- According to Nadler and Nadler, "Human resource development is a series of organised activities conducted
within a specified time and designed to produce behavioural change".
- It comprises of various mechanisms that make sure that the organisation's human resources are skilful,
knowledgeable, competent and possess the correct behaviour and attitude for the present as well as future
performance.
Objectives of HRD
1) Achieving Organisational Effectiveness: HRD facilitates employment of sufficient number of qualified and
experienced personnel some specialists and some generalists, according to managerial, supervisory and
operational needs of an organisation. This, in turn, helps in achieving organisational effectualness.

2) Developing and Enhancing Competencies: As organisations grow, their needs of competencies also
changes. Market conditions are fluid and hence demand changes in short-term and long-term goals and
strategies. New opportunities also throw new challenges, which require innovative technologies and policies
and in some cases, enhancement of skills and knowledge. The objective of HRD is to identify and bridge these
gaps in competency-related requirements of the personnel, created by such changing conditions. HRD does this
by encouraging employees to develop and enhance their competencies, providing regular in-house training
sessions and deputing employees to receive training at specialised training centres in collaboration with other
departments of the organisation.

3) Identifying and Developing Potential:Organisations have future plans and employees have ambitions.
Expansion and diversification programmes of organisations require that with the changing needs, potential
employees should be given adequate opportunities to utilise their potential to the fullest. HRD foresees an
organisation's future needs, identifies potential employees and helps them work towards actualising their full
capability.

4) Motivating Personnel: Motivation is a psychological feature that inspires people to act towards achieving a
particular objective. People working for an organisation may have the requisite competencies for a job. but the
intensity of interest may be lacking. Motivation induces zeal in people. HRD motivates employees to work with
commitment and dedication.
5) Creating Harmonious Environment for Healthy Teamwork: Achieving result in any activity is a
collaborative effort of team members. At times, individual's ambition and team goals are in conflict with each
other. HRD aims to achieve coherence and synthesis between the two. To achieve this, HRD builds up an
organisational culture that helps to develop healthy teamwork among the people.
6) Enhancing Productivity and Quality: Productivity and quality are directly linked to individual capabilities
to be productive and quality conscious. HRD precisely defines roles and responsibilities of individuals. This
helps every employee to focus on his work with a sense of responsibility to achieve results expected from him,
resulting in increase of productivity and quality. Also, HRD provides opportunities for meritorious employees
to move up the organisational ladder, which in turn motivates them to be productive and raise quality standards.
[

 Challenges before HRD

1) Ever-Changing Manpower Demographics: An HRD department needs to match steps with changing
manpower demographics. Now-a-days, the pace of businesses all over the globe is changing very fast. As newer
specialisations are emerging, the workforce is becoming more diverse in terms of skills, qualifications, and in
today's times, ethnicity. Intra-country and inter-country migration of manpower is very common. Employees
from diverse backgrounds carry with them their own baggage of cultural and moral values, as well as working
systems. HRD needs to cope with this diversity. To blend this diversity into a coherent, seamless entity, is
indeed a challenging task.

2) Global Competition: With the advent of scientific innovations like the internet and mobile technology,
along with relaxed laws for inter-country business, the world has virtually become a smaller place. This has
made global business competition an important challenge to face. With not much control over the global prices
of commodities, human resource has become a decisive factor. The challenge before HRD is to change, upgrade
and develop manpower according to changing needs of the business. Business environment has become more
complex and highly predictable..

3) Keeping Pace with Advancement: With science advancing rapidly, there is an availability of
newertechnology and processes, making older working methods obsolete. For an organisation to maintain pace
inthis competitive scenario, its HRD department needs to work fast to introduce training and
developmentprogrammes for employees so that they can acquire newer skills that match newer technology and
processes.Organisations that cannot do this have no option, but to be left behind in the business race.

4) Motivating Employees for Life-long Learning:Organisations provide generalised training. The training
requirements of individual employees cannot be met by such training programmes. With ever-changing
workplace requirements, an employee needs to take up the responsibility of sharpening his skills, expertiseand
knowledge at every step; this makes his learning a life-long process

5) Awareness about Customer Demands: Although the end-product is the result of the efforts of all
departments and employees, all employees are not aware of the demands of customers regarding the products.
To make every employee aware of the market demand, the HRD department should facilitate meetings between
production, quality control, design and other relevant departments.

6) Entry of Multinational Companies (MNCs): In a global business environment, mergers with and takeovers
by MNCs are very common. This results in a blend of diverse cultures and skills. HRD should take up the
challenge to see that the skill gap between employees is not so big as to cause the occurrence of conflicts among
employees. Weaker employees need to be trained by the employer or should self-train themselves.
 PERFORMANCE APPRAISAL

Meaning and Definition of Performance Appraisal

- Performance appraisal is a tool which is used to evaluate the employees' performance at the workplace.
- It generally includes qualitative and quantitative dimensions of employees job performance. In this context,
performance is defined as the level of work achievement.
- It generally represents how successfully an individual satisfies the job requirements.
- Performance is constantly evaluated on the basis of outcomes.
- For example, a student applied great effort while preparing for exams but he received poor remarks. In such
case, the effort applied is of high level but performance is comparatively low. Immediate supervisors,
subordinates, customers being served, computers and even self-appraisal can evaluate the performance of an
individual.

- According to Mondy et al., "Performance appraisal is a system of review and evaluation of an individual's
(or team's) performance".

- According to Gomej-Mejia et al., "Performance appraisal involves the identification, measurement, and
management of human performance in organisations".
- According to DeNisi, "Performance appraisal is the system whereby an organisation assigns some score
toindicate the level of performance of a target person or group".

According to Flippo, "Performance appraisal is defined as a systematic, periodic and so far as humanly possible,
an impartial rating of an employee's excellence in matters pertaining to his present job and to his potentialities
for a better job".

 Need for Performance Appraisal

Needs for performance appraisal are as follows:

1) It is required to inform the employees about the criteria being used by the organisations to decide the
productivity and utility of employees in the organisation.

2) It is required in an organisation to evaluate the achievements and failure of employees related to their work.
It also helps the employees to know their position in the opinion of their supervisor and organisation.

3) Performance appraisal is needed to motivate the employees to become more efficient in their work. It
provides them with a summary of their past performance, which helps them in planning their future in a better
way.

4) It helps to recognise the personality differences because each person differs in personality and has different
situational, psychological, physiological and social traits.

5) Performance appraisal helps to identify the strengths and weaknesses of an employee.

Consistent appraisal makes this information easily available during allocating new assignments. Knowing the
strengths and weaknesses, it also helps the management in effectively selecting the right employee for the right
team, which is necessary for effective management.
 Approaches &Methods of Performance Appraisal :

Methods of Performance Appraisal

Traditional/PastModern/ Future
Oriented Method oriented Methods

1) Graphic Rating Scales (GRS): 1) Behaviourally Anchored Rating Scales (BARS):

2) Straight Ranking Method 2) Management by Objectives (MBO):
3) Paired Comparison Method 3) Psychological Appraisals
4) Critical Incident Method 4) Human Resource Accounting
5) Group Appraisal Method: 5) 360-Degree Performance Appraisal
6) Checklist Method 6) Assessment Centres
7) Forced Choice Method
8) Forced Distribution Method
9) Field Review Method

 Traditional/Past-Oriented Methods of Appraisal

Traditional methods of performance appraisal focus on past performance. They aim at giving feedback to the
employees pertaining to their activities which can be utilised for attaining bigger victory in the near future.
Traditional appraisal methods are as follows:

1) Graphic Rating Scales (GRS): A Graphic Rating Scale (GRS) is also called "linear or simple rating scale It
provides a list to appraisers including various characteristics necessary for effective performance like co
operation, flexibility, readiness, motivation, etc. A five- or seven-point graphic rating scale includes each
characteristic. Numbers and/or expressive words or phrases indicating out the performance level are pointed in
the rating scale. The middle part of the rating scale is more often filled with words like "average", "adequate",
"satisfactory", or "meets standards".

2) Straight Ranking Method: This is the most traditional and easiest method of performance appraisal. By this
method, every employee is provided with a rank starting from 'best' to 'worst'considering his overall
performance. Simplicity is the key quality of this method. It involves lesser administration and tends to provide
a satisfactory solution to small enterprises having fewer employees. Due to rank assignment, this method
encounters various appraisal failures, specifically central tendency and human errors.

3) Paired Comparison Method: This method came into existence in continuation to the straight ranking
method, with a view to offer an organised process for evaluating relative ranks of the employees. It is also
known as "man-to-man appraisal". It is a useful method in which the employee, who is supposed to be
appraised, is compared with others, in a combination, one at a time. As many times, the person is compared
with another one, it is counted on paper. The appraiser must set a standard as a basis for appraising the
employees.

4) Critical Incident Method: This method focuses on diagnosing those particular happenings (or
circumstances) in which the employee has performed really good or those which needs further enhancement. It
is a method asking for a narration of happenings, but does not believe in providing ranks or ratings. It is
sometimes combined with a rating type system.

5) Group Appraisal Method: It is usually seen that some appraisers use very high level of standards for
appraising their subordinates. However, it is not necessary to assess them as per such high standards. It is
generally seen that where the appraiser himself is excellent, he anticipates his subordinates also to be at the
same level. To overcome this problem, a group appraisal method is developed. This method considers the
performance evaluation by a group of people holding information about the job and performance standards.

6) Checklist Method: Under this method, rater does not assess the performance of the employee. Rather, he
prepares a report about his performance and final scores are given by the HR department. A chain of questions
is given pertaining to the employee's actions. For the purpose of pointing out whether the answer to a question
regarding an employee is assertive or not, the rater examines it. It is possible that some questions may be given
more or equal weightage. Normally, the questions are framed in 'yes/no style.

7) Forced Choice Method: This method has an objective of rectifying the biasness of the rater to assign
constantly high or low ratings to every employee. It utilises some sets of combined phrases or statements, where
two can be positive and two can be negative. The rater is requested to point out the most and least narrative four
phrases of a certain employee. In fact, the phrases are prepared in such a manner that the rater cannot simply
evaluate as to which phrase is applicable to the most efficient employee. Commonly used phrases are:
1) Grasp rapidly - Works sincerely.
ii ) Dependable performance -Satisfactory performance.
iii) Generally late -Usually slow at work.

8) Forced Distribution Method (Forced Ranking Method): Leniency is one of the major errors in rating due
to which many employees are given high ratings. This method aims to remove the problems by persuading the
rater to evenly distribute the rates on the rating scale. This method relies on the assumption that the level of
employee's performance validates to a normal distribution forming a bell-shaped curve.

9.)Field Review Method: In this method, appraisee is assessed by someone external to his own department
either from the commercial office or from the HR department. External evaluator checks the employee's past
records and takes an interview of the person and his superior. This method is mostly used to take decisions
regarding promotions at the executive level.
 Modern/Future-Oriented Methods of Appraisal:
 Modern methods of performance appraisal focus on future performance. These methods evaluate
employees'capabilities for achievement and define standards for both short and long-term performance.
Various modern methods of performance appraisal are as follows:

1) Behaviorally Anchored Rating Scales (BARS): BARS are often known as behavioural expectation scale.
The rating points on this rating scale are established by the statements of efficient or inefficientbehaviours.
They are termed as behaviourally anchored because the scale shows a series of narrative behavioural statements,
ranging from worst to best. A rater must point out which behaviour explains an employee's performance in the
best possible manner.

2) Management by Objectives (MBO): Concept of MBO was first given by Peter F. Drucker. It is an
individual appraisal method which determines task-related results rather than behaviours or activities. It is
also termed as appraisal by results. Its main goal is to improve the performance of organisation by linking
the organisational and subordinates objectives. Employees are provided various inputs in order to get an
idea about their objectives, allotted timeframe for completing the job, etc. MBO involves regular evaluation
and feedback in order to reach the target.

3) Psychological Appraisals: Big organisations generally hire full-time industrial psychologists. When
psychologists are asked to evaluate, they evaluate a person's future capability instead of his past
performance. The appraisal usually includes psychological tests, in-depth interviews, conversation with
supervisors and a review of other assessments. Afterwards, the psychologists complete the analysis of the
employee's logical, emotional, motivational and other job-related characteristics that determine individual
capability.

4) Human Resource Accounting: This method adds up some monetary value to the workforce of an
organisation. This process includes the assessment of goodwill of an organisation. It can be enhanced by
establishing a system in order to carry out regular assessment of particular variables. These variables are
categorised in two forms, ie, key variables and intervening variables.

The key variables are the strategies, rules and regulations of an organisation, including its leadership policies,
abilities and behaviour of an employee, etc. Intervening variables include commitments, attitudes,
encouragements, interpersonal relations, communication and decision-making.

5) 360-Degree Performance Appraisal: It is used to evaluate the performance of employees and managers
based on the feedback obtained from the individuals who work alongwith them. It can be taken as an organised
collection and review of performance data of a person or a group extracted from a number of stakeholders.
Through this method, the employees hold the chance to review the manager, which is not possible in traditional
performance appraisals. It is an objective and realistic method, which is free from biasness.

6) Assessment Centres: Assessment centres are mainly used for the assessment of managerial or administrative
capability. It is a central point where managers may appear jointly to contribute in job- related exercises
assessed by trained evaluators. The basic purpose is to assess managers periodically. says one to three days,
with the help of observation and evaluation of their actions across the cycle of chosen exercises or work
samples. Assessees are asked to take part in workgroups (without leaders), in- basket exercises, computer
simulations, role-playing and other parallel activities which require the same qualities for successful
performance as required in the actual work. Once recording of observations is completed, the raters gather to
discuss these observations and take final decisions on the basis of these discussions

 Problems of Performance Appraisal

Limitations of performance appraisal are as follows:

1) Rating Errors: Positive or negative deviations in ratings of performance appraisal, which affects its accuracy
are termed as rating errors. Most common rating errors are as follows:

1) First Impression Error: It occurs when a manager forms a positive or negative image about an
employee on the basis of first impression and keeps it in mind for future judgements as well. It is alsoknown as
primary or primacy effect. For example, a new manager finds that an employee is notperforming properly. The
reason behind this is that his parents had recently died in a mishap. In amonth's time the employee became
normal and began giving a high level performance but themanager's opinion did not change as it was negatively
influenced by the first impression.

ii) Halo Effect: It takes place whenever a rater gives too much importance to a particular factor of performance
and gives identical ratings to other performance factors as well. For example, if an employee is always the first
one to reach office and the last one to leave office, he is considered to be very industrious and creative. Whereas
an employee with the casual attitude and relaxed body language would not be taken seriously and would not be
relied upon. These two judgements taken by a manager are based on halo effect and might not be accurate as the
manager has taken into account only a single obvious characteristic of the employees.

iii) Strictness or Leniency: Several managers rate their subordinates equally either low or high. These are
known as strictness or leniency errors. The strict manager assigns lower ratings to what an employee isentitled
to. While the lenient manager assigns higher rating than entitled. For example, Ramesh gives higher ratings to
all his employees than what they deserve because he feels that this will motivate them to perform better and
they will put all their efforts to match up with the rating being given to them.

iv) Central Tendency Bias: Some managers play a safe game by giving average ratings to all the employees. It
could be performed with a view to averse the need of valid scoring across two ends. The reason behind this is
because several systems want the managers to mention additional remarks when they assign too high or too low
ratings to employees.

v) Recency Bias: Recent actions have the tendency to surpass the overall performance. Generally, people have a
short memory. For example, an individual performed very well and hard over the year, but due to some
inevitable situations in the last few weeks, his performance level went down. As a result, his supervisor gave
him a bad rating on the basis of his last few weeks' performance and ignored his eleven months superior
performance. This is termed as recency error. If the manager maintains the record of his performance
throughout the year, then recency error can be reduced to a large extent.
vi) Stereotyping: Stereotyping refers to making a general image regarding the characteristics (which is usually
wrong) of all members of a group. This hampers a manager's ability to take correct decisions. For example,
Mahesh is an introvert but an excellent salesman, but his manager underrates his performance as compared to
the other salespersons because he does not fit with them. The manager here ignored Mahesh's performance due
to stereotyping and made an inaccurate judgement.

vii) Contrast Effect: Contrast effect states that something which is drastically different (highest or lowest) will
overstate the difference. For example, in an interview when there are huge numbers of job applications,
distortion in the evaluation of any candidate may occur on the basis of the place of his application. If his
application is placed after a relatively weak candidate, it may immediately grasp the attention of the interviewer
whereas it may lose its charm if it is placed after a very strong candidate. Another example of contrast effect is
that after rating an outstanding performer, the supervisor begins to rate a good performer.

viii) Personal Bias: Sometimes unfair evaluation occurs due to various reasons like personal beliefs, attitudes,
assumptions, experiences, preferences, and deficiency of accepting any particular an individual, class, or fact.
Everyone experiences such biasness while taking day-to-day decisions about people, things, etc. Differentiating
people on the basis of race, religion, age, sex, etc., and assuming that a particular person is not suitable for a
specific job, is an example of personal bias. If a manager believes that women are emotional and men are
rational, then he will not select a female candidate for a job, which requires practical decisions.

ix) Spill over/Past Performance Effect: It simply means previous performance rating affects the current rating,
irrationally. For example, Vijay was awarded as a 'star performer' in the last year as he got the highest rating.
This year his performance was not up to the mark even then he was rated as a 'star performer', on the basis of
previous record.

x) Similar-to-Me Effect: It is in the nature of supervisors to give higher ratings to those employees whom they
believe have qualities or qualifications similar to their own. For example, those employees whose children go to
the same school as that of their manager get high performance rating as compared to those employees whose
children go to the other schools.

xi) Attribution Error: It is the inclination to determine behaviour of people according to personal factors while
ignoring the situational factors. For example, Manoj is a manager having both good and average employees in
his team but he gives the credit of success to his own leadership quality and blames the bad attitude and laziness
of employees for failure.

2 ) Poor Appraisal Forms:

Various factors related to appraisal forms affect the entire appraisal process like:
i) Ambiguous rating scale.
ii) Vital dimensions of job performance may be ignored by rating form.
iii) Various irrelevant performance dimensions are involved in rating forms.
iv) Forms may be lengthy and complicated.

3) Lack of Rater Awareness:

It is possible that raters may not be properly skilled to execute performance management exercises. Then, it
becomes a great barrier for a rater having inadequate specialisation in a particular area to assess the technical
capabilities of a ratee. The raters may not have plenty time to execute the appraisals in an organised manner and
to hold a proper review session.

4) Ineffective Organisational Policies and Practices:

Raters get de-motivated if they do not get the correct appreciation for their evaluation. Often, low ratings
assigned by raters are taken by management as a negative sign of malfunction on the part of rater or a signal of
employee dis-satisfaction. Thus, most of the employees obtain good ratings, inspite of their poor performance.
Generally, the rater's immediate senior must appreciate the ratings..

5) Inflationary Pressures:
It is a particular case of low discrimination in the upper limit of the rating decisions. These pressures are
regular in occurrence. Due to the growing importance of equality principles and fear of revenge from unhappy
employees, who did not receive good reviews, the appraisal process has become quite firm and lenient. Harmful
consequences from appraisal process can be minimised by usual inflating or modifying appraisals.

 Training And Development

Meaning and Definition of Training

- Training can be defined as the systematic attempt to enhance the specific skills, desired behaviour, and
knowledge of employees which are necessary for performing a job effectively.
- Employee training begins soon after the orientation process.
- It is an application oriented. It is for a short time period and it is for non-managerial personnel. It is the
formal and systematic modification of behaviour through learning.
- It is essential for the growth of the organisation as well as for the employees.
- Training refers to the learning opportunities designed to help grow employees.
- The process of enhancing the technical skills of workers in a short period is called training.
- Training concentrates on couching the members of an organisation how to perform effectively in their
current jobs

According to Dale S. Beach, "Training is the organised procedure by which people learn knowledge and/or skill
for a definite purpose".
According to H. John Bernardin, "Training is any attempt to improve employee performance on a currently held
job or one related to it".
According to Edwin B. Flippo, "Training is an act of increasing the knowledge and skills of an employee for
doing a particular job"
According to Planty, Cord and Efferson, "Training is the continuous, systematic development among all levels
of employees of that knowledge and their skills and attitude which contribute to their welfare and that of the
company".
Training Methods

Training Methods

On-the-Job Methods Off-the-Job Methods

Job Instruction Training(JIT) Role-Play

Apprenticeship In-Basket Exercise

Job Rotation Conferences

Coaching Seminar

Understudy Group Discussion

Mentoring Sensitivity Training

Lectures

Simulations

Case Study

Syndicates

 On-the-Job Methods

On-the-job training methods are based on the concept of learning by doing. In this method, trainees are
provided with real job settings to do their jobs. In some situations, they are given sole responsibility to handle
the issues on their own and this is how they learn by doing their task. Also, the new employees gain knowledge
of what is to be done from the existing employees and improve their skills under the guidance of experienced
ones. This type of training method has become very popular and is used by most of the corporations. Some of
the crucial on-the-job training methods are discussed below:
1) Job Instruction Training (JIT): Under this training process, trainees are given instructions systematically
one-by-one. These instructions are given by the experienced trainers who are well-known with the techniques
and procedures to be used and the functions to be performed during the job. In this training method, the learners
first observe their instructors while performing the task and then follow them by performing the task on their
own. This helps the trainers to easily point out the faults committed by the trainees and rectify them as soon as
possible

2) Apprenticeship: It follows the principle of "earning while learning". In this method, an expert and
experienced person gives his knowledge and skills to the trainee who desires to learn that skill. Once the trainee
has completed apprenticeship programme, trainee can apply for the permanent job, if there is any. It aims to
provide broad training to enable the trainee to take up a wide variety of tasks within his field of specialisation.

3) Job Rotation: It is that process in which the employees are given the opportunity to perform the functions of
other departments in the organisation. When the employees are rotated from one department to another
department or from one division to other division, they gain new knowledge and experience about the different
jobs performed by different people in the organisation. Job rotation takes place either in the form of promotions
in which the employees are promoted from lower level to higher level or in the form of lateral transfers, in
which only the job responsibility changes, but not the position of the employee. Thus, this training method is
the best way to transform an employee to an expert.

4) Coaching: The guidance given by the superiors of the organisation to their subordinates is called coaching.
Besides being an unofficial and unplanned training method, it improves the bonding between the employees and
their superiors. The senior manager acts as a coach of instructor and guides the employees about how toperform
the task and how the mistakes done can be rectified. Later, they also evaluate the performance of these
employees.

5) Understudy: It is the method of preparing the trainees to perform the responsibilities of his trainer or to
occupy the position of his senior in future. In this method, when the superior or manager is about to get
separated from the organisation due to the reasons of transfers, resignation, retirement etc., his position is
allotted to that employee who has received training under him. This method is different from coaching in the
sense that the manager can select employee from his department for understudy.

6) Mentoring: In this method, training is given by a specialised and experienced person. In organisations,
mentoring is usually done by senior employees where they try to enhance the skills of junior employees. Many
organisations use mentoring as a nurturing tool which fosters the understanding and proficiency of their
employees.

 Off-the-Job Methods

Off-the-job training methods follow the rule of learning by gaining knowledge. Under this
method, the trainees are called upon in a classroom which…
1. Lectures : When there is requirement of imparting technical knowledge to the new employees ,Lecture
methodsproves to be the best way to clear the notions ideas to the trainees.It is one way communication method
2)Stimulation : It depicts the real life situation of the job that may have happened in the past .such as damage to
any valuable thing or any situation that may have affected the company,Several realistic situations are given to
the trainees to prepare them to handle the situations accordingly. By this, the organization prepares the trainees
well in advance about what may happen on the job and how they have to deal with these types of situations.
This method is used in those industries where on-the-job training can be expensive
or destructive, such as, in an aeronautical industry.

3) Case Study: Under this method, the real business cases are framed and they are provided to trainees Trainees
have to discuss it and give their ideas on how they would have tackled that situation. This method is called case
study method and is one of the very common ways of imparting knowledge based on actual business situations.

4) Role-Play: In this method, trainees are provided with an imaginary or real problem which is generally
concerned with the organisation. They are asked to assume identity of a particular person and behave as if they
are in that particular situation, In order to enhance their managerial skills, employees can make use of various
visual aids and tips given by their mentor while executing their performance. Role playing is widely used for
human relations and leadership training.

5) In-Basket Exercise: In this method, the trainee is given all the relevant things like letters, reports,
recordsetc., that are needed by managers. The trainee is given a specific situation which managers
confrontregularly. He is asked to assess the situation, prioritise the things, justify his reasons and give final
decisionon the issues raised during the exercise.
The exercise gives the manager a snapshot of leamer's ability to perform the executive functions and roles in the
job. The whole exercise is video-recorded and the concerned candidates are tested on the grounds of proposed
set of their skills and abilities such as of problem-solving ability, time management, etc.

6) Conferences: A structured method of communicating thoughts to a large number of audiences who are
attending the event is called as a conference. Experts from specific fields come together to share their views on
a common topic and also obtain answers to their questions, if they have any.

7) Seminar: Another word for 'Seminar' is "Seed Plot" which means it is a base ground for gaining knowledge.
These are conducted by experienced and expert people who not only prepare the topic of discussion and deliver
it in front of learners but also help them to share their ideas and explore their views towards the topic of
discussion. Since, it is focussed on any particular topic, learners are able to understand the things more clearly
and respond effectively.

8) Group Discussion: It is one of the very common training methods adopted by numerous organisations Under
this method, a topic is given to the group of trainees and they are asked to actively participate in it and give their
outlook towards the issue. The discussion topic is given on the spot and thus, no time is given to the trainees to
prepare the topic. This method not only helps in solving the problem related to an organisation but also creates a
higher rate of interest and enthusiasm among the trainees as they are able to share good experience and gain
new ideas and knowledge about the subject.

9) Sensitivity Training: As by name, sensitivity training, it is very clear that this training is related to emotions
and sentiments. It is also called as T-group training or laboratory training. The assessment is based on the
behaviour of one for the other. This training is carried out to make employees get aware of and respect the
feelings and emotions of other co-trainees.
10) Syndicates: Syndicate training method has proved to be very useful for training higher management. In this
training method the employees form a group and get united to execute any particular function. This method
includes numerous groups who work altogether to achieve the organisational training goals.

 CAREER PLANNING

-Meaning and Definition of Career Planning

- The process that enables individuals to choose their career goals and the way through which he can achieve
those goals is called career planning.
- From organisation's perspective, career planning assists the employees in planning their careers in such a
way which is beneficial for the organisation as well the employees
- Career planning crafts a pathway of growth and development of the employee from the time he joins the
organisation, till the time he retires.
- It also identifies potential employees who can be useful for the organisation and train them for their roles.
Managers use it as a technique for career mapping of employees who have recently started working.
- Identification, growth, planned-employment and re-employment of talents are needed for career planning

Accrding to Schwind, Das and Wagar, "Career planning is the process of enhancing an employee's future.
value.
According to Schermerhorn, "Career planning is a process of systematic matching career goals and individual
capabilities with opportunities for their fulfilment".

 Uses of Career Planning

The process of career planning is crucial for the employees as well as the organisation:

Employees: The following reasons illustrate the importance of career planning for employees 1)

1) Defines Clear Path of Career: With the help of career planning employees becomes aware about the career
prospects available to him within the organisation. He can foresee the position to which he is capable of
rising and the amount of effort he needs to put in. This facilitates him to choose a career that is appropriate
for him, keeping in mind his talent and skills. He can also gain benefit from the training and development
programmes running in the organisation in order to groom himself and become eligible to handle bigger
roles and responsibilities.
2) Facilitates Self-Development: Though, it is a common belief that organisation grooms its employee, but the
fact is that the employee grooms himself by way of self-development methods. After gaining clarity on his
career path, the individual concentrates on developing himself with the help of various techniques. Self-
development attained through a definite career path helps the individual to reach the height that he would have
never even thought of reaching.

3)Enhanced Productivity: When the content of the work is undesirable it creates career dissatisfaction. A person
who is not satisfied with his job he has chosen for himself would not prove to be sufficiently productive for the
organisation.
While on the contrary, if the job content is interesting the productivity of the employee increases. It is a known
fact that people value intrinsic factors more than extrinsic factors as intrinsic factors provide meaning to their
work. Intrinsic factors make individuals feel useful to their own self, to the organisation and the society, by
accomplishing their tasks..

Organisation: The following are the reasons due to which career planning is useful for the organisation:

1) Ensure Availability of Talent: Various booming organizations emphasise on developing and promoting their
own employees and making them ready to take-up managerial positions rather than hiring managers from
outside. This needs a well-planned career path along with the sincere efforts to assist the manager in moving on
the chosen career path. Due to this, it becomes mandatory for the organisation to do career planning. i

2) Attracting and Retaining Talent: Organisationscatiatract talented employees, which are difficult to find, by
only promising them a bright future. This can be done by going for a proper career planning. An
organisation can create a positive image in the market by doing proper career planning for its employees and
in this manner can attract talented employees. The new hires are also assured that they are in such
organisation, who values their skills and capabilities and is providing them a career and not a job.

3) Promoting Positive Image of Organisation: Some firms conduct yearly surveys across the world in order to
identify the best employer. These surveys emphasise on "matching individual and job requirements". The only
way to achieve this is through effective career planning. In a way, he contented and committed employees are
the best to portray a positive image of any organisation.

iv) Protecting Interest of Disadvantageous Employees: Organisation is a social entity and in thun liable towards
every member of the society. It has to ensure that the interest of the weaker groups of the society such as,
physically handicapped people, retired persons, etc. is not ignored. It is a social necessity to help these groups
develop and come at par with others. It can be done by proper manpower planning further followed by career
planning and development.
 MOBILITY OF EMPLOYEES

Introduction

- Employee mobility refers to the movement of a person into or out of a job.

- It may involve change in the job department, organisation or even the country of that person.
- Employee mobility can happen in the form of changes in the location of workers across physical space
(geographic mobility) as well as across a set of job (occupational mobility).
- Geographic mobility can also be classified into short-distance and long-distance moves.
- It can also be divided into voluntary and forced movements. Occupational mobility can be lateral
(movements within the group of jobs that are equal in socio-economic status) or vertical (movement to a
better or worse job).

- Strategic HRM researchers have traditionally viewed employee mobility from the costs and benefits of
acquiring employees through attraction and selection, as well as losing employees through turnover.

- However, strategic human capital researchers have examined employee mobility as a process that influences
the ongoing inflow and outflow of knowledge, social capital, and organisational routines, in addition to the
individuals who enter and exit the organisation.

- By examining employee mobility in this light, we can view mobility as a strategic issue with implications
that span beyond the immediate consequence of losing or gaining an employee.

 Types of Employee Mobility

Employee mobility can be categorised into two types:

1) Internal mobility of employees
2) External mobility of employees

 Internal Mobility of Employees

- Internal mobility means movement of the present employees within the same organisation, in search of new
job prospects. It helps in the growth of existing employees by providing them new and better job
opportunities within the organization

- External Mobility of Employees:

- External mobility means movement of the employees of and organisation to any other organisation in
search of better career opportunities. This mobility mostly occurs when employees are dissatisfied with their
existing job conditions.
- Thus, the employees get separated from their organisation due to reasons such as suspension demotion,
termination, voluntary retirement or resignation.

- External mobility is tolerable and desirable for the organisations to certain permissible limits. This is
because it enables the management can bring in fresh talents and knowledge to organisation.
- Beyond certain level, external mobility may lead to increased training cost frequent labour redeployment in
workplaces, increased rate of accidents, production disturbances and wastages and reduced employee
productivity and motivation. Further, external mobility levels seen to be closely related to career stages of
the employees. For example, new or recently joined employees have higher tendency to leave the
organisation than those in their mid or late career lives. When employees are not able to leave the
organisation for some reasons, they may adopt withdrawal behaviours like absenteeism and tardiness

 Cost of External Mobility

The costs of external mobility depend on whether managers intend to eliminate the position or to replace the
departing employee. Some of the costs involved in replacing an employee are as follows:

1) Recruitment Costs: The costs associated with recruiting a replacement may include advertising the job
vacancy and using a professional recruiter to travel to various locations (including college, campuses) To fill
executive positions or technologically complex openings, it may be necessary to employ a search firm to locate
qualified individuals, who most likely are aiready employed. A search firm typically charges the company a fee
of about 30 percent of the employee's annual salary.

3) Selection Costs: Selection costs are associated with selecting, hiring, and placing a new employee in a joh
Selection can involve interviewing the job applicant, which includes the costs associated with travel to the
interview site and the productivity lost in organising the interviews and arranging meetings to make
selection decisions. For example, a law firm's decision to hire a new associate may involve the participation
of many junior associates as well as senior partners. Each of these lawyers may charge clients hundreds of
dollars per hour for his or her time. If several meetings are called after the interviews are completed, these
lawyers lose valuable time that they could have spent working for their clients

3) Training Costs: Organisations incur costs in providing new employees with the knowledge necessary to
perform on the job. Most new employees need some specific training to do their job. For example, sales
representatives need training on the company's line of products. Training costs also include the costi associated
with an orientation to the company's values and culture.

4) Compensation Costs: A company incurs separation costs for all employees who leave, whether or not they
will be replaced. The largest separation cost involves compensation in terms of pay and benefits. Most
companies provide severance pay (also called separation pay) for laid-off employees. Severance pay may add
up to several months salary for an experienced employce.

Types of External Mobility

External mobility is of two types-

1) Accession: Accessions are additiom of new candidates to the existing employees. Accessions include
employment of new candidates, re-employment of former employees, employees called back to work after lay
off etc
4) Separation: Separation involves ending the employment relationship with an employee. Simply, it can be
denoted by "termination of employment. It is also known as employee turnover. The employment of an
employee is terminated when an employee even after getting the notice is not in a position to improve
his/her performance.

 SUCCESSION MANAGEMENT

Introduction
- Succession management may be defined simply as the process of identifying and preparing the right people
for the right jobs at the right time.
- An important element of succession management is ensuring that the company has a pool of candidates
ready to assume more responsible positions.
- This entails estimating future needs for executive talent, identifying candidates, and assessing candidates to
determine their development needs, establishing development goals, implementing development activities,
and tracking learning and readiness for advancement.
- This is an on-going, long-term process as manager's move through the pool and as the needs of the company
change. The focus is not on who is available now for advancement but rather on how many people are likely
to be needed for a range of future higher level positions and whether the company will have experienced
people ready for advancement when the positions need to be filled.
Process of Succession Management

Following are the four phases of the acceleration pool process for management success:

1) Nominating, Identifying High Potentials: During this phase, managers nominate candidates, and an executive
resource board screens them. The board makes the final decision on whom to select for the pool.
2) Diagnosing Development Opportunities: During this phase, the developmental needs of pool members are
determined using an assessment centre, 360-degree feedback surveys (including supervisor ratings of
performance and self-assessment), cognitive tests, personality tests, or a psychological assessment. Assessment
results are fed back to the pool members, perhaps with the benefit of coaching. A coach, mentor, or supervisor
will help the pool member establish developmental priorities.
3) Prescribing Developmental Activities: During this phase, the executive resource board decides on a pool
member's assignments, special training, or coaching. The board also begins the process of monitoring progress.
4) Ensuring that Development actually takes Place and Documenting Development: During this phase,pool
members develop the needed behaviour and knowledge through training and coaching. They apply the new
behaviour and knowledge in their assignment or a short-term project. Measures of development are obtained to
(a) indicate changes in competencies that were targets for development,
(b) demonstrate application of learned behaviours and knowledge (i.e.. new behaviours were indeed tried), and
(c) determine the effects of development on job performance. The developmental experiences and measures are
incorporated into pool members' career development portfolios.

.
5) Reviewing Progress and Determining New Assignments: During this phase, the executive resource board
audits pool members progress and decide on a new/next assignment, going back to phase This cycle (phases 3
through 5) continues as the pool member develops and eventually is promoted into positions of increasing
responsibility, achieving the organizational level targeted by the pool, and perhaps entering a new pool for even
higher level responsibility.

 WAGE AND SALARY ADMINISTRATION

Meaning and Concept of Wage and Salary Administration

- Wages and salaries are the payments which are given to the employees for their performance
- Policies and functions carried-out during the compensation management are established and carried out by
the process of wage and salary administration.
- With the passage of time, this process has become an important part of human resource management and is
carried-out by the HR manager along with the higher authorities of the corporation.
- It includes various functions such as performance appraisal, wages and salary surveys, establishment of
salary structure, rules for managing wages, incentives and bonus, profit-sharing, etc.
- As per the organisational needs and circumstances, making adjustments in salary structure and organising
the compensation cost is also done through wage and salary administration.
- In order to derive higher profits from the employees, organisations must consider that that the wage and
salary policy should be unbiased and must be able to manage the recruitment, development, promotion,
retainment and transfers of the employees.

According to D. S. Beach, "Wage and Salary administration implies the establishment and implementation of
sound policies and principles of employee compensation".
According to Nwachukwu and Ogunbameru, "Wage and salary administration refers to the development,
implementation and on-going maintenance of a base pay system".

 Factors Affecting Wage and Salary Administration

Various organisations avoid increasing the wages of the employees as increased cost of production may hamper
the results and the profit levels may decrease. Factors influencing the wages and salaries of the employees are
mainly categorised as follows:
1) External Factors: Wage and salary administration is influenced by various external factors. Some of them are
as follows:

i) Demand and Supply:

- The labour market situations operate throughout the nation and they determine the wage rate of the
employees.
- The demand and supply of workers play a very important role in determining the wage structure of the
company.
- If the demand of a particular type of worker is more and supply is low then, there will be increased rate of
wage. Whereas, when demand of a particular type of worker is less and supply is more, this will result in
lower wage rate.

ii) Cost of Living:

-The cost of living of the employees has a great impact on the wage rates of an organisation.
- In order to satisfy the basic standard of living, employees prefer those organisations which provide them
higher wages. Since, the price index number is also considered in wage adjustment process, thus, an increase in
the price index will make the workers more expensive and they will start demanding higher wages.

iii) Trade Union's Bargaining Power:

- The bargaining power of union leaders also affects the wage rates. If the trade union is powerful, its
financial status is strong, leader is dynamic and the number of members is more, then they can easily get
their wages increased. In case if all these things do not work out, they can use strike as their last weapon for
increasing their wages. Employers may be successful in offering low wages if the trade union lacks strength
and unity among its members.

iv) Government Legislation: In many under-developed countries, including India, employers exploit the
workers and pay them low wages. Thus, to save workers from such exploitation, government introduced
Minimum Wage Act in 1948 in order to develop the conditions of the labour and provide them with minimum
wages that can fulfil their basic needs. In this way, government has made various laws to ensure that workers
get enough wages to sustain them and their family.

⚫v) Psychological and Social Factors: Psychological needs and social factors such as justice, equitability and
fairness should be given preference while fixing the wage rates. Focusing on these factors, management not
only motivates the employees to perform their work enthusiastically but also helps them to live their life with
dignity and feeling of proud.

vi) Economy: Changing economic conditions has a great me about the wage lates are reduced very organisation.
During the recessions, there is abundance of labour but the wage rates are reduced to a great extent. This
situation adversely affects the productivity of maximum number of organisations, but there are few small-scale
organisations which bloom during this period.

vii) Technological Development: Quick industrial growth has resulted in scarcity of skilled labsur
Technological upgradations require change in the levels and types of the skills, which in turn leads to changes
in the wage rates. Therefore, in order to keep it aligned with the changing requirements of the market,
organisations need to keep pace with the existing market rates

vii) Prevailing Market Rates: The prevailing wage rate in the labour market influence the wage rates to a great
extent. In order to retain the competent employees for a long duration, their salary should be either equal to
market rates or more than that. Lower salary can result in turnover of employees as they can move out in search
of better job opportunities.

2) Internal Factors: The internal factors having influence on wage and salary administration are as
follows:
i) Organisation's Ability to Pay: Wage and salary administration entirely depends upon the ability of an
organisation to pay its employees. Big firms whose profit margins are high can afford to give high wage rates
whereas, organisations such as hospitals and educational institutes pay less salary to their employees as they are
less profitable organisations. But in today's time, this factor has become less important as no matter whether an
organisation is earning profits or not, it cannot pay less than its competitors. Besides this, they need to increase
their wage rates in order to attract talented and competent candidates.

ii) Job Requirements: Job pricing is done on the basis of job requirements such as skills possessed by the
employee, effort made by him, qualification, experience and productivity of the worker, working conditions,
etc. The value of a job can be ascertained by measuring the level of job difficulty. The more the difficulty level
of the job, more is the salary given to the employee.

iii) Management Strategy: The remuneration can be determined on the basis of an overall strategy by the
company. If the organisation aims at growing rapidly in the industrial market, remuneration needs to be high
than that of what the competitors are paying, while if it aims at maintaining present earnings due to hard time of
the company, the remuneration level can be average or below average.

iv) Employee Related Factors: Qualification, experience, knowledge, seniority, performance, creativity and
potential are some of the employee-related factors that play a very important role in determining the
remuneration of an employee.

 Objectives of Wage and Salary Administration A sound wage and salary administration seeks to
achieve the following objectives:

1) Helps to Establish a Fair and Equitable Remuneration: Compensation given to the employees should be fair
and unbiased and for that, employees should be assessed on the basis of their performance, job requirements
and industrial scale. Remuneration should be given to the employees after considering both internal as well as
external equity. In simple words, wages should be paid according to the worth of the job and the rate of wages
in the labour market.

2) Helps to Attract Talented Personnel: High salary rate and good pay structure help the organisations to attract
large number of talented, qualified and competent candidates to render their services in the company. Since,
these people play a very significant role in making a company successful, they are considered to be valuable
assets of the organisation and the organisation is dependent on them to a large extent.

3) Helps in Retaining Existing Employees: Proper wage and salary structure not only helps the corporation in
retaining skilled and talented employees but also reduces their chances of quitting the job. Adequate wages and
salaries provide the employees a greater job satisfaction which further increases their loyalty towards the
organisation. If the manpower is not satisfied with the remuneration, they may look for better opportunities
somewhere else in the market.

4) Helps to Increase Productivity: In order to improve the productivity, organisations need to boost up the
morale of its employees and for that, effective wage and salary management can prove out to be of great help.
5) Facilitates Cost Controlling: Since, the remuneration of employees constitute a major part of the expense of
an organisation and has a great impact on the company, proper wage and salary administration will keep a
control on the pay structure and the cost incurred on the human resource.

6) Ensures Cordial Union-Management Relations: Most of the employees working in an organisation face
problems related to the salaries and wages. This adversely affects the union-management relationship but when
the wage and salary administration is done systematically on the basis of job analysis and prevailing wage rate,
the chances of employee grievances are reduced. It also reduces disputes over the issue of wages and salary
which in turn creates harmony in the organisation.

7) Improves Organisational Image: Wage and salary management act as a mirror of any organisation. Good
wage and salary adusieistployees which furth follow-up of legal requirements shows the progress of the
company as well as its employees which further improves the public image of the organisationos

8) Maintains Internal and External Equity: A successful wage and salary administration is based on both
internal as well as external equity. As per internal equity, the pay of an employee in one organisation should be
equal to the pay of another employee at same post in other organisation. As per external equity, salaries are paid
to the employees after determining the current wage rate from the labour market. In simple words, equal and
fair pay for equal work done.

9) Ensures and Reward Desired Behaviour: Good performance, loyalty, discipline, taking up responsibilities
seriously, etc., are some of the desired behaviours of every employee. The one who meets these requirements is
rewarded and these rewards act as a motivator for the employee. Thus, compensating an employee in order to
appreciate him motivates him to bring the desired behaviour.

10) Ensures Legal Compliance: An effective wage and salary administration follows the rules and regulations
set by the government and make sure that none of the employees violate those laws.
 EMPLOYEE/FRINGE BENEFITS

Meaning and Definition of Fringe Benefits

- Fringe benefits are also popularly known as employee benefits. This is a supplemental compensation which
is paid by an employer to his employee, apart from his direct wages and incentives.
- These are granted assistance or additional facilities to the employees by the employer either: (a) voluntarily
or (b) as a legal requirement or (c) as a part of collective negotiated agreement.

According to William B. Werther et al., "Fringe benefits embrace a broad range of benefits and services that
employees receive as part of their total compensation packages".
According to Cockmar, "Pringe benefits are those benefits which are provided by an employer to or for the
benefit of an employee and which are not in the form of wages, salaries and time-related payments".

Objectives of Fringe Benefits

Employee benefits are granted to achieve the following objectives:

1) To Attract the Most Talented Job Seekers: An organisation which offers fringe benefits to its employees
enjoys an excellent reputation in the job market and places itself in a prestigious position to attract the best
talents.

2) To Boost Motivation of Employees: Organisations use employee benefits as one of the m,. techniques to boo
morale of Loyalty long-term relations work sincerely. Also, as one of the techniques ta boyaemployeertionality
builds long-term relationships between an employer and final employee it helps reduce rates.
3) To Provide Taxation Benefit: Usually, employee benefits are non-taxable earnings in the hands of
employees. This is a benefit in addition to all other basic benefits.

4) To Improve Management-Labour Relations: Employee benefits act as a compensatory mechanism to reduce

dissatisfaction among workers regarding basic wages and incentives, thus resulting in improved relationships
between management and employees.

5) To Promote Companionship among Employees: As employee benefits are granted to all the employees
without being linked to work performance, they promote companionship among employees.

6) To Act as Assurance of Concern: Employee benefits assure employees that the management is concerned
about their needs and difficulties.

7) To Reduce HR Cost: Since, some of the employee benefits (like the same gift to all, transportation and
canteen facility) are distributed collectively to all the employees, the volume of the material or services
involved in these benefits would substantially bring down the cost because of acquiring these products or
services in bulk.
 Principles of Employee Benefits Programme

Disbursement of employee benefits should be based on following principles:

1) Employee benefits must be truly beneficial to the employees. The employees do not appreciate superficial
fringe benefits.
2) Employee benefits must be provided out of sincere concern for the welfare of employees. No compulsion
should be felt by the management nor should the management have the feeling of superiority as a donor.

3) The benefits should justify its costs.

4) Administration of employee benefits must be well-planned and should consider everyone.
5) Concerns of employees should be respected as far as possible, and the negotiating capacity of the labour
union should also be taken into consideration.
6) It should be possible to estimate the cost of benefits, and adequate finance should be made available.
7) The benefit must be as broad based as possible, i.e., it should be applicable to as large a number of
employees as possible.
8) Employees should be well-informed about using the benefits to maximum advantage. For example, if it is in
monetary form, employees should be educated how to invest wisely or how to use sensibly and not misuse away
the money received