Addis Ababa Medical and Business College

Program: MBA
Course Title:
Human Resource Management
Course guide:
Abebayehu H. (Asst. prof.)
Email:abeba2011@gmail.com
HRM PPT by: Abebayehu Haile.
UNIT-I: Nature and Scope of Human Resource Management
Definition

According to Flippo, “human resource management is

the   planning , organizing , directing and controlling of the
procurement, development, compensation, integration,
maintenance, and separation of human resource to the end that
individual, organizational and social objectives are
accomplished.”
Cont….

Human resource management(HRM)is the process of employing

people, training them, compensating them, developing policies
relating to them, and developing strategies to retain them. As a
field, HRM has undergone many changes over the last twenty
years, giving it an even more important role in today’s
organizations.
Cont….

In the past, HRM meant processing payroll, sending birthday

gifts to employees, arranging company outings, and making
sure forms were filled out correctly—in other words, more of
an administrative role rather than a strategic role crucial to the
success of the organization.
Functions of HRM
Management of human resources consist of several inter-related
function. These function are common to all organization though
every organization may broadly be classified into:

(1) Managerial function,

(2) Operating functions.

Cont….

Managerial Function

• Planning

• Organizing

• Directing

• Controlling
Cont….

Operative Function

The operative or service functions of human resource management

are concerned with specific activities of procuring, developing,
compensating and maintaining an efficient work force.
Cont….

It is concerned with securing and employing the right kind and

proper number of people required to accomplish the
organizational objectives.
Objectives of HRM

To improve the service rendered by the enterprise to society

through building better employee morale, which leads to
more efficient individual and group performance.
Cont….

To establish in the mind of those associated with the

enterprise – employees, shareholders, creditors, customers
and the enterprise is rendering the best service of which it is
capable and distributing the benefits derived fairly and
contributing to the success of the enterprise.
Cont….

To employ the skill and knowledge of employee efficiently

and effectively that is to utilize human resources effectively
for the achievement of organizational goals.

To enhance job satisfaction and self actualization of

employees, by encouraging and assisting every employee to
realize full potential.
Cont….

To provides facility and condition of work and creation of

favorable atmosphere for maintaining stability of employment.

To develop and maintain a quality of work life which makes

employment in the organization a desirable and social situation.
Organization of Human capital management and careers in HRM

Human Capital Management (HCM)

Human Capital Management, or HCM, is the effective

acquisition, employment, and development of a company’s
employees through strategic and tactical practices, processes,
and applications in order to maximize their economic value.
Cont….

To be most effective, the set of Human Capital Management

practices, processes, and applications should be focused on the
organizational need to provide specific competencies.
Cont….
Why Is Human Capital Management Important?

Human Capital Management is important because employees,

the individuals who spend much time each day working and
contributing to the success of an organization, are a valuable
resource that can either make or break an organization. Thus,
Human Capital Management is essential for acquiring and
retaining high-performing employees.
Cont….

The responsibility of human resource professionals is to create

and implement ways for employees to be hired, oriented,
trained, motivated, and engaged.
Cont….

Human Capital Management plays an essential role in helping

the organization’s human resources department increase the
overall productivity and happiness of employees. In turn,
productive and happy employees work harder and care more
about the success of the organization.
Cont….

Careers in HRM

HR is a key component of any organization’s senior

management team. Though the human resources department
is widely known for conducting interviews, explaining
company benefits, managing employee relations,
Cont….

providing career development advice and helping hiring

managers with performance and productivity expectations, the
profession has a much larger role in business today.
Cont….

HR professionals have evolved from the behind-the-scenes

administrative role of the 20th century to active involvement in
shaping corporate policy. Senior management recognizes the
significant contributions of HR to their organization’s bottom
line and overall success.
Cont….

This shift continues in the profession. To a more significant extent than

ever before, many HR roles are consequently focused equally on
contributing strategically and functionally to manage the organization’s
talent.
HRM and Environment scanning

Environmental scanning

• Systematic monitoring of trends affecting the organization

• When it comes to the detailing of environmental scanning

companies are required to monitor the trends of much varying
nature

• Identifies trends that might affect the formulation and

implementation of both organizational and HR strategies
Cont….
External and internal environment of the organization
Internal environment
Financial, physical, human and technological resources
External environment
Micro environment
Customers
Competitors
Suppliers
Publics
Cont….

Macro environment

Economic environment

None economic environment

Political& legal environment

Socio- cultural environment

Demographic environment
Cont….

• Techniques of environmental analysis

PESTEL analysis

SWOT analysis

QUEST analysis

Industry analysis

Competitor analysis
Integrating HR-strategy with Business strategy.
Strategic planning is the process of determining the
organization's long-term objectives and establishing the goals
necessary to achieve them. The process involves an in-depth
analysis of current and anticipated conditions that may affect
the organization's ability to achieve its mission.
Cont….

A business strategy is a future-oriented plan for creating and

maximizing competitive advantages to accomplish the organization's
mission. To successfully execute that strategy, each function within the
business needs to align its departmental strategy with the overall
business strategy.
Cont….

However, it is easy for functional and departmental leaders to

slip into a narrow "silo" perspective of their strategy. After all,
each function has distinct areas of responsibility - finance and
accounting, sales and marketing, operations, HR, information
technology and production. But aligning individual
departmental strategies with the overall business strategy helps
the business plan to be executed efficiently.
Cont….

The HR function, more than other functions, is involved in and

affects the operation and execution of all the other business
functions. This is identified most readily in HR's enterprise-
wide staffing responsibility, but extends to the entire life-cycle
of employment. The HR function intersects and affects the
other business functions in the following areas:
Cont….

Talent acquisition;

Performance management;

Training and development;

Employee retention and engagement;

Employment law compliance;

Cont….
• Compensation and benefits; and

• Safety and security.

Therefore, properly aligning the HR strategy with the

organization's business strategy is critical to achieving the
organization's mission.

Alignment is the connection of strategy and execution through

communication. Aligning strategies requires HR to:
Cont….
• Understand the business strategy;

• Assess current conditions;

• Plan and implement the HR strategy; and

• Measure and evaluate results and adjust as needed.

UNIT-II: Human Resource Planning, Job Analysis,
Recruitment, and Selection

Human resource planning /man power planning

Manpower Planning which is also called as Human Resource

Planning consists of putting right number of people, right kind of
people at the right place, right time, doing the right things for
which they are suited for the achievement of goals of the
organization.
Cont….

Human Resource Planning has got an important place in the

arena of industrialization. Human Resource Planning has to be
a systems approach and is carried out in a set procedure. The
procedure is as follows:
Cont….

• Analyzing the current manpower inventory

• Making future manpower forecasts

• Developing employment programs

• Design training programs

Nature of HRP planning

It is future oriented: – Human Resource Planning is forward-

looking. It involves forecasting the manpower needs for a
future period so that adequate and timely provisions may be
made to meet the needs.
Cont….

It is a continuous process: – Human Resource Planning is a

continuous process because the demand and supply of Human
Resource keeps fluctuating throughout the year. Human
Resource Planning has to be reviewed according to the needs
of the organization and changing environment.
Cont….

Integral part of Corporate Planning: – Manpower planning is an

integral part of corporate planning because without a corporate
plan there can be no manpower planning.

Optimum utilization of resources: – The basic purpose of Human

Resource Planning is to make optimum utilization of organization's
current and future human resources.
Cont….

Both Qualitative and Quantitative aspect: – Human Resource

Planning considers both the qualitative and quantitative
aspects of Human Resource Management, ‘Quantitative’
meaning the right number of people and ‘Qualitative’ implying
the right quality of manpower required in the organization.
Cont….

Long term and Short term: – Human Resource Planning is both

Long-term and short-term in nature. Just like planning which is
long-term and short-term depending on the need of the hour,
Human Resource Planning keeps long-term goals and short-term
goals in view while predicting and forecasting the demand and
supply of Human Resource.
Cont….

Involves study of manpower requirement: – Human Resource

Planning involves the study of manpower availability and the
manpower requirement in the organization.
Importance of human resource planning

Key to managerial functions- The four managerial functions,

i.e., planning, organizing, directing and controlling are based
upon the manpower. Human resources help in the
implementation of all these managerial activities. Therefore,
staffing becomes a key to all managerial functions.
Cont….

Efficient utilization- Efficient management of personnels

becomes an important function in the industrialization world of
today. Setting of large scale enterprises require management of
large scale manpower. It can be effectively done through
staffing function.
Cont….

Motivation- Staffing function not only includes putting right

men on right job, but it also comprises of motivational
programmes, i.e., incentive plans to be framed for further
participation and employment of employees in a concern.
Therefore, all types of incentive plans becomes an integral part
of staffing function.
Cont….

Better human relations- A concern can stabilize itself if human

relations develop and are strong. Human relations become
strong trough effective control, clear communication, effective
supervision and leadership in a concern. Staffing function also
looks after training and development of the work force which
leads to co-operation and better human relations.
Cont….

• Higher productivity- Productivity level increases when

resources are utilized in best possible manner. higher
productivity is a result of minimum wastage of time, money,
efforts and energies. This is possible through the staffing and
it's related activities ( Performance appraisal, training and
development, remuneration)
Factors affecting HRP

Factors Affecting Human Resource Planning – Macro

Environmental Factors, Micro Environmental Factors and
Company Specific Factors.
Cont….
• Macro Environmental Factors
Economy
Demographic factor
Labor market
Regulatory framework
Cont….

• Micro environment

A. Industry growth

b. Industry attractiveness

c. Technology

d. Competitive climate
Cont….

Company specific

• Strategy

• Human resource inventory

• Human resource mobility

HR planning process

What are the steps in the human resource planning process?

Step 1: Assess your current human resource capacity

Start by looking at your current human resources state of play.

This will involve analyzing the HR strength of your organization
across factors including employee numbers, skills, qualifications,
experience, age, contracts, performance ratings, titles, and
compensations.
Cont….

During this phase, it’s a good idea to gather insight from your
managers who can provide real-world feedback on the human
resource issues they face, as well as areas in which they think
changes are necessary.
Cont….

Step 2: Forecast future HR requirements

You will then need to look at the future HR needs of your

organization and how human resources will be applied to meet
these organizational goals. HR managers will typically look at
the market or sectoral trends, new technologies that could
automate certain processes, as well as industry analysis in order
to gauge future requirements.
Cont….

Of course, there are a number of factors affecting human

resource planning such as natural employee attrition, layoffs,
likely vacancies, retirements, promotions and end of contract
terms. Above all of this, you will need to understand the goals
of the organization:
Cont….

are you entering a new market, launching new products or

services, expanding into new areas. Forecasting HR demand is
a complex task based on several dynamics. Being informed
and having a seat, or at least an ear, at boardroom level is
essential if you are to make accurate HR projections.
Cont….

Step 3: Identify HR gaps

An effective human resource plan walks the fine line between

supply and demand. By assessing the current HR capacity and
projecting future requirements you should have a clear picture of
any gaps that exist. Using your HR forecast you can better judge if
there will be a skills gap, for example.
Cont….

Should you upskill existing employees or recruit employees

who are already qualified in specific areas? Are all current
employees being utilized in the right areas or would their skills
be better suited to different roles?
Cont….

Step 4: Integrate the plan with your organization’s overall strategy

After you’ve assessed your current human resources capacity,

projected future HR demands and identified the gaps, the final step
is to integrate your human resources plan with your organizational
strategy.
Cont….

On a practical level, you will need a dedicated budget for human

resources recruiting, training or redundancies, and you will also
need management buy-in across the business. You will need
cooperation and the necessary finances in order to implement the
plan and a collaborative approach from all departments to put it
into practice.
REQUISITES FOR SUCCESSFUL HRP

There are at least 10 pre-requisite for successful HRP:

1)HRP must be recognized as an integral part of corporate

planning. The planner of human resources must be aware of
the corporate objectives.
Cont….

2) Backing of top Management for HRP is absolutely essential. 3)

Plans should be prepared by skill levels rather than by aggregates.

4) Personnel records must be complete, up-to-date and readily

available.

5) The time Horizon of the plan must be long enough to permit any
remedial action.
Cont….

6) The Impact of external forces like technological changes,

changes in labor market composition and the like needs to be

considered while developing the human resource plan.

7) HRIS should be used as decision support system and should

alert managers to problems and opportunities.
Cont….
8) Data collection, analysis, techniques of planning and the plans
themselves need to be constantly revised and improve in the light of
experience.

9) The techniques of planning should be those best suited to the data

available and the degree of accuracy required.

10) HRP responsibilities should be centralized in order to co-ordinate

consultation between management level.
Barriers to HRP

1. Lack of Support

2. Wrong Perception about Human Resource Practitioner

3. Incompatibility of Information

4. Approach Confliction

5. Absence of Operating Managers’ Co-Ordination

Cont….

6. Identity Crisis

7. Insufficient Initial Efforts

8. Resistance from Employees

9. Coordination with other Managerial Functions

10. Expensive and Time Consuming

11. Uncertainties
Developing a Work Flow Analysis
 Job
The process of Analysis
getting detailed
information about
jobs. Job
Descriptions

Job
Specifications
Job Specifications
• Job Specification: a list of the knowledge, skills, abilities,
and other characteristics (KSAOs) that an individual must
have to perform a particular job.
• Knowledge: factual or procedural information necessary
for successfully performing a task.
Cont….

• Skill: an individual’s level of proficiency at performing a

particular task.
• Ability: a more general enduring capability that an individual
possesses.
• Other Characteristics: job-related licensing, certifications, or
personality traits.
 Fleishman Job Analysis System

What is it? Categories of abilities:

• Job analysis technique • Written comprehension
that asks subject-matter • Deductive reasoning
experts to evaluate a job • Manual dexterity
in terms of the abilities
• Stamina
required to perform the
job. • Originality

4-70
 Importance of Job Analysis

• Job analysis is so • Work redesign

important to HR • Human resource
managers that it has
planning
been called the building
block of all HRM • Selection
functions. • Training
• Almost every HRM • Performance appraisal
program requires some
• Career planning
type of information
determined by job • Job evaluation
analysis:

4-71
Nature of job analysis and competitive Advantage
Process of job analysis
Potential problems with job analyses and job
design
Lack of support from
employees

Lack of management
support Inability to identify the
Problems with
job analysis and need of job analysis and
design design
Biased nature of job analyst

Using single data source

Factors affecting job design

• Organizational Factors

• Organizational factors include characteristics of the task, workflow,

ergonomics, and work practices.

• Environmental Factors

• Environmental elements affect all activities of HRM, and job design is

no exception. The external factors that have a bearing on job design are
employee abilities and availability, and social and cultural expectations.
Cont….

• Behavioral Factors

Behavioral factors have to do with human needs and the necessity

to satisfy them. Higher-level needs are more significant in this
context. Individuals inspired by higher-level needs to find jobs
challenging and satisfying which are high on the following
dimensions:
Recruitment

• In human resource management, “recruitment” is the process of

finding and hiring the best and most qualified candidate for a
job opening, in a timely and cost-effective manner. It can also
be defined as the “process of searching for prospective
employees and stimulating and encouraging them to apply for
jobs in an organization”.
Cont….

It is one whole process, with a full life cycle, that begins with
identification of the needs of the company with respect to the
job, and ends with the introduction of the employee to the
organization.
Cont….

• When we speak of the recruitment process, we immediately

think of activities such as the analysis of the requirements of a
specific job, attracting candidates to apply for that job,
screening the applicants and selecting among them, hiring the
chosen candidates to become new employees of the
organization, and integrating them into the structure.
Cont….

• Obviously, the main reason why the recruitment process is

implemented is to find the persons who are best qualified for
the positions within the company, and who will help them
towards attaining organizational goals. But there are other
reasons
Recruitment process

Conduct of job analysis

Build job description

Review job description

Set minimum qualifications for the employee who will do the job.

Define a salary range.

Cont….

• Sourcing of talent

Networking

Posting.

Print and media advertising.

Developing and using proper techniques. 

Using the reputation of the company.

Cont….
• Screening of applicant
Preliminary screening.
Initial interview.
Conduct of various tests for recruitment.
Final interview.
Selection
Cont….

• Finalization of the job offer

• Making the offer

• Acceptance of the offer by the applicant

• Introduction and induction of new employee

Types of recruitment

Internal Recruitment - is a recruitment which takes place

within the concern or organization. Internal sources of
recruitment are readily available to an organization. Internal
sources are primarily three - Transfers, promotions and
Re-employment of ex-employees.
Cont….
• External Recruitment - External sources of recruitment
have to be solicited from outside the organization. External
sources are external to a concern. But it involves lot of time
and money. The external sources of recruitment include -
Employment at factory gate, advertisements, employment
exchanges, employment agencies, educational institutes,
labour contractors, recommendations etc.
Selecting Human Resources

Selection is the process of picking or choosing the right

candidate, who is most suitable for a vacant job position in an
organization. In others words, selection can also be explained as
the process of interviewing the candidates and evaluating their
qualities, which are required for a specific job and then choosing
the suitable candidate for the position.
Cont….

Selection process

A good selection process should comprise the following steps

Employment Interview

Checking References

Medical Examination

Final Selection
Cont….

Barriers to effective selection in employment process

The impediments or barriers to effective selection of people at

work can be explained as under:
Cont….

1) Ineffective Recruitment: If the recruiter fails to attract

qualified candidates (in recruitment process) then it is
obvious that right candidate will not be selected (in
selection process).

2) Perception: Our inability to understand others accurately

Cont….
3) Stereotyping: In stereotyping, we generally categorize the
candidates such as:
• All females are basically sincere and honest
• Candidates with Science background are intelligent etc.
Cont….

4) Gender Issue: In early days, men predominately held

managerial jobs and if those jobs are viewed as being primarily
masculine in nature, such stereotyping may produce negative
reaction in selecting right candidates.
Cont….

5) Age/Race Issue: In many selections, age and race of the

candidates are considered rather than their skills, abilities or
experiences. This leads to bias selection.

6) Halo Effect: In hallo effect the personal characteristics influence

or overwhelms the interviewers and this lead to wrong selection.
Cont….

7) Quota System: Quota system also influences effective

selection.
8) Fairness: Selection requires that no individual should be
discriminated based on religion, region, race or gender.
Cont….

9) Validity: Validity refers to tests that help to predict job

performance of an incumbent.

10) Reliability: A reliable method is one, which will produce

consistent results every time it is conducted .
Cont….
11) Pressure: This occurs when politicians, bureaucrats,
relatives, friends, and peers try to influence on the selectors to
pick particular candidate.

12) Nepotism/Favourism: This is one of major/common barrier

to effective selection in both public and private sectors.

13) Cost and time: Sometimes due to insufficient time and

budget, right person cannot be selected
Cont….

Induction

• Induction also called orientation, and it is design to provide a

new employee with information which he or she needs to
function’s comfortably and effectively in the organization.
Once an employee is selected and placed on an appropriate job,
the process of familiarizing him with the job and organization
begins. This process is called induction. The new comer is
explained his duties and responsibilities, company policies and
rules, and other relevant information to get acquainted and
accommodated with the organization.“
Cont….
Induction conveys three types of information: -

• General information about the daily work routine.

• A review of the organization’s history, founding further

objectives, operations-product and employee contribution.

• A detailed presentation in broacher’s of the organization and

policies, work rules and employee benefits.
Cont….

Objectives of induction

• To help the new comer overcome his natural shyness and

nervous in meeting new people in a new environment.

• The idea is to make the new people feel at home.

• Coordination will developed with co-workers.

Cont….

• Make good relationship, good initial impression of a company, work

supervision.

• To build up the new employee’s confidence in the organization and in

himself so that he may become an efficient employee.

• To give the new comer necessary information such as location of

cafeteria, toilets and locker room, rest periods and leave rules etc.
Cont….
Placement

After an employee has been hired and oriented, he or she

must be placed in the right job. Placement is understood as
the allocation of people to jobs. It is the assignment or
reassignment of an employee to a new job.
Cont….
Socialization

It is the process of adaptation. It is the process by which new

employees attempt to learn and inculcate the norms and values of work
roles in an organization.
Cont….

Socialization stages

Pre arrival stage

• It recognizes that all the new recruits arrive in the

organization with a set of values, norms, expectations and
learning.
Cont….
Encounter stage

• When the new employees join the organization, he encounter

the realities of the situation in term of his job, work culture,
subordinates and peer’s.

Metamorphosis stage

• In this stage, the new employee acquire the skills require to

adjust with the values and norms of the organization.
UNIT-III: Training and Development, Performance Appraisal, Remuneration, and Motivation

Nature of training and development

A formal definition of training & development is any attempt

to improve current or future employee performance by
increasing an employee’s ability to perform through learning,
usually by changing the employee’s attitude or increasing his
or her skills and knowledge.
Cont….

The need for training & development is determined by the

employee’s performance deficiency, computed as follows:

Training & Development need = Standard performance –

Actual performance.
Cont….

• Training, Refers to the process of imparting specific skills.

• Education, on the other hand, is confined to theoretical

learning in classrooms.

• Development, refers to those learning opportunities designed
  to help employees grow.
Cont….

To bring the distinction among training, education

and development into sharp focus, it may be stated that
“Training is offered to operatives”, whereas “Developmental
programmes are meant for employees in higher positions”.
Education however is common to all the employees, there grades
notwithstanding.
Cont….

Aims/objectives of training & development

The fundamental aim of training is to help the organization

achieve its purpose by adding value to its key resource – the
people it employs. The particular objectives of training are to:
Cont….
• Develop the competences of employees and improve their
performance;
• Help people to grow within the organization in order that, as
far as possible, its future needs for human resource can be
met from within;
• Reduce the learning time for employees starting in new jobs
on appointment.
Inputs In Training And Developments

• Any training and development programme must contain

inputs which enable the participants to gain skills, learn
theoretical concepts and help acquire vision to look into
distant future.
Cont….

Skills: Training, as was stated earlier, is imparting skills to

employees. A worker needs skills to operate machines, and use
other equipments with least damage or scrap. Common motor
skills include walking, riding a bicycle, throwing a ball and
driving a car. Motor skills are needed for all employees – from
the clerk to the general manager. 
Cont….

Employees, particularly supervisors and executives, need
Interpersonal skills popular known as the people skills.
Interpersonal skills are needed to understand one self and
others better, and act accordingly. 

Examples of interpersonal skills include listening, persuading, and
showing an understanding of others’ feelings.
Cont….

Education: The purpose of education is to teach theoretical

concepts and develop a sense of reasoning and judgement. 

That any training and development programme must contain 
an element of education is well understood by HR specialist.
Cont….

Development: Another component of a training and

development is development which is less skill oriented but
stressed on knowledge. Knowledge about business
environment, management principles and techniques, human
relations, specific industry analysis and the like is useful for
better management of the company.
Cont….

Ethics:There is need for imparting greater ethical orientation  
to a training and development programme. There is no denial
of the fact that ethics are largely ignored in businesses.
Unethical practices abound in marketing, finance and
production function in an organization.
Cont….

Attitudinal Changes:

Attitudes represent feeling and beliefs of individuals towards 
others. Attitude affects motivation, satisfaction and job
commitment. Negative attitudes need to be converted
into positive attitudes.
Gaps in Training

A training gap exists when there is a variance between

desired/required behavior or performance and actual behavior or
performance. This gap can occur on an individual, team or
organizational level. This gap can reflect a lack of hard or soft
skills, a lack of understanding of job expectations, industry
knowledge, cultural norms or other issues.
Cont….

• Hard skills are job-specific or functional skills—for example,

cloud-based computing skills or knowledge of human
resource-related laws and practices. Soft skills are bigger-
picture capabilities that range from adaptability, curiosity and
empathy to communication and critical thinking.
Cont….
The training needs assessment process:

Establish clear expectations. In order to accurately evaluate

performance—and, therefore, accurately identify any training
needs—job expectations must be clearly established and
understood.
Cont….

Measure performance. Measuring performance not only

establishes an objective point of reference, it creates an
opportunity to discuss the instances of unsatisfactory
performance and identify and document any issues and
associated training or other actions.
Cont….

Solicit input on training needs. The individuals who are

doing the work have a particularly relevant perspective on
training needs are perhaps the best source of information on
short-term training needs.
Cont….
Support career development. Ask employees to rate their
satisfaction with training and development opportunities and
how existing policies and programs might be improved.
Cont….

Conduct an organizational resource analysis. Conduct an

overall analysis of human resources roles and requirements
relative to the organization’s strategies and objectives to
identify broad (for example, industry-specific) and position or
job category-specific (including reskilling/upskilling) training
needs and any resource requirements or redundancies.
Cont….

• Establish a coaching and mentoring program. 

Coaching and mentoring is an organizational best practice that

is associated with high-performance. Mentors can support
employee personal and career development and be another
point of perspective on training gaps.
The training process

Step 1: Decide If Training is needed

• The first step in the training process is a basic one: to determine whether a problem
can be solved by training. Training is conducted for one or more of these reasons:

1) Required legally or by order or regulation,

2) To improve job skills or move into a different position,

3) For an organization to remain competitive and profitable.

Cont….

Step 2: Determine What Type of Training is needed

• The employees themselves can provide valuable information on

the training they need. They know what they need/want to make
them better at their jobs. Just ask them! Also, regulatory
considerations may require certain training in certain industries
and/or job classifications.
Cont….
Step 3: Identifying Goals and Objectives

• Once the employees' training needs have been identified,

employers can then prepare for the training. Clearly stated
training objectives will help employers communicate what
they want their employees to do, to do better, or to stop
doing!
Cont….

Step 4: Implementing the Training

• Training should be conducted by professionals with

knowledge and expertise in the given subject area; period.
Nothing is worse than being in a classroom with an instructor
who has no knowledge of what they are supposed to be
teaching!
Cont….
Step 5: Evaluation Training Program

• One way to make sure that the training program is accomplishing its
goals is by using an evaluation of the training by both the students
and the instructors Training should have, as one of its critical
components, a method of measuring the effectiveness of the training.
Cont….

Performance appraisal

• Performance Appraisal is the systematic evaluation of the

performance of employees and to understand the abilities of a
person for further growth and development. Performance
appraisal is generally done in systematic ways which are as
follows:
Cont….
Performance Appraisal Process
1.Establishing performance standards

• The first step in the process of performance appraisal is the setting up

of the standards which will be used to as the base to compare the
actual performance of the employees.
Cont….

2. Communicating the standards

Once set, it is the responsibility of the management to

communicate the standards to all the employees of the
organization. The employees should be informed and the
standards should be clearly explained to the employees.
Cont….

3.Measuring the actual performance

The most difficult part of the Performance appraisal process is

measuring the actual performance of the employees that is the
work done by the employees during the specified period of
time.
Cont….

4.Comparing actual performance with desired performance

• The actual performance is compared with the desired or the standard

performance. The comparison tells the deviations in the performance
of the employees from the standards set.
5.Discussing  results [Feedback]

• The result of the appraisal is communicated and discussed

with the employees on one-to-one basis. The focus of this
discussion is on communication and listening.
Cont….
Challenges of performance appraisal

• Lack of objectivity in performance appraisal. One of the biggest

appraisal issues is employees' belief they're not evaluated fairly:
Instead of being judged on performance, employees worry they're
judged by race, gender or how much they and the manager get along. 
Cont….

• Comparing an employee to their coworkers. Harvard

Business Review says employees think appraisals are
inaccurate and unfair when they're compared to their colleagues
rather than their own past performance. Even when the
supervisor ranks an employee above their coworkers, the
employee may still feel dissatisfied.
Cont….

• Clashing goals, Employees are usually proud of their work, so

they expect to hear good feedback from their boss. Instead, the
appraisal usually includes a list of things they need to improve.
Organizations often frown on uniformly positive appraisals, so
the manager may feel pressured to find fault even if they think
their employee is great.
Cont….

• Neither manager nor employee really give a crap. The

manager can't commit if they have to provide critical
feedback they don't believe in. Employees who feel they're
not getting the respect they deserve may not care what their
review says is wrong with them.
Cont….

• Performance reviews don't change anything. The Cut says

maybe a third of appraisals improve employee performance.
Another third do worse, and the performance of the rest
remains constant.
Cont….

• Appraisals suck up time. The average manager spends more

than five weeks a year on appraisals, while employees spend
a week of work on appraisal-related activity.
Job Evaluation Methods

• Definition: The Job Evaluation is the process of assessing

the relative worth of the jobs in an organization. The jobs are
evaluated on the basis of its content and the complexity
involved in its operations and thus, positioned according to
its importance.
Cont….

• The purpose of the job evaluation is to have a satisfactory

wage differential. Job Evaluation Methods There are non-
analytical and analytical job evaluation methods that are
employed by the organizations to realize the worth of a set of
jobs.
Cont….
• Non-analytical Job Evaluation Methods

• Ranking Method: This is the simplest and an inexpensive job

evaluation method, wherein the jobs are ranked from he highest to the
lowest on the basis of their importance in the organization. In this
method, the overall job is compared with the other set of jobs and then
is given a rank on the basis of its content and complexity in performing
it.
Cont….

• Job Grading Method: Also known as Job-Classification

Method. Under this method the job grades or classes are predetermined
and then each job is assigned to these and is evaluated accordingly. For
Example Class, I, comprise of the managerial level people under which
sub-classification is done on the basis of the job roles such as office
manager, department managers, departmental supervisor, etc.
Cont….

Analytical Job Evaluation Methods

• Factor-Comparison Method: Under this method, the job is

evaluated, and the ranks are given on the basis of a series of
factors Viz. Mental effort, physical effort, skills required
supervisory responsibilities, working conditions, and other
relevant factors.
Cont….
• Point-Ranking Method: Under this method, each job’s key factor is
identified and then the sub factors are determined. These sub-factors
are then assigned the points by its importance. For example, the key
factor to perform a job is skills, and then it can be further classified
into sub-factors such as training required, communication skills, social
skills, persuasion skills, etc.
The point ranking method is less subjective and is an error free as the
rater sees the job from all the perspectives. But however it is a complex
method and is time-consuming since the points and wage scale has to be
decided for each factor and the sub factors.
Remuneration and Employee Benefit

Employee benefits typically refers to retirement plans, health

insurance, life insurance, disability insurance, vacation,
employee stock ownership plans, etc. Benefits are increasingly
expensive for businesses to provide to employees, so the range
and options of benefits are changing rapidly to include, for
example, flexible benefit plans.
Cont….

Benefits are forms of value, other than payment, that are

provided to the employee in return for their contribution to the
organization, that is, for doing their job. Some benefits, such as
unemployment and worker's compensation, are federally
required. (Worker's compensation is really a worker's right,
rather than a benefit.)
Cont….

Prominent examples of benefits are insurance (medical, life,

dental, disability, unemployment and worker's compensation),
vacation pay, holiday pay, and maternity leave, contribution to
retirement (pension pay), profit sharing, stock options, and
bonuses. (Some people would consider profit sharing, stock
options and bonuses as forms of compensation.)
Cont….

You might think of benefits as being tangible or intangible. The benefits

listed previously are tangible benefits. Intangible benefits are less direct,
for example, appreciation from a boss, likelihood for promotion, nice
office, etc. People sometimes talk of fringe benefits, usually referring to
tangible benefits, but sometimes meaning both kinds of benefits.
Cont….

You might also think of benefits as company-paid and

employee-paid. While the company usually pays for most types
of benefits (holiday pay, vacation pay, etc.), some benefits, such
as medical insurance, are often paid, at least in part, by
employees because of the high costs of medical insurance.
Cont….

Employee Compensation

Compensation includes topics in regard to wage and/or salary

programs and structures, for example, salary ranges for job
descriptions, merit-based programs, bonus-based programs,
commission-based programs, etc.
Cont….

Compensation is payment to an employee in return for their

contribution to the organization, that is, for doing their job.
The most common forms of compensation are wages, salaries
and tips.
Cont….

Incentive plans, for example, bonus plans, are a form of variable pay.
(Some people might consider bonuses as a benefit, rather than a form of
compensation.) Some programs include a base pay and a variable pay.

Organizations usually associate compensation/pay ranges with job

descriptions in the organization. The ranges include the minimum and
the maximum amount of money that can be earned per year in that role.
Cont….

Employees have certain monies withheld from their payroll

checks, usually including federal income tax, state income tax,
FICA (social security) contributions, and employee
contributions to the costs of certain benefits (often medical
insurance and retirement).
 Components of Remuneration

Component # 1. Base Pay Structure (Fixed Component):

Salaries and wage are the periodic assured payments made to
the employees. Salaries are generally paid to the permanent
employees on the monthly basis, whereas wages are paid to
temporary or contractual workers on the daily basis.
Cont….
Base Pay is the fixed component and generally
consists of the following:
i. Basic Component:
Normally 40 percent of the base pay is basic and rest of
the base pay falls under various other, categories. This
breakage is governed by the tax laws of the land.
Cont….

ii. HRA (House Rent Allowance):

Calculated as a percentage of basic. HRA limits are fixed by the
government and are uniformly applicable. If a company decides
to pay more than the limit decided by the company it can
however the excess shall be taxed as is the basic. If a company
pays HRA component then it must collect proofs of rent-paid
(rental receipts) from the employee.
Cont….

iii. DA (Dearness Allowance):

It is calculated as a percentage of basic. The payment of dearness
allowance facilitates employees and workers to face the price
increase or inflation of prices of goods and services. The
onslaught of price increase has a major bearing on the living
conditions of the labor.
Cont….

The increasing prices reduce the compensation to nothing and

the money’s worth comes down based on the level of inflation.
The payment of dearness allowance, which may be a fixed
percentage on the basic wage, enables the employees to face
the increasing prices.
Cont….

iv. Leave Travel Allowance:

Leave Travel allowance or LTA is paid by certain companies.
However again proofs of travel expenses must be collected by
the company from the employees.
Cont….

v. Mobile Expenses:
Medical Allowance/Reimbursements, etc.
Component # 2. Variable Pay Programs:
Variable pay programs are generally classified differently for
sales and non-sales.
Cont….

i. Variable Pay Plans for Sales:

Variable pay plans for sales represents a pay-mix that may be a
70-30 or 60-40 or 50-50 plan. Here the 30, 40 or 50 represents
the variable portion of the pay and is linked to the targets. Targets
could be product-based, territory-based, revenue-based, and
profitability-based or based on new business creation.
Cont….

ii. Variable Pay Plans for Non-Sales:

Such pay plans are for those employees who either are those
who need incentives to propel their work or are those whose
performance can be improved by giving them incentives like
insurance plans, credit cards, mutual funds etc. Generally the
variable portion in non-sales is lesser than in case of sales.
Cont….

• The variable pay is based on jobs and levels of job.

Sometimes such plans may be covered under company-
wide plans and the entire variable portion may be broken
under employee performance, functional performance
(i.e. performance of the function in which that employee
works) and organizational performance.
Theories of remuneration

• Reinforcement and Expectancy Theory: This theory is based on

the assumption that, the reward-earning behavior is likely to be
repeated, i.e. an employee would do the same thing again for which
he was acknowledged once. Similarly, in the case of Expectancy
Theory, given by Vroom, the employee is motivated to do a particular
thing for which he is sure or is expected that performance will be
followed by a definite reward or an outcome.
Cont….

• Equity Theory: According to this theory, there should be equity or

the uniformity in the pay structure of an employee’s remuneration. If
the employee feels he is not being paid fairly for the amount of work
he does in a day will result in lower productivity, increased turnover
and high absenteeism. The remuneration system should comply with
three types of equity:
Cont….

Internal Equity: The employee perceives the fairness in different pay

for different jobs based on the nature of work involved, i.e. he must feel
that pay differentials among the jobs are fair.
Cont….

External Equity: The employee should feel the fairness in

what they are being paid is in line with what other players in
the same industry are paying to their employees for the same
kind of job.
Cont….

Individual Equity: The employee perceives the pay

differentials among the individuals who are performing the
same kind of a job and within the same organization. Usually,
an individual with more experience gets high remuneration as
compared to the fresher irrespective of the nature of a job.
Cont….

• Agency Theory: This theory states that both the employer and the
employee are the stakeholders of the company, and the remuneration
paid to the employee is the agency cost. The employee will try to get
an increased agency cost whereas the employer will try to minimize it.
Hence, the remuneration should be decided in such a way that the
interest of both the parties can be aligned.
Motivation

Importance of Motivation in an Organization.

The process of motivation plays a very important role in any

organization, profit, or non-profit. The managerial process of direction
is driven primarily by the process of motivation as it creates within the
mind of an employee the desire to work in the direction determined by
the manager. The following aspects may be considered under this head:
Cont….

1. Increases Productivity

Motivation is a process that leads to an increase in the productivity

of the employee. Motivation meets the needs of the employee and
thereby creates the drive to work to the best of his abilities. A well-
employee will be willing to put in more effort towards the
betterment of the organization
Cont….
2. Ensures Organizational Efficiency
Motivation plays an important role in changing the attitudes of
the employees in the organization. An Indifferent attitude is
extinguished most efficiently by motivation. The presence of
such a favorable attitude allows the organization to thrive and
be successful.
Cont….

3. Ensures Loyal Workforce

A well-motivated workforce is a loyal workforce. Motivated

employees have high levels of morale and commitment towards
the organization and its goals and objectives. Motivation thus
reduces employee turnover and reduces the need for constant
induction of new employees.
Cont….
4. Ensures a Reactive Workforce

Adapting to changing business environments is an important feature of

any successful business. In order to react to changes easily and to
continue smooth functioning, an organization requires extensive loyalty
and commitment of its employees. This reduces resistance to the changes
that the organization intends to make. This in effect makes the
organization efficient in adapting to changing needs.
Cont….
5. Facilitates Direction

Direction is an important managerial function and forms one of its

core functions. Motivation as already mentioned is a vital part of
the direction. The direction is a process that involves directing or
initiating action according to a plan drawn up requires the
employees to work wholeheartedly with commitment and loyalty.
Cont….
Motivation Theories

Motivation is a state-of-mind, filled with energy and enthusiasm,

which drives a person to work in a certain way to achieve desired
goals. Motivation is a force which pushes a person to work with
high level of commitment and focus even if things are against
him. Motivation translates into a certain kind of human behavior. 
Cont….
• It is important to ensure that every team member in an organization is
motivated. Various psychologists have studied human behavior and have
formalized their findings in the form various motivation theories. These
motivation theories provide great understanding on how people behave
and what motivates them.

• Motivation is a huge field of study. There are many theories of

motivation. Some of the famous motivation theories include the
following:
Cont….

1. Maslow’s hierarchy of needs

Abraham Maslow postulated that a person will be motivated

when his needs are fulfilled. The need starts from the lowest
level basic needs and keeps moving up as a lower level need is
fulfilled. Below is the hierarchy of needs:
Cont….
• Physiological:  Physical survival necessities such as food,
water, and shelter.
• Safety:  Protection from threats, deprivation, and other dangers.
• Social (belongingness and love):  The need for association,
affiliation, friendship, and so on.
• Self-esteem:  The need for respect and recognition.
• Self-actualization:  The opportunity for personal development,
learning, and fun/creative/challenging work.  Self-actualization
is the highest level need  to which a human being can aspire.
Cont….

2. Hertzberg’s two factor theory

• Hertzberg classified the needs into two broad categories

namely hygiene factors and motivating factors.
Cont….

• Hygiene factors are needed to make sure that an employee is

not dissatisfied. Motivation factors are needed for ensuring
employee's satisfaction and employee’s motivation for higher
performance. Mere presence of hygiene factors does not
guarantee  motivation, and presence of motivation factors in the
absence of hygiene factors also does not work.
Cont….

3. McClelland’s theory of needs

• McClelland affirms that we all have three motivating drivers,

and it does not depend on our gender or age. One of these
drives will be dominant in our behavior. The dominant drive
depends on our life experiences. 
Cont….

• The three motivators are:

• Achievement: a need to accomplish and demonstrate own

competence People with a high need for achievement prefer tasks
that provide for personal responsibility and results based on their
own efforts.  They also prefer quick acknowledgement of their
progress.
Cont….

• Affiliation: a need for love, belonging and social acceptance

People with a high need for affiliation are motivated by being
liked and accepted by others.  They tend to participate in
social gatherings and may be uncomfortable with conflict.
Cont….

• Power: a need for control own work or the work of others

People with a high need for power desire situations in which
they exercise power and influence over others.  They aspire for
positions with status and authority and tend to be more
concerned about their level of influence than about effective
work performance.
Cont….

4. Vroom’s theory of expectancy

• Victor Vroom stated that people will be highly productive and

motivated if two conditions are met:  1) people believe it is likely that
their efforts will lead to successful results and 2) those people also
believe they will be rewarded for their success.
Cont….

• People will be motivated to exert a high level of effort when

they believe there are relationships between the efforts they
put forth, the performance they achieve, and the outcomes/
rewards they receive.
Cont….
5. McGregor’s theory X and theory Y
Douglas McGregor formulated two distinct views of human
being based on participation of workers. The first is basically
negative, labelled as Theory X, and the other is basically
positive, labelled as Theory Y. Both kinds of people exist.
Based on their nature they need to be managed accordingly.
Cont….
• Theory X:  The traditional view of the work force holds that
workers are inherently lazy, self-centred, and lacking
ambition.  Therefore, an appropriate management style is
strong, top-down control.
• Theory Y:  This view postulates that workers are inherently
motivated and eager to accept responsibility.  An appropriate
management style is to focus on creating a productive work
environment coupled with positive rewards and
reinforcement.
UNIT-V: Contemporary Issues in Human Resource Management

Outsourcing HR activities

Companies’ human resources (HR) departments have a lot of

responsibilities—from benefits, education and recruiting, to leadership
development, change management and everything in between. What if
you could focus on the HR activities that directly affect your core
business by delegating some tasks to an outside professional?
Cont….

These days, it’s more important than ever before for companies to
strengthen their primary products or services. That is why many
company leaders are outsourcing responsibilities that could shift the
focus for employees and are better left to experts, anyway. Aside from
these reasons, though, here are five benefits of outsourcing your HR
activities:
Cont….

Save money. Although it costs to hire a human resource

vendor, you have to compare it to hiring a full-time HR
professional.
Cont….

Free up capital for other activities. If you’re a pharmaceutical

company, does it make sense to spend capital on activities
unrelated to your end business plan, like HR? Outsourcing these
responsibilities provides you more to spend on departments
crucial to your business, such as research and development.
Cont….

Gain new insights and strategies. It’s always refreshing to have

an outside source provide feedback on your processes and know
you’re getting objective insight. By hiring a third-party HR
vendor, you’ll have access to these new insights all the time,
which will allow for a stronger HR and overall business strategy.
Cont….

Control a complex area. Human resource departments are multi-

faceted and require expert knowledge and skills to control such
intricate processes. Do you have the necessary manpower and
experience? Have confidence that these responsibilities will be
done properly by a professional and your company may actually
improve HR compliance and accuracy.
Cont….

Get that competitive edge. Hiring HR experts means that

you’re getting access to world-class capabilities. They can not
only complete these responsibilities efficiently (saving you
time), but they will also provide you with the best, most up-to-
date information and resources possible,  thus giving you a head
start over competitors.
Quality of work life

Quality of work life is a process (QWL) of work organizations

which enables its members at all levels to participate actively
and efficiently in shaping the organization's environment,
methods and outcomes.
Cont….

• Quality of Work-Life is a value based process, which is aimed towards

meeting the twin goals of enhanced effectiveness of the organization
and improved quality of life at work for the employees.”

• Quality of Work-Life is a generic phrase that covers a person’s feelings

about every dimension of work including economic rewards and
benefits, security, working conditions, organizational and interpersonal
relationships and its intrinsic meaning in a person’s life.
Cont….
Quality of Work Life – Concept (With Some Interrelated
Set of Ideas)
Quality of work life is a multifaceted concept. The premise of
quality of work life is having a work environment where an
employee’s activities become more important. This means
implementing procedures or policies that make the work less
routine and more rewarding for the employee. These
procedures or policies include autonomy, recognition,
belonging, progress and development and external rewards.
Cont….

“QWL is an indicator of how free the society is from

exploitation, injustice, inequality, oppression and restrictions
on the continuity of the growth of a man.
Cont….

It embodies the following inter-re­lated sets of ideas: 

(a) Ideas dealing with a body of knowledge, concepts
experiences related to the nature, meaning and structure of
work.
(b) Ideas dealing with the nature and process of
introducing and managing organizational change; and
Cont….

(c) Ideas dealing with outcomes or results the change process.

Glaser also sees QWL as a process by which all members of

the organization, through appropriate channels of
communication, have some say about the design of their jobs
in particular and the work environment in general.
Cont….

Norton and others also view QWL as not only improving

the jobs content, but also moving towards participant
management.
The concept of QWL view work a process of interaction and
joint problem solving by working people-managers,
supervisors, workers.
Human Resource Issues in mergers & acquisitions

Mergers and acquisitions (M&As) are tools businesses use to

achieve organizational objectives—tools that have profound
impacts on the employees of the organizations at every level as
two organizations attempt to integrate into one.
Cont….

• A merger is generally defined as the joining of two or more

different organizations under one common owner and
management structure. An acquisition is the process of one
corporate entity acquiring control of another corporate entity
by purchase, stock swap or some other method.
Cont….

• An estimated 70 percent to 90 percent of all M&As fail to achieve

their anticipated strategic and financial objectives. This rate of failure
is often attributed to various HR-related factors, such as incompatible
cultures, management styles, poor motivation, loss of key talent, lack
of communication, diminished trust and uncertainty of long-term
goals.
e-HR

The Management aspect of E-HR involves drafting policies and

controlling both the traffic and collection of electronic
information. Nature and Characteristics of Management, As new
technology comes out that is more portable and capable of
creating and storing more information, it is the responsibility of
HR to define how employees interact with the data.
HR scorecard

• One of the key problems that HR has been facing in the past decades is
the perception that HR doesn’t add to the company strategy. Indeed, HR
directors in many organizations are often still looking for a seat at the
proverbial (board) table. In many organizations, HR has failed to do so.

• The HR scorecard, first published about by Becker, Huselid & Ulrich in

their 2001 book that bore the same title, aims to solve this.
Cont….
• The HR scorecard is a strategic HR measurement system that
helps to measure, manage, and improve the strategic role of
the HR department.
• The HR scorecard is meant to measure leading HR indicators
of business performance. Leading indicators are
measurements that predict future business growth. These are
called HR deliverables. They are also known as HR metrics,
as they are metrics that are linked to the business strategy.
Cont….
There are five steps to create an HR scorecard:
• Create an HR strategy map
• Identify HR deliverables
• Creation of HR policies, processes, and practices
• Aligning HR systems
• Creating HR efficiencies
Whistleblowing policy

• A whistleblower as defined by this policy is an employee of

(Name of Company/Organization) who reports an activity
that he/she considers to be illegal or dishonest to one or more
of the parties specified in this Policy.
Cont….

• The whistleblower is not responsible for investigating the activity or

for determining fault or corrective measures; appropriate management
officials are charged with these responsibilities.

• Examples of illegal or dishonest activities are violations of federal,

state or local laws; billing for services not performed or for goods not
delivered; and other fraudulent financial reporting.
Employer Branding and Employee Branding

Employee branding is the process by which employees

internalize the desired brand image and are motivated to
project the image to customers and other organizational
constituents. Like employee branding, employer branding
efforts feed back into how your company is seen by people
who might apply to work for you, as well as your existing and
potential customers.
Cont….

• Organizations with a strong employee brand have the ability to

turn their employees into powerful brand ambassadors. They
are also more likely to improve employee loyalty, contribute to
solid brand reputation management, increase employee
motivation levels, and attract and secure the right talent.
Cont….
• An employer brand is an important part of the employee value
proposition and is essentially what the organization
communicates as its identity to both potential and current
employees. It encompasses an organization’s mission, values,
culture and personality. A positive employer brand
communicates that the organization is a good employer and a
great place to work. Employer brand affects recruitment of new
employees, retention and engagement of current employees,
and the overall perception of the organization in the market.