Unit 1 Introduction
Concept of Human Resource Management
Human resource management was previously known as personnel management which was
concerned with the activities of a single department. It was typically concerned with the
administration of human. The functions carried out by the department were recruitment and
selection, reward, appraisal, development, grievance handling, retirement, registration and so
forth. It was introduced and developed in the bureaucratic or governmental set up in which
importance was given on organization and administration of manpower.
Now, human resource management may be defined as a process in which human resources are
recruited and mobilized in such a way that it helps in achieving the objective of the organization.
HRM is concerned with the people dimension in management under which the consideration is
given towards recruitment and selection, development, motivation and maintenance of human
resources in an organization. It is one of the main functions of management, which is related
with the management of human energies and competencies. Human resource management helps
to ensure the right man for the right position and at the right time in a changing environment.
The organizational performance depends on the efficiency of human resource working in the
organization. Hence, a proper set up should be taken for manpower planning, recruitment,
motivation, training and development, performance evaluation, remuneration management and
industrial relation.
Moreover, human resource management is concerned with the development of human skill,
knowledge and ability to perform the organizational tasks effectively and efficiently. It is a field
of study consisting of four functions- acquisition, development, motivation and maintenance of
human resources. The acquisition is related with getting people development is with preparing
them for work, motivation refers to activating them and finally maintenance refers to keeping
them retained in the organization.
Therefore, human resource management is an art of managing and mobilizing people in the
organization. It is done through the application of different practices and policies which
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Unit 1 Introduction
ultimately values human resources as major asset of an organization. It integrates personnel
function into strategic management.
According to DeCenzo/Robbins : “Human resource management is a process consisting of the
acquisition, development, motivation and maintenance of human resource”.
Characteristics of HRM
Human resource management is concerned with the management of human energies and
competencies to ensure competent and committed workforce in organizations. It has the
following characteristics:
1. Human focus
HRM is human concentrated. It is concerned with human element at work in
organization. It gets the jobs done through people to achieve results. It focuses on people
possessing energies and competencies.
2. Management function
HRM involves the application of management principles and functions. It involves
planning, implementing and controlling of acquisition, development, utilization and
maintenance of human resources.
3. Pervasive/Universal
HRM is pervasive function of management. It is concerned with all levels of human
resources at work in an organization.
4. Continuous commitment
HRM is continuous on-going function of organization. It is not a one-time activity. It is
concerned with not only present but also with future. It is continuous commitment of
employees.
5. Dynamic
HRM is dynamic function. It is greatly affected by the changes in the environment. It is
adaptable to the changing environment such as political, economic, social , technological
and so on.
6. System
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Unit 1 Introduction
HRM is system oriented. It is a system of interrelated acquisition, development,
utilization and maintenance sub system. It utilizes the potential of the work force to
improve the productive contribution.
7. Mutuality-oriented
HRM promotes mutuality between employers and employees. It is in terms of mutual
objectives, mutual influence, mutual respect, mutual rewards, mutual responsibilities and
so on.
8. Focus on results
HRM is performance oriented. It has its focus on results, rather than on rules. It
encourages people to give their 100%. It tries to secure the best from people by winning
the whole hearted cooperation. It is a process of bringing people and organization
together so that the goals of each are met.
Objectives of HRM
Human resource management is an important function of management. Its overall
objectives is to ensure the availability, retention and utilization of a competent workforce
in an organization. The specific objectives are given below:
1. Effective Utilization of Resources
Human resource management ensures the effective utilization of resources. HRM teaches
how to utilize human and non-human resources so that the goals can be achieved. Organization
aiming to utilize their resources efficiently invites the HR department to formulate required
objectives and policies.
2. Goal achievement
The objective of HRM is to develop and efficiently utilizes human resources to help achieve the
following goals:
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Unit 1 Introduction

Personal goals: HRM assists employees to achieve their personal goals like
compensation, development, placement and career and so on.

Functional goals: There are various department in an organization like production,
finance, marketing, research and development and so on. HRM helps to achieve the goal
of department.

Organizational goals: HRM assists organization to achieve their goal. Such goal can be
profit, sales, service, leadership and so on.

Societal goals: HRM assists organization to achieve societal goal of an organization such
as: welfare of society, creation of employment, solution to social problem and so on.
3. Development of Human Resources
Human resource management provides favorable environment for employees so that
people working in organization can work creatively. This ultimately helps them to
develop their creative knowledge, ability and skill. To develop personality of
employees, human
resource
management,
organizes
training
and
development campaigns which provides an opportunity for employees to enhance their
quality to work.
4. Respect For Human Beings
Another importance of human resource management is to provide a respectful
environment for each employee. Human resource management provides with required
means and facilitates employee along with an appropriate respect because the dominating
tendency develops that will result organizational crisis. Hence, all of them should get
proper respect at work. Human resource management focuses on developing good
working relationships among workers and managers in organization. So, good human
resource management system helps for respecting the employees.
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Unit 1 Introduction
5. Goal Harmony
Human resource management bridges
the gap between individual
goal
and
organizational goal-thereby resulting into a good harmony. If goal difference occurs, the
employees will not be willing to perform well. Hence, a proper match between individual
goal and organizational goal should be there in order to utilize organizational resources
effectively and efficiently.
6. Employee Satisfaction
Human resource management provides a series of facilities and opportunities to
employees for their career development. This leads to job satisfaction and commitment.
When the employees are provided with every kind of facilities and opportunities, they
will be satisfied with their work performance.
7. Employee Discipline And Moral
Human resource management tries to promote employee discipline and moral through
performance based incentives. It creates a healthy and friendly working environment
through appropriate work design and assignment of jobs.
8. Organizational Productivity
Human resource management focuses on achieving higher production and most effective
utilization of available resources. This leads to an enhancement in organizational goals
and objectives.
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Unit 1 Introduction
Components of HRM
Human resource management is a process which involves around four basic functionsacquisition, development, motivation and maintenance of human resources. These basic
elements are the key steps for achieving organizational goals. The basic influencing factor of
these components is organizational goal because such activities are to be performed within the
given constraints in order to accomplish the task. These four elements or factors of HRM can be
described as follows:
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Unit 1 Introduction
1. Acquisition
Acquisition function is concerned with recruitment and selection of manpower requirement for
an organization. It ensures that the company has the right number of people at the right place and
at the right time who are capable to complete required work. It is the starting point of human
resource management function. Acquisition is primarily concerned with planning, recruitment,
selection and socialization of employees. It selects and socializes the competent employees who
have adopted the organization's culture.
2. Development
Development phase begins after the socialization of newly appointed employees in an
organization. It is concerned with informing knowledge and skill to perform the task properly.
Moreover, it is an attempt to improve employee performance by imparting knowledge, changing
attitudes and improving skills. It can be done through teaching, coaching, class-room courses,
assignments, professional programs and so on. The ultimate goal of employee development is of
course to enhance the future performance of the organization by the efficient employees. The
development of employees is not only for newly appointed employees, it is also for existing
employees to develop them according to change in internal and external environment.
3. Motivation
Only training and development do not inspire employees to do better work. For this, they should
be motivated. Here motivation means an activity which induces and inspires people to perform
well in actual work floor. Motivation includes job specification, performance evaluation, reward
and punishment, work performance, compensation management, discipline and so on. It is
important for better work performance because high performance depends on both ability and
motivation.
4. Maintenance
Maintenance is the last components of human resource management. It is concerned with the
process of retaining the employees in the organization. This contributes towards keeping the
employees who can do extremely better for the organization. It creates such a homely and
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Unit 1 Introduction
friendly environment for those high performers, and make them to remain in the same
organization for a longer period of time. This requires that the organization should provide
additional facilities, safe working conditions, friendly work environment, and satisfactory labor
relations. If these activities are performed in right manner, we can expect to have capable and
competent employees in the organization. These employees are committed to the
organizational objectives and are satisfied with their jobs.
HRM and personal management
Personnel management is an administrative function which exists in an organization to ensure
right personnel at right organizational activity. It is a traditional approach of managing
employees which focuses on adherence to policies and rules of organization. Personnel
management is concerned with planning, job analysis, recruitment and performance appraisal
along with training and compensation management. Personnel management also focuses on
managing labor relationship by handling employee grievances.
Human resource management is a modern approach of managing people at workplace which
focuses on acquisition, development, utilization and maintenance of human resource. It combines
physical energies and their strengths with human competencies. In simple words, human
resource management can be referred as the policy which ensures right quality and quantity of
human resource in the organization. Like personnel management, human resource management
is also concerned with planning, job analysis, recruitment and selection, hiring and socialization,
training, performance appraisal, rewarding, and compensation management.
For more detailed information regarding differences between personnel management and human
resource management, please check the table below.
Basis of Difference
Personnel Management
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Human Resource Management
Unit 1 Introduction
Basis of Difference
Personnel Management
Human Resource Management
It is modern approach of managing
It
is
traditional
of
people at workplace and is concern of
managing people at workplace and
managers of all level (from top to
Meaning
is concern of personnel department.
bottom).
Nature
It is a routine function.
It is a strategic/planned function.
Efficient
Focus
management
is
given
priority.
Human values and individual needs
are given priority.
Personnel
Function
approach
administration,
labor
Acquisition, development, utilization
relation and employee welfare are
and maintenance of human resource
major
are major functions of human resource
functions
of
personnel
management.
management.
It determines human resource needs
and formulates policies by matching
Objective
It manages people in accordance
individual’s needs with organization’s
with organization’s goal.
needs.
It regards people as strategic and
Perspective/viewpoint
Job design
Interest
It regards people as basic input to
valuable resource to make desired
make desired output.
output.
Jobs are designed on the basis of
Jobs are designed on the basis of
division of labor.
teamwork.
Organization’s interest is valued the
Interest of organization and interest of
most.
employee is harmonized.
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Unit 1 Introduction
Basis of Difference
Personnel Management
Human Resource Management
It is development oriented. It provides
Orientation
It is discipline, direction and control
space
for
employee
oriented.
performance and growth.
involvement,
Communication is limited, or even
Communication
restricted.
Communication is open.
It emphasizes on adherence of rules
and
Emphasis
Benefits
regulations
and
their
It emphasizes on combination of
human energies and competencies.
implementation.

Committed human resource

Readiness to change

Increased production

Disciplined employees

Increased profit

Increased production

Quality of work life
Organizational goal is achieved and
Result
Organizational goal is achieved and
both employers and employees are
employers are satisfied.
satisfied.
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Unit 1 Introduction
HRM environment
Environment literally means the surrounding external objects, influences or circumstances under
which someone or something exists. The environment of any organization is “the aggregate of all
conditions, events and influences that surround and affect it”. In simple words, environment
comprises all those forces which have their bearing on the functioning of various activities
including human resource activities. Environment scanning helps HR (Human Resource)
manager become proactive to the environment which is characterized by change and intense
competition.
Managers are facing lot of human resource and behavioral issues and challenges while working
in an organization. Here we are discussing some of the critical issues faced by managers in the
external environment:
1. Globalization
Globalization is a term in business that refers to the integration of an organization's
operations, processes and strategies into diverse cultures, products, services and ideas.
Understanding the effects of globalization on human resources can help managers to better
equip their organizations for the increasingly global business environment.
Challenges:
The various challenges possessed by globalization are given below:

Values, symbols and beliefs/principals differ sharply among cultures.

Different work rules and the work plays in a person’s life influence patterns of both
work related behavior and attitudes towards work.

They also affect the nature of supervisory relationship, decision making style, process
and organizational design.

Group and inter-group processes, response to stress and the nature of political
behaviors also differ from culture to culture.
Opportunities
If the globalization is managed properly, it can provide various opportunities such as:
expanded market and revenue, opportunity to learn new things, better cared opportunities for
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Unit 1 Introduction
employees among others and so on. Thus, HR managers should be ready to face challenges
and utilize the various opportunities provided by globalization.
2. Work force Diversity
The future success of any organizations relies on the ability to manage a diverse body of
talent that can bring innovative ideas, perspectives and views to their work. Diversity refers
to the differences among the people. Workforce diversity include, but are not limited to: age,
origin, ancestry, gender, physical abilities/qualities, race, sexual orientation, educational
background, geographic location, income, marital status, military experience, religious
beliefs, parental status, and work experience. The challenge and problems faced of
workplace diversity can be turned into a strategic organizational asset if an organization is
able to capitalize on this melting pot of diverse talents.
Opportunities and Challenges:
With the mixture of talents of diverse cultural backgrounds, genders, ages and lifestyles, an
organization can respond to business opportunities more rapidly and creatively, especially in
the global area which must be one of the important organizational goals to be attained. More
importantly, if the organizational environment does not support diversity broadly, one risks
losing talent to competitors. Furthermore, it can bring high turnover, personal conflict and
ineffective communication and so on.
This is especially true for multinational companies (MNCs) who have operations on a global
scale and employ people of different countries, ethical and cultural backgrounds. Thus, a HR
manager needs to be mindful and may employ a ‘Think Global, Act Local’ approach in most
circumstances.
In order to effectively manage workplace diversity, Cox (1993) suggests that a HR Manager
needs to change from view ("our way is the best way") to a culturally relative perspective
("let's take the best of a variety of ways").
3. Technological Advances
Rapid changes in technology have affected businesses in more ways than we can count, from
globalization and organizational adjustments to a workforce demanding for remote and
mobile job opportunities — and human resources has had to adapt rapidly. If HR wants to
continue to play a critical role in helping businesses anticipate and manage organizational
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Unit 1 Introduction
change, it must have technology at its core. As technology advances, technical changes create
challenges that human resource managers must face. The human resource manager plays an
important role in helping employees keep pace with technical changes.
Technological advance is necessary for quality and productivity. Quality is an important
issues because it is the basis of competition. The increasing concern for quality products and
services has given birth to the term “Total Quality Management”. The challenges for
managers across the world is to have human resources to deliver the quality product and
services to its customers. For this, technology is must. Ability to cope with the changing
technological advances is necessary for HR to get the success in this competitive world.
4. Nature of work
Previously the world economy was based on agriculture and then moved towards industry
based. Today, most of the developed country’s economy has moved towards knowledge and
service sector. This trend has cut backs in managerial ranks, decentralized decision making
process, increased responsibility to the employees, participation, team work and increased
automation and so on.
Increased quality awareness and quality have demanded high level of skills and knowledge.
Employers must train and re-educate their less skilled employees. Moreover, manag ers must
become more responsive to the needs of their skilled employees to keep them from going to
the competitors.
5. Legal trends
Legal trends refer to the laws, rules and regulation made by government which must be
followed by the organization. HR managers must prepare themselves for such changing laws
because they do not face the same laws all the time.
“Think globally, act locally” is the policy adopted by most of the HR managers now-a-days.
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Unit 1 Introduction
Contemporary HR issues
The major challenges of HRM today are discussed below:
1. Globalization- It leads to increase competition, product life cycle are getting shorter and
business complexities and the global outsourcing of human resources is increasing. So the human
resource management policy and practices are also facing challenges of globalization.
2. Technological Change- Technological changed brings the change in job design, skills need
and process of doing job. Qualified and competent workers are required to work with new
technology other the organization will lose its competitive strength.
3. Contingent workforce –The temporary, part-time, daily wages and contract basis worker are
contingent workers. The tendency of employing these workers is in increasing trend due to
restructuring and reengineering of organizations.
4. Change management – Organization has to work in a changing and dynamic environment.
Change is the fact of organization’s life. Organization should manage it properly and effectively.
5. Mobility and diversity of workforces – Employees are always waiting for a better
opportunity. Competent and experienced workers are very difficult to retain in organization,
because their needs and wants are inspired by globalization. The varied characteristics of
workers in terms of nature of work, and in terms of caste, religion, and culture is diversity of
workforce.
6. Complexity – Changing environment, increasing size of organization, increasing level of
employees, rules and procedures are the main causes of increasing complexity. This changes
brings challenges to HRM.
7. Learning organization – Every organization has to develop the capacity to continuously
learn, adapt and change. Management need to find ways to expand employees capacity
through continuous learning.
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Unit 1 Introduction
8. HR and improving productivity - HR managers of today know that people are the most
essential factors in any organization. Therefore the role of HR managers towards product
improvement are increasing which are given below:

Implementing employee participating programs

Better communication system

Developing better labour-management relation

Increasing training and development programs

Selection and retention of highly skilled and talented employees.
Challenges and Responsibilities of HR manager
Human resources managers plan, direct, and coordinate the administrative functions of an
organization. They oversee the recruiting, interviewing, and hiring of new staff; consult with top
executives on strategic planning; and serve as a link between an organization’s management and
its employees.
Some of the major challenges faced by human resource managers are as follows: 1. Recruitment
and Selection 2. Emotional and Physical Stability of Employees 3. Balance Between
Management and Employees 4. Training, Development and Compensation 5. Performance
Appraisal 6. Dealing with Trade Union.
1. Recruitment and Selection:
Finding a suitable candidate for the job from a large number of applicants is a basic problem for
the human resource manager. They have to make suitable changes from time to time in the
selection procedure and see to it that the candidate is up to the mark fulfilling the job
requirements. If required, the candidate should be provided with training to get quality results.
2. Emotional and Physical Stability of Employees:
Providing with wages and salaries to employees is not sufficient in today’s world. The human
resource manager should maintain proper emotional balance of employees. They should try to
understand the attitude, requirements and feelings of employees, and motivate them whenever
and wherever required.
3. Balance Between Management and Employees:
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Unit 1 Introduction
The human resource manager has a responsibility to balance the interest of management and
employees. Profits, commitment, cooperation, loyalty, and sincerely are the factors expected by
management, whereas better salaries and wages, safety and security, healthy working conditions,
career development, and participative working are the factors expected by employees from
management.
4. Training, Development and Compensation:
A planned execution of training programmes and managerial development programmes is
required to be undertaken to sharpen and enhance the skills, and to develop knowledge of
employees. Compensation in the form of salary, bonus, allowances, incentives and perquisites is
to be paid according to the performance of people. A word or letter of appreciation is also to be
given, if some of them have done their jobs beyond expectations to keep their morale up.
5. Performance Appraisal:
This activity should not be considered a routine process by the human resource manager. If
employees are not getting proper feedback from them, it may affect their future work. A
scientific appraisal technique according to changing needs should be applied and the quality of it
should be checked from time to time.
6. Dealing with Trade Union:
Union members are to be handled skillfully as they are usually the people who oppose the
company policies and procedures. Demands of the union and interests of the management should
be matched properly.
Responsibilities of Human Resources Managers
Human resources managers typically do the following:

Plan and coordinate an organization’s workforce to best use employees’ talents

Link an organization’s management with its employees

Plan and oversee employee benefit programs

Serve as a consultant with other managers advising them on human resource issues, such as
equal employment opportunity and sexual harassment

Coordinate and supervise the work of specialists and support staff

Oversee an organization’s recruitment, interview, selection, and hiring processes

Handle staffing issues, such as mediating disputes and directing disciplinary procedures
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Unit 1 Introduction
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Unit 2 Human resource planning
Concept of Human Resource Planning
This is the age of planning. Planning is knowing where to go and how to get there. Human
resource planning is the starting point of human resource management. It is an essential part of
the acquisition function of HRM. It is also known as manpower planning.
Human resource planning is the process of predetermining future human resource needs and
choosing courses of actions needed to satisfy those needs. It involves estimating size and
composition of future work force. It determines the specific number of jobs to be filled. It
ensures an organization has the right number of people at right time.
HRP requires detailed analysis of the present and future need of the human resource to the
organization. It helps to analyze the future human resource availabilities. It plays an important
role in the achievement of business plans and thus future organizational success.
According to DeCenzo and Robbins, “HRP is a process by which an organization ensures that it
has the right number and kind of people, at right time, capable of effectively and efficiently
completing those tasks that will help the organization achieve its overall objectives.
Characteristics of HRP
The various characteristics of HRP are given below:1. Future Oriented
Human resource planning is prepared to assess the future requirement of manpower in the
organization. It helps identify the size and composition of resources for future purpose.
2. Continuous Process
Human resource planning is a continuous process. The human resource planning prepared today
may not be applicable for future due to ever changing external forces of the environment. Hence,
to address such changing factors, the human resource planning needs to be revised and updated
continuously.
3. Optimum Utilization of Human Resources
Human resource planning focuses on optimum utilization of resources in the organization. It
checks how the employees are utilized in a productive manner. It also identifies employees'
existing capabilities and future potentialities to perform the work.
4. Right Kinds and Numbers
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Unit 2 Human resource planning
Human resource planning determines the right number and kind of people at the right time and
right place who are capable of performing the required jobs. It also assesses the future
requirement of manpower for organizational objective.
5. Determination of Demand And Supply
Human resource planning is a process of determining demand for and supply of human resources
in the organization. Then a match between demand and supply estimates the optimum level of
manpower.
6. Environmental Influence
Human resource planning is influenced by environmental changes, hence, it is to be updated as
per the change occupied in the external environment.
7. Related To Corporate Plan
Human resource planning is an integral part of overall corporate plan of the organization. It can
be formulated at strategic, tactical and operational levels.
8. A Part of Human Resource Management System
As a part of total human resource management system, human resource planning is regarded as a
component or element of HRM which is concerned with acquisition and assessment of
manpower. It serves as a foundation for the management of human resource in an effective and
efficient manner.
Importance of HRP
Human resource planning is the starting point of HRP. Its importance is clear from the following
points:1. Uncertainty reduction
Globalization, new technologies, organizational restructuring and diversity provides various
uncertainties to the organization. Human resource planning reduces the impact of these
uncertainties by predetermining the future human resource requirements. It matches demand
and supply forecast to determine future shortages and surplus of human resources in
organization.
2. Objective focus
Human resource planning focuses on achievement of objectives of the organization. HR plan
linked to overall corporate plan. These facilitate better coordination. It also gives direction to
HR activities of the organization.
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Unit 2 Human resource planning
3. Environment adaptation
Human resource planning assesses current human resources competencies or skill through
human resource inventory. It assess job requirement through job analysis. Existing human
resource can adapted to changing technological, political, legal, economic, social and cultural
forces through HR planning.
4. Recruitment Of Talented Personnel
Another purpose of HR planning is to recruit and select the most capable personnel to fill
job vacancies. It determines human resource needs, assesses the available HR inventory
level and finally recruit the personnel needed to perform the job.
5. Development Of Human Resources
Human resource planning identifies the skill requirements for various levels of jobs. Then it
organizes various training and development campaigns to impart the required skill and ability
in employees to perform the task efficiently and effectively.
6. Proper Utilization Of Human Resources
Human resource planning measures that the organization acquires and utilizes the manpower
effectively to achieve objectives. Human resource planning helps in assessing and recruiting
skilled human resource. It focuses on the optimum utilization of human resource to
minimize the overall cost of production.
7. Foundation for Personnel Functions
As stated earlier, human resource planning provides essential information for designing and
implementing personnel functions, such as recruitment, selection, personnel movement
(transfers, promotions, layoffs) and training and development.
8. Improved labour relation
HRP promotes awareness about the importance of human resources at all levels of
organization. This ensures commitment of all levels of managers to HR goals. It also assists
in collective bargaining with labour unions.
Human resource planning process
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Unit 2 Human resource planning
Human resource planning is a process through which the right candidate for the right job is
ensured. For conducting any process, the foremost essential task is to develop the organizational
objective to be achieved through conducting the said process.
Six steps in human resource planning are presented in Figure 5.3.
1. Analyzing Organizational Objectives:
The foremost step in every process is the determination of the objectives for which the
process is to be carried on. Objective to be achieved in future in various fields such as
production, marketing, finance, expansion and sales gives the idea about the work to be done
in the organization.
2. Inventory of Present Human Resources:
From the updated human resource information storage system, the current number of
employees, their capacity, performance and potential can be analyzed. To fill the various job
requirements, the internal sources (i.e., employees from within the organization) and
external sources (i.e., candidates from various placement agencies) can be estimated.
3. Forecasting Demand and Supply of Human Resource:
The human resources required at different positions according to their job profile are to be
estimated. The available internal and external sources to fulfill those requirements are also
measured. There should be proper matching of job description and job specification of one
particular work, and the profile of the person should be suitable to it.
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Unit 2 Human resource planning
4. Estimating Manpower Gaps:
Comparison of human resource demand and human resource supply will provide with the
surplus or deficit of human resource. Deficit represents the number of people to be
employed, whereas surplus represents termination. Extensive use of proper training and
development programme can be done to upgrade the skills of employees.
5. Formulating the Human Resource Action Plan:
The human resource plan depends on whether there is deficit or surplus in the
organization. Accordingly, the plan may be finalized either for new recruitment, training,
interdepartmental transfer in case of deficit of termination, or voluntary retirement
schemes and rearrangement in case of surplus.
6. Monitoring, Control and Feedback:
It mainly involves implementation of the human resource action plan. Human resources
are allocated according to the requirements, and inventories are updated over a period.
The plan is monitored strictly to identify the deficiencies and remove it. Comparison
between the human resource plan and its actual implementation is done to ensure the
appropriate action and the availability of the required number of employees for various
jobs.
Major HRP activities
The major activities of HRP include:
1. Forecasting future HR demand
Forecasting future manpower requirement either in terms of mathematical estimates
of trends in the economy and development in industry or of judgmental estimates
based upon specific future plans of the company.
2. Preparing present HR inventory (record)
Inventorying present human resources and analyzing the degree to which these
resources are employed optimally.
3. Anticipating/Expecting manpower problems
It is done by estimating the present resources into the future and comparing them with
the forecast of requirements to determine their adequacy, both quantitatively and
qualitatively.
4. Planning necessary programs
It involves planning the necessary programs of recruitment, selection, development,
motivation and compensation so that future human resource requirement will be met.
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Unit 2 Human resource planning
HR demand and supply forecasting
Demand forecasting is a quantitative aspect of human resource planning. It is the process of
estimating the future requirement of human resources of all kinds and types of the organization.
The various techniques of demand forecasting are:
1. Management Judgment
2. Expert forecast
3. Statistical Analysis
1. Management Judgement - The demand forecast for future HR is based on informed judgment
of manager. It is based on rule of thumb. The estimate can be done in in following
approaches
 Top Down approach- Top management prepares the estimates of requirement and sends
the information to lower level managers.
 Bottom up approach - Line managers and supervisors prepare and estimates of
requirements and send information to top management.
 Participative approach – Management and subordinates jointly estimate requirements.
2. Expert Forecasts – it includes:
 Survey – HR experts conduct a survey of line managers about future HR needs. The
responses are analyzed to forecast requirements.
 Delphi Technique – It is a pooling of judgement and opinions about estimates of future
HR needs from a group of experts. Various rounds of responses are asked to find out a
group consensus about HR requirements. No face to face contact of expert.
 Nominal Group Techniques- Experts sit face to face to make forecasts as group. In first
stage members generate ideas independently & in next stage they interacting in group to
evaluate ideas.
3. Statistical Analysis
Statistical techniques are based on past data. It includes:
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Trend analysis – The methods which forecast employees future requirements on the basis of
past some organizational data trends.
Regression analysis- It is a statistical process for estimating the relationship between
variables. Estimation of future demand is based on relationship between variables
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Unit 2 Human resource planning
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Ratio analysis- Forecasts based on ratio between sales volumes, no. of employee required.
Work load analysis – Methods that use information about the actual content of work based on
the analysis of the work. Work load analysis involves use of ratios to determine HR
requirements.
Supply forecasting means to make an estimation of supply of human resources taking into
consideration the analysis of current human resources inventory and future availability.
The various techniques are:
1.
2.
3.
4.
5.
Replacement Chart
Succession Planning
Management Judgement
Markov Analysis
Statistical techniques
1. Replacement Chart – A chart used to estimate vacancies in higher level job and identify how
potential HR supply can fill these vacancies via internal movement from lower levels job.
2. Succession planning- It is a special type of planning used to forecast potential managers for
future promotion at the higher management level. It identify potential successor and done in
middle and top level manager.
3. Management Judgment - The demand forecast for future HR is based on informed judgment of
manager.
4. Markov Analysis – It is quantitative technique. It forecast internal supply of HR. It tracks past
employees movement to plan future supply. Its a flow model of forecasting.
5. Statistical Techniques
 Trend analysis- it projects past trends into future.
 Regression Analysis Techniques- It helps to establishes relationship with past level of supply to
predict future supply of HR.
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Unit 3 Job analysis and design
Concept of Job analysis
In simple words, a job may be understood as a division of total work into
packages/positions. Job may be defined as a group of positions involving some duties,
responsibilities, knowledge and skills.
Job analysis refers to the process of collecting information about a job. In other words, it refers
to the composition of the job. Job analysis is understood as the analysis of job-related activities
in the organization. Job analysis collects and analyses the information related to jobs and various
aspects of jobs. It is performed upon ongoing jobs only which contain job contents and the skill
requirement to perform the specific task. It involves a formal study of jobs which is essential in
determining the duties and the nature of the jobs in the organization.
Job analysis is a process of gathering or collecting information relating to job description and job
satisfaction. It is the systematic process of gathering and organizing the information relating to
various aspects of job, which describes the job contents and minimum job requirements in terms
of skills, efforts, responsibilities and working conditions. Job analysis attempts to provide
information related to the following questions:
- Where does the work come from?
- What kind of machines to be used in performing the job?
- What knowledge, skills and abilities are needed to do the specific task?
- How much supervision is necessary?
- What is the current working condition and what is should be?
- What are the performance expectations for the jobs?
Therefore, it can be concluded that job analysis is an analytical study of job-related information
which provides a basis for defining duties, responsibilities and accountability of each job. It
helps to prepare job description and job specification statements. It is a part of overall work
planning which involves analysis, measurement, control, design and redesign of different jobs.
Edwin B. Flippo has defined Job analysis as the process of studying and collecting information
relating to the operations and responsibilities of a specific job.
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Unit 3 Job analysis and design
Job terminology
8. Career
7. Occupation
6. Job family
5. Job
4. Position
3. Duty
2. Task
1. Element
1. Element = A job element is the smallest unit into which a work can be divided.
2. Task = A task is a distinct work activity carried out for a distinct purpose. E.g., typing a
letter, preparing lecture.
3. Duty = A duty is a number of tasks. Counseling student is a duty of a college instructor.
4. Position= A position is a group of task assigned to one individual. A collection of tasks
and duties which are performed by one person. For example, the P.A. to Chairman
receives visitors, takes dictation, operates computer, answers queries, attends to
complaints and helps students.
5. Job = A group of positions similar in their significant duties. For example the job of
salesmen, technical assistants, computer programmers, etc.
6. Job family = Groups of different jobs that need similar skills. For example, sales jobs and
clerical jobs in different departments.
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Unit 3 Job analysis and design
7. Occupation= occupation is a group of job that are similar as to kind of work and are
found throughout an industry’s or entire country. It is a category of work.
8. Career= it is sequence of position jobs or occupations that a person has over his working
life.
Purpose and methods of collecting job analysis information
Methods of collecting Job Analysis Information
We can collect information for job analysis by using various methods. On the basis of
availability of information, degree of sensitivity of information, nature and attitude of collectors,
etc. analyst can choose one or more methods among the following to collect information for job
analysis:
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1. Observation Method:
Observation is the method in which analyst or information collector watches keenly to the
activities of employees or movements of machinery and equipment. From this method, first-hand
information can be obtained as collector or analyst gets visual impression. Observer involves
himself closely and observes the activities, machines, equipment, materials, working condition,
hazards, coordination and cooperation. This increases the reliability of information.
Advantages of observation method:
It is simple to administer.
It helps to get first-hand information.
Reliability of information will be high.
It is less time consuming method.
It is cost effective method.
Disadvantages of observation method:
Information may be distorted if employees are pre-informed.
All information may not be observed at less time period.
Managerial jobs may not be observed quickly.
Observation may affect the work outputs.
2. Interview method:
Interview is the face to face interaction between employees and job analyst to get the job analysis
information. Under this method, analysts talk with employees and supervisors or ask them
questions regarding job in their presence at work place. Check list of questions can be used to
collect information to make interview more effective.
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Unit 3 Job analysis and design
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Advantages of Interview Method:
Employees get the opportunity to give explanation. So, the information will be more reliable and
accurate.
Misconception of observation can be reduced.
Detail information regarding the job can be collected.
Check list provides the guideline to get the required information.
Disadvantages of Interview Method:
This method is costly and time consuming.
Employees may mislead information.
3. Questionnaire Method:
Questionnaire is the set of questions to be asked to the respondent to get information. Under this
method, analyst prepares a set of questions to collect information. Such set of questions is sent to
the employees. Employees return questionnaire form after filling up at their ease. This method is
also called survey method. Questionnaire is normally prepared with multiple choice questions.
Some questions can be open ended questions
Advantages of Questionnaire method:
This method is suitable to collect information from the large number of employees.
Employees can provide information at their convenient situation. This saves the time.
Employees provide information regarding sensitive questions as well.
This method is less time consuming and less costly.
Information from different jobs can be collected at a time.
Information for the managerial effectiveness can also be collected effectively as employees can
provide information without writing their name.
Disadvantages of Questionnaire method:
Questionnaire may be misunderstood because of which wrong response may be obtained.
Response may be misinterpreted which leads to the wrong conclusion.
Non response rate of employees remains high.
Chance of mocking response randomly remains high which reduces accuracy of job analysis.
4. Dairy Method:
Under this dairy method, employees are requested to write diary for their daily job activities.
Employees are expected to make entry of all the incidents, accidents, major activities,
coordination from different jobs, etc. Analysts later study the diary of each employee and
summarize the required information.
Advantages of diary method:
This method is economical and feasible to all level employees.
This is simple method as employees can write diary in their own way.
Disadvantages of Diary method:
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Unit 3 Job analysis and design
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Majority employee do not write diary in regular basis. So, information may be incomplete.
All employees may not self-responsible to write the actual information. They may write
according to their perception.
Information sorting and refining becomes too difficult.
This method is time consuming.
5. Technical conference method:
Under technical conference method, specialists in job analysis, experienced employees,
technicians and extensive knowledge of the jobs are requested to attend the seminar or
conference. From the discussion, all relevant information is recorded. Such information is more
realistic and factual.
Advantages of technical conference method:
Information from expert specialists can be obtained.
Job information can be filtered at ease.
Disadvantages of technical conference method:
This is expensive method.
Because of lack of participation of employees, there is the possibility of less correct information.
Purpose of job analysis
The data collected from the job analysis can be used for a variety of purposes. These purposes
are categorized into three classes. These purposes are discussed below
one. Job description.
2. Job specification
3. Job evaluation
1. Job Description:
Job descriptions describe the duties, responsibilities, working conditions and activities of a
particular job. Job descriptions vary in terms of the level of details provided. However, several
components are present in almost every job description. For example the title of the job, type of
summary, the worker requirements etc.
It is a statement which indicates what the employees does, under what conditions and why. It
contains job title, job duties to be performed, characteristics of the job, environmental conditions
and authorities and responsibilities of the employees.
Benefits
• Describe the job to potential candidate
• Guide to hire employees and what are expected to do by employees.
• It helps in performance appraisal of employees
• It helps to identify the needs of training.
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Unit 3 Job analysis and design
Content of Job Descriptions
1. Job title and level of job
2. Job summary- general nature of job
3. Relationships- responsible to & responsible for
4. Location of the job- Department, physical location
5. Working conditions- physical condition for work place
6. Duties and responsibilities- what employees do?
7. Authority- Right to make decision and give order to subordinates.
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2. Job Specification:
Job specification detail the knowledge, skills and abilities relevant to a job, including the
education, experience, specialized training, personal traits and manual dexterity required. The
job specification is important for a number of reasons. First, certain jobs have qualifications
required by law. For example, airline pilots, attorneys and medical doctors all need to be
licensed. Another type of job specification is based on professional tradition. For example,
university professors must usually hold a ph. D or equivalent degree if they are going to be in a
term track position. Finally, job specifications might involve establishing certain standards or
criteria that are deemed necessary for successful performance. It also mentions the personal
qualities of employees, which are required for the job.
Benefits
Specify the qualification and characteristics need to recruit.
It guides to select right candidates.
Content of job specification1. Education qualification and training
2. Experience- current & previous
3. Skills- communication, leadership, computer, writing
4. Interest – It include social interaction, sports, culture
5. Abilities- Physical – strength, Mental- Judgment, initiative, getting along with others.
3. Job Evaluation:
The information gathered during a job analysis can be used as input for the organization’s job
evaluation system. The job evaluation determines the worth of a particular job to the
organization. This information is primarily used to determine the pay for the job. Thus,
employees should be paid more for working on more difficult jobs. It specifies the relative value
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Unit 3 Job analysis and design
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of each job in the organization to develop compensation package. It is very important tool for
decision making the job evaluation methods are:
Ranking method- rank the jobs highest to lowest.
Classification method- the methods evaluates the jobs based on predetermined job grades.
Point method- This methods break downs the jobs based on identifiable criteria and allocate
points to each criteria.
Uses of job analysis information
Job analysis helps to prepare sound human resource practice and policies. Because job analysis
provides a deeper understanding of the behavioral requirements of the job, it plays a vital role in
the defense of employment practices. Following are the main importance and uses of job
analysis:
1. HR Planning
Job analysis provides useful information for human resource planning. It is the foundation for
forecasting demand for and supply of human resources in an organization. It is also necessary for
preparing HR inventory and HR information system in the organization.
2. Recruitment and Selection
Job analysis provides necessary information for conducting recruitment and selection of
employees in the organization. Recruitment generates a pool of candidates who are willing to
perform in the organization, whereas selection selects the best suited candidate out of the
available candidates who are supposed to perform well in the organization.
3. Training and Development
Up-to-date description and specification statements help to ensure the requirement
of training and development needs in the organization. By comparing knowledge and skill of
current employees with the expected level of performance, the need of training and development
requirement can be assessed.
4. Compensation Management
Job analysis provides necessary information for managing compensation of employees. It helps
to rank the job in order to determine pay surveys. Hence, it helps in compensation decisions.
5. Performance Appraisal
Job analysis helps to appraise the performance of employees by providing clear cut standards of
performance for each job. It compares each employee's actual performance with the
predetermined standards.
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Unit 3 Job analysis and design
6. Information of Duties
Job analysis provides valuable information regarding the duties and responsibilities of an
incumbent through job description statement. It also provides the content and skill requirement
of each job.
7. Health and Safety
In course of job analysis, certain unsafe environmental and operational conditions or personal
habits are discovered and thus, that may lead to safety improvements.
8. Job Re-engineering
Job analysis provides valuable information data relating to the content and skill requirement of
jobs which help to bring about improvements in the engineering design of jobs.
9 .Employee Counseling
Vocational guidance and rehabilitation counseling is possible through comprehensive job
description and specification statements.
Job analysis technique
At it is established that job analysis is the process of studying job content and context so that it
facilitates to find the job requirement and skills requirements. It helps to find the right man at
right job. It provides the job satisfaction and motivation to employees. So, job analysis should be
accurate and scientific. There are number of techniques or methods of job analysis. Job analysis
techniques can be different for different purposes, organizations and contexts. For the purpose of
simplicity, they can be grouped under two broad categories and Job focused techniques and
person or behavior focused techniques as below:
A. Job Focused Techniques:
Job analysis can be conducted by focusing only to the job dimensions i.e. task to be done. Such
techniques are categorized under job focused techniques. Job focused techniques thus, give high
priority to the tasks or activities to accomplish for the job analysis. There are following four most
popular methods of job analysis under job focused techniques:
1. Functional job analysis:
Functional job analysis method describes the nature of jobs in terms of people, data and the
things. It prepares job summaries, job descriptions and job specification. This technique first
time was developed by department of labor, United States of America. This method aims to
provide a standardized method by which different jobs can be quantitatively rated, classified and
compared as depicted earlier. The core emphasis of this method is a rating of each job in terms of
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Unit 3 Job analysis and design
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what an incumbent does with respect to data, people and thins. This technique was designed to
improve job placement and counseling for workers who register for employment at local state
employment at local state employment officers. This method is being one of the most popular
methods of job analysis in private and government organization. Functional job analysis
considers following important fundamental assumptions:
Jobs are concerned with data, people and things
All jobs require rating data, people and thin with the worker to some degree.
The function appropriate to dealing with data, people or things is hierarchical and ordinal,
proceeding from complex to the simple.
U.S department of labor (1977) has suggested three main functions of a clerical employee. Data
consists of six elements, people related function consists of eight elements and things consists
seven elements. Each of these functions concentrated at work.
2. Management position description questionnaire method:
Under this method, highly structured questionnaire containing 197 items are prepared to collect
the information regarding managerial responsibilities, restriction, demand and other
miscellaneous position characteristics. Information collected by collecting responses from
questionnaire are analyzed and concluded for the responsibilities to be conducted, accountability
required, authority demand, skills and qualification required to accomplish the responsibility
effectively and efficiently. This method is frequently used to evaluate managerial jobs, determine
the training needs of employees moving into managerial jobs, and determine compensation
system for managerial jobs. This method further helps in succession planning.
3. The Hay Plan:
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Hay plan is the method of job analysis which collects information regarding nature and scope of
position. Hay plan provides basis of job comparison within and outside the organization. This
assists in establishing reward system in organization to make equitable. Hay plan is similar to
management position description questionnaire but less structured. This method covers following
five important aspects:
How does the position fit into the organization?
What is the general composition of supporting staff in the organization?
What can be the general nature of the technical, managerial and human relationship technique
required?
What is the nature of problem solving knowledge required for the job position?
What is the nature of control and supervisory requirements in a specific managerial job?
This method specifies each job in terms of its function, nature, managerial relationship, technical
aspects, knowledge required for solving problem, need of control and supervision at job, etc.
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Unit 3 Job analysis and design
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4. Methods of Analysis:
Irrespective to traditional job analysis procedures, this method concentrates on the method to be
used to do the jobs effectively and efficiently. Traditional methods concentrate mainly on
describing the job elements and general duties but they do not discuss about how to do the job
more effectively and efficiently as possible. Method analysis fulfills this gap. Method analysis is
basically applied to non managerial jobs. This technique focuses on the following principles:
Balancing movements of two hands
Doing productive work and reducing idle time
Trying to reduce muscular effort
Locate all tools and materials for proper application
Scientific tools and techniques to use for efficient and effective job done
Coordination required between employees
B. Person or Behavior Focused Techniques:
These techniques focus on the behavior or personal traits of the employees desired in job. In this
method, personal characteristics, abilities and potentialities of persons desired to fit at job are
analyzed. There are different techniques under behavior focused techniques which primarily
specify person oriented content of jobs. Some common behavior focused techniques to analyze
the job are described below:
i. Position analysis questionnaire:
In this method questionnaire is used as an instrument to collect information regarding job
position. It is highly specialized instrument used for analyzing job in terms of employee
activities. This method focuses human characteristics, tasks and technological factors. PAQ
contains 194 job dimensions. These elements are grouped into six general categories. Each job
element is also rated on one of six rating scales.
This method focuses more on quantitative information relating job and person. It can be used to
analyze almost every job. This method provides basis of comparison of different jobs. For
effective PAQ, trained and qualified persons are required.
ii. Physical ability analysis:
Every job requires certain mental and physical abilities. Physical ability analysis method is
basically concerned with the physical abilities. This method considers nine physical abilities of
employees to be employed while analyzing the job. Complexities, coordination of organs, speed
etc. are the areas of the job analysis under this method.
iii. The critical incident technique:
Different situations or incidents have to face by employees in their daily work life which they
have to solve and make wise decision for the betterment of organization. So, such situation or
events that may have to face by employees at different jobs. Thinking this as the price concern,
CIT utilizes actual or critical incidents or events like extreme behavior, outstanding, effective or
ineffective efforts while attending general job activities. This means jobs are evaluated and
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Unit 3 Job analysis and design
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analyzed on the basis of some critical information from job. Such information are collected from
employees and supervisors. This method focuses on the job behavior to describe their level of
performance i.e. both high levels and low-level performance. This technique collects the
information regarding:
What led to the incident?
What exactly the employee did?
What are the perceived consequences of the employee's behavior?
Whether or not, these consequences were within the control of the employee?
Such information helps to decide whether a particular person is capable of performing under the
critical situations. This method also provides sufficient information for determining training need
and establishing compensation system though this method focuses only on characteristics of
employees.
iv. Guidelines oriented job analysis:
Guidelines oriented job analysis method determines the job elements which can be performed
with same guidelines or instruction. The objective of GOJAS is to provide uniform guidelines to
analyze the job. This method offers a realistic job description. With this method, we can develop
job related selection procedures, performance appraisal forms and spotting training needs. In this
method, job incumbents are involved in the job analysis process. Therefore, employee
understanding and validity towards the job analysis can be enhanced.
Concept of Job design
Job design is the process of formation of structure to work activities. This is a systematic process
of organizing specific job. It is thus, the logical sequence of job analysis which provides the job
related data and skill requirement of the incumbent.
It is the management function of organizing tasks, duties and responsibilities into a unit of work.
It helps to set the purpose, fix and task characteristics and duties. Job design is another words,
can be defined as the integration of job content and the method of doing the job. This combines
the qualification, skills and experience required for the job intrinsic and extrinsic rewards
associated with job, and the basic relationship between organizational needs and employee
needs.
Job design affects the productivity of employees and hence organization. Scientifically designed
job becomes the basis of employee motivation. Poorly designed job decreases the productivity or
organization as they discourage employees.
Job design is the subject matter to change. It may be affected by so many factors like job factors,
organizational factors, behavioral factors, technological factors and environmental factors. So, it
should be changed or modified from time to time.
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Unit 3 Job analysis and design
The main purpose of job design is to increase the productivity of organization. Some of the
major purpose of job design is to improve quality and quantity of goods/services, reduce
operation costs and reduce turnover and training costs.
For our purpose, job design is the process of collecting job related information and grouping
them in such a way that a manageable job can be created with sufficient motivational reward
system. This prepares not only the job package but also the qualification, skills, experience and
additional qualities required for the job. Job design, in this way, prepare the job description
(What to do?), job specifications (what are required to accomplish the job?) and the job
evaluation (whether the jobs are ranked or structured properly?). In broader sense, job design is
the process of creating organizational structure so that the basis of evaluation of job and
hierarchy is estimated. It is the basis of functional relationship between various areas of
functions.
Job design is the way in which job tasks are organized into a unit of work. (Duecento and
Robbins).
Job design involves conscious efforts to organize tasks, duties and responsibilities into a unit of
work to achieve certain objectives. (Barry and Alan).
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Unit 4 Employee Recruitment and Selection
Concept of Recruitment
Recruitment is a vital function of an organization because it brings together manager and
worker. An essential part of the gaining component of human resource management, it is
the procedure of judgment right people for right positions at the right time. It is
concerned with classifying and attracting a pool of capable candidates to fulfill human
resource requirements of an organization.
Recruitment is a positive process of searching for prospective employees and stimulating
them to apply for the jobs in the organization. When more persons apply for jobs then
there will be a scope for recruiting better persons.
The job seekers too, on the other hand, are in search of organizations offering them
employment. Recruitment is a linkage activity bringing together those with jobs and
those seeking jobs. In simple words, the term recruitment refers to discovering the source
from where potential employees can be selected. The scientific recruitment process leads
to higher productivity, better wages, high morale, reduction in labor turnover and
enhanced reputation. It stimulates people to apply for jobs; hence, it is a positive process.
According to Edwin B. Flippo, recruitment is the process of searching the candidates for
employment and stimulating them to apply for jobs in the organization.
Thus, it is the process of finding and attracting capable applicants for employment. The
process begins when new recruits are sought and ends when their applications are
submitted. The result is a pool of applications from which new employees are selected.
Recruitment is the continuous process whereby the firm attempts to develop a pool of
qualified applicants for the future human resources needs even though specific vacancies
do not exceeds. It is the function preceding the selection, which helps to create a pool of
prospective employees for the organization so that the management can select the right
candidate for the right job from this pool.
Sources of Recruitment
The searching of suitable candidates and informing them about the openings in the
enterprise is the most important aspect of recruitment process. The candidates may be
available inside or outside the organization. There are two sources of recruitment i.e.,
internal and external sources.
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Unit 4 Employee Recruitment and Selection
(A) Internal Sources:
Best employees can be found within the organization. When a vacancy arises in the
organization, it may be given to an employee who is already on the pay roll. Internal
sources include promotion, transfer and in certain cases demotion. When a higher post is
given to a deserving employee, it motivates all other employees of the organization to
work hard. The employees can be informed of such a vacancy by internal advertisement.
Methods of Internal Sources:
The Internal Sources Are Given Below:
1. Transfers:
Transfer involves shifting of persons from present jobs to other similar jobs. These do not
involve any change in rank, responsibility or prestige. The numbers of persons do not
increase with transfers.
2. Promotions:
Promotions refer to shifting of persons to positions carrying better prestige, higher
responsibilities and more pay. The higher positions falling vacant may be filled up from
within the organization. A promotion does not increase the number of persons in the
organization. A person going to get a higher position will vacate/empty his present
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Unit 4 Employee Recruitment and Selection
position. Promotion will motivate employees to improve their performance so that they
can also get promotion.
3. Present Employees:
The present employees of a concern are informed about likely vacant positions. The
employees recommend their relations or persons intimately known to them. Management
is relieved of looking out prospective candidates.
The persons recommended by the employees may be generally suitable for the jobs
because they know the requirements of various positions. The existing employees take
full responsibility of those recommended by them and ensure of their proper behavior and
performance.
Advantages of Internal Sources:
The Following are The Advantages of Internal Sources:
1. Improves morale:
When an employee from inside the organization is given the higher post, it helps in
increasing the morale of all employees. Generally, every employee expects promotion to
a higher post carrying more status and pay (if he fulfills the other requirements).
2. No Error in Selection:
When an employee is selected from inside, there is a least possibility of errors in
selection since every company maintains complete record of its employees and can judge
them in a better manner.
3. Promotes Loyalty:
It promotes loyalty among the employees, as they feel secured because of chances of
advancement.
4. No Hasty/quick Decision:
The chances of hasty decisions are eliminated as the existing employees are well tried
and can be relied upon.
5. Economy in Training Costs:
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Unit 4 Employee Recruitment and Selection
The existing employees are fully aware of the operating procedures and policies of the
organization. The existing employees require little training and it brings economy in
training costs.
6. Self-Development:
It encourages self-development among the employees as they can look forward to occupy
higher posts.
Disadvantages of Internal Sources:
(I) it discourages capable persons from outside to join the concern.
(ii) It is possible that the requisite number of persons possessing qualifications for the
vacant posts will not be available in the organization.
(iii) For posts requiring innovations and creative thinking, this method of recruitment
cannot be followed.
(iv) If only seniority is the criterion for promotion, then the person filling the vacant post
may not be capable.
(B) External Sources:
All organizations have to use external sources for recruitment to higher positions when
existing employees are not suitable. More persons are needed when expansions are
undertaken.
The external sources are discussed below:
Methods of External Sources:
1. Advertisement:
It is a method of recruitment frequently used for skilled workers, clerical/accounting and
higher staff. Advertisement can be given in newspapers and professional journals. These
advertisements attract applicants in large number of highly variable quality. Preparing
good advertisement is a specialized task.
2. Employment Exchanges:
Employment exchanges in India are run by the Government. For unskilled, semi-skilled,
skilled, clerical posts etc., it is often used as a source of recruitment. In certain cases, it
has been made obligatory for the business concerns to notify their vacancies to the
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Unit 4 Employee Recruitment and Selection
employment exchange. In the past, employers used to turn to these agencies only as a last
resort. The job seekers and job-givers are brought into contact by the employment
exchanges.
3. Schools, Colleges and Universities:
Direct recruitment from educational institutions jobs (i.e. placement) which require
technical or professional qualification has become a common practice. A close link
between the company and educational institutions helps in getting suitable candidates.
The students are spotted during the course of their studies. Junior level executives or
managerial trainees may be recruited in this way.
4. Recommendation of Existing Employees:
The present employees know both the company and the candidate being recommended.
Hence, some companies encourage their existing employees to assist them in getting
applications from persons who are known to them.
In certain cases, rewards may also be given if candidates recommended by them are
actually selected by the company. If recommendation leads to favoritism, it will impair
the morale of employees.
5. Factory Gates:
Certain workers present themselves at the factory gate every day for employment. This
method of recruitment is very popular in India for unskilled or semi-skilled labor. The
desirable candidates are selected by the first line supervisors. The major disadvantage of
this system is that the person selected may not be suitable for the vacancy.
6. Casual/unplanned Callers:
Those personnel who casually come to the company for employment may also be
considered for the vacant post. It is most economical method of recruitment. In the
advanced countries, this method of recruitment is very popular.
7. Central Application File:
A file of past applicants who were not selected earlier may be maintained. In order to
keep the file alive, applications in the files must be checked at periodical intervals.
8. Labor Unions:
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Unit 4 Employee Recruitment and Selection
In certain occupations like construction, hotels, maritime industry etc., (i.e., industries
where there is instability of employment) all recruits usually come from unions. It is
advantageous from the management point of view because it saves expenses of
recruitment.
9. Labor Contractors:
This method of recruitment is hiring unskilled and semi-skilled workers in industry. The
contractors keep themselves in touch with the labor and bring the workers at the places
where they are required. They get commission for the number of persons supplied by
them.
10. Former Employees:
In case employees have been laid off or have left the factory at their own, they may be
taken back if they are interested in joining the concern (provided their record is good).
11. Other Sources:
Apart from these major sources of external recruitment, there are certain other sources,
which are exploited by companies from time to time. These include special lectures
delivered by recruiter in different institutions, though apparently these lectures do not
relate to recruitment directly.
Then there are video films, which are sent to various concerns and institutions to show the
history and development of the company. These films present the story of company to
various audiences, thus creating interest in them.
Various firms organize trade shows, which attract many prospective employees. Many a
time advertisements may be made for a special class of work force (say-married women)
who worked prior to their marriage.
Merits of External Sources:
1. Availability of Suitable Persons:
Internal sources, sometimes, may not be able to supply suitable persons from within.
External sources do give a wide choice to the management. A large number of applicants
may be willing to join the organization. They will also be suitable as per the requirements
of skill, training and education.
2. Brings New Ideas:
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Unit 4 Employee Recruitment and Selection
The selection of persons from outside sources will have the benefit of new ideas. The
persons having experience in other concerns will be able to suggest new things and
methods. This will keep the organization in a competitive position.
3. Economical:
This method of recruitment can prove to be economical because new employees are
already trained and experienced and do not require much training for the jobs.
Demerits of External Sources:
1. Demoralization:
When new persons from outside join the organization then present employees feel
demoralized because these positions should have gone to them. There can be a heart
burning among old employees. Some employees may even leave the enterprise and go for
better paths in other concerns.
2. Lack of Co-Operation:
The old staff may not co-operate with the new employees because they feel that their
right has been snatched away by them. This problem will be serious especially when
persons for higher positions are recruited from outside.
3. Expensive:
The process of recruiting from outside is very expensive. It starts with inserting costly
advertisements in the media and then arranging written tests and conducting interviews.
In spite of all this if suitable persons are not available, then the whole process will have to
be repeated.
4. Problem of Maladjustment:
There may be a possibility that the new entrants have not been able to adjust in the new
environment. They may not temperamentally adjust with the new persons. In such cases,
either the persons may leave themselves or management may have to replace them. These
things have adverse effect on the working of the organization.
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Unit 4 Employee Recruitment and Selection
Concept of Selection
The Selection is the process of choosing the most suitable candidate for the vacant
position in the organization. In other words, selection means clearing out unsuitable
applicants and selecting those individuals with essential qualifications and capabilities to
fill the jobs in the organization.
Most often, the selection and recruitment are used interchangeably but both have
different scope. The former is a negative process that rejects as many unqualified
applicants as possible to hire the right candidate while the latter is a positive process that
attracts more and more candidates and stimulates them to apply for the jobs.
Byers and Rue: “Selection is the process of choosing from those available individuals
who are most likely to perform successfully in a job”.
A selection test is a systematic and standardized procedure of sampling human behavior
in order to obtain qualified applicants for organizational activities. It is used to assess the
ability, aptitude and personality of prospective candidates. Selection test is conducted in
order to select a right person for the right job who will be capable of performing
organizational activities if hired. Selection test is a device that reveals the information
about the candidate, which is not obtained through other steps of selection. It screens the
employee's ability, knowledge, and decides whether he/she can perform well in the
organization.
Importance of Selection
Selection means to choose the person from among the prospective candidates to fill in the
vacant posts in the organization. The success of the organization depends upon the
quality of personnel selected for the job. Thus, selection of personnel is the most
important function of the personnel management. The importance of selection may be
judged from the following facts:
(1)
Procurement/Gaining of Qualified and Skilled Workers
Scientific selection facilitates the procurement of well-qualified and skilled
workers in the organization. It is in the interest of the organization in order to
maintain the sovereignty over the other competitive firms. Selection of skilled
personnel reduces the labor cost and increases the production. Selection of skilled
personnel also facilitates the expansion in the size of the business.
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Unit 4 Employee Recruitment and Selection
(2) Reduced Cost of Training and Development
Proper selection of candidates reduces the cost of training because qualified personnel
have better grasping power. They can understand the technique of the work better and in
no time. Further, the organization can develop different training programs for different
persons based on their individual differences, thus reducing the time and cost of training
considerably.
(3) Absence of Personnel Problems
Proper selection of personnel reduces personnel problems in the organization. Many
problems like labor turnover, absenteeism and monotony shall not be experienced in the
organization. Labor relations will be better because workers will be fully satisfied by the
work. Skilled workers help the management to expand the business and to earn more
profits and management intern compensate the workers with high wages, benefits etc.
(4) Reduce Applicant Numbers
Recruitment attracts many applicants to a particular job, which may prove difficult to
manage, but selection reduces applicants to a manageable number. Candidates who have
applied for a job during the recruitment stage are screened in the selection stage. Those
who prove suitable for the job are selected, and unsuitable ones are rejected.
(5) Low Employee Turnover
Appropriate selection procedures applied in the recruitment process ensure that only the
most qualified individual is chosen to fill a vacancy. Recruited employees who are
satisfied with their jobs lead to a low employee turnover rate. Employee retention is
important to an organization, as the costs of hiring and training new employees are very
high.
(6)The Time Dimension
A good selection procedure saves time in the recruitment and orientation processes
because the applicant is expected to have been introduced to some aspects of the
organizational culture, such as the dress code. No time is wasted trying to train the new
recruit with various aspects of the organization's culture and norms. The employee is
given an adequate picture of what the new job entails, thus eliminating wasting time
doing unnecessary tasks that are not part of his job description.
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Unit 4 Employee Recruitment and Selection
Selection Process
The criterion finalized for selecting a candidate for a particular job varies from company
to company.
Brief details of the various steps in selection procedure are given as follows:
1. Inviting applications:
The prospective candidates from within the organization or outside the organization are
called for applying for the post. Detailed job description and job specification are
provided in the advertisement for the job. It attracts a large number of candidates from
various areas.
2. Receiving applications:
Detailed applications are collected from the candidates, which provide the necessary
information about personal and professional details of a person. These applications
facilitate analysis and comparison of the candidates.
3. Scrutiny/Inspection of applications:
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Unit 4 Employee Recruitment and Selection
As the limit of the period within which the company is supposed to receive applications
ends, the applications are sorted out. Incomplete applications are rejected; applicants with
un-matching job specifications are also rejected.
4. Written tests:
As the final list of candidates becomes ready after the scrutiny of applications, the written
test is conducted. This test is conducted for understanding the technical knowledge,
atti-tude and interest of the candidates. This process is useful when the number of
applicants is large. Many times, a second chance is given to candidates to prove
themselves by conducting another written test.
5. Psychological tests:
These tests are conducted individually and they help for finding out the indi-vidual
quality and skill of a person. The types of psychological tests are skill test, intelligence
test, synthetic/unreal test and personality test.
6. Personal interview:
Candidates proving them successful through tests are interviewed per-sonally. The
interviewers may be individual or a panel. It generally involves officers from the top
management.
The candidates are asked several questions about their experience on another job, their
family background, their interests, etc. They are supposed to describe their expectations
from the said job. Their strengths and weaknesses are identified and noted by the
interviewers, which help them to take the final decision of selection.
7. Reference check:
Generally, at least two references are asked for by the company from the can-didate.
Reference check is a type of crosscheck for the information provided by the candidate
through their application form and during the interviews.
8. Medical examination:
Physical strength and fitness of a candidate is must before they takes up the job. In-spite
of good performance in tests and interviews, candidates can be rejected based on their ill
health.
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Unit 4 Employee Recruitment and Selection
9. Final selection:
At this step, the candidate is given the appointment letter to join the organization on a
particular date. The appointment letter specifies the post, title, salary and terms of
employment. Generally, initial appointment is on trial and after specific time it becomes
permanent.
10. Placement:
This is a final step. A suitable job is allocated to the appointed candidate so that they can
get the whole idea about the nature of the job. They can be adjusted to the job and
perform well in future with all capacities and strengths.
Selection Test
Organizations may use a variety of tests to assist them in assessing the suitability of
applicants, as well as their potential for success in the tasks that will be expected. A test
is a standardized objective measure of the behavior of a candidate for the selection
purpose. Organization needs to select the qualified and competent candidates. There are
different types of selection tests can be administered depending on the needs of
organization and the nature of job.
Tests are classified into five types. They are:
(I)
Aptitude tests
(ii)
Achievement tests
(iii)
Situational tests
(iv)
Interest tests
(v)
Personality test
Aptitude/skill Tests: These tests measure whether an individual has the capacity or
hidden ability to learn a given job if given adequate training. Aptitudes can be divided
into general and mental ability or intelligence and specific aptitude such as mechanical,
clerical, manipulative capacity etc.
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Unit 4 Employee Recruitment and Selection

Intelligence Tests: These tests in general measure intelligence quotient of a
candidates. In detail, these tests measure capacity for comprehension, reasoning, word
fluency, verbal comprehension, numbers, memory and space. Though these tests are
accepted as useful ones, they are criticized against deprived sections of the community.
Further, it is also criticized that these tests may prove to be too dull as a selection device.

Mechanical Aptitude Tests: These tests measure the capacities of 4-D
visualization, perceptual speed and knowledge of mechanical matter. These tests are
useful for selecting apprentices, skilled, mechanical employees, technicians etc.

Psychomotor Tests: These tests measure abilities like motor ability and eye-hand
coordination of candidates. These tests are useful to select semi-skilled workers and
workers for repetitive operations like packing, watch assembly.

Clerical Aptitude Tests: Measure specific capacities involved in office work. Items
of this test include spelling, computation, comprehension, copying, word measuring etc.
Achievement Tests: These tests are conducted when applicant claims to know something
as these tests are concerned with what one has accomplished These tests are more useful
to measure the value of specific achievement when an organization wishes to employ
experienced candidates. These tests are classified into:
Job Knowledge Test: Under this test, a candidate is tested in the knowledge of a particular
job. For example, if a junior lecturer applies for the job of a senior lecturer in commerce,
he may be tested in job knowledge where he is asked questions about Accountancy
principle, Banking, Law, Business Management etc.
Work Sample Test: Under this test, a portion of the actual work is given to the candidates
as a test and the candidate is asked to do it. If a candidate applies for a post of lecturer in
Management, he may be asked to deliver a lecture on Management Information System
as work sample test.
Situational Test: This test evaluates a candidate in a similar real life situation. In this test
the candidates is asked to either cope with the situation or solve critical situations of the
job.
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Unit 4 Employee Recruitment and Selection
(a)Group Discussion: This test administered through group discussion approach to solve a
problem under which candidates are observed in the areas of initiating, leading,
proposing valuable ideas, resolving skills, oral communicating skills, coordinating and
concluding skills.
(b)In Basket: Situational test is administered through basket. The candidate, in this test, is
supplied with actual letters, telephone and telegraphic message, reports and requirements
by various officers of the organization, adequate information about the job and
organization. The candidates is asked to take decisions on various items based on the in
basket information regarding requirements in the memoranda.
Interest Test: These tests are inventories of the likes and dislikes of candidates in relation
to work, job, occupations, hobbies and recreational activities. The purposes of this test is
to find out whether a candidate is interested or disinterested in the job for which he is a
candidate and to find out in which area of the job range/occupation the candidate is
interested. The assumption of this test is that there is a high correlation between the
interest of a candidate in a job and job success.
Personality Tests: These tests prove deeply to discover clues to an individual value
system, his emotional reactions and maturity and characteristic mood. They are expressed
in such traits like self-confidence, tact, emotional control, optimism,
decisiveness/certainty, sociability, conformity, objectivity, patience, fear, distrust,
initiative, judgment dominance or submission, impulsiveness, sympathy, integrity,
stability and self-confidence.
Personality tests have disadvantage in the sense that they can be faked by
sophisticated/stylish candidates and most candidates give socially acceptable answers.
Further, personality inventories may not successfully predict job success.
Concept of Interview
Interview is the widely used election method. It is a face-to-face interaction between
interviewee and interviewer. If handled carefully, it can be a powerful technique in
having accurate information of the interviewee otherwise unavailable. At the same time,
if the interview is not handled carefully, it can be a source of bias, restricting or
misleading the flow of communication.
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Unit 4 Employee Recruitment and Selection
Different scholars have defined ‘interview’ differently. According to Scott and others,
“an interview is a purposeful exchange of ideas, the answering of questions and
communication between two or more persons”. Bingham and others define an interview
as a ‘conversation with a purpose”.
It is a process of collecting some information whether the candidates like the job or not.
Under these processes, job seekers invited to appear at the interview board with their
relevant academic and other qualification records. Interview is generally taken by one
member committee several managers at different places, and several persons sitting in a
board.
Types of Interview
Formal Interview: This held in a more formal atmosphere in the employment office by
the employment officer with the help of well-structured questions. The time and place of
the interview are stipulated by the employment office.
Planned Interview: This is a formal interview carefully planned. The interviewer has a
plan of action worked out in relation to time to be devoted to each candidate, type of
information to be sought, information to be given, the modality of interview and so on.
He may use the plan with some amount of flexibility.
Patterned Interview: This is also a planned interview but planned to a higher degree of
accuracy, exactness and precision. A list of questions and areas are carefully prepared.
The interviewer goes down the list of questions, asking them one after another.
Non-directive Interview: This is designed to let the interviewee speak his mind freely.
The interviewer is a careful and patient listener, stimulating whenever the candidate is
silent. The idea is to give the candidate complete freedom to ‘sell’ him without burdens
of the interviewer’s questions.
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Unit 4 Employee Recruitment and Selection
Depth Interview: This is designed to intensively examine the candidate’s background and
thinking and to go into considerable detail on a particular subject to special interest to the
candidate. The theory behind it is that if the candidate is found good in his area of special
interest, the chances are high that if given a job he would take serious interest in it.
Stress Interview: This is designed to test the candidate and his conduct and behavior by
putting him under conditions of stress and tension. This is very useful to test the behavior
of individuals under disagreeable and trying situations.
Group Interview: This is designed to see how the candidates react to and against each
other. All the candidates may be brought together in the office and they may be
interviewed. The candidates may, alternatively, be given a topic for discussion and be
observed as to who will lead the discussion, how they will participate in the discussion,
how each will make his presentation and how they will react to each other’s views and
presentation.
Panel Interview: This is done by members of the interview board or a selection
committee. This is done usually for supervisory and managerial positions. It pools the
collective judgment and knowledge of members of the panel. The candidate may be
asked to meet the panel individually for a lengthy interview.
Unstructured Interview (Non-directive approach)
Questions are not prepared in advance. They are made up during the interview moment.
Questions are unpredictable and differ as per candidates. It encourage applicant to talk as
much as possible. It is straight method and may over looked important aspects of job or
applicant’s background.
Semi-structured Interview (Mixed approach)
Major questions to be asked are broadly planned. However, the interviewer has
flexibility in asking specific questions for detail enquiry purpose. The candidate’s
response is generally lengthy. These techniques of structures the questions will help to
get information of the candidates. It provides comparable data of candidates. It is a
realistic approach.
Structured Interview (Directive approach)
In this interview, interviewer uses a list of pre- determined standardized questions related
with Job knowledge question, situational, questions and, job requirement questions.
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Unit 4 Employee Recruitment and Selection
Standardized evaluation forms are used to rate the candidates. It is useful for large
number of candidates. This method has high validity and reliability.
Recruitment and Selection Practices in Nepalese Organizations
Existing scenario
A lot factors determine the recruitment and selection practices in any country or in
locality. Conditions of labor market, political ideology and management philosophy
largely affects the recruitment. Following are the major characteristics of Nepalese job
market.
We have a strange paradox in our country. There is large-scale unemployment on the one
hand at the same time shortage of skilled labor on the other hand. Here unemployment
refers to the people who are:
-
Not affiliated to any political parties
Not good in terms of English and computer literacy
University degree holders who do not possess any specific skills.
Lot of negative and undesirable practices can be seen in the market. In other words, all
the evils related to the recruitment and selection such a corruption, nepotism/partiality
and favoritism, political influence etc. are found in hiring people. We should try to avoid
such situation.
Factors affecting Recruitment and Selection practices in Nepal
Both internal and external factors have affected recruitment and selection process:
-
-
External factors: Important factors in this category are demand and supply of
specific skills, unemployment rate, labor-market conditions, legal and political
conditions and company’s image and so on.
Internal factors: Important factors in this category are recruitment and selection
policy of the organization, decision to have temporary and part time employees,
size of the organization, cost of recruitment and selection, growth and expansion
phase and so on.
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Unit 4 Employee Recruitment and Selection
Existing Practices
Recruitment and selection practices in Nepalese organization are discussed below1. Government organization
Recruitment and selection activities of these offices are conducted by public
service commission in Nepal.
-they use a mix of internal and external sources.
-the Civil Service Act and rules specify the procedure and composition of sources.
-recruitment is done by public service commission for all open competition
oriented position.
-the concerned ministry should request demand for specified post with minimum
qualification required.
-generally, public service commission publishes vacancies in ‘Gorkhapatra’ in
Wednesday.
-the selection process followed are: evaluation of application form, written test,
semi structured interview by group experts, publication of result, medical report,
appointment, orientation and so on.
2. Semi-Government organization/Public enterprises
Before the restoration of democracy in the year 2046 B.S. were bound to follow
general principles prescribed by public service commission. They were more or
less similar to civil service. However, after the restoration of democracy, public
enterprises started conducting their whole recruitment and selection
independently- announcing vacancies for promotion and for the new vacancies as
well.
3. Government school/colleges
Most of the government-funded schools/universities also suffer from the similar
type of problems as it is found in public enterprises. They have well established
policy and procedures to conduct recruitment and selection practices. As
compared to universities school sector lack proper freedom. They are very
dependent on political decision and top-down approach.
4. Private sector organization
Organized private sector organization rarely goes through formal recruitment and
selection process. Usually they prefer to hire their relatives, friends and near and
dear ones. If they do not get capable person within the circle then only they hire
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Unit 4 Employee Recruitment and Selection
independent and capable person. However, the public companies and organized
private sector used to seek capable candidates from open market. They have their
own policies and procedures guided by Company Act 2053 B.S.
5. Private Banks and Financial Institutions
They must go through formal practices of recruitment and selection. For most of
the positions, they go through all the steps discussed earlier. They also go through
selection test, orientation, and training programs. The final approval of newly
selected candidate is made by selection committee.
6. Non-Government organization (non-profit sector)
There are two types of NGOs namely local and international (NGOs and INGOs).
Recruitment and selection practice in NGOs is more or less similar to the private
sector organization but the practices of INGOs are different. In general, they go
through formal recruitment and selection practice.
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Unit 4 Employee Recruitment and Selection
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Unit 5 Training and Development
Concept of HR training and development
In simple terms, training and development refers to the imparting/conveying of specific
skills, abilities and knowledge to an employee. A formal definition of training &
development is it 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.
*Training refers to the process of imparting specific skills.
*Development refers to the learning opportunities & designed to help employees grow.
•
Training is the act of increasing the knowledge and skills in an employees for
doing a particular job.( Edwin B Flippo)
•
Training is a learning experience in that it seeks a relatively permanent change in
an individual that will improve his or her ability to perform on the job.(DeCenzo
and Robbins)
TRAINING AND DEVELOPMENT is a subsystem of an organization and core function
of human resource management. It ensures continuous skill development of employees
working in organization and habituates process of learning for developing knowledge to
work. Training and Development is the foundation for obtaining quality output from
employees.
Training and Development is a structured program with different methods designed by
professionals in particular job. It has become most common and continuous task in any
organization for updating skills and knowledge of employees in accordance with
changing environment. Optimization of cost with available resources has become
pressing need for every organization which will be possible only by way of improving
efficiency and productivity of employees, possible only by way of providing proper
employee training and development conditioned to that it should be provided by
professionals.
Training is a planned program designed to improve performance at the individual, group,
and organizational levels. It is a systematic and organized short term process by which
people learn technical knowledge and skills for a definite purpose.
Development is a long term systematic and organized process e of learning experiences
to develop the competencies of employees and utilize these competencies for achieving
organizational goals.
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Unit 5 Training and Development
Training need assessment
“Training Needs Assessment” (TNA) is the method of determining if a training need
exists and, if it does, what training is required to fill the gap. TNA seeks to identify
accurately the levels of the present situation in the target surveys, interview, observation,
secondary data and/or workshop. The gap between the present status and desired status
may indicate problems that in turn can be translated into a training need.
Training Needs=Desired Capability – Current Capability of the Participants.
Training can reduce, if not eliminate, the gap, by equipping the participants with
knowledge and skills and by encouraging them to build and enhance their capabilities.
The data on the present status are vital to the evaluation or impact survey in the latter part
of the training cycle. These shall serve as the baseline data. The following are some
techniques for acquiring such data. These may be applied independently or in
combination.
Why do we need a Training Needs Assessment?
First, identify dissatisfaction with the current situation and desire for change as
similarities among the requests. Each request implies that a gap or difference exists
between what is and what could be or should be. A learning or performance gap between
the current and desired condition is called a need. TNA aims at the following situations: Solving a current problem
 Avoiding a past or current problem
 Creating or taking advantage of a future opportunity
 Providing learning, development or growth
 The purpose of TNA is to answer some familiar questions: why, who, how, what,
and when.
https://www.jica.go.jp/project/cambodia/0601331/pdf/english/3_TNA_01.pdf
Training need level of analysis
There are three levels of analysis for determining the needs of training.
1. Individual level- In this level the needs of training is determined by individual
employees. It identifies who needs training in what and how long. It is based on
performance analysis. Training needs for individual can be created by
 Changing HR plans, policies and practices
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Unit 5 Training and Development
 Change in technology
 Change in job descriptions and jog specification
 Skill deficiencies on the job indicated by performance
2. Task Level – In this level the needs of training is based on job analysis. Training
needs at task level can be created by
 Job redesign, task reallocation, new jobs, changed task due to introduction of
technology.

Change in process and procedure of doing job
 Up grading of job function
 Change in performance standard to assess result.
3. Organizational Level- It focus the training needs determination based on organization
as a whole. Training needs at organizational level can be created by:
 Organization growth & expansion, diversification, new ventures. New employees
 Change in environment, strategies, objectives, structure, technology. Training is
required for environmental adaption.
 Change in products and productivity
 High turnover, absenteeism, accidents
HR Training Objectives
The objectives of training can be summarized as follows: –
1. Introduction: – Training constitutes a significant entry into the company’s way of
life. Organizations have to provide introduction training to all employees entering
the organization to let them know,
 What is company’s culture?
 How does structure function?
 What are policies & rules of organization?
2.Updating: - A significant objectives of training is to prevent the Oldness of
the employees by updating their skills & knowledge.
3.Preparing for future Assignments.
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Unit 5 Training and Development
4. Improvement in Performance: Training will be an important aid to managers
for developing themselves as well as their subordinates. It is not a substitute for
development on the job, which comes from doing, experiencing, observing, giving and
receiving feedback and coaching.
Training can bring about an improvement in a person’s:

Knowledge

Skills

Attitude, thereby raising his potential to perform better on the job.
5. Growth
Training is also focused towards developing people for higher levels of
responsibility thereby reducing the need for recruiting people from outside. This would
have the effect of improving the morale of the existing employees.
6. Organizational Effectiveness
Training provides a means for bringing about organizational development. It can be used
for strengthening values, building teams, improving inter-group relations and quality of
work life. The ultimate objective of training in the long run is to improve the company’s
performance through people performing better.
7. Increased Productivity
Training takes the current capabilities of the workers of a brand, polishes it and makes
them learn and devise new and effective methods of doing the same thing, in a repeated
manner. In other words, the training, if done in a proper way, can give your business a
whole new look with a much powerful base as experienced workers at its core.
8. Quality Improvement
Improving the quality of the product is obviously one of the main objectives of training
and development since it’s not like those times when customers weren’t such quality
conscious. Today’s customer knows what’s better for him and what’s not. Simply said,
those old methods of some sweet talk and business won’t work for much long, because
once they know the reality behind the curtains through the services and products quality,
they will leave the company as it is without giving it, even, a second thought.
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Unit 5 Training and Development
9. Safety First
Safety of anyone, either he is a worker, an officer or even a customer, is not something
that can be taken lightly, especially in cases, where one knows that even a minute mistake
can even lead to life threats. Therefore, providing the knowledge, for using the equipment
in a proper way and creating the life-friendly product, also belongs to one of the major
objectives of training and development. The higher, the employees are better at handling
equipment, the better it is both for the company and for the workers.
10. Labor turnover Reduction
No business can flourish well while it is regularly turning over its workforce since it is
obvious that every new workforce will require some time to understand the type of work,
its principle and safety precautions, which lead to decreased productivity. Moreover, it
also diminishes the feeling of self-confidence among the workers, and this really isn’t a
good thing.
On the contrary, training ensures that the company doesn’t need to turn over its
workforce again and again because it prepares the employees to face any situation which
proves helpful in bringing in the feeling of workers. Therefore, the workforce feels safe
and secure at a particular job.
Methods of HR training
There are two types of methods of HR training which are discussed below:1. On the job training (OJT)
2. Off the job training
1.
On the job training (OJT)
When an employee learns the job in actual working site in real life situation, and not
simulated/fake environment, it is called OJT. Employee learns while working. Take the
instance of roadside mechanics. Small boys working there as helpers learn while helping
the head mechanic.
This type of training, also known as job instruction training, is the most commonly used
method. Under this method, the individual is placed on a regular job and taught the skills
necessary to perform that job. The trainee learns under the supervision and guidance of a
qualified worker or instructor. On-the-job training has the advantage of giving firsthand
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Unit 5 Training and Development
knowledge and experience under actual working conditions. While the trainee learns how
to perform a job, he is also a regular worker rendering the services for which he is paid.
On-The-Job Training Methods
(a) Job Rotation: This type of training involves the movement of the trainee from one
job to another.
The trainee receives job knowledge and gains experience from his supervisor or trainer in
each of the different job assignments. Though this method of training is common in
training managers for general management positions, trainees can also be rotated from
job to job in workshop jobs. This method gives an opportunity to the trainee to
understand the problems of employees on other jobs and respect them.
Job rotation method has been using in the Indian banking sector mainly by State bank
group for the probationary officers for the period of approximately 2 years to finally post
them as assistant bank manager.
(b) Coaching: The trainee is placed under a particular supervisor who functions as a
coach in training the individual. The supervisor provides feedback to the trainee on his
performance and offers him some suggestions for improvement. Often the trainee shares
some of the duties and responsibilities of the coach and relieves him of his burden. A
limitation of this method of training is that the trainee may not have the freedom or
opportunity to express his own ideas.
(c) Job Instruction: This method is also known as training through step by step. Under
this method, trainer explains the trainee the way of doing the jobs, job knowledge and
skills and allows him to do the job. The trainer appraises the performance of the trainee,
provides feedback information and corrects the trainee.
(d) Committee Assignments: Under the committee assignment, group of trainees are
given and asked to solve an actual organizational problem. The trainees solve the
problem jointly. It develops team work.
(e) Apprenticeship:Employees learn by working with those already skill in their jobs for
example plumbers, electrician, barber, carpenter, mechanist. The duration of such
training last for two to five years. Trainees are allowed to perform
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Unit 5 Training and Development
sophisticated(experience) tasks as their skills and experience increase. It is effective for
acquiring skills from the master/instructor but time consuming.
Internship
Internship is one of the on-the-job training methods. Individuals entering industry in
skilled trades like machinist, electrician and laboratory technician are provided with
thorough instruction though theoretical and practical aspects. Most of the Universities
and Colleges encourage students for internship as part of the curriculum as it is beneficial
to all concerned.
Advantages of On-the-Job Training:
 It is directly in the context of job
 It is often informal
 It is most effective because it is learning by experience
 It is least expensive
 Trainees are highly motivated
 It is free from artificial classroom situations.
Disadvantages of On-the-Job Training:
 Trainer may not be experienced enough to train.
 It is not systematically organized
 Poorly conducted programs may create safety hazards.
2.
Off the job training
Off-the-job training is conducted in a location specifically designated for training. It may
be near the workplace or away from work, at a special training center or a resort.
Conducting the training away from the workplace minimize distractions and allows
trainees to devote their full attention to the material being taught- However, off-the-job
training programs may not provide as much transfer of training to the actual job as do onthe-job programs.
Many people equate off-the-job training with the lecture method, but in fact a very wide
variety of methods can be used.
Employee training at a site away from the actual work environment. It often utilizes
lectures, case studies, role playing, simulation, etc.
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Unit 5 Training and Development
“Off the Job Training” Methods
1. Classroom Lectures: Under the off the job methods of training, classroom method or
lecture method is well-known to train managerial level employees in the organization.
Under this method employees are called to the room like that of classroom to give
training by trainer in the form of lectures. This method is effectively used for the purpose
of teaching administrative aspects or on management subject to make aware of
procedures and to give instructions on particular topic.
Advantage – It can be used for large groups. Cost per trainee is low.
Disadvantages – Low interest of employees. It is not learning by practice. It is One-way
communication. No authentic feedback mechanism. Likely to lead to boredom for
employees.
2. Audio-Visual: Providing training by way of using Films, Televisions, Video, and
Presentations etc. This method of training has been using successfully in education
institutions to train their students in subjects to understand and integrate easily and help
them to remember forever. New companies have come up for providing audio visual
material for students in their concern subjects. In the corporate sector, mainly in customer
care centers employers are giving training to their employees by using audio visuals
material to teach how to receive, talk and behaviour with the customer.
Advantages – Wide range of realistic examples, quality control possible.
Disadvantages – One-way communication, No feedback mechanism. No flexibility for
different audience.
3. Simulation/Imitation: The simulation Method of training is most famous and core
among all of the job training methods. In the simulation training method, trainee will be
trained on the especially designed equipment or machine seems to be really used in the
field or job. But, those equipment or machines are specifically designed for training a
trainees were making them ready to handle them in the real field or job. This method of
planning is mostly used where very expensive machinery or equipment used for
performing Job or to handle that job.
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Unit 5 Training and Development
Example:- The simulation method has been using widely for the purpose of training
aeroplane pilots on aeroplane simulator to make them ready to handle an fly aeroplane.
Especially in Air force fighter pilots are getting trained on the jet fighters simulator.
because the cost of aeroplane or jet fighter will be very expensive, hence employer may
not allow directly to get trained on real equipment to avoid damage to equipment or
machine or in sometimes may cause loss of trainee life. To avoid all such risks by the
employer giving training on simulator is safe
4. Vestibule Training: - Mostly this method of training will be used to train technical
staff, office staff and employees who deal with tools and machines. Employees learn their
jobs on the equipment they will be using, but the training is conducted away from the
actual work floor by bringing equipments or tools to certain place where training is
provided, but not work place. Vestibule training allows employees to get a full feel for
doing task without real world pressures.
Vestibule training is provided to employees when new or advanced equipment or tools
introduced in to the organization to do a particular job by using them. For this purpose
such equipment is brought to a separate place to give demonstration and train how to use
and that handle it by employees safely.
5. Case Studies: It is a written description of an actual situation in the past in same
organization or somewhere else and trainees are supposed to analyze and give their
conclusions in writing. This is another excellent method to ensure full and whole hearted
participation of employees and generates good interest among them. Case is later
discussed by instructor with all the pros and cons of each option. It is an ideal method to
promote decision-making abilities within the constraints of limited data.
6. Role Playing: During a role play, the trainees assume roles and act out situations
connected to the learning concepts. It is good for customer service and training. This
method is also called ‘role-reversal’, ‘socio-drama’ or ‘psycho-drama’. Here trainees act
out a given role as they would in a stage play. Two or more trainees are assigned roles in
a given situation, which is explained to the group. There are no written lines to be said
and, naturally, no rehearsals. The role players have to quickly respond to the situation
that is ever changing and to react to it as they would in the real one. It is a method of
human interaction which involves realistic behaviour in an imaginary or hypothetical
situation. Role playing primarily involves employee-employer relationships, hiring,
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Unit 5 Training and Development
firing, discussing a grievance problem, conducting a post appraisal interview, disciplining
a subordinate, or a salesman making presentation to a customer.
7. Programmed Instructions:This is self-instruction method. It can be in form of
programmed texts or manuals. It condenses information to be learned into organized and
step- by step logical sequences. Trainees are required to provide feedback on their
learning progress on specific skills. Computer assisted instruction is widely used for the
delivery of programmed instruction .Interactive video conferencing is popular for this
training.
8. Management Games With computerized management games, trainees divide into
five- or six-person groups, each of which competes with the others in a simulated
marketplace. Each group typically must decide, for example.
how much to spend on advertising.
how much to produce,
how much inventory to maintain, and
how many of which product to produce.
Management games can be effective. People learn best by being involved, and the games
can gain such involvement. They help trainees develop their problem-solving skills, as
well as to focus attention on planning rather than just putting out fires. The groups also
usually elect their own officers and organize themselves. This can develop leadership
skills and foster cooperation and teamwork.
Advantages of Off-the-Job Training
Trainers are usually experienced enough to train
It is systematically organized
Efficiently created programs may add lot of value
Disadvantages of Off-the-Job Training:
It is not directly in the context of job
It is often formal
It may not be based on experience.
It is expensive.
Trainees may not be much motivated
It is artificial in nature.
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Unit 5 Training and Development
Evaluation of Training program
Training program should be periodically evaluated to determine its effectiveness. Some
of the criteria that are used in evaluating the effectiveness of training are increased
productivity, decreased cost, and decrease of wastage and so on.
Criteria or area of evaluating training effectiveness
The evaluation must be systematic and objective. Training effectiveness can be viewed in
terms of outcomes. The certain criteria for evaluating training effectiveness can be
explained as follows:
Reaction: Process and methods perceived by trainees, during training are expressed in
terms of opinion, impression and attitudes. An effectiveness of training can be measured
on the basis of each reaction.
Learning: Degree of learning in terms of knowledge, skills, attitudes acquired by
trainees can be measured to evaluate training effectiveness. Learning should bring
positive change.
Behavior: Behavior shown by employees in the job after getting training is observed to
evaluate training effectiveness. Transfer of new learning through training shown by
employees to the job shows the training effectiveness.
Result: Result is concerned with the improvements in job performance. Higher
productivity, better quality, lower turnover/accident/absenteeism are positive result. They
show the positive effect of training.
Methods of evaluating training effectiveness
The various methods for evaluating training effectiveness are given below:Observation: Trainees are observed closely during the delivery of training program by
trained expert. Changes in knowledge and attitudes of trainees by observing, recording of
errors and mistake are made systematically, experts who involve in observation can rate
on a scale to find out the degree of learning. It is simple method to administer.
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Unit 5 Training and Development
Test-retest method: Level of knowledge is tested before the employees enter the
training. After the completion of training, their level of knowledge is retested and change
in scores are observed. High score indicates positive effect of training. Generally,
objective test is used. It is simple, popular, sound and low-cost method. Sometime
increase in score may be due to other reasons but behavioral changes cannot be measured
by such test.
Pre-post performance method: The actual job performance of each participant is
evaluated and rated prior to training. Participants are rated before and after training. After
such training there will be change in the trainee. Job performance of each participant is
re-evaluated after the completion of training. The change in job performance is attributed
to training. It is due to the positive change in behavior.
Experimental control group method: Comparable two groups are established and
evaluation is made in terms of skills, intelligence and learning abilities. One group is
control group whose members work on the job without undergoing training. Another
group is an experimental group whose members undergo training. The performance of
each group is evaluated. If the performance of experimental group improves, training is
regarded effective. It is used to evaluate differences in knowledge, skills and intelligence.
This method is an objective and most preferred approach.
Trainee survey: Though the direct survey of trainees also can be evaluated training.
Under this method, various kinds of question can be asked about personal, job-related
training facilities, timing material for training, behavioral changes as a result of training,
trainees effectiveness, suggestions for improvement etc.The feedback received from
trainees is useful for removing weakness of the current programs . However, the survey is
time-consuming and costly.
Cost-effectiveness analysis: Under this method of measuring training effectiveness,
benefits given by training and cost incurred are compared. If total benefits exceed the
total training cost then the training is effective. It is realized in future. It's measured in
monetary value. Training and evaluation should go hand in hand. Organization should
use more than one approach for evaluating the effectiveness of training.
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Unit 5 Training and Development
Process of Evaluation of Training Program
The process of evaluation of training program are discussed below:1. Setting training objectives/standards
The first step of evaluating the training program is to set the objectives or standards.
While setting the objectives, it should be clear and measureable so that it can be
discussed easily with employees, trainers, supervisors and so on.
2. Developing evaluation criteria
The another step is to develop the various evaluation criteria to measure the success or
failure of the training program. The criteria should be enough to understand and
measured. If possible, weights and points to be given to each criteria should be
determined. The criteria that can be used are reaction, learning, behavior and results.
3. Pre-testing trainees existing knowledge
In this stage, each trainee’s skills and knowledge is evaluated prior to training on actual
job performance. This information is very much useful to compare the achievement made
after the training.
4. Monitoring training sessions
This step is similar to process control used in controlling production and operation
management. The objective of this step is to increase the result of training and reduce the
weakness of the program. This step helps to know and control the training objectives,
schedule, inputs and delivery.
5. Evaluating training
This step is measuring actual performance. In this questionnaire form can be given to the
trainees after the completion of training program. Feedback also can be received through
interviews.
6. Feedback for future programs
This is the last but not the least important step in the evaluation process. This step utilizes
information obtained from above step and tries to utilize them for determining the
strength and weakness of training program, determining overall success, costs and
benefits of the program and giving feedback to the concerned authorities for conducting
such program in future.
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Unit 5 Training and Development
Concept of Management Development
Management development is a systematic process of improving managerial
performance. It develops managerial potential by increasing conceptual, interpersonal
and decision making skills. Above all, it develops managerial capability to manage
effectively. It is the process of training and growth by which individuals gain and apply
knowledge, skills, insight and attitudes to manage work organization effectively.
It is more future oriented and more concerned with education rather than employee
training or to assist them to perform better. Management development enhances the
interpersonal skills. It motivates employee and increases their level of confidence. It
provide the opportunity to move up in the hierarchy level. It focuses on the team work.
Gary Dessler- “Management development is any attempt to improve current or future
management performance by impart knowledge, changing attitudes or increasing skills”.
Methods of Management Development
1. On the job method of Management development
Coaching
It is actively guiding managers by their experienced immediate supervisor. The coach
gives the guidance through directions, advice, criticism and suggestions. If the coaching
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Unit 5 Training and Development
is done by someone other than immediate boss it is called mentoring. It provides the
opportunity of interaction, rapid feedback and managers are self-motivated to develop.
Understudy
In this method trainee managers are given staff posts under an experienced managers
with “Assistant” title. Trainee get a chance to learn the job under senior manager. During
vacation times, such understudy managers acts as substitutes for managers. This
techniques provides valuable knowledge and abilities for trainee managers and develops
effective leadership. It also help the ready supply of competent managers whenever the
vacancy arises due to any reasons.
Job Rotation
In this techniques managers are moved from one job to another in horizontal job transfer
in order to broaden their experience, knowledge skills at certain intervals and reducing
boredom and monotony. It is often designed for beginning level managers. It ensure the
avoidance of the problems which arises for a newly promoted managers. Job rotation may
be of planned, situational or line and staffs,
Multiple management ( Committee assignment)
It is a participative management system. In this technique trainee managers are asked to
participate in top level managerial activities, such as corporate goal formation, corporate
planning , policy making etc. Trainee managers get an opportunity to share in decision
making to learn and be familiar with organizational problems. Multiple management
gives an opportunity to gain knowledge on different issues.
Internship
It is the training provided to professional and technical personnel. It serves as an efficient
method allowing participants to combine theoretical knowledge with practical
experience. The trainees are interned in organization for a specific period and works as an
employee. Internship helps the trainees to know the real world situation.
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Unit 5 Training and Development
2. Off the job method of Management Development
Lectures
It is oral communication of specific information by instructor to trainees. Lecture is based
on talking and showing. Participant get opportunity to acquire knowledge and develop
skills and abilities. Audio-visual aids like films, video, overhead projector and power
points slides makes the formal presentation interesting.
Seminar
It is a formal and established method for effective training. Specialists prepare and
present paper in seminar. They can use film, documentary , power point, etc to make
effective training. Trainees actively participate in seminar.
Case study
It is a training method in which trainees will be given a case problem to discuss among
members in group and find a solution of the case for decision making. This method gives
the trainees an opportunity to apply their knowledge, skills and ability.
Role Play
Role playing technique is used for human relations and leadership training. Its purpose is
to give managers an opportunity to learn human relation skills through practice and to
develop insight into one’s own behavior and its effect upon others. It increase the
managers skill in dealings with others. The trainees are informed of a situation and of the
respective roles they have to play.
Behavior Modeling
Behavior modeling is a technique in which the trainees watch film or video that show
model persons behaving effectively in a problem situation. This represent the right way
of doing something. In other words trainees are shown how to behave in a simulated but
realistic situation. It is basically used to solve interpersonal problems such as handling a
complaining employees.
Sensitivity Training
Sensitivity training means the development of awareness and sensitivity to behavioral
pattern of self and others. This techniques changes the behavioral of trainees managers
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Unit 5 Training and Development
through group interaction in a open environment. The managers discuss with each other,
express ideas, listen to others and they become sensitive to own and others behavior.
They respect others. It helps to develop listening power, increase ability in observing
behaviors, increase openness etc.
Transactional Analysis
This method was developed by psychiatrist Eric Berne. In this method trainees are taught
to analyze their interaction with others in terms of the ego states being expressed. TA will
help managers to correct their behavior while transacting with their colleagues in
organization. TA describe that an individual’s personality consists of three ego states.
The parent: Ego state of authority, superiority, controlling
The adult: Ego state of objectivity and rationality
The child : Ego state of desire and emotions
The parent and child ego state feel and react directly, the adult state thinks before
acting. The ideal interaction is of adult ego state.
Objectives of Management Development
Main objective of management development is to prepare managers for overall responsibilities.
More specially, management development has following objectives:
1. To increase managerial capabilities:
One of the primary objectives of management development is to increase managerial capability.
Managers require accomplishing varieties of activities. They need to supervise, motivate,
communicating, leading, planning, organizing, etc. Such functions demand special skills,
knowledge and capabilities. Management development programs aim to increase capabilities
essential to conduct such managerial functions.
2. To enhance managerial potential:
Management development also aims to increase the future potentiality of each managerial
employees. Each managerial employee may have specific skills and qualities. Such qualities
should be awarded with special responsibilities. Management development prepares different
plans
and
programs
to
prepare
them.
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Unit 5 Training and Development
3. To provide personal growth:
In order to increase the tenure of managerial employees at the organization, their personal
growth should be ensured. Future of each manager should be planned in the organization.
Through management development programs, the opportunity for personal growth is secured.
4. To improve decision making:
Managerial decisions are vital for the success and failure of organization. The quality of
decisions of managers determines the milestone of the organization. Customer satisfaction,
relation with venders, relation with employees, productivity and profitability of organization all
are dependent on decision of managers. So, decision making quality of employees should be
improved. Management development aims to improve decision making capability of employees.
5. To aim succession planning:
Managerial positions at the future can be generated by market expansion, resignation, expiry, etc.
For managerial job, it is risky to fulfill through external source. So, organization prepare
succession plans to prepare future managers. In this course of action, management development
plays
vital
role.
Also read: Performance Appraisal in HRM: Use or Importance, Methods
6. To cope with change:
Managing change is one of the most important objective of management development. To
analyze the changing environment, managers required special skills, knowledge and capability.
Management development prepares managerial employees for this purpose. So, by preparing
managers for analyzing the changing environment, it aims to adapt change.
7. To bring change in behavior:
Behavior of managerial employees is the most important in motivating employees. Their attitude
and behavior towards employees, job and organization affects on behavior of subordinates.
Therefore, by implementing educational programs, management development aims to change the
behavior of employees.
8. To foster team work:
Managerial success depends upon the team work. Management development develops mutual
understanding, feelings of cooperation and mutual trust. This foster team work which leads for
the organizational success.
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Unit 5 Training and Development
9. To increase job satisfaction:
Managerial employees get the opportunity of personal growth. They enhance their skills,
knowledge and capability by which their efficiency will be increased. Their effort will have the
constructive support for organizational success. All these facts help to increase managerial job
satisfaction.
Career planning and development
Effective HRM encompasses career planning, career development and succession
planning. An organization without career planning and career development initiatives is
likely to encounter the highest rate of erosion, causing much harm to their plans and
programmes.
The term career planning and career developments are used interchangeably in most of
the organizations. Career is a sequence of attitudes and behaviours associated with the
series of job and work related activities over a person’s lifetime.
Yet in another way, it may be defined as a succession of related jobs, arranged in
hierarchical order, through which a person moves in an organization. As the literal
definition of career focuses on an individually perceived sequence, to be more accurate,
career may be either individual-centred or organizational-centred.
Therefore, career is often defined separately as external career and internal career.
External career refers to the objective categories used by society and organizations to
describe the progression of steps through a given occupation, while internal career refers
to the set of steps or stages which make up the individual’s own concept of career
progression within an occupation. For such two different approaches, in organizational
context, career can be identified as an integrated step of vertical lateral movement in an
occupation of an individual over his employment span.
Career – Defined as the “occupational positions a person has had over many years” (Gary
Dessler).
Career Planning
The careful process through which someone becomes aware of personal skills, interest,
knowledge, motivation and other characteristics, and establishes action plan to attain
specific goals.(Gary Dessler)
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Unit 5 Training and Development
Career planning encourages individuals to explore and gather information, which enables
them to syn-thesize, gain competencies, make decisions, set goals and take action.
Career planning is not possible without a clear understanding of career goals and career
path.
Career goals- They are desired future positions an employee strives to reach as a part of
career.
Career path – It is a sequential pattern of jobs during career. It can cover a period of 30
years or more till retirement of employee. It takes a long term perspective of the job.
Career Development
Career development is the life long series of activities that contribute to a person’s career
exploration, establishment, success and fulfillment.(Gary Desseler)
Career development is the series of activities or the on-going lifelong process of
developing one’s career. It usually refers to managing one’s career in an intraorganizational or inter-organizational scenario. It involves training on new skills, moving
to higher job responsibilities, making a career change within the same organization,
moving to a different organization or starting one’s own business.
Objectives of Career planning
 The overall objective of career planning is to predetermine the desire career paths
of an employee to achieve career goals. It provides continuity, order and meaning
to the life of employee.
 Meet internal staffing requirements
 Reduce employee turnover
 Develop employees potential;
 Motivates employees
Mentoring and Counseling
Mentoring
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Unit 5 Training and Development
Mentoring is the Employee training system under which a senior or more experienced
person (the mentor) is assigned to act as an advisor, counselor, or guide to a junior or
trainee. The mentor is responsible for providing support to, and feedback on, the person
in his or her charge.Mentoring is the process of sharing your knowledge and experience
with an employee.
It is a program in which middle level managers and senior level managers help less
experienced employees, by giving them career and personal development advices.
The person who gives advice is the mentor and receive advice is mentee. A mentor is
usually more experienced and qualified who can pass on knowledge, experience and
ideas focus on career and personal development of mentee.
Mentoring can be informal or formal:
 Informal mentoring takes place freely between senior and more junior employees.
 Formal mentoring occurs through a program with an established structure.
A mentor can be an employee’s manager or not:
Management typically involves at least some employee mentoring. In acting as a mentor
for an employee who reports to you, think of yourself as an advocate for that employee—
not for any particular behavior, but for the person—for their personal growth and career.
Discipline can then become a matter of helping an employee out of a difficult situation.
In formal mentoring programs, the mentor is typically not the employee’s manager, nor
even in the employee’s chain of command
Mentoring is an ongoing relationship that is developed between a senior and junior
employee. Mentoring provides guidance and clear understanding of how the organization
goes to achieve its vision and mission to the junior employee.
Counseling
Emotions are part of the nature of human beings and emotional upsets are part of their
life. It is sometimes more disastrous to defeat emotions. The emotional problems affect
the interest of the employees himself and the organization in which he is working for.
The problems may reduce their productivity, morale and increase absenteeism. Hence the
managers should take steps to maintain a reasonable emotional balance of their
employees and channelize their emotions on the constructive lines. The instrument with
which the managers can achieve such balance is called counseling.
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Unit 5 Training and Development
Counseling is a method of understanding and helping people who have technical,
personal and emotional or adjustment problems that usually has emotional contents that
an employee with the objective of reducing it so that performance is maintained at
adequate level or even improved upon.
Features of Counseling
Counseling is interviewing the person being counseled and helping to solve his problems
through human approach of sharing and guidance.
Counseling is sitting down in private setting for an open discussion with an employee.
Sometimes it is to pay a sincere compliment, sometimes it is to solve a problem that is
hurting productivity/effectiveness, sometimes it is because an employee violated your
discipline line and you need to talk about improvement in his behavior.
It is communicating one to one, in private. It is interviewing- it's a two way dialogue and
not one way lecturing or advising.
It is encouraging the other person to talk about himself so that the problem and it's
reasons emerge clearly and solutions can be worked out.
In an organization, counseling can be done by the team leader, supervisor or manager or
one can seek the expertise and assistance of an in-house or external professional
counselor.
Situations that Call for Counseling in an Organization
Given below is a partial indicative list of situations that call for counseling from a
superior to his subordinate:
When an employee violates your standards.
When an employee is consistently late or absent.
When an employee’s productivity is down.
When one employee behaves in such a way that productivity of others is negatively
affected.
When two employees have a conflict that is becoming public and it is affecting the work.
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Unit 5 Training and Development
When you want to compliment an individual.
When you want to delegate a new task.
Training and Development practices in Nepalese Organization
In Nepalese organization, we find three types of employees- new employees, old
employees and managerial personnel. Training is necessary for all the above employees.
We do not have large and well-established in house and outdoor training institutes. So far
we know, the country lacks a comprehensive/micro-level survey on training needs of
Nepalese organization. Companies in Nepal have generally remained unconcerned about
the need of training assessment, conduction and evaluation program. Most of the training
programs attended by employees are donor driven.
Training efforts and institute in Nepal
Development of training system in Nepal is still in preliminary stage. Training has not
found a niche/role in the HR function. Majority of organization lack training budget.
Considering the importance of training a few well established public enterprises like
Agricultural Development Bank, NTC, NEA, Nepal Bank Limited have set their own
training units. Major institutes in Nepal at present are;













Nepal Administrative Staff College (NASA)
Revenue Administration Training Center
Local Development Training Academy
Judiciary Administration Training Center
Bankers Training Center
Nepal productivity and Economic Development Center
Center for Economic Development and Administration, TU
Management Association of Nepal
Agriculture Training Centers
Hotel Management and Tourism Training Academy
Health Training Centers
Nepal Airlines Training Center
Communication Training center
Cooperative Training Center
Situation of Vocational Guidance/ Career Counseling and HR plan
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Unit 5 Training and Development
Not all the problems that arise in the organization can be solved through training
program. Many of the training and development needs and problem related in that area in
Nepal are generated by the:
 Organization faculty HR policy
 Lack of clear cut job analysis system
 Lack of fair recruitment and selection process, transfer policy and technology
adaptation
 Lack of career counseling and vocational guidance.
Every young applicant searching for job requires advice and counseling to what kind of
work will be most suitable for them.
Training and Development methods used in Nepalese Organization
Training and development programs in Nepalese organization are conducted as a fashion
by copying other organizations. This is just wastage of time and money. Following are
the different types of program which are very common in Nepalese organization;





Induction training
Job training
Crafts training (skill)
Training for promotion and
Refresher training.
Scenario of T&D practices in Nepalese organizations
1. HR plan and T&D related issues
Discussion presented in the above paragraphs clearly shows that most of our
organizations lack proper HR plan, job analysis, training policy and vocational
guidance programs. These are the major factors that have generated a long list of
issues in training and development program.
 Many organization lacks separate HR department, formal and long range
HR plan.
 Most of the employees are untrained or under trained
 T&D is nobody’s responsibility
 They lack comprehensive/complete training.
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Unit 5 Training and Development
2. Role and status of HR department
The role of HR department in T&D program is not clear and sometimes hopeless.
They mostly play the traditional role of personnel function. They lack separate
training budget. The roles of unions are disappointing and non-professional. The
status of HR department are not strong.
3. Training need assessment
Except few sectors like bank, finance, multinational companies, most of the
organization lack proper system of training need need assessment. Government,
semi-government organization, NGO, INGO heavily depends upon the training
agencies and foreign quotas.
4. Training methods and techniques
From the research, it is found that most of the respondents were not found satisfied
with the training methods and techniques that were used to train employees in the
past. Therefore, the best way to solve the problem is to arrange in-house training
for which they can hire trainers from the open market.
 Our organization use a mix of on the job and off the job training methods as
per the requirements,
 For complex and long term T&D programs our organization largely depend
upon the foreign country.
 Due to various reason most of organization use traditional method of
training like lecture, conference, field visit, job rotation and so on.
5. T&D budget
Aggregate annual expenditure in T&D is regarded as the mirror of organization
commitment to invest in its human assets. T&D budget spent by our organization
are not only inadequate but also hopeless.
6. Effectiveness or outcome of T&D
Most of the research work conducted in this issue indicates that there is poor link
between training received and jobs given. Employees are not placed on the jobs
for which they are trained.
25
Unit 5 Training and Development
This situation is further deteriorated by frequent job rotation and transfers adopted
by organization. Training sessions are considered as relaxation from regular
duties.
26
Unit 6
Performance Appraisal
Concept of Performance Appraisal
Performance means to do something or to produce something.
Appraisal means to decide the value of work done. It is the judgement of the
characteristics, traits and performance of others.
What is a 'Performance Appraisal'
An annual review of an employee’s overall contributions to the company by his/her
manager. Performance appraisals, also called annual reviews, evaluate an employee’s
skills, achievements and growth, or lack thereof. Companies use performance appraisals
to give employees big-picture feedback on their work and to justify pay increases and
bonuses, as well as termination decisions.
The performance appraisal is the process of assessing employee performance by way of
comparing present performance with already established standards which have been
already communicated to employees, subsequently providing feedback to employees
about their performance level for the purpose of improving their performance as needed
by the organization.
As said above the very purpose of performance uprising is to know performance of
employee, subsequently to decide whether training is needed to particular employee or to
give promotion with additional pay hike. performance appraisal is the tool for
determining whether employee is to be promoted, demoted or sacked ( remove ) in case
of very poor performance and no scope for improvement.
Every corporate sector uses performance appraisal as a tool for knowing about the
employee and take decisions about particular employee. for the purpose of performance
appraisal of employees there are different methods under the category of traditional
methods and modern methods which are discussed in following chapters.
Dale S. Beach, "Performance appraisal is systematic evaluation of the individual with
respect to his or her performance on the job and his or her potential for development".
Randall S. Schuler, "Performance appraisal is a formal, structured system of measuring
and evaluating an employees job, related behaviour and outcomes to discover how and
why the employee is presently perfuming on the job and how the employee can perform
more effectively in the future so that the employee, organization, and society all benefit."
1
Unit 6
Performance Appraisal
Uses of Performance Appraisal
The various uses of performance appraisal are given below:Evaluation
Companies can use performance appraisals to evaluate employees on how they
performed against the goals and objectives set by their managers. Appraisals are also
useful for setting expectations for the upcoming year. Small-business owners can use
appraisals to recognize the extraordinary efforts of certain employees, while pointing out
how they can improve. Companies may also evaluate employees on their teamwork
skills.
Development
Evaluation is about identifying performance gaps, while development is about filling in
those gaps. Businesses can use performance appraisals as the basis for career
development plans, including the identification of skills and training that employees
would need to progress up the ranks in a corporate hierarchy.
Recognition
Companies may also use performance appraisals to recognize outstanding employees. For
example, employees with a consistent rating in the top five percent of their peer group
might be placed in a management mentoring program and receive pay raises. However,
consistently under-performing employees may be demoted or terminated. Whenever
possible, companies should provide written appraisals because formal records are
important for preparing future appraisals and in legal procedures.
Employee Feedback
Appraisals can also be useful for gathering employee feedback. For example, companies
sometimes ask employees if they are satisfied with their career development plans and
what additional training they might need. This kind of feedback helps human resources
and senior management with career planning.
Promotion
Performance appraisal serves as a basis for promotion of employees by communicating
required skills, efficiency and potentials of the employees. It is the common interest of
employees to get promoted into position where they can utilize their abilities effectively.
It is mismanagement to promote the employees into such position where they cannot
2
Unit 6
Performance Appraisal
perform effectively. Hence, performance appraisal provides relevant information on
promotion decision.
Transfers
Transfer decision is concerned with the transformation of employees from one work unit
to another. It is conducted when the employees are not performing will in the
organization. Performance appraisal provides reliable and relevant information for
transfer decisions.
Remuneration
Performance appraisal serves as a basis for administrating the remuneration of
employees. It means, by assessing the current and past performance of an individual a
decision regarding reward and punishment will be made.
Supervision
Performance appraisal provides a guide line for determining where and what kind of
supervision is required. It also helps in personnel research.
Methods of Performance Appraisal
Broadly all methods of appraisals can be divided into two different categories.
 Past Oriented Methods
 Future Oriented Methods
Past Oriented Methods
1. Rating Scales: Rating scales consists of several numerical scales representing job
related performance criterions such as dependability, initiative, output, attendance,
attitude etc. Each scales ranges from excellent to poor. The total numerical scores are
computed and final conclusions are derived. Advantages – Adaptability, easy to use,
low cost, every type of job can be evaluated, large number of employees covered, no
formal training required. Disadvantages – Rater’s biases
2. Alternative ranking
The evaluator will list the employees in an rank order from highest to the lowest on the
basis of overall performance. Only one employee can be the best or the worst. If the
3
Unit 6
Performance Appraisal
evaluator is required to appraise 20 individuals this method best will be placed at no 1
and worst one is placed at no 20 in the ranking list.
2. Checklist: Under this method, checklist of statements of characters of employee in the
form of Yes or No based questions is prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation. Advantages – economy, ease of
administration, limited training required, standardization. Disadvantages – Raters biases,
use of improper weighs by HR, does not allow rater to give relative ratings
3. Forced Choice Method: The series of statements arranged in the blocks of two or more
are given and the rater indicates which statement is true or false. The rater is forced to
make a choice. HR department does actual assessment. Advantages – Absence of
personal biases because of forced choice. Disadvantages – Statements may be wrongly
framed.
4. Forced Distribution Method: here employees are gathered around a high point on a
rating scale. Rater is compelled to distribute the employees on all points on the scale. It is
assumed that the performance is conformed to normal distribution. Advantages –
Eliminates Disadvantages – Assumption of normal distribution, unrealistic, errors of
central tendency.
5. Critical Incidents Method: The approach is focused on certain critical behaviors of
employee that makes all the difference in the performance. Supervisors as and when they
occur record such incidents. Advantages – Evaluations are based on actual job behaviors,
ratings are supported by descriptions, feedback is easy, reduces recency biases, chances
of subordinate improvement are high. Disadvantages – Negative incidents can be
prioritized, forgetting incidents, overly close supervision; feedback may be too much and
may appear to be punishment.
6. Behaviorally Anchored Rating Scales: statements of effective and ineffective
behaviors determine the points. They are said to be behaviorally anchored. The rater is
supposed to say, which behavior describes the employee performance. Advantages –
helps overcome rating errors. Disadvantages – Suffers from distortions inherent in most
rating techniques.
7. Field Review Method: This is an appraisal done by someone outside employees’ own
department usually from corporate or HR department. Advantages – Useful for
managerial level promotions, when comparable information is needed, Disadvantages –
Outsider is generally not familiar with employees work environment, Observation of
actual behaviors not possible.
4
Unit 6
Performance Appraisal
8. Performance Tests & Observations: This is based on the test of knowledge or skills.
The tests may be written or an actual presentation of skills. Tests must be reliable and
validated to be useful. Advantage – Tests may be apt to measure potential more than
actual performance. Disadvantages – Tests may suffer if costs of test development or
administration are high.
9. Confidential Records: Mostly used by government departments, however its
application in industry is not ruled out. Here the report is given in the form of Annual
Confidentiality Report (ACR) and may record ratings with respect to following items;
attendance, self-expression, team work, leadership, initiative, technical ability, reasoning
ability, originality and resourcefulness etc. The system is highly secretive and
confidential. Feedback is given only in case of an adverse entry. Disadvantage is that it is
highly subjective and ratings can be manipulated because the evaluations are linked to
HR actions like promotions etc.
10. Essay Method: In this method the rater writes down the employee description in
detail within a number of broad categories like, overall impression of performance,
promote ability of employee, existing capabilities and qualifications of performing jobs,
strengths and weaknesses and training needs of the employee. Advantage – It is
extremely useful in filing information gaps about the employees that often occur in a
better-structured checklist. Disadvantages – It its highly dependent upon the writing skills
of rater and most of them are not good writers. They may get confused success depends
on the memory power of raters.
11. Cost Accounting Method: Here performance is evaluated from the monetary returns
yields to his or her organization. Cost to keep employee, and benefit the organization
derives is ascertained. Hence it is more dependent upon cost and benefit analysis.
12. Comparative Evaluation Method (Ranking & Paired Comparisons): These are
collection of different methods that compare performance with that of other co-workers.
The usual techniques used may be ranking methods and paired comparison method.
Ranking Methods: Superior ranks his worker based on merit, from best to worst.
However how best and why best are not elaborated in this method. It is easy to administer
and explanation.
5
Unit 6
Performance Appraisal
Paired Comparison Methods: In this method each employee is rated with another
employee in the form of pairs. The number of comparisons may be calculated with the
help of a formula as under.
N x (N-1) / 2
Future Oriented Methods
1. Management By Objectives: It means management by objectives and the performance
is rated against the achievement of objectives stated by the management. MBO process
goes as under.




Establish goals and desired outcomes for each subordinate
Setting performance standards
Comparison of actual goals with goals attained by the employee
Establish new goals and new strategies for goals not achieved in previous year.
Advantage – It is more useful for managerial positions.
Disadvantages – Not applicable to all jobs, allocation of merit pay may result in setting
short-term goals rather than important and long-term goals etc.
2. Psychological Appraisals: These appraisals are more directed to assess employees
potential for future performance rather than the past one. It is done in the form of indepth interviews, psychological tests, and discussion with supervisors and review of other
evaluations. It is more focused on employees emotional, intellectual, and motivational
and other personal characteristics affecting his performance. This approach is slow and
costly and may be useful for bright young members who may have considerable
potential. However quality of these appraisals largely depend upon the skills of
psychologists who perform the evaluation.
3. Assessment Centers: This technique was first developed in USA and UK in 1943. An
assessment center is a central location where managers may come together to have their
participation in job related exercises evaluated by trained observers. It is more focused on
observation of behaviors across a series of select exercises or work samples. Assesses are
requested to participate in in-basket exercises, work groups, computer simulations, role
6
Unit 6
Performance Appraisal
playing and other similar activities which require same attributes for successful
performance in actual job.
Disadvantages – Costs of employees traveling and lodging, psychologists, ratings
strongly influenced by assessee’s inter-personal skills. Solid performers may feel
suffocated in simulated situations. Those who are not selected for this also may get
affected.
Advantages – well-conducted assessment center can achieve better forecasts of future
performance and progress than other methods of appraisals. Also reliability, content
validity and predictive ability are said to be high in assessment centers. The tests also
make sure that the wrong people are not hired or promoted. Finally it clearly defines the
criteria for selection and promotion.
4. 360-Degree Feedback: It is a technique which is systematic collection of performance
data on an individual group, derived from a number of stakeholders like immediate
supervisors, team members, customers, peers and self. In fact anyone who has useful
information on how an employee does a job may be one of the appraisers. This technique
is highly useful in terms of broader perspective, greater self-development and multisource feedback is useful.
360-degree appraisals are useful to measure inter-personal skills, customer satisfaction
and team building skills. However on the negative side, receiving feedback from multiple
sources can be unapproachable, threatening etc. Multiple raters may be less adept at
providing balanced and objective feedback.
Appraisal Interview/evaluation interview
An appraisal interview is a formal discussion process between an employee and his/her
manager. It is one of the best ways for an employee to increase productivity and change
work habits. In appraisal interview, the employer and the employee discuss the
performances of the individual and the key areas of improvement and how the employee
can grow through a feedback mechanism.
Appraisal interview is face to face discussion and review of performance appraisal with
the employee. It provides performance feedback to employee. It is conducted after the
performance appraisal formally conducted.
Objectives
7
Unit 6
Performance Appraisal
1. To improve and change the behavior of employees whose performance does not meet
the standards.
2. Maintain behavior of employees whose performance meets the standards
3. Reinforce/support the behavior of employees whose performance is above the
standards.
Methods of evaluation interview
1. Tell and sell method- It is an attempt of the supervisor to convince the employee to
accept the judgment. The employee is also asked to set the goals for improving
performance.
2. Tell and listen method- The supervisor tell the employee about the strength and
weakness, a chance is given to employee to respond to the evaluation
3. Problem solving method- the supervisor manage an active and open dialogue with
employee about the performance problems and try to pursued it mutually.
4. Mixed approach method- It is the combined of tell and sell with problem solving
method. The employee is told about performance and goals are set for improvement at
mutual point.
8
Unit 6
Performance Appraisal
MBO approach to appraisal
The concept of Management by Objectives’(MBO) was first given by Peter Drucker in
1954.Management by objectives (MBO) is a tool for performance management and
strategic planning. The MBO technique requires the supervisor and the employee to
develop and agree on realistic, achievable and measurable objectives; to determine how
those objectives will be met; and to agree on how results will be measured. In a true
MBO plan, strategic objectives are established for the organization and are then broken
into divisional and departmental objectives, and finally into individual objectives. This
cascading of objectives throughout the organization is intended to put the full weight of
all employees’ efforts behind achieving the same organizational goals and to help each
employee understand his or her contribution to the organization’s success. MBO is well
suited for non-routine positions, such as executives, managers and project leaders, in
which individuals have a higher degree of control and influence on an outcome that is
measurable. This type of review offers a relatively high level of objectivity.
MBO encourages employees to actively participate in goal setting and is said to increase
motivation by relating organizational goals to individual goals. The process works best
when there is open knowledge of the MBO encourages employees to actively participate
in goal setting and is said to increase motivation by relating organizational goals to
individual goals. The process works best when there is open knowledge of the
organization’s strategic objectives and a high degree of commitment to the process from
all levels of the organization. When managed well, MBO may offer a relatively high level
of objectivity.
9
Unit 6
Performance Appraisal
Advantages
1. It is a based on participative management principle.
2. It assists planning and control. Motivate employee towards goal achievement.
3. Periodic evaluation and feed back
Disadvantages
1 It may not be effective when managers do not trust employees
2. It may have drawbacks due to immeasurable objective
3. It is time consuming in developing and administering
10
Unit 6
Performance Appraisal
Problems in Performance Appraisal
1. Bias
We all have our biases, whether they come out as a general positive or negative feeling
about something or someone. Remind yourself that you’re trying to be as objective as
possible about reviewing an employee’s performance, and your biases can bull the
process into a highly subjective direction. They can also make your appraisal efforts
inconsistent across different employees, and being consistent is a key feature of a process
that is fair. Just because you may not like a person doesn’t mean the evaluation of their
performance must reflect that. Keep it as objective as possible.
2. Stereotyping (labeling)
This one may feel similar towards bias, but it’s a little bit different. It’s not so much
about liking or disliking someone as just assuming a person fits a certain mold, whether
that stems from the person’s race, gender, ethnic background, religious beliefs, political
views or a host of other characteristics. When you start applying labels based on a
person’s membership in some kind of group, you’re engaging in stereotyping. Like
biases, stereotypes can also be either positive or negative. What you have to do is look
past the labels and really get to know the person whose performance you’re evaluating.
3. The Halo (or Horns) Effect.
The halo effect is introduced when an overall impression of an individual is judged on the
basis of a single trait. A high rating on one trait leads automatically to high rating on all
other trait. Also, a very high rating may be given to protect an employee for whom there
may be personal sympathy.
Sometimes you’ll have a generally positive or negative overall feel about an employee,
and it’s all too easy to let that general feeling color your appraisal of specific
performance aspects. If all the specific performance aspects are coming out with similar
appraisals, stop and check yourself for the halo or horns effect. Any given employee will
probably display areas of weakness as well as areas of strength, so keep that in mind to
avoid coloring the entire appraisal by an overall impression.
4. Leniency, Central and Severity Tendencies.
These three mistakes are all about distribution errors. Some appraisers are kind and score
everyone as above average, while others might score everyone as average, while still
others might tend to score everyone as below average. More than likely, there should be a
11
Unit 6
Performance Appraisal
range of evaluations where there are some standouts, some poor performers, and some
average performers as well. If all your appraisals are coming out the same, make sure
you’re giving the full range of performance measures adequate consideration.
5. Similarity Error.
Birds of a feather do tend to flock together, which is the root of this mistake. Some
managers will automatically give higher scores to employees that are more like
themselves and lower scores to those who are different. Keep in mind that you’re
evaluating their performance and results, not how much they are or are not like you.
Objectivity and respect for diversity are the ways to keep from making this appraisal
error.
6. The Recency Effect.
Another common error is when appraisers focus in only on a short period of time right
before an appraisal takes place. If performance appraisals happen once or twice a year at
your organization, it’s important to remember that you’re evaluating performance over
the entire period, not just a small part of it. Otherwise, you’re not being fair to someone
who has done a great job but only recently begun to falter, or vice versa. Avoiding this
error entails having a good process in place to capture performance information
throughout the period being reviewed.
7. Compare/Contrast Error.
It’s also important to keep in mind that you’re not comparing or contrasting employees
against each other. You should be appraising each individual’s performance against a set
of standards and criteria. Contrast error can bring down scores of good performers
because if they are compared against high performers, the contrast makes them seem less
than average when in fact they are good if they fulfill the specific criteria of what is good.
8. Attribution Error.
This is a tricky one because it involves allowing your subjective opinion on what might
have caused certain behaviors or outcomes, and allowing that to cloud your judgment.
Never assume you understand why an employee behaved a certain way, and don’t let that
into your appraisal process. Stick to the objective criteria that have been laid out and how
the employee’s performance compares to them.
12
Unit 7
Performance Appraisal
Concept of Performance Appraisal
Performance means to do something or to produce something.
Appraisal means to decide the value of work done. It is the judgement of the
characteristics, traits and performance of others.
What is a 'Performance Appraisal'
An annual review of an employee’s overall contributions to the company by his/her
manager. Performance appraisals, also called annual reviews, evaluate an employee’s
skills, achievements and growth, or lack thereof. Companies use performance appraisals
to give employees big-picture feedback on their work and to justify pay increases and
bonuses, as well as termination decisions.
The performance appraisal is the process of assessing employee performance by way of
comparing present performance with already established standards which have been
already communicated to employees, subsequently providing feedback to employees
about their performance level for the purpose of improving their performance as needed
by the organization.
As said above the very purpose of performance uprising is to know performance of
employee, subsequently to decide whether training is needed to particular employee or to
give promotion with additional pay hike. performance appraisal is the tool for
determining whether employee is to be promoted, demoted or sacked ( remove ) in case
of very poor performance and no scope for improvement.
Every corporate sector uses performance appraisal as a tool for knowing about the
employee and take decisions about particular employee. for the purpose of performance
appraisal of employees there are different methods under the category of traditional
methods and modern methods which are discussed in following chapters.
Dale S. Beach, "Performance appraisal is systematic evaluation of the individual with
respect to his or her performance on the job and his or her potential for development".
Randall S. Schuler, "Performance appraisal is a formal, structured system of measuring
and evaluating an employees job, related behaviour and outcomes to discover how and
why the employee is presently perfuming on the job and how the employee can perform
more effectively in the future so that the employee, organization, and society all benefit."
1
Unit 7
Performance Appraisal
Uses of Performance Appraisal
The various uses of performance appraisal are given below:Evaluation
Companies can use performance appraisals to evaluate employees on how they
performed against the goals and objectives set by their managers. Appraisals are also
useful for setting expectations for the upcoming year. Small-business owners can use
appraisals to recognize the extraordinary efforts of certain employees, while pointing out
how they can improve. Companies may also evaluate employees on their teamwork
skills.
Development
Evaluation is about identifying performance gaps, while development is about filling in
those gaps. Businesses can use performance appraisals as the basis for career
development plans, including the identification of skills and training that employees
would need to progress up the ranks in a corporate hierarchy.
Recognition
Companies may also use performance appraisals to recognize outstanding employees. For
example, employees with a consistent rating in the top five percent of their peer group
might be placed in a management mentoring program and receive pay raises. However,
consistently under-performing employees may be demoted or terminated. Whenever
possible, companies should provide written appraisals because formal records are
important for preparing future appraisals and in legal procedures.
Employee Feedback
Appraisals can also be useful for gathering employee feedback. For example, companies
sometimes ask employees if they are satisfied with their career development plans and
what additional training they might need. This kind of feedback helps human resources
and senior management with career planning.
Promotion
Performance appraisal serves as a basis for promotion of employees by communicating
required skills, efficiency and potentials of the employees. It is the common interest of
employees to get promoted into position where they can utilize their abilities effectively.
It is mismanagement to promote the employees into such position where they cannot
2
Unit 7
Performance Appraisal
perform effectively. Hence, performance appraisal provides relevant information on
promotion decision.
Transfers
Transfer decision is concerned with the transformation of employees from one work unit
to another. It is conducted when the employees are not performing will in the
organization. Performance appraisal provides reliable and relevant information for
transfer decisions.
Remuneration
Performance appraisal serves as a basis for administrating the remuneration of
employees. It means, by assessing the current and past performance of an individual a
decision regarding reward and punishment will be made.
Supervision
Performance appraisal provides a guide line for determining where and what kind of
supervision is required. It also helps in personnel research.
Methods of Performance Appraisal
Broadly all methods of appraisals can be divided into two different categories.
 Past Oriented Methods
 Future Oriented Methods
Past Oriented Methods
1. Rating Scales: Rating scales consists of several numerical scales representing job
related performance criterions such as dependability, initiative, output, attendance,
attitude etc. Each scales ranges from excellent to poor. The total numerical scores are
computed and final conclusions are derived. Advantages – Adaptability, easy to use,
low cost, every type of job can be evaluated, large number of employees covered, no
formal training required. Disadvantages – Rater’s biases
2. Alternative ranking
The evaluator will list the employees in an rank order from highest to the lowest on the
basis of overall performance. Only one employee can be the best or the worst. If the
3
Unit 7
Performance Appraisal
evaluator is required to appraise 20 individuals this method best will be placed at no 1
and worst one is placed at no 20 in the ranking list.
2. Checklist: Under this method, checklist of statements of characters of employee in the
form of Yes or No based questions is prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation. Advantages – economy, ease of
administration, limited training required, standardization. Disadvantages – Raters biases,
use of improper weighs by HR, does not allow rater to give relative ratings
3. Forced Choice Method: The series of statements arranged in the blocks of two or more
are given and the rater indicates which statement is true or false. The rater is forced to
make a choice. HR department does actual assessment. Advantages – Absence of
personal biases because of forced choice. Disadvantages – Statements may be wrongly
framed.
4. Forced Distribution Method: here employees are gathered around a high point on a
rating scale. Rater is compelled to distribute the employees on all points on the scale. It is
assumed that the performance is conformed to normal distribution. Advantages –
Eliminates Disadvantages – Assumption of normal distribution, unrealistic, errors of
central tendency.
5. Critical Incidents Method: The approach is focused on certain critical behaviors of
employee that makes all the difference in the performance. Supervisors as and when they
occur record such incidents. Advantages – Evaluations are based on actual job behaviors,
ratings are supported by descriptions, feedback is easy, reduces recency biases, chances
of subordinate improvement are high. Disadvantages – Negative incidents can be
prioritized, forgetting incidents, overly close supervision; feedback may be too much and
may appear to be punishment.
6. Behaviorally Anchored Rating Scales: statements of effective and ineffective
behaviors determine the points. They are said to be behaviorally anchored. The rater is
supposed to say, which behavior describes the employee performance. Advantages –
helps overcome rating errors. Disadvantages – Suffers from distortions inherent in most
rating techniques.
7. Field Review Method: This is an appraisal done by someone outside employees’ own
department usually from corporate or HR department. Advantages – Useful for
managerial level promotions, when comparable information is needed, Disadvantages –
Outsider is generally not familiar with employees work environment, Observation of
actual behaviors not possible.
4
Unit 7
Performance Appraisal
8. Performance Tests & Observations: This is based on the test of knowledge or skills.
The tests may be written or an actual presentation of skills. Tests must be reliable and
validated to be useful. Advantage – Tests may be apt to measure potential more than
actual performance. Disadvantages – Tests may suffer if costs of test development or
administration are high.
9. Confidential Records: Mostly used by government departments, however its
application in industry is not ruled out. Here the report is given in the form of Annual
Confidentiality Report (ACR) and may record ratings with respect to following items;
attendance, self-expression, team work, leadership, initiative, technical ability, reasoning
ability, originality and resourcefulness etc. The system is highly secretive and
confidential. Feedback is given only in case of an adverse entry. Disadvantage is that it is
highly subjective and ratings can be manipulated because the evaluations are linked to
HR actions like promotions etc.
10. Essay Method: In this method the rater writes down the employee description in
detail within a number of broad categories like, overall impression of performance,
promote ability of employee, existing capabilities and qualifications of performing jobs,
strengths and weaknesses and training needs of the employee. Advantage – It is
extremely useful in filing information gaps about the employees that often occur in a
better-structured checklist. Disadvantages – It its highly dependent upon the writing skills
of rater and most of them are not good writers. They may get confused success depends
on the memory power of raters.
11. Cost Accounting Method: Here performance is evaluated from the monetary returns
yields to his or her organization. Cost to keep employee, and benefit the organization
derives is ascertained. Hence it is more dependent upon cost and benefit analysis.
12. Comparative Evaluation Method (Ranking & Paired Comparisons): These are
collection of different methods that compare performance with that of other co-workers.
The usual techniques used may be ranking methods and paired comparison method.
Ranking Methods: Superior ranks his worker based on merit, from best to worst.
However how best and why best are not elaborated in this method. It is easy to administer
and explanation.
5
Unit 7
Performance Appraisal
Paired Comparison Methods: In this method each employee is rated with another
employee in the form of pairs. The number of comparisons may be calculated with the
help of a formula as under.
N x (N-1) / 2
Future Oriented Methods
1. Management By Objectives: It means management by objectives and the performance
is rated against the achievement of objectives stated by the management. MBO process
goes as under.




Establish goals and desired outcomes for each subordinate
Setting performance standards
Comparison of actual goals with goals attained by the employee
Establish new goals and new strategies for goals not achieved in previous year.
Advantage – It is more useful for managerial positions.
Disadvantages – Not applicable to all jobs, allocation of merit pay may result in setting
short-term goals rather than important and long-term goals etc.
2. Psychological Appraisals: These appraisals are more directed to assess employees
potential for future performance rather than the past one. It is done in the form of indepth interviews, psychological tests, and discussion with supervisors and review of other
evaluations. It is more focused on employees emotional, intellectual, and motivational
and other personal characteristics affecting his performance. This approach is slow and
costly and may be useful for bright young members who may have considerable
potential. However quality of these appraisals largely depend upon the skills of
psychologists who perform the evaluation.
3. Assessment Centers: This technique was first developed in USA and UK in 1943. An
assessment center is a central location where managers may come together to have their
participation in job related exercises evaluated by trained observers. It is more focused on
observation of behaviors across a series of select exercises or work samples. Assesses are
requested to participate in in-basket exercises, work groups, computer simulations, role
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playing and other similar activities which require same attributes for successful
performance in actual job.
Disadvantages – Costs of employees traveling and lodging, psychologists, ratings
strongly influenced by assessee’s inter-personal skills. Solid performers may feel
suffocated in simulated situations. Those who are not selected for this also may get
affected.
Advantages – well-conducted assessment center can achieve better forecasts of future
performance and progress than other methods of appraisals. Also reliability, content
validity and predictive ability are said to be high in assessment centers. The tests also
make sure that the wrong people are not hired or promoted. Finally it clearly defines the
criteria for selection and promotion.
4. 360-Degree Feedback: It is a technique which is systematic collection of performance
data on an individual group, derived from a number of stakeholders like immediate
supervisors, team members, customers, peers and self. In fact anyone who has useful
information on how an employee does a job may be one of the appraisers. This technique
is highly useful in terms of broader perspective, greater self-development and multisource feedback is useful.
360-degree appraisals are useful to measure inter-personal skills, customer satisfaction
and team building skills. However on the negative side, receiving feedback from multiple
sources can be unapproachable, threatening etc. Multiple raters may be less adept at
providing balanced and objective feedback.
Appraisal Interview/evaluation interview
An appraisal interview is a formal discussion process between an employee and his/her
manager. It is one of the best ways for an employee to increase productivity and change
work habits. In appraisal interview, the employer and the employee discuss the
performances of the individual and the key areas of improvement and how the employee
can grow through a feedback mechanism.
Appraisal interview is face to face discussion and review of performance appraisal with
the employee. It provides performance feedback to employee. It is conducted after the
performance appraisal formally conducted.
Objectives
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1. To improve and change the behavior of employees whose performance does not meet
the standards.
2. Maintain behavior of employees whose performance meets the standards
3. Reinforce/support the behavior of employees whose performance is above the
standards.
Methods of evaluation interview
1. Tell and sell method- It is an attempt of the supervisor to convince the employee to
accept the judgment. The employee is also asked to set the goals for improving
performance.
2. Tell and listen method- The supervisor tell the employee about the strength and
weakness, a chance is given to employee to respond to the evaluation
3. Problem solving method- the supervisor manage an active and open dialogue with
employee about the performance problems and try to pursued it mutually.
4. Mixed approach method- It is the combined of tell and sell with problem solving
method. The employee is told about performance and goals are set for improvement at
mutual point.
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MBO approach to appraisal
The concept of Management by Objectives’(MBO) was first given by Peter Drucker in
1954.Management by objectives (MBO) is a tool for performance management and
strategic planning. The MBO technique requires the supervisor and the employee to
develop and agree on realistic, achievable and measurable objectives; to determine how
those objectives will be met; and to agree on how results will be measured. In a true
MBO plan, strategic objectives are established for the organization and are then broken
into divisional and departmental objectives, and finally into individual objectives. This
cascading of objectives throughout the organization is intended to put the full weight of
all employees’ efforts behind achieving the same organizational goals and to help each
employee understand his or her contribution to the organization’s success. MBO is well
suited for non-routine positions, such as executives, managers and project leaders, in
which individuals have a higher degree of control and influence on an outcome that is
measurable. This type of review offers a relatively high level of objectivity.
MBO encourages employees to actively participate in goal setting and is said to increase
motivation by relating organizational goals to individual goals. The process works best
when there is open knowledge of the MBO encourages employees to actively participate
in goal setting and is said to increase motivation by relating organizational goals to
individual goals. The process works best when there is open knowledge of the
organization’s strategic objectives and a high degree of commitment to the process from
all levels of the organization. When managed well, MBO may offer a relatively high level
of objectivity.
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Advantages
1. It is a based on participative management principle.
2. It assists planning and control. Motivate employee towards goal achievement.
3. Periodic evaluation and feed back
Disadvantages
1 It may not be effective when managers do not trust employees
2. It may have drawbacks due to immeasurable objective
3. It is time consuming in developing and administering
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Problems in Performance Appraisal
1. Bias
We all have our biases, whether they come out as a general positive or negative feeling
about something or someone. Remind yourself that you’re trying to be as objective as
possible about reviewing an employee’s performance, and your biases can bull the
process into a highly subjective direction. They can also make your appraisal efforts
inconsistent across different employees, and being consistent is a key feature of a process
that is fair. Just because you may not like a person doesn’t mean the evaluation of their
performance must reflect that. Keep it as objective as possible.
2. Stereotyping (labeling)
This one may feel similar towards bias, but it’s a little bit different. It’s not so much
about liking or disliking someone as just assuming a person fits a certain mold, whether
that stems from the person’s race, gender, ethnic background, religious beliefs, political
views or a host of other characteristics. When you start applying labels based on a
person’s membership in some kind of group, you’re engaging in stereotyping. Like
biases, stereotypes can also be either positive or negative. What you have to do is look
past the labels and really get to know the person whose performance you’re evaluating.
3. The Halo (or Horns) Effect.
The halo effect is introduced when an overall impression of an individual is judged on the
basis of a single trait. A high rating on one trait leads automatically to high rating on all
other trait. Also, a very high rating may be given to protect an employee for whom there
may be personal sympathy.
Sometimes you’ll have a generally positive or negative overall feel about an employee,
and it’s all too easy to let that general feeling color your appraisal of specific
performance aspects. If all the specific performance aspects are coming out with similar
appraisals, stop and check yourself for the halo or horns effect. Any given employee will
probably display areas of weakness as well as areas of strength, so keep that in mind to
avoid coloring the entire appraisal by an overall impression.
4. Leniency, Central and Severity Tendencies.
These three mistakes are all about distribution errors. Some appraisers are kind and score
everyone as above average, while others might score everyone as average, while still
others might tend to score everyone as below average. More than likely, there should be a
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range of evaluations where there are some standouts, some poor performers, and some
average performers as well. If all your appraisals are coming out the same, make sure
you’re giving the full range of performance measures adequate consideration.
5. Similarity Error.
Birds of a feather do tend to flock together, which is the root of this mistake. Some
managers will automatically give higher scores to employees that are more like
themselves and lower scores to those who are different. Keep in mind that you’re
evaluating their performance and results, not how much they are or are not like you.
Objectivity and respect for diversity are the ways to keep from making this appraisal
error.
6. The Recency Effect.
Another common error is when appraisers focus in only on a short period of time right
before an appraisal takes place. If performance appraisals happen once or twice a year at
your organization, it’s important to remember that you’re evaluating performance over
the entire period, not just a small part of it. Otherwise, you’re not being fair to someone
who has done a great job but only recently begun to falter, or vice versa. Avoiding this
error entails having a good process in place to capture performance information
throughout the period being reviewed.
7. Compare/Contrast Error.
It’s also important to keep in mind that you’re not comparing or contrasting employees
against each other. You should be appraising each individual’s performance against a set
of standards and criteria. Contrast error can bring down scores of good performers
because if they are compared against high performers, the contrast makes them seem less
than average when in fact they are good if they fulfill the specific criteria of what is good.
8. Attribution Error.
This is a tricky one because it involves allowing your subjective opinion on what might
have caused certain behaviors or outcomes, and allowing that to cloud your judgment.
Never assume you understand why an employee behaved a certain way, and don’t let that
into your appraisal process. Stick to the objective criteria that have been laid out and how
the employee’s performance compares to them.
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Concept of Reward Management
Reward management is creating implementing and controlling reward system that help
maintain and improve organizational performance by attracting, retaining and motivating
quality employees. Reward management consists of analyzing employee remuneration,
compensation and all of the other benefits for the employees. Reward management aims
to create and efficiently operate a reward structure for an organization. Reward structure
usually consists of pay policy and practices, salary and payroll administration, total
reward, minimum wage, executive pay and team reward.
Reward management is the process of formulating and implementing of strategies and
policies that aim to reward people fairly, equitably and constantly in accordance with
their value to the organization.(A. Murlis)
Reward can be anything that attracts a worker’s attention and stimulates him to work. In
the words of Burack and Smith, “An incentive scheme is a plan or program to motivate
individual or group performance. An incentive program is most frequently built on
monetary rewards but may also include a verity of non-monitory reward or prizes.
Reward management is essential in designing, implementing and maintaining pay
systems which help to improve organizational performance. To do this, the system has to
provide for competitive and equitable pay levels and structures. It should ensure that the
rewards are linked to contribution, performance and potential. Reward may also include
promotion, desirable work assignment.
Rewards consists of a package of :
Pay- Wages and salaries
Benefits- pay holiday, vacation leave, pension, gratuity, insurance etc.
Services- housing, food, transportation, loans, children's educational expenses, cultural
activities etc.
Job related rewards- promotion, more responsibilities, job autonomy, opportunity for
growth, participation on decisions.
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Types of Reward Management
There are a number of ways to classify rewards. However, the important ones are
discussed below:1. Intrinsic versus extrinsic rewards:
The satisfactions one gets from the job itself are its intrinsic rewards. These
satisfactions are self-initiated rewards, such as having pride in one’s work, having a
feeling of accomplishment, or being part of a team. The techniques of flex time, job
enrichment, shorter work weeks, and job rotation, can offer intrinsic rewards by
providing interesting and challenging jobs and allowing the employee greater freedom.
On the other hand extrinsic rewards include money, promotions, and fringe benefits.
Their common thread is that extrinsic rewards are external to the job and come from an
outside source, mainly, management.
Thus, if an employee experiences feelings of achievement or personal growth from a job,
we would label such rewards as intrinsic. If the employee receives a salary increase or a
write up in the company magazine, we would label those rewards as extrinsic.
While we have stressed the role of extrinsic rewards in motivation, we should point out
that intrinsic and extrinsic rewards may be closely linked.
2. Financial versus Non-financial rewards:
Rewards may or may not enhance the employees financial well-being. If they do they
can do this directly through wages, bonuses, profit sharing, and the like, or indirectly
through supportive benefits such as pension plans, paid vacations, paid sick leaves and
purchase discounts.
Non-financial rewards are potentially at the disposal of the organization. They do not
increase the employee’s financial position, instead of making the employees life better
off the job, non-financial rewards emphasize making life on the job more attractive. It
increases the status or image of the employee.
The old saying “one man’s food is another man’s poison” applies to the entire subject of
rewards, but specifically to the area of non-financial rewards. What one employee views
as something I’ve always wanted, another finds superfluous.
Some workers are very status conscious. An attractive office, a carpeted floor, a large
executive desk, or a private bathroom may be just the office furnishing that stimulates an
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employee towered top impressive job title, their own business cards, their own secretary,
or a well located parking space with their name clearly painted underneath the
“Reserved” sign.
Qualities of Effective rewards
An effective reward management system is essential for high satisfaction and motivation
of employees at work. It is concerned with the process of employee attraction, motivation
and retention. Therefore, an effective reward system should possess the following
qualities.
1. Importance
An utmost care should be given towards the management of reward system because the
employees should feel that reward is important for them. No reward is equally important
for all employees. Hence, they should be rewarded with what they feel is important for
them.
2. Equitable
Equitable is concerned with the fairness in distributing rewards to the employees. It
means rewards should be perceived as equitable and fair. The fairness can be among the
organization's employees in one hand and fairness relative to what people get for the
similar job in another organization, on the other.
3. Visibility
Rewards, to be effective, must be visible and seen by the employees. Because visible
rewards helps to motivate employees for higher level of performance. They help to
satisfy individual's esteem and recognition needs.
4. Flexibility
Rewards, to be effective, should be flexible to vary with changes in the performance.
This means rewards should vary as per the changes in actual performance of the
employees.
5. Low Cost
An effective reward should be less costly because rewards are not free gifts they have
some costs. Hence, the costs and benefits of reward should be taken into account in order
to maintain organizational effectiveness.
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6. Use of Team Rewards for Interdependent Job
An interdependent job holds the philosophy that the tasks are interrelated with each other,
and is performed step-by-step. The overall completion of such jobs is not the credit of
single individual, rather it is due to the combined effort of all team members involving in
the entire process of the job. Hence, in such situation it is advisable to use team rewards
such as gain sharing and bonuses.
Types of Employee Benefits
An employee benefits package includes all the benefits provided by an employer. There
are some types of employee benefits that are mandated by law, including minimum wage,
overtime, leave under the Family Medical Leave Act, unemployment, and workers
compensation and disability.
What Are Employee Benefits?
Employee benefits are non-salary compensation that can vary from company to company.
Benefits are indirect and non-cash payments within a compensation package. They are
provided by organizations in addition to salary to create a competitive package for the
potential employee.
There are two types of employee benefits:
1.
Direct benefits
Direct benefits are directly related to the performance of the employees. It means benefits
are given to the employees on the basis of their performance in an organization.
It includes pay of wages (hourly/daily normally for blue collar worker who work by hand
directly) or salary (weekly/monthly normally paid to white collar worker who work in
office). Incentives include extra payments provided for higher/extra performance.
Examples include sales piece wage, bonuses, commissions, profit-sharing, stock options.
2.
Indirect benefits
Usually known as “fringe benefits”, they are supplements to wages received by
employees. Examples include:
Payment for time not worked
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Paid holidays – Saturday, festivals,
Bereavement pay: paid holidays on death of family members
Holiday pay : more payment if you work in holidays)
Paid vacation- for working allocated number of days in a year
Sick leaves
Old age and retirement benefits (Provident fund, pension, gratuity)
Medical benefits (provided to employees and their family)
Insurance benefits (provided to employees and in some case to their family as well)
Services
These are rights related with quality of work life of the employees such as car, housing
loans, reimbursement of the children’s education costs, discounts on company products,
recreation etc.
Practices of Pay determination in Nepal
Pay practices in Nepal differ according to the nature of the organization, management,
legal provision and union pressures which are discussed below:1. Government organization
They strictly follow the rules and regulations developed by government. Monthly
salary and incentives are lowest in the SAARC region. But benefits, services and
perquisites (bonus) are higher as compared to the private organization in Nepal.
2. Private sector organization
Except few private sector organization, the general pay level is not satisfactory.
They just try to pay as minimum as possible though many of these deserve to pay
higher than that. They try to satisfy legal compliance only. Many private
organization ever pay lower than the minimum wages. Services and perquisites are
just for the name sake.
3. Private banks and financial institutions
With reference to pay practices in Nepal, these organizations are the most
attractive ones to job applicants and existing employees. But they too are not much
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attractive in terms of long-term benefits and to the junior and lower class
employees. They offer good salary/wages, incentives, bonus, services and
perquisites.
4. Non-government organization
The pay system of NGOs is not much satisfactory in Nepal, except few
organization and few positions. Monthly salary/wages level either similar to
government organization or little bit higher. But they do not offer long term
benefits and services.
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Unit 9 Employee Grievances and Disciplines
Concept of Employee Grievances
A grievance is any dissatisfaction or feeling of injustice having connection with one’s
employment situation which is brought to the attention of management. Speaking
broadly, a grievance is any dissatisfaction that adversely affects organizational relations
and productivity.
Employee grievance refers to the dissatisfaction of an employee with what he expects
from the company and its management. A company or employer is expected to provide
an employee with a safe working environment, realistic job preview, adequate
compensation, respect etc. However, employee grievance is caused when there is a gap
between what the employee expects and what he receives from the employer.
Employee grievances may or may not be justified. However, they need to be tackled
adequately because they not only lower the motivation and performance of the employee
but also affects the work environment. Employee grievances if left unchecked can lead to
large disputes within the company. Any company must have a proper channel for
employee grievance redressal.
Employee Grievance should be handled in a proper and well defined manner. If an
employee reports a matter related to a policy or something he or she is not happy with or
wants to complaint against, a framework defined in policy should be used.
“A grievance is any dissatisfaction or feeling of injustice in connection with ones
employment situation that is brought to the attention of management”. ( Dale S. Beach )
Features of Grievance:
1. A grievance refers to any form of discontent or dissatisfaction with any aspect of
the organization.
2. The dissatisfaction must arise out of employment and not due to personal or
family problems.
3. The discontent can arise out of real or imaginary reasons. When employees feel
that injustice has been done to them, they have a grievance. The reason for such a
feeling may be valid or invalid, valid or irrational, justifiable or ridiculous.
4. The discontent may be voiced or unvoiced, but it must find expression in some
form. Initially, the employee may complain orally or in writing. If this is not
looked into promptly, the employee feels a sense of lack of justice. Now, the
discontent grows and takes the shape of a grievance.
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5. Broadly speaking, thus, a grievance is noticeable to be perceived as nonfulfillment of one’s expec-tations from the organization.
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Handling grievances
There are two procedures of grievances handling which are discussed below:
1. Open door policy
Under this procedure the employees are free to meet the top executive of the
organization and get grievances redressed.
Some organization adopt the counseling procedure for handling grievances. They
try to understand employees psychology and make him/her realize where the
problem lies. The problem is solved mutually in a satisfying way.
This approach promotes up wards communication from employees to
management. Higher mgmt. becomes aware of employees grievances . Prompt
handling of grievances is possible . It takes little time and cost. It is suitable in
small organization where managers are familiar with work situation.
2. Step-ladder procedure
Under this procedure, the aggrieved/hurt employee has to proceed step by step in
getting his grievance heard and redressed.
The various steps are discussed below:
1. Verbal communication : the aggrieved dissatisfied employee verbally explains his
grievance to his immediate supervisor or in a conference specially arranged for the
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2.
3.
4.
5.
purpose. The employee seeks the satisfaction from his supervisor. The grievance
can be handled if the supervisor has been proper trained for the purpose.
Written complains: The second step begins when the grievance is not settled by
the supervisor. In this case, it is sent to a higher level manager with a note in
which are mentioned the time, place and nature of the action to the employee. The
higher level manager is generally the chief manager or superintendent or industrial
relation officer.
Approaching the grievance committee: the grievance is to be submitted to the
grievance committee because the decision of the supervisor and the higher level
manager have not solve the problem. The committee considers records and may
suggest a possible solution. Committee may include some fellow employees or
combination of union and management.
Approaching company HR officer: if the decision made by the committee is not
accepted by the grievant, he may approach the management or the corporate
executive.
Arbitration : the final step is taken when grievance is referred to the arbitrator
who is acceptable to the employee as well as management. They may agree
beforehand that the arbitrator’s award will be final and binding to both parties.
Concept of Employee Discipline
Discipline is the regulation and variety of human activities to produce a controlled
performance. The real purpose of discipline is quite simple. It is to encourage employees
to confirm to established standards of job performance and to behave sensibly and safely
at work. Discipline is essential to all organized group action.
The acceptable behavior to be followed by an employee in and outside the organization is
known as employee discipline. In general sense, following the direction of upper level
supervisor or manager, making effort for the organizational goal attainment and playing
the positive role in making healthy, competitive and dedicated environment in the
organization is considered as maintaining the discipline. Discipline reflects the inside and
outside organizational behavior of an employee.
Employee's behavior directly affects the productivity and effectiveness of organization.
In this way employees discipline plays an important role in making the organization as a
successful or failure organization.
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Discipline is understood in different ways in different situations. It is also understood as
an attitude of mind, result of environment and custom, necessity driven change, legal
assumption and ethical base. It motivates an employee to accept and accredit the
tradition, value and assumption of an organization. Discipline is a positive thought
towards the organizational environment and work life. Discipline can save organization
from possible negative effect that may arise due to strike, low productivity, internal and
external environment.
Discipline is a procedure that corrects or punishes a subordinate because a rule of
procedure has been violated.· —Dessler,2001
Discipline should be viewed as a condition within an organization whereby Employees
know what is expected of them in terms of the organization’s rules, Standards and
policies and what the consequences are of infractions.· —Rue & Byars, 1996
According to Richard D. Calhoon’, “Discipline may be considered as a force that
prompts individuals or groups to observe the rules, regulations and procedures which are
deemed to be necessary for the effective functioning of an organization”.
Causes of Discipline (Problems Relating to Discipline)
Following are the main causes of Discipline
1. Problems regarding attendance:
Attendance related problems are common problems in an organization. Under this
problem, following are the major ones:
Absenteeism: Employees remain absent in the organization without prior information or
permission of management or concern person.
Late present at work: To be present late than the reporting time without any genuine
reason and prior information.
Early leaving job: To leave the duty earlier than the ascertained time.
Slow at work: To be lazy and careless and not completing the job in time intentionally.
Misuse of leave: Taking unnecessary leave and taking leave in the day when it is
important to be present.
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Others: To sign on the absent day, doing attendance on others name or make other absent,
to leave own workplace and go on others place to disturb etc. are also considered as the
attendance related problems.
It requires processional promptness to address the attendance related problems by
checking attendance regularly and taking absenteeism record by supervisor, using card or
sophisticated electronic machine instead of traditional attendance register and help to
solve the attendance related problem. Such techniques are being common in modern
organizations like multinational companies, bank and financial institutions, insurance
companies etc. This problem can be solved for long term motivating the employees
positively.
2. Problems regarding job behavior:
Employees behavior directly affects on organizational activities. Their behavior affects
the organizational productivity and profitability. But sometime, employee's behaviors are
unexpected, unsocial and unacceptable. Such unexpected and unsocial behaviors are also
regarded as disciplinary problems. Following behaviors of employees are regarded as
disciplinary problems:
Disobedience of order: Disobeying the order of seniors.
Carelessness: Not being sensitive about the job responsibility and misusing the resources.
Neglecting safety devices: Not using the safety measures at workplace like not wearing
helmet, gloves, gown, boot, sun glass etc., is also regarded as disciplinary problem.
Misconduct: To misbehave with senior or junior, consumers, suppliers or any other
outsiders.
Not reporting: Not reporting about the accidents or unusual activities.
Misuse of resources: Using purposelessly equipment and resources.
To manage problems regarding job related behavior, organization's act, policy, rules and
actions must be enacted strongly. In order to solve such problems, appropriate reward and
punishment system must be managed.
3. Dishonesty related problem:
Honesty is the best ornament of the employees. An employee being unable to
demonstrate honesty is an unethical activity. These activities adversely affect
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Unit 9 Employee Grievances and Disciplines
performance as well as image of the organization. Following problems are regarded as
dishonesty related problem:
Stealing: To steal goods, equipment and raw materials from organization.
Avoid work: Not to bear responsibility and rejecting job.
Information falsification: To give wrong information for fulfilling assigned interest.
Fraud: To deceive organization for monetary benefit.
Information leakage: To provide confidential information and technology to the rival
organization.
Others: To provide employees for strike, to blame others unnecessarily, to misuse
organizations property, backbiting about the organization etc.
Being careful is very necessary to reduce the problems related to dishonesty.
Environment that enhances mutual trust and cooperation must be created. Making strict
rules related to physical assets accounting system and other different aspects can help
reducing this type of problem. Reward and punishment system must be enacted to make
it more effective.
4. Problem related to outside activities:
Though employees perform their job inside the organization, their activities outside the
organization also affect the organization. Such activities are more sensitive as they
directly affect on organizational image. So, the employee's activities outside the
organization are also kept within the scope of employee discipline. Following activities
are considered as problems related to outside activities discipline:
Unauthorized strikes: Attaining or organizing unauthorized activities like strike, damage
against the country, government, and society.
Spy: Spying for competing organization, leaking confidential and sensitive information
of the organization etc.
Misusing resources and assets of society.
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The address such problems, brief study of social background of employees must be done
at the time of recruitment and selection, social orientation programs have to be
conducted, and information of all employees has to be collected.
Process of Managing discipline
http://hrmpractice.com/disciplinary-procedure/
Discipline implies obedience to rules and standard of acceptable behavior. Indiscipline
requires disciplinary actions. Disciplinary action should correct undesirable behavior. It
should be progressive. Although there is no specific procedure for managing discipline,
however, following steps should be taken into consideration:1. Oral warning
As soon as a supervisor perceives a worker’s performance problem, he or she should
issue an oral warning. The supervisor should ask the worker whether there are any longterm problems or skill deficiencies that need to be corrected. Have the manager keep
detailed notes or prepare a memo to file about the conversation, in case further action is
necessary.
2. Written warning
It is the first formal disciplinary action. The employee is informed in writing. Employee
must be informed of rule that has been violated. Employee should be given chance to
provide explanation including the plan for correction. A copy of written warning is kept
in employees file .The HRD is provided a copy of the written warning.
3. Suspension
The employee is prohibited from performing the tasks assigned to him. It is a short lay
off without pay. It generally follows written warning. The duration of suspension can be
one day or several weeks or month until the disciplinary case is finalized by the
management.
4. Pay Cuts
The employee is either denied annual increment or his pay is cut. It has demoralizing
effect on the employee.
5. Demotion
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Unit 9 Employee Grievances and Disciplines
This is reduction in job grade accompanied by reduction in pay. It is used where
management wants to avoid dismissal of the problem employee. It is of a permanent
nature.
6. Dismissal
It is ultimate disciplinary action for the most serious offences. The employee is
dismissed from the job. When all other actions fail, dismissal is the action.
Grievances handling practices in Nepalese organizations
Grievance is real or imagined cause for complaint to acquire something. Employee’s
grievances are a matter of important concern for human resource management.
Grievances are employee’s perception of unfair treatment on the job when is revealed in
feelings of discount or dissatisfaction. It is employee’s expectations and managerial
practices relating to conditions of employment. When employee or union complaint is
brought to the notice of management, it becomes grievance.
 Trends in nature of grievances has also been changing lately. Today, employees
are more concerned about their rights. Also, change in technology has been
identified as a new source of grievance. For instance, efficiency brought by the use
of technologies, many jobs has been reduced. This creates a challenge for the
organization to train the employees or create new jobs for them. With regard to
this, lack of trainings has been seen as one of the most crucial factor inducing
employee grievances.
 In Nepalese industries, it is seen that most of the grievance are handled directly by
labor unions but it would be better if the employees, union and the management
solve it through the HR Department and then only move to the Unions if the
problems or grievances are not solved. This issue can be solved by developing a
flow chart that defines the process for handling grievance in an organization.
 The Government of Nepal has also provided various policies and provisions for
handling grievances. Labor law and Labor Court in Nepal has various provisions
for the welfare and well-being of the employees. However, it will always be a
good idea to solve the problem within an organization rather than involving the
labor court or any other external agents.
 Open Door Policy (Informal Approach): The employees are invited to walk- in at
any time and express their grievances to even higher levels of management. This
process are being in office incharge’s room, manager’s room, Deputy Director’s
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room, and Managing Directors chamber. The problem is solved in a mutually way.
Sometimes this approach is implemented even in mass meeting.
 Legal Compliance (Labor Contract Approach): Sometimes management has to
take a legalistic view in handling grievance. It follows the contract with unions
and employees. The process, time and some other things may also specify in the
contract.
Nepal Telecom has to follow the following guidelines for grievance handling:1. Give the grievant a good and full hearing.
2. Handle and investigate each grievance thoroughly and promptly.
3. Fully examine prior grievance records of the grievant.
4. If possible visit the work area or field office or things happened place.
5. Treat to union proper representatives as our equal in discussions.
6. Sometimes it has to be individually hold.
7. Be objective in making settlements of the grievance.
8. Follow-up on the impact of settlement of grievance.
9. Always try to settle grievance. Dealing with employees grievance is not easy task.
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Concept of Labour relations
Traditionally, labor relation was considered as a relationship between employees and
employers. But these days, this has become a burning issue consisting of the relationship
between workers, employers and social environment (government) of the organization. It
is a dynamic socio-economic process that makes a social dialogue possible among
employees, employers and the organizational social environment. The primary focus of it
should be on grievance handling, industrial dispute, and interpretation labor laws, etc. It
provides a context in which organizational rules and regulations are framed so that
organizational roles assigned to members are performed.
It refers to all means of relationship between management and employees, unions and
management, unions and employees and between the employees themselves.
Labor relation ate the study of the workers and their trade unions, management,
employees association and the state institutions concerned with the regulations of
employment. ( H. A. Clegg)
Labor relations are the complex of interrelations among workers, managers and
government ( J.T. Dunlop)
Objectives of labour relations
The objectives of labour relations are discussed below: Uninterrupted production: The most important benefit of industrial relations is
that this ensures continuity of production. This means, continuous employment for
all from manager to workers. The resources are fully utilized, resulting in the
maximum possible production.
 Reduction in Industrial Disputes: Good industrial relations reduce the industrial
disputes. Disputes are reflections of the failure of basic human urges or
motivations to secure adequate satisfaction or expression which are fully cured by
good industrial relations. Strikes, lockouts, go-slow tactics, and grievances are
some of the reflections of industrial unrest which do not spring up in an
atmosphere of industrial peace. It helps promoting peace and co-operation.

High morale: Good industrial relations improve the morale of the employees.
Employees work with great passion with the feeling in mind that the interest of
employer and employees is one and the same, i.e. to increase production. Every
worker feels that he is a co-owner of the gains of industry.
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 Industrial democracy: The process of joint consultation covers the way for
industrial democracy. This motivates workers to give their best to the organization
and share the fruits of progress jointly with the management.
 Reduced Wastage: Good industrial relations are maintained on the basis of
cooperation and recognition of each other. It will help increase production.
Wastages of man, material and machines are reduced to the minimum and thus
national interest is protected.
 Change management: Harmonious labour relations reduce resistance to change.
They are important in promoting innovation and change management.
 Enhance the economic status of workers by ensuring proper salary, wages and
benefits for their employment. IR aims to ensure equitable and fair treatment of
labour in HRM functions related to recruitment, selection, compensation, reward
and promotion, etc.
Actors of Labour Relations
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Some of the major parties to industrial relation are as follows: 1. Employees 2. Employer
3. Government.
1. Employees:
Among the participants to IR, employees are considered as the most affected one by the
IR system prevalent in an organization. Employees with their various characteristics such
as their commitment to the work and the organization, their educational and social
background, their attitudes towards the management and so on affect and are affected by
the system of IR.
Generally, employees perceive IR as a means to improve their conditions of employment,
voice against any grievances, exchange views and ideas with management and participate
in organizational decision making processes.
Employees participate in the IR system through their associations, or say, trade unions.
Past evidences indicate that trade unions play a crucial role in making an IR system as
effective or otherwise. Trade unions with their strong political and emotional overtones
are looked upon as a tool to take concessions from employers.
With regard to their role in relation to IR, they work to achieve the following
objectives:
1. To redress the bargaining advantage on one-on-one basis, i.e., individual worker by
way of joint or collective actions.
2. To secure better terms and conditions of employment for their members.
3. To obtain improved status for the worker in his/her work.
4. To increase democratic mode of decision making at various levels.
2. Employer:
Employer is the second party to IR. In the corporate organization, employer is
represented by the management. Hence, management becomes responsible to various
stakeholders in an organization including employees.
According to Cole, management has to see IR in terms of the following employeeemployer relationship:
1. Creating and sustaining employee motivation.
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2. Ensuring commitment from employees.
3. Achieving higher levels of efficiency.
4. Negotiating terms and conditions of employment with the representatives of
employees.
5. Sharing decision making with employees.
Like employees’ associations, employers also form their associations at the local,
industry and national levels.
The major objectives of the employers’ associations in relation to IR are to:
1. Represent employers in collective bargaining at the national or industry level.
2. Develop machinery for avoiding disputes.
3. Provide feedback on employee relations.
4. Advise member organizations on the issues relating to IR.
3. Government:
The role of government in the matter of industrial relations has been changing along with
changes in industrial environment and management perspective. The IR matters were left
to be settled by the employees and employers. But, towards the end of the 19 century, the
attitude of the government in the changed conditions of conflicts between employees and
employers, changed to some kind of intervention in the matter of IR.
Government is the large bureaucratic organization. It tries to regulate the relationships of
employers and employees and keep an eye on both groups to keep each in line. This
relationship is enforced and maintained through labour courts, industrial tribunals, wage
boards, investigation and enquiry committees. They lay down principles, norms, rules
and regulations and give awards.
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Reason for joining trade unions
1. Economic reasons
For higher wages, increased benefits, shorter hours and improved working
conditions are certainly important reasons for joining a union.
2. Job security
One basic human need is security. In the work environment, employees find
themselves in a dependent relationship on their bosses and on what they probably
view as impersonal organizations. They want to know that their jobs will exist in
the future and that they will be protected against unfair or arbitrary treatment.
Anyway, with the growth of technological change, however, workers feel
especially vulnerable to job loss. For example, several thousand robots are now
being utilized in manufacturing, with continued growth expected for the use of
robotics in the near future.
3. Social reasons
Men and women are social beings. Therefore, workers have a strong need to be
accepted by their peers, to belong, and to go along with others. Some unions offer
attractive benefits, such as insurance. Peer pressure may also cause workers to join
unions.
4. Recognition
Some employees have found that the union structure offers them an opportunity to
gain recognition not available to them in the business organization. For example, a
worker with little education may serve on a shop committee or even be elected as
a position of influence, such as steward or officer in the local.
5. Participation
Many workers have explained their union membership in terms of their desire to
obtain a voice in decisions that affect them in their working environment. To other
workers who feel lost in our large, complex, industrial society, the union is viewed
as a last hope that they will be able to influence their destiny.
6. Greater Bargaining Power
The individual employee possesses very little bargaining power as compared to
that of his employer. If he is not satisfied with the wage and other conditions of
employment, he can leave the job. It is not practicable to continually resign from
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one job after another when he is dissatisfied. This imposes a great financial and
emotional burden upon the worker. The better course for him is to join a union that
can take concerted action against the employer. The threat or actuality of a strike
by a union is a powerful tool that often causes the employer to accept the demands
of the workers for better conditions of employment.
7. Minimize Discrimination
The decisions regarding pay, work, transfer, promotion, etc. are highly subjective
in nature. The personal relationships existing between the supervisor and each of
his subordinates may influence the management. Thus, there are chances of
favoritisms and discriminations. A trade union can compel the management to
formulate personnel policies that press for equality of treatment to the workers. All
the labor decisions of the management are under close scrutiny of the labor union.
This has the effect of minimizing favoritism and discrimination.
Concept of Trade unionism
Trade unions are associations of workers or organization formed together by labour,
workers or employees to achieve their demands for better conditions at their work
atmosphere. In the United States, trade unions go by the name labor unions. A labor
union, or trade union, is an organization of workers who have joined together to achieve
goals in areas such as wages and working conditions. The union negotiates contracts and
conditions with employers, keeping employee satisfaction high and protecting workers
from unsafe or unfair working conditions.
These unions exist to deal with problems faced by laborers, these problems maybe of any
nature such as those concerning the pay, unfair work rules, timings and so on. All the
workers working under one particular employer is represented by the worker's union. All
the communication that happens in between the employer and the workforce generally
takes place through the union. All of the above trade unions are also liable and
responsible for maintaining discipline and among the workers, core purpose is to see that
proper relations or being maintained in between management and workers and trade
union may take disciplinary action against the workers who ever misbehaves, disturbed
peace and harmony in the workplace and maintenance indiscipline.
Trade unions or labour unions are governed by the different law in different countries,
they should follow the procedure and mode of registration for formation of the trade
union according to the law of the country. Trade union formed in accordance with the law
of their country shall have the privileges given by the law of trade union. With privileges
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or rights of the trade union, it should perform certain duties with respect to workers. The
Primary purpose of a trade union is collective bargaining. In India trade unions can be
formed only the persons engaged in trade or business can form trade unions.
A union is an organization of workers, working collectively, seeking to promote and
protect its mutual interests through collective bargaining. ( DeCenzo and Robbins)
Function of Trade unionism
Some of the most important functions of the trade union are as follows: i. Increasing Cooperation and Well-being among Workers ii. Securing Facilities for Workers iii.
Establishing Contacts between the Workers and the Employers iv. Trade Unions working
for the Progress of the Employees v. Safeguarding the Interests of the Workers vi.
Provision of Labor Welfare.
i. Increasing Co-operation and Well-being among Workers:
The modern industry is complex and demands specialization in jobs. This results in
extreme division of labor, which leads to the growth of individualism and development of
impersonal and formal relationships. There is no common unifying bond among the
workers.
It is in this context that the trade unions come into the picture and they promote
friendliness and unity among the workers. Besides this, the trade unions also discuss the
problems, which are common to all the workers. It is a platform where workers come
together and know each other. The trade unions also provide some kind of entertainment
and relaxation to the workers.
ii. Securing Facilities for Workers:
Most of the industrialists are not very keen on providing the facilities and proper working
conditions to the workers. They are more interested in getting their work done to the
maximum extent. In such conditions, trade unions fight on behalf of the workers and see
that the facilities have been provided by the management.
iii. Establishing Contacts between the Workers and the Employers:
In present days, there are many industries, which have grown into giants. A single unit in
a particular industry may employ hundreds of employees. Many times a worker or
employee may not have a chance to see their managers. In this situation, the workers are
not able to express their grievances before their employers, and even the management
does not know the difficulties faced by the workers.
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The trade unions play an important role in bringing to the notice of the employers the
difficulties and grievances of the employees. They try to arrange face-to-face meetings
and thus try to establish contacts between the employees and the employers.
iv. Trade Unions working for the Progress of the Employees:
The trade unions try to improve the economic conditions of the workers by representing
their cases to the employers and try to get adequate bonus to the workers.
v. Safeguarding the Interests of the Workers:
Most of the industries try to exploit the workers to the maximum. They do not provide
any benefits such as increasing their wages, granting sick leaves, giving compensation in
case of accidents, etc. The workers are not made permanent even after many years of
service and in some cases they are removed from service summarily. The trade unions
provide security to the employees in such situations.
vi. Provision of Labor Welfare:
The economic conditions of the industrial workers are very poor. The standard of living
is very low. A majority of industrial workers are illiterate or semi-literate. It is the
responsibility of the trade unions to get them proper housing facilities and promote the
socio-economic welfare of the laborers. The trade unions also try to arrange educational
facilities for the children of the workers.
Types of Trade unions
Classification based on ideology
a. Revolutionary Unions: Revolutionary unions believe in destruction of existing
social/economic order and creation of a new one. They want shift in power and authority
and use of force – Left unions/communist model.
b. Reformist or Welfare Unions: They work for changes and reforms within existing
socio-political framework of society - European Model.
c. Uplift Unions: They advocate widespread reforms well beyond the area of working
condition i.e., change in taxation system, elimination of poverty etc.
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Unit 10 Labour Relation and Labour regulation in Nepal
Classification based on trade
a. Craft union: Many unions have memberships and jurisdictions (control/power)
based on the trades they represent. The most narrow in membership is the craft
union, which represents only members certified in a given craft or trade, such as pipe
fitting, carpentry, and clerical work. Although very common in the western world,
craft unions are not common in countries like India and Sri Lanka.
b. General union: At the other extreme in terms of the range of workers represented in
the general union, which has members drawn from all trades. Most unions in India
and Sri Lanka are in this category.
c. Blue collar vs. White collar unions: Another common classification of unions
based on trades or crafts is that between so called blue-collar workers and whitecollar workers. Unions representing workers employed on the production floor, or
outdoor trades such as in construction work, are called blue-collar unions. In
contrast, those employees in shops and offices and who are not in management
grades and perform clerical and allied functions are called white-collar workers.
d. Industrial union: In addition, trade unions may be categorized on the basis of the
industry in which they are employed. Examples of these are workers engaged in
agriculture of forestry: hence agricultural labour unions or forest worker unions.
Classification based on agreement
Another basis on which labour agreements are sometimes distinguished is on basis of the
type of agreement involved, based on the degree to which membership in the union is a
condition of employment. These are:
a. Closed Shop: Where management and union agree that the union would have sole
responsibility and authority for the recruitment of workers, it is called a Closed Shop
agreement. The worker joins the union to become an employee of the shop. The TaftHartley Act of 1947 bans closed shop agreements in the USA, although they still exist in
the construction and printing trades. Sometimes, the closed shop is also called the ‘Hiring
Hall.’
b. Union Shop: Where there is an agreement that all new recruits must join the union
within a fixed period after employment it is called a union shop. In the USA where some
states are declared to be ‘right-to-work’.
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Unit 10 Labour Relation and Labour regulation in Nepal
c. Preferential Shop: When a Union member is given preference in filling a vacancy,
such an agreement is called Preferential Shop.
d. Maintenance Shop: In this type of arrangement no compulsory membership in the
union before or after recruitment exists. However, if the employee chooses to become a
member after recruitment, his membership remains compulsory right throughout his
tenure of employment with that particular employer. This is called a maintenance of
membership shop or maintenance shop.
e. Agency Shop: In terms of the agreement between management and the union a non
union member has to pay the union a sum equivalent to a member’s subscription in order
to continue employment with the employer. This is called an agency shop.
f. Open Shop: Membership in a union is in no way compulsory or obligatory either
before or after recruitment. In such organizations, sometimes there is no union at all. This
is least desirable form for unions. This is referred to as an open shop.
Concept of Collective bargaining
In the work situation, an individual worker has to face many problems such as, low
wages, long hours of work, loss incentive etc. These problems of an individual or few
individuals cannot attract the attention of the employer because of their less bargaining
power. The growth of trade union increased the bargaining strength of workers and
enables them to bargain for their better conditions collectively.
Collective bargaining is a source of solving the problems of employees in the work
situation collectively. It provides a good climate for discussing the problems of workers
with their employers. The employees put their demands before the employers and the
employers also give certain concession to them. Thus it ensures that the management
cannot take unilateral decision concerning the work ignoring the workers. It also helps
the workers to achieve responsible wages, working conditions, working hours, fringe
benefits etc. It provides them a collective strength to bargain with employer. It also
provides the employers some control over the employees.
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The process of collective bargaining is bipartite (two part) in nature, i.e. the negotiations
are between the employers and employees without a third party’s intervention. Thus
collective bargaining serves to bridge the emotional and physiological gulf between the
workers and employers though direct discussions.
Richardson says, “Collective bargaining takes place when a number of work people
enter into negotiation as a bargaining unit with an employer or a group of employers with
the object of reaching agreement on conditions of the employment of the work people”.
Collective bargaining involves discussions and negotiations between two groups as to the
terms and conditions of employment. It is called ‘collective’ because both the employer
and the employee act as a group rather than as individuals. It is known as ‘bargaining’
because the method of reaching an agreement involves proposals and counter proposals,
offers and counter offers and other negotiations.
Process of Collective bargaining
1. Preparation: At the very first step, both the representatives of each party prepares
the negotiations to be carried out during the meeting. Each member should be well
versed with the issues to be raised at the meeting and should have adequate
knowledge of the labor laws.
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The management should be well prepared with the proposals of change required in the
employment terms and be ready with the statistical figures to justify its stand.
On the other hand, the union must gather adequate information regarding the financial
position of the business along with its ability to pay and prepare a detailed report on the
issues and the desires of the workers.
2. Discuss: Here, both the parties decide the ground rules that will guide the
negotiations and the prime negotiator is from the management team who will lead
the discussion. Also, the issues for which the meeting is held are identified at this
stage.
The issues could be related to the wages, supplementary economic benefits (pension
plans, health insurance, paid holidays, etc.), Institutional issues(rights and
duties), Administrative issues (health and safety, technological changes, job security,
working conditions).
3. Propose: At this stage, the chief negotiator begins the conversation with an
opening statement and then both the parties put forth their initial demands. This
session can be called as a brainstorming, where each party gives their opinion that
leads to arguments and counter arguments.
4. Bargain: The negotiation begins at this stage, where each party tries to win over
the other. The negotiation can go for days until a final agreement is reached.
Sometimes, both the parties reach an friendly solution soon, but at times to settle
down the dispute the third party intervenes into the negotiation in the form of
arbitration or adjudication.
5. Settlement: This is the final stage of the collective bargaining process, where both
the parties agree on a common solution to the problem discussed so far. Hence, a
mutual agreement is formed between the employee and the employer which is to
be signed by each party to give the decision a universal acceptance.
Thus, to get the dispute settled the management must follow these steps systematically
and give equal chance to the workers to speak out their minds.
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Labour disputes
In general term, dispute is the disagreement or conflict between two persons or parties for
particular interest. Labor dispute is thus the disagreement between parties for particular
interest. It is disagreement or conflict between employees and employer i.e., employees
and management as well as employees and employees. Labor disputes are the result of
disagreement in rights and interest in the organization.
As there can be different objectives and output standards of organization and of
employees, they may have disagreement between the views, ideas and procedures in
executing the plans. If both the parties are rigid to their own interests, views and behaves,
disputes may arise.
Labor disputes normally can be seen in terms of interest and rights. This may be because
of the different perception, understanding and beliefs of managers and employees. Labor
disputes attract anxiety, strikes, lockout and industrial unrest. This becomes the reason
for decreasing organizational productivity and even the existence. Labor dispute is
considered as the weak industrial relation in the organization. Thus, labor dispute must be
settled at the very first stage.
Labor disputes are created because of controversy between employer and employees
regarding the terms and condition of employment, fringe benefits, working hour, tenure,
wage to be negotiated during collective bargaining, or the implementation of already
agreed upon terms. It is a gap regarding the terms and conditions of employment, fringe
benefits, working hour, tenure, wages being negotiated during collective bargaining
between an employer and its employees.
Labor dispute is thus, the situation of disagreements and conflicts in interest between
different persons and parties. This is the result of difference in understanding and views.
Disputes in the organization are common and unavoidable but the issue is that the degree
of disputes should not exceed the control limit of management. Management should thus,
initiate to settle the disputes at early time.
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Causes of Labour disputes
The main reason of labor dispute is the misunderstanding or disagreement between the
issues between parties or individuals. Some of the common causes of labor disputes are
discussed below:
1. Compensation:
The amount or value received by an employee for their labor is known as compensation.
This should be competitive and revised timely. The purchasing capacity of an employee
goes decreasing due to the inflation. Thus, the salary has to be increased time to time.
Same level of compensation has to be provided for the same level of performance.
Otherwise, there may be dissatisfaction among the employees and this may give rise to
labor dispute.
2. Working condition:
Poor working condition is another reason for the labor dispute. Drinking water, sufficient
light in the room, open space, clean and fresh air, comfortable furniture, modern
equipment, security, lunch break etc. are the factors of working condition. If the working
factors are not employee friendly, employees will be dissatisfied that may lead to the
labor dispute.
3. Facilities and incentives:
Facilities like parking, flexible working time, advance salary and incentive provision on
the basis of job performance like dearness allowance, bonus, profit sharing, etc. motivates
the employee for better performance. If the organization doesn't provide sufficient facility
and incentives employees will be dissatisfied and they may raise their voice. This may
also arises dispute between the management and employees.
4. Indiscipline:
Power struggle between the employees, power struggle between the manager, and power
struggle between different employees union etc. being indiscipline in the organization.
Similarly, if there is weak leadership, employees cannot be controlled and they behave in
their own way which creates in-disciplinary environment. This also may be the reason for
labor dispute.
5. Resistivity to change:
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Unit 10 Labour Relation and Labour regulation in Nepal
Organization has to accord or change with the changes in technology, market and goods
and service. This change brings change in the job responsibility of employees which
requires new skill, experience and qualification. Employees may not be positive towards
the change. Change imposed by the management may bring labor dispute in the
organization.
6. Employee dismissal:
Employees may be dismissed due to over staffing or other disciplinary action. But,
without the appropriate reason and process, if an employee is dismissed, then the
employee himself/herself or with the support of employees union can create the labor
dispute.
7. Non-recognition of employee union:
In the present context, employees working in an organization want to establish employee
union for their welfare. Law has also protected the rights of employees to establish the
employee union. If management does not allow establishing the union or does not
recognize the established union, then that may also be a reason of labor dispute.
8. slow solving employee grievance:
There are various reasons that may bring dissatisfaction and grievance to the employees.
If the grievance is not solved in time, it will give rise to the labor dispute.
9. Unfair conduct:
Labor dispute arise due to the unfair behavior of the management. Discrimination in the
selection, promotion, transfer, management participation etc. can be the reason for labor
dispute.
10. Political Pressure:
Due to the political pressure, employee union may get over empowered in the collective
bargaining process. It becomes difficult to solve the problem between the management
and employee union. This creates a feeling of revenge to the management whereas
employee union wants to solve the problem by force. As a result, labor dispute takes
place.
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Settlement provision of labour disputes
Labor disputes should be addressed or prevented as soon as possible. Prevention of
disputes means, avoiding it from the very beginning of its occurrence whereas, settlement
of dispute means managing the existing dispute through the use of different management
tools and techniques. Following are the main methods of settling the disputes:
1. Collective Bargaining:
It is concerned with a process of negotiation, settlement and administration of
disagreement between management and workers. In collective bargaining, workers are
represented by their representatives for the determination of mutually trusted terms and
conditionals at work. Under this method of dispute settlement, employees and
management sit together to discuss about the agenda and problems of employees. Then,
they reach at the agreement based upon the consensus of both of the involving parties to
settle the existing disputes or to avoid the further occurring labor disputes in the
organization.
2. Grievance handling:
Employee's grievance is the perception of unfair treatment at work. In every organization,
employees have complaint against their employers. Hence, a complaint affecting one or
more employees at a time does constitute a grievance. Grievance are symptoms of
conflict in an organization; hence they need to be managed promptly and efficiently.
Therefore, a proper step should be taken towards the systematic settlement of grievances
in the organization.
3. Conciliation:
Conciliation means settlement of dispute by persuasion of third parties. In simple terms,
conciliation means reconciliation of differences between individuals. It refers to a process
by which the disputing parties are brought together before a third party with a view to
settle the disputes through persuading. They discuss about the issues and problems and
reach upon at an agreement. During discussion, the third party can only provide
suggestions but cannot influence either party for the implementation of its suggestion.
4. Mediation:
It is resolution under which a third party is appointed for providing recommendations and
suggestion. Under this process, the party i.e., mediator plays more significant role as
compared to conciliation. Here, the third party, works as an arbitrator by giving a solution
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Unit 10 Labour Relation and Labour regulation in Nepal
on a dispute while in conciliation the conciliator only facilitates for table talk between
disputing parties.
5. Adjudication:
It is an ultimate legal remedy for a dispute settlement. Under this method, the disputes are
settled in reference to adjudication by the government. Hence, this is regarded as a
process of mandatory settlement of any dispute through adjudication with or without the
consent of disputing parties.
6. Arbitration
Arbitration is a procedure in which a neutral third party studies the bargaining situation,
listens to both the parties and gathers information, an then makes recommendations that
are binding on the parties. Arbitration is effective as a means of resolving disputes
because it is:
I. Established by the parties themselves and the decision is acceptable to them, and
2. Relatively speedy when compared to courts or tribunals. Delays are cut down and
settlements are speed up.
Feature and provision of Labour Act in Nepal
The Labour Act of Nepal makes the following provisions for settlement of collective
disputes between labour and management in Nepal. They are interest-related disputes.
1. Written complaint to employer
 Labour files a written complaint to the employer. Such complaint should be signed
by at least 51% of the workers. The complaint is made through the authorized
trade union.
 Bilateral discussions are held between labour and management. The dispute is
settled through negotiation within 21 days. If not, the next step follows.
2. Written complaint to Labour office

Labor files a written complaint to Labor Office of the government Bilateral
discussions are held between labour and management. The labour officer plays the
conciliation role.The dispute is settled within 15 days. If not the following
situations can occur:
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Unit 10 Labour Relation and Labour regulation in Nepal
 Strike: The labour can go on strike. A notice to go on strike is given to
management 30 days in advance. The resolution to go on strike should be passed
by 60% of workers through secret ballot. The notice to go on strike is also given
to Department of Labour, Labour Office, and Local Administration Office.
 Lock-out: Management can resort to lockout with government approval.
3. Appointment of Mediator/Tribunal
A mediator can be appointed with the mutual consent of the labour and the management.
If there is no agreement on mediator, a tribunal could be constituted. Such tribunal should
have equal representation of labour, management and government.
The dispute is settled by the mediator/tribunal through arbitration within 15 days. If not
the next step follows.
4. Appeal to Government
 Any party to the dispute can file an appeal to the government within 35 days.

The government adjudicates on the dispute within 60 days.
 If the government decision is not on time, the workers can go on strike.
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Settlement of individual disputes
19