III- B.

COM HUMAN RESOURCE MANAGEMENT CM512P

SEMESTER -V (For the Students Admitted from the year 2016 HRS/WK –6
CORE-13 onwards) CREDIT - 6

Objectives
1. To enable the students to understand the Human resource management concepts and
principles.
2. To create an awareness about the existing HR practices of the companies in India.

UNIT –I Introduction to Human Resources Management (17 Hrs.)

Human Resources Management – Definition – Meaning, Nature, Scope and Objectives,
Functions, Importance. Qualities and Role of HR Manager - Problems and Challenges of
HR Manager. Human Capital Management (HCM) –Jobs and Career in Human Capital
Management.

UNIT –II Human Resource Planning (20 Hrs.)

Human Resource Planning – Definition, Need And Importance, HRP Process, Problems
And Barriers to HRP, HRP Effectiveness-Job Analysis –Job Design, Job Enrichment– Job
Description, Job Specification.

UNIT –III Recruitment and Selection (18 Hrs.)

Recruitment and Selection – Meaning and Definition, Objectives Sources of Recruitment,
Process, Methods, and Recruitment Practices in India. Application Blank, Interviews,

UNIT –IV Training and Development (18 Hrs.)

Training And Development - Meaning – Nature, Principles, Assessing the Needs of
Training, Inputs and Gaps in Training – Training and Development as Source of
Competitive Advantage – Methods of Training, Evaluation of Effectiveness of Training
Programme, Making the Training Effective - HR Culture in MNCs.

UNIT –V Performance and Potential Appraisal (17 Hrs.)

Performance and Potential Appraisal - Meaning, Purpose-Process – Methods –
Traditional and Modern Methods - Problems.

TEXT BOOKS
1. Human Resource Management – Dr.S.S. Khanka, S. Chand Publishing, New Delhi.
2. Human Resource Management – L.M. Prasad, Sultan Chand and sons, New Delhi.

REFERENCE BOOKS
1. Human Resource Management - K. A. Aswathappa, Himalaya Publishing House.
2. Personnel Management – C. B. Mamoria, Himalaya Publishing House.
3. Personnel Management and industrial relations – P. C. Tripathi, Sultan Chand and
sons, New Delhi.

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 UNIT - I

INTRODUCTION

MEANING:

In common parlance, human resources means the people. People are the most
significant resources in an organization. It is man who makes all the difference in any
organization.

L F Urwick has remarked that “business houses are made or broken in the long-run not be
markets or capital, patents, or equipments, but by men”.

According to Peter F Drucker, “Man of all the resources available to man, can grow and
develop”.

Human resources are heterogeneous in the sense that they differ in personality,
perception, emotions, values, attitudes, motives and modes of thoughts.

Human resources are dynamic and behave differently. They react to the same situation
in quiet different ways. Even the same individual may behave differently at two different points
of time. It is therefore, very difficult to predict human behavior.

Human resources have the greatest potential to develop and grow provided the right
climate is provided to them. An organization can survive and grow if it has right people at the
right time at right jobs.

DEFINITION OF HRM:

According to Flippo, “Personnel Management or say, Human Resources Management is the

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

In short, Human Resources Management is an art of managing people at work in such a manner
that they give their best to the organization for achieving its set goals.

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 NATURE / FEATURES OF HUMAN RESOURCE MANAGEMENT

1. Comprehensive function: It is concerned with managing people at work. It covers all

types of people at all levels in the organization. It is applied to workers, supervisors,
managers etc.,
2. People-oriented: Human Resources Management is concerned with employees as
individuals as well as groups. It is the task of dealing with human relationship in the
organization. It is the process of achieving the best fit between individuals, jobs,
organizations and the environment. It is also the process of bringing people and
organizations together.
3. Action-oriented: Human Resources Management focuses on action rather than on
recordkeeping. It stresses the solution of personnel problems.
4. Individual-oriented: Every employee is considered as an individual so as to provide
services and programmes to facilitate employee satisfaction and growth.
5. Development-oriented: Human Resources Management is concerned with developing
potential of employees so that they get maximum satisfaction from their work and give
their best to the organization. It seeks to help the employees to realize their full potential.
6. Pervasive Function: Human Resources Management is inherent in all organizations and
at all levels. It is equally useful and necessary in industry, government, armed forces, sports
organizations etc. It permeates all the functional areas – production, marketing, finance,
research, recruitment, selection etc. It is the responsibility of all those who manage people
as well as being a description of the work of those who are employed as specialists.
7. Continuous Function: It is an ongoing or never ending exercise. It cannot be practiced
only one hour each day or one day a week. It requires a constant alertness and awareness
of human relations and their importance in every day operations.
8. Future-oriented: It is helping an organization achieve its objectives in the future by
providing competent and well-motivated employees. It aims at obtaining willing co-
operation of the work force in achieving the desired goals.
9. Challenging Function: Managing Human resources is a challenging job due to the
dynamic nature of people. People have sentiments and emotions. So, they cannot be treated
like machines. Therefore, it is necessary to handle them tactfully. It is not simply managing
people, but administering a social system.

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10. Science as well as Art: It is a science as it contains an organized body of knowledge
consisting of principles and techniques. It is an art because it involves application of
theoretical knowledge to the problems of Human resources.
11. Staff-Function: The function of Human Resources Management is advisory in nature.
The Human resources managers do not manufacture or sell goods. But, they do contribute
to the success and growth of an organization.
12. Young discipline: Human Resources Management is comparatively recent origin. It
started in the last part of the 19th century.
13. Inter-disciplinary: It involves application of knowledge drawn from several disciplines
like sociology, anthropology, psychology, economics etc.
14. Nervous System: It is similar to the nervous system in the human body. It is not an
extraneous element in the organization structure. Rather, it lies embedded in the structure,
is inherent in its functioning and an integral part of the process of management itself.

SCOPE OF HRM

The scope of Human Resources Management is indeed, very vast and wide. It includes all
activities starting from man power planning till the employee leaves the organization. It
consists of acquisition, development, maintenance/retention and control of human
resources in the organization.

Control Acquisition

H R Audit H R Planning
H R Accounting Recruitment, Selection
H R Information system Placement

Human
Resource
Management

Maintanance Development
Remuneration Training, Career
Motivation development,
Health and safety Organizational
Social Security development, Internal
Industrial relations mobility
Performance appraisal

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The National Institute of Personnel Management (NIPM), Kolkatta, has specified the scope of
Human Resources Management as follows:

1. The Labour or Personnel Aspect: This is concerned with man power planning,
recruitment, selection, placement, transfer, promotion, training and development, lay-
off and retrenchment, remuneration, productivity etc.
2. Welfare Aspect: It deals with working conditions and amenities such as canteen,
crèches, rest and lunch rooms, housing, transport, medical assistance, education, health
and safety, recreation facilities etc.
3. Industrial relations aspects: This covers union-management relations, joint
consultation, collective bargaining, grievance and disciplinary actions, settlement of
disputes etc.
OBJECTIVES OF HUMAN RESOURCE MANAGEMENT

The objectives of Human Resource Management are derived from the basic objectives of an
organization. Integration of employer’s interest and employee interests in achieving the
ultimate goal of the organization is the objective of Human Resource Management. In the light
of the above the objectives of Human Resource Management may be summarized as follows:

i. To help the organization attain its goals by providing well-trained and well-motivated
employees.
ii. To employ the skills and knowledge of employees efficiently and effectively, i.e., to utilize
human resources effectively.
iii. To enhance job satisfaction and self-actualization of employees by encouraging and
assisting every employee to realize his/her fill potential.
iv. To establish and maintain productive, self-respecting and internally satisfying working
relationships among all the members of the organization.
v. To bring about maximum individual development of members of the organization by
providing opportunities for training and advancement.
vi. To secure the integration of all the individuals and groups with the organization by
reconciling individual/group goals with those of an organization.
vii. To develop and maintain a quality of work life (QWL) which makes employment in the
organization a desirable personal and social situation.
viii. To maintain high morale and good human relations within the organization.
ix. To help maintain ethical policies and behavior inside and outside the organization.

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x. To manage change to the mutual advantage of individuals, groups, the organization and the
society.
xi. To recognize and satisfy individual needs and group goals by offering appropriate monetary
and non-monetary incentives.

The requirements for attaining the above objectives are as follows:

i) Recruiting the right personnel possessing necessary skills and attitudes.

ii) Developing clearly defined objectives and policies through common understanding and
mutual consultation.
iii) Communicating and explaining the goals to be achieved and the contributions expected of
every member of the organization.
iv) Dividing the tasks properly with clearcut authority, responsibility and relationship of one
position with another.
v) Maintaining sound industrial and human relations so as to secure the willing co-operation
of all.
vi) Providing suitable monetary and non-monetary rewards for the contributions of employees.

FUNCTIONS OF HUMAN RESOURCE MANAGEMENT

Functions performed by Human Resource Management can broadly be classified into two
categories, viz. (I) Managerial Functions, and (II) Operative Functions (or) Service
Functions.

I. MANAGERIAL FUNCTIONS:
i. Planning: Planning is a predetermined course of action. It is a process of determining
the organizational goals and formulation of policies and programmes for achieving
them. Forecasting is one of the important elements of planning process. Other
functions of managers depend on planning function.
ii. Organizing: Organizing is a process by which the structure and allocation of jobs are
determined. Thus, organizing involves giving each subordinate a specific task,
establishing departments, delegating authority to subordinates, establishing channels of
authority and communication, coordinating the work of subordinates, and so on.
iii. Staffing: This is a process by which managers select, train, promote and retire their
subordinates. This involves what type of people should be hired, recruiting prospective
employees, selecting employees, setting performance standard, compensating

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 employees, evaluating performance, counseling employees, training and developing
employees.
iv. Directing / Leading: Directing is the process of activating group efforts to achieve the
desired goals. It includes activities like getting subordinates to get the job done,
maintaining morale, motivating subordinates etc. for achieving the organizational goal.
v. Controlling: It is the process of setting standards for performance, checking to see
how actual performance compares with these set standards, and taking corrective
actions as needed.

II. OPERATIVE FUNCTIONS:

i. Procurement: It involves procuring the right kind of people in appropriate number to
be placed in the organization. It consists of activities such as manpower planning,
recruitment, selection placement and induction or orientation of new employees.
ii. Development: This function involves activities meant to improve the knowledge,
skills, aptitudes and values of employees so as to enable them to perform their jobs in
a better manner in future. These functions may comprise training to employees,
executive training to develop managers, organization development to strike a better fit
between organizational climate/culture and employees.
iii. Compensation: Compensation function involves determination of wages and salaries
matching with contribution made by employees to organizational goals. It consists of
activities such as job evaluation, wage and salary administration, bonus, incentives, etc.
iv. Maintenance: It is connected with protecting and promoting employees while at work.
For this purpose, various benefits such as housing, medical, educational, transport
facilities, etc. are provided to the employees. Several social security measures such as
provident fund, pension, gratuity, group insurance, etc. are also arranged.

IMPORTANCE OF HRM:

The significance of Human Resource Management can be discussed at four levels – corporate,
professional, social and national.

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Significance for an Enterprise: Human Resource Management can help an enterprise in
achieving its goals more efficiently and effectively in the following ways:

a) Attracting and retaining the required talent through effective Human resources
planning, recruitment, selection, placement, orientation, compensation and promotion
policies.
b) Developing the necessary skills and right attitudes among the employees through
training, development, performance appraisal, etc.
c) Securing willing co-operation of employees through motivation, participation,
grievance handling, etc.
d) Utilizing effectively the available human resources.
e) Ensuring that the enterprise will have in future a team of competent and dedicated
employees.

Professional Significance: Effective management of human resources helps to improve the

quality of work life. It permits team work among employees by providing healthy, working
environment. It contributes to professional growth in the following ways:

a) Providing maximum opportunities for personal development of each employee.

b) Maintaining healthy relationships between individuals, and different work groups.
c) Allocating work properly

Social Significance: Sound human resource management has a great significance for the
society. It helps to enhance the dignity of labour in the following ways:

a) Providing suitable employment that provides social and psychological satisfaction to

people.
b) Maintaining a balance between the jobs available and the jobseekers in terms of
members, qualifications, needs and aptitudes.
c) Eliminating waste of human resources through conservation of physical and mental
health.

National Significance: Human resource and its management plays a vital role in the
development of a nation. The effective exploitation and utilization of a nation’s natural,
physical and financial resources require an efficient and committed manpower. There are wide
differences in development between countries with similar resources due to differences in the
quality of their people.

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 ROLE OF HR MANAGER
1. As a specialist: He must be an expert. As a specialist he advices various HODs on different
aspects such as Human resources planning, recruitment, selection, orientation, training,
appraisal, compensation etc., In all the above activities, the Human resources manager
should provide information, suggestions and assistance.
2. As an information source: He provides valuable information about labour market, labour
laws, and other related areas. It is very much necessary to formulate policy and procedures
about Human resources. He serves as a record keeper and researcher.
3. As a change agent: The Human Resource Manager serves as an internal change agent. He
makes necessary infrastructure and support for organizational development. He helps in
introducing and implementing major institutional changes in the organization. He is an
innovator and he should be familiar with the needs and changing environment of the
organization.
4. As a controller: He assists line managers in effective implementation of Human resource
policies and programmes. His advice and service is essential for monitoring and
controlling.
5. As a liaison man / mediator: He is expected to act as a connecting point or linking pin or
as a mediator. He plays the role of a peace maker. He settles disputes between the
management and employees.
6. The conscience role: It is of a humanitarian who reminds the management of its morals
and obligations to its employees.
7. The counselor role: The dissatisfied employees with the present job approach the Human
resource manager for counseling. In addition employees facing different problems like
material, health, children education / marriage, mental, physical also approach the Human
resource managers. In turn the Human resource manager offers suggestions and ideas to
solve or overcome the problems.
8. The spokesman role: He is the frequent spokesman for or representative of the company.
9. The fire-fighter role: In union-management relations, he acts as a shock absorber. He is
the management’s defense against trade union activities. He acts as a trouble shooter.
QUALITIES OF HR MANAGER:

A good Human resources manger should posses the below listed qualities and skills to
channel the talent, latent potential and capabilities of employees.

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1. Strategic Acumen / Policy Initiation: A Human Resource Manager must possess
sharp strategic acumen to devise an organizational road-map and to ensure that it
reflects corporate objectives and long-term goals.
2. Organizational Skill: A Human Resource Manager should exhibit sound organization
skills to co-ordinate regular training and development programs, implement business
practices and deploy Human resources systems, Technologies and modules.
3. Creativity: A Human Resource Manager should be creative which increase the
competency.
4. Communication Skills: A Human Resource Manager is often the key liaison between
top management and the employees and extended workforce of an organization. Hence,
to create a better environment in the workplace the Human Resource Manager should
possess good communication skills.
5. Intuition: Intuition is the capacity of knowing things in advance without the use of
rational processes.
6. Knowledge: A thorough knowledge base is essential for Human Resource Manager.
7. Commitment: A Human Resource Manager should be committed to the success of the
project and of all team members.
8. Being Human: Employees like managers who are human and who don’t take
advantage of their authority.
9. Negotiation Expertise: A human resource manager has to communicate with external
contractors and staffing agencies to source employee needs and other specialized
requirements.
10. Motivational: This quality is required for keeping employees happy and satisfactory.
The Human Resource Manager should be well versed with his / her employee’s
interests, needs, hopes, desires and values.
11. Mentorship: A Human Resource Manager should support newly hired employees,
empathize with the needs of experienced employees and generally serve as a resource
for other staff members of an organization.
12. Educational Qualification:

a. Degree of a recognized university.

b. PG / Diploma in sociology or social work or personal management / industrial relations

/ labour welfare / labour law, or MBA with specialization in Human Resource Management.

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 13. Discriminating Skill: Ability to discriminate between right and wrong, between
just and unjust, merit and demerit.
14. Executing Skill: He is expected to execute the management’s decisions with speed,
accuracy and objectivity. He should also streamline the office, set standard of
performance, co-ordinate, control etc.
15. Counseling Skill: He should offer consultancy services to employees about marital,
health, mental, physical and career problems.
16. Problem Solving Ability: An HR manager should solve problems of overall human
resource management and long term organizational planning.
17. Leadership Skill: This quality broadly concerned both in the group and individual
relationships and labour management relations.
18. Professional Attitude: He should have patience and understanding, ability to listen
before offering advice. He should have knowledge on various disciplines like
technology, engineering, sociology, psychology, philosophy, physiology, commerce,
economics and law etc.

PROBLEMS AND CHALLENGES OF A HR MANAGER

The major issues and challenges faced by HR Managers are:

i. Health and Welfare: Health and Welfare, retirement, change management,

compensation, Employee rewards, HR effectiveness measurement, HR technology
selection & implementation, industrial relations, Leadership development, Learning
and development, Legal / Regulatory compliance, Management and Audit,
integration/restructuring, Organizational effectiveness. Health & Welfare of the
employees is a big challenge. If health of the employees of an organization is sound,
they are able to perform well.
ii. Staffing: Outsourcing, mobility of employees, Recruitment and availability of skilled
local labour, retention and succession planning.
iii. Change Management: Change Management represents a particular challenge for
personnel management staff, as this expertise has generally not been a consistent area
of focus for training and development of HR professionals. An intensified focus on
training may be needed to develop added competencies to deal with change
management.

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iv. Leadership Development: It also proves to be a big challenge HR professionals
continue to wrestle with understanding the best ways to keep people in the pipeline and
develop leaders for future succession planning. HR professionals are expected to
provide the essential frameworks, processes, tools and points of view needed for the
selection and development of future leaders. Across the globe leadership development
has been identified as a critical strategic initiative in ensuring that the right employees
are retained, that the culture of the organization supports performance from within to
gain market position, and that managers are equipped to take on leadership roles of the
future so that the organization is viable in the long term.
v. Measuring HR Effectiveness: It is an interesting new top three focus for HR as it
highlights the profession's need to measure results - not only in terms of transaction
management but also in terms of driving the business. HR professionals have been
questioned in the past regarding their business acumen. Utilizing metrics to determine
effectiveness is the beginning of a shift from perceiving HR's role as purely ad
administrative function to viewing the HR team as a true strategic partner within the
organization.
vi. Compensation: It has moved down the list of perceived challenges while
organizational effectiveness is expected to play a larger role in the years to come. Where
HR departments have traditionally focused on measuring their own effectiveness, there
is an evolving recognition that they can provide organizational value by measuring the
effectiveness of the entire business organization. The shift is significant as it represents
movement from simply counting the numbers hired to determining the ROI of collective
and individual hires on a long-term basis. Going beyond measuring turnover, this new
approach considers bad turnover and good turnover along with the overall cost of
replacement hires. Compensation is one of the top three issues including mergers &
acquisitions, the invention of new systems for human capital management and global
competition.
vii. Time Allocation: Another important challenge is time allocation. Of the total hours
worked by HR Department what percent of the total time would be allocated to each of
these roles. Almost one-quarter hours worked in were devoted to a strategic business
partner as a partner with senior and line mangers in strategy execution, helping to move
planning from the conference room the the market place. Bureaucracy can also be a
problem, presenting "the need to consider doing things differently in order to eliminate

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 bottlenecks and red tape." Looking forward, empowerment of local managers is seen as
a priority issue.

HR effectiveness presents a challenge when, in one representative's words, "line managers

think performance management, job evaluation, monitoring and evaluation a waste of time.
The attitude bogs down the efforts by the HR team.

HUMAN CAPITAL MANAGEMENT (HCM)

IR – PM – HRM – HRD - HCM

The term HRM is now sought to be replaced by Human Capital Management (HCM). It
represents the latest development but, yet to gain wide acceptance in management and
academic circles. Human resources are not the company’s property, are owned by employees
but given on rent to companies. Under the HCM, employees are treated more like investors of
their own capital. Human capital is high precarious (unstable) and is in constant danger of
being lost when an employee quits the organization. HCM recognizes the people as assets and
the main source of value for an organization.

Human Capital Management is defined as the systematic analysis, measurement and

evaluation of how people policies and practices create value.

Aims of human capital management

1. Obtain, analyse and report on data that inform the direction of HR strategies and
processes.
2. Use measurements to prove that superior HRM strategies and processes deliver superior
results.
3. Reinforce the belief that HRM strategies and processes create value through people.

HCM demands action by an organization on the following:

1. Focusing on knowledge and insight rather than on matrics and standards.

2. Acknowledging complexity and not trying to understand everything through cause and
effect.
3. Using best-fit, not just basic.
4. Focusing on creating value.
5. Integrating people and business strategy, driving and accelerating the business plan.

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 6. Managing a large proportion of the people management agenda through strategic
programmes.
7. Gaining energy from the outside-in, matching potential capability with investors’ and
customers’ needs.
8. Measuring strategic differentiators.
9. Focusing on long term stretch objectives and learning from their outcomes.
10. Reporting to the employees, managers and the board.

Not all organizations are ripe to implement HCM. It works best where:

• The organization is a people oriented business.

• It is relatively large.
• The environment is not simple and stable.
• It has investors or stake holders who are interested in the medium to longer term.
• It is focused on growth through differentiation rather than cost leadership.
• It is managed strategically.
• Planning is bottom-up as well as top-down.
• Managers take responsibility for people management.
• The culture is relatively sophisticated.
• The organization uses technology effectively.

JOBS AND CAREERS IN HRM

HR positions in organizations can be divided into 3 categories, i.e., HR specialist, HR manager,

HR executive. In addition there are numerous support positions, e.g., clerical and
programming.

HR SPECIALIST:

His jobs are usually the entry level positions for an HRM career. It includes interviewer,
compensation analyst, benefits coordinator, job analyst and trainer. In large firms there will be
promotional opportunities within the specialized function. For example, a new specialist as an
interviewer can move up to coordinating campus recruitment in a region. A specialist may
do a little of everything. He might run an orientation program for new employees,
interview applicants etc.

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 Pause and Ponder:(consider and think about)
As MD of a fast growing company Saravanan is spending a lot of time on people issues. Should
he hire an HR Manager?

HR MANAGER:

He is a generalist who administers and coordinating programs cutting across functional areas.
He is usually a top ranking person at a plant. Hence, he is expected to know about all areas of
HRM because, he has to oversee the policies and advice line managers on HR issues. He is to
head a functional personnel activity at the corporate level.

HR EXECUTIVE:

The top level HR executive, usually the vice president of an organization has the responsibility
of linking the firm’s corporate policy and strategy with Human Resource Management. He is
expected to feed inputs into the organizational goals especially if these goals affect or are
affected by personnel activities. It is important to consider HR opportunities and limitations in
establishing overall organizational directions.

As new businesses have been emerging new jobs in HR are being created. Some of the job
titles now in practice are high sounding and are highly focused. For example, Assistant
Manager-Compensation and Benefits (MASTEK), HR-MIS Executive (CMS COMPUTERS),
HR Manager-Talent Management (Sum Total Systems, India). IT Recruiter (Shakti Info
solutions (P) Ltd.)Assessment specialist (WIPRO).

UNIT – II

HUMAN RESOURCE PLANNING (HRP)

MEANING: HRP is a process of striking balance between human resources required and
acquired in an organization. In other words, it is a process by which an organization determines
how it should acquire its desired man power to achieve the organizational goals. Thus, HRP

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helps an organization have the right number and right kind of people at the right place and at
right time to successfully achieve its overall objectives.

DEFINITION: According to Terry L. Leap & Michael D. Crino, “HRP includes estimation
of how many qualified people are necessary to carry out the assigned activities, how many
people will be available and what, if anything, must be done to ensure that personnel supply
equals personnel demand at the appropriate point in the future.”

According to Beach, “HRP is a process of determining and assuming that the organization
will have an adequate number of qualified persons, available at the proper times, performing
jobs which meet the needs of enterprise and which provide satisfaction for the individuals
involved.”

NEED AND IMPORTANCE OF HRP

Some of the compelling reasons that favour HRP may be listed as follows:

1. Work can be carried out smoothly: To carry on its work, each organization needs
personnel with the necessary qualifications, skills, knowledge, work experience and
aptitude for work. These are provided through effective HRP.
2. Internal supply position could be assessed at the right time: Since a large number
of persons have to be replaced, who have grown old, or to retire, die or become
incapacitated because of physical or mental ailments, there is a constant need for
replacing such personnel.
3. Demand-Supply imbalances could be arrested: HRP is essential because of frequent
labour turnover which is unavoidable and even beneficial because it arises from factors
which are socially and economically sound such as voluntary quits, discharges,
marriage, promotions.
4. Possible to cope with sudden changes such as expansion, diversification, etc.: In
order to meet the needs of expansion programmes, HRP is unavoidable. It becomes
necessary due to increase in the demand for goods and services with growing
population, a rising standard of living-larger quantities of the same goods and services
are required.
5. Easy to cope with changes in technology: The nature of the present work force in
relation to its changing needs also necessitates the recruitment of new labour. To meet

16
 the changes in technology and new techniques of production the existing employees
need to be trained or new blood injected in an organization.
6. Avoid ups and downs in availability of people with relevant skills and
qualifications: HRP is also needed in order to identify areas of surplus personnel or
areas of shortage of personnel.
7. Critical assessment: HRP compels the management to assess critically the strength
and weakness of its employees and personnel policies on continuous basis and in turn,
take corrective measures to improve the situation.
8. Avoiding duplication: Through HRP, duplication of efforts and conflict among efforts
can be avoided, on the one hand, and coordination of workers’ efforts can be improved
on the other.
9. Organization-the ultimate beneficiary: Increase in skill, knowledge, potentialities,
productivity and job satisfaction make the organization the main beneficiary. It is
benefited in terms of increase in prosperity, production, growth, development, profit
and thus an edge over its competitors in the market.

HUMAN RESOURCE PLANNING PROCESS

HRP process consists of activities relating to future demand for and supply of manpower and
matching the two in the context of overall organizational plans and objectives.

The various activities involved in the process of HRP are now discussed:

1. Analyzing organizational plans and objectives: The process of HRP begins with
analyzing the overall plans and objectives of the organization. Analysis of business
plans into sub-sectional and functional plans such as technology, production, finance,
marketing, expansion and diversification provides for assessing the human resource
requirements for each activity in each department.
2. Analyzing the objectives of HRP: The main purpose of HRP is matching employees’
abilities to enterprise requirements, with an emphasis on future instead of present
arrangements.

COMPANY OBJECTIVE

DEMAND FOR COMPANY OBJECTIVE

LABOUR
17 Present supply minus wastage
How many?
What kind? External labour market factors
When? & Where? Changes in hours,
FEEDBACK
Possible
modification
to company
objectives

COMPANY OBJECTIVE
Recruitment/redundancy programme
Training and development programme
Industrial relations policy
Accommodation plan

3. Forecasting demand for human resources: This is subject to vary from time to time,
depending upon both external and internal factors. External factors include
competition, economic and political climate, technological changes, government policy
etc. Internal factors include growth and expansion, design and structural changes,
management philosophy, change in leadership style, employees’ resignation,
retirement, termination etc. Therefore, while forecasting these factors need to be taken
into consideration.

There are various techniques employed to forecast requirement of human resources in the
future of the organization. These include:

A. Management judgment: This technique is very simple and time saving. Under this,
either a “bottom-up” or a “top-down” approach is employed for forecasting future
human resource requirement of an organization. In case of bottom-up approach line
managers prepare departmental requirements and submit it to the top managers. In

18
B. The top-down approach, the top managers prepare the departmental forecasts which are
reviewed with departmental heads. However, neither of these approaches is accurate.
These suffer from subjectivity and suitable only for small firms.
C. Work-Study method: This method can be used when it is possible to measure work and
standards and where job methods do not change frequently. In this method, F.W.
Taylor’s time and motion study are used to ascertain standard time for doing a standard
work.
D. Ratio-Trend analysis: This is one of the quickest forecasting techniques. Under this
method the forecasting is made on the basis of time-series data. In other words, this
technique involves studying past ratios.
E. Delphi Technique: This is named after the ancient Greek oracle at the city of Delphi.
This is one of the judgmental methods of forecasting human resource needs. It is a
more complex and time consuming technique. The group members do not meet face to
face. The forecasting is done independently by the group members. This process will
continue until a consensus is reached.
F. Flow models: Among the flow models, the simplest model is Markov model. This
involves the following:
i) Determination of time period that will be covered under forecast.
ii) Establishment of employee’s categories also called states.
iii) Enumeration of annual close among various categories or states for several time
periods.
iv) Estimation of probability of flows or movements from one category to another
based on past trends.

However, this model suffers from disadvantages like heavy reliance on past data, which
may not be accurate in abnormal situations.

G. Mathematical models: These models express relationship between independent

variables (production, sales etc.) and dependent variable (number of workers required).
4. Forecasting supply of human resources: This gives the quantity and quality of people
available from internal and external sources of man power supply, after making due
allowances for absenteeism, transfers, promotions etc. This forecasting begins with
human resource audit.
5. Matching demand and supply: Once demand for and supply of human resources is
forecast the two needs are to be reconciled. Such reconciliation will reveal either

19
 shortage or surplus of Human resource in future. Accordingly action plan will be
prepared to meet the situation. In case of shortage of Human resource recruitment,
transfer, promotion, training and development etc. will be done. In case of surplus it
will be made good through schemes like redeployment, retrenchment, announcing VRS
through golden handshake etc. will be recommended and implemented.
6. Monitoring and control: Once the action plans are implemented, these need to be
reviewed, regulated and monitored against the set standards. Monitoring helps to reveal
the deficiencies if any. Corrective measures help remove deficiency and thus control
the implementation of action plan. In case of any changes in the business environment,
the former action plans are to be modified to suit the changed environment.

PROBLEMS IN HUMAN RESOURCE PLANNING

The main problems in the process of HRP are as follows:

(i) Inaccuracy: HRP involves forecasting the demand for and supply of human resources.
Therefore, HRP cannot be a cent percent accurate process. Longer the time frame of
planning, greater is the possibility of inaccuracy. Inaccuracy also increases when
departmental forecasts are merely aggregated without any critical review.
(ii)Employees Resistance: Employees and trade unions feel that due to widespread
unemployment people will be available for jobs as and when required. Moreover they
feel that human resources planning increases the workload and regulates them through
productivity bargaining. Employees may also resist HRP feeling that it increases the
cost of manpower.
(iii) Uncertainties: Labour absenteeism, labour turnover, seasonal employment,
technological changes and market fluctuations are the uncertainties which serve as
constrains to HRP. It is risky to depend upon general estimates of manpower in the
face of rapid environmental changes.
(iv) Insufficient Information System: In most of the Indian industries human resource
information system has not been fully developed. In the absence of reliable data it is
not possible to develop effective human resource plans.
(v)Lack of Top Management Support: In the absence of support and commitment from
the top, human resource experts find it difficult to obtain vital inputs. Sometimes the
correct start is not sustained due to lack of patience. Successful HRP flourishes slowly
and gradually.

20
(vi) Time and Expense: Planning is a time-consuming and expensive exercise. A good
deal of time and cost are involved in data collection and forecasting.
(vii) Unbalanced Focus: Some companies use HRP as a number game. There is too much
focus on the quantitative aspect to ensure the flow of people in and out of the
organization. Such an exclusive focus overtakes the more important dimension, i.e.,
the quality of human resources. Career planning and development, skill levels, morale,
etc. are likely to suffer due to such unbalanced approach to human resource planning.
(viii) Alignment with Strategic Goals not Easy: It is not easy to align Human resource
plans with the strategic goals of a company. Unless there is consistent support and
continued blessing form top management. People at all levels must be working with
real, enthusiasm, sincerity and commitment to achieve the best fit in the larger interests
of an organization.

Thus, limitations of manpower planning arise both from inherent limitations of forecasting
and from human weaknesses.

GUIDELINES FOR MAKING HRP EFFECTIVE

Some of the steps that may be taken to improve the effectiveness of human resource
planning are given below:

1. HR Plan must fit in with Overall Strategy: Human resource plans should be
balanced with the corporate plans of the enterprise. The methods and techniques used
should fit the objectives, strategies and environment of the particular organization. The
Human resource plan must fit in with the overall objectives of the organization.
Important aspects such as people working in the organization, working conditions,
human relationships, etc. must be kept in mind while developing the plan.
2. Appropriate Time Horizon: The period of a Human resource plan should be
appropriate to the needs and circumstances of the specific enterprise. The size and
structure of the enterprise as well as the changing aspirations of the people should be
taken into consideration.
3. Adequate Organization: Human resource planning function should be properly
organized. A separate cell, section or committee may be constituted within the human
resource department to provide adequate focus, and to co-ordinate the planning efforts
at various levels.

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4. Top Management Support: Before starting the Human resource planning process the
support and commitment of top management should be ensured. Moreover, the
exercise should be carried out within the limits of a budget.
5. Participation: To be successful, Human resource planning requires active
participation and coordinated efforts on the part of operating executives. Such
participation will help to improve understanding of the process and thereby reduce
resistance.
6. Information System: An adequate database should be developed for Human resources
to facilitate human resource panning
7. Balanced Focus: The quantity and quality of Human resource should be stressed in a
balanced manner. The emphasis should be on filling future vacancies with right people
rather than merely matching existing people with existing jobs. Upward mobility of
existing staff needs to be considered carefully. Labour turnover should be considered
according to length of service rather than merely on aggregate basis.
8. Employee Skills Inventory: The organization must have an up-to-date employee skill
inventory showing previous jobs held, tenure on current job, educational and training
qualifications, specific knowledge and skills, prior work performance, past and current
compensation, mobility factors.
9. Co-ordination: A separate HR planning division must be created, especially in large
organizations, to co-ordinate Human resource planning exercise at various levels. The
various plans for procurement, promotion and retention of human resources must be
integrated properly. The ultimate objective must be to make use of the human resources
in an optimal manner by filling future vacancies with the right type of people.

JOB ANALYSIS

A job may be understood as a division of total work into packages / positions. According
to Dale Yoder, “A job is a collection or aggregation of tasks, duties and responsibilities
which as a whole, is regarded as a regular assignment to individual employees and which
is different from other assignments.”

Job analysis refers to the process of collecting information about a job. Job analysis is
performed upon ongoing jobs only. It contains job contents. Job analysis provides the
following information about a job:

i. Identity of the job in terms of its title and code number.

22
 ii. The operations and tasks involved in the job.
iii. Location, physical setting, hazards and discomforts, supervision etc.
iv. Duties involved in the job along with the frequency of occurrence.
v. Material, methods and equipments used in performing the job.
vi. How the job is performed-nature of operations.
vii. Relationship of the job with other jobs.
viii. Personal attributes required for performing the job.

Definition: According to Edwin B. Flippo, “The process of studying and collecting

information relating to the operations and responsibilities of a specific job. The immediate
products of this analysis are job descriptions, job specifications.”

There are two major aspects of job analysis. These are:

1. Job Description.
2. Job Specification.
I. Job Description:

It is prepared on the basis of data collected through job analysis. Job description is a functional
description of the contents what the job entails. It is a narration of the contents of the job. The
main object of a job description is to differentiate it from other jobs and to set out its outer
limits. It is an important document as it helps to identify the job and gives a clear idea of what
the job is.

Purposes of Job Description:

• Grading and classification of jobs

• Placement and orientation of new employees
• Promotions and transfers
• Outlining of career path
• Developing work standards
• Counseling of employees
• Delimitation of authority
• Work measurement and work improvement
• Investigating accidents

23
 • Redressal of grievances relating to duties and responsibilities
• Establishing a common understanding of a job between management and workers

Contents of Job Description:

A job description normally contains the following information:

1. Job Identification – job title, code number, department

2. Job summary – contents in terms of the activities or tasks
3. Job duties and responsibilities – It is the heart of job description.
4. Working conditions – heat, light, noise, dust and fumes etc.
5. Social environment – size of work group and interpersonal interactions
6. Machines, tools and equipments – names of major machines, equipments, materials
used in the job.
7. Supervision – Extent of supervision given or received, designation of immediate
superiors and subordinates.
8. Relation to other jobs – the jobs immediately below and above are mentioned.

II. Job Specification:

Job specification focuses on the person i.e., the job holder. It is a statement of the minimum
levels of qualifications, skills, physical and other abilities, experience, judgments and attributes
required for performing job effectively. In other words, it is a statement of the minimum
acceptable qualifications that an incumbent must possess to perform a given job. It specifies
the physical, psychological, personal, social and behavioural characteristics of the job holders.

Uses of Job Specification:

• Personnel planning
• Performance appraisal
• Hiring
• Training and development
• Job evaluation and compensation
• Health and safety
• Employee discipline
• Work scheduling

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 • Career planning

Uses of Job Analysis

Job analysis is useful for overall management of all personnel activities. The same is specified
as follows:

1. Organizational design: Job analysis is useful in classifying jobs and interrelationship

among them. Responsibility commensurate with the authority and accountability for
various jobs can be specified so as to minimize duplication or overlapping.
2. Human Resource Planning: Job analysis provides useful information for forecasting
man power requirements in terms of knowledge and skills. It also helps in planning for
promotions and transfers. It also facilitates division of work.
3. Recruitment and Selection: Recruitment succeeds job analysis. Basically, the goal
of the Human resource planning is to match the right people with the right job. This is
possible only after having adequate information about the jobs that need to be staffed.
4. Placement and orientation: The orientation programme can be geared towards
helping the employee learn the activities, tasks and duties that are required to perform
a given job more effectively.
5. Training and Development: Job analysis provides information required to identify
training needs, to design training programmes and to evaluate training effectiveness.
Similarly, employee development programmes such as job rotation, job enlargement
and job enrichment are based on job analysis only.
6. Job Evaluation: It refers to determination of relative worth of different jobs. It thus
helps in developing appropriate wage structures.
7. Performance Appraisal: It involves comparing the actual performance of an
employee with the standard one. This serves as a base for awarding promotion,
effecting transfers or assigning training needs.
8. Personnel Information: Most of the organizations maintain computerized
information about their employees. This is popularly known as “human resource
information system” (HRIS).
9. Employee Counseling: Job analysis provides information about career choices and
personnel limitations. Such information is helpful in vocational guidance and
rehabilitation counseling. Employees who are unable to cope with the hazards and

25
 demands of given jobs may be advised to opt for subsidiary jobs or to seek voluntary
retirement.
10. Health and Safety: Job analysis helps in identifying and uncovering hazardous
conditions and unhealthy environmental factors such as heat, noise, fumes, dust etc.
and thus, facilitates management to take corrective measures to minimize and avoid the
possibility of accidents and injury.

Process of Job Analysis

Job analysis involves a process. There is no fool-proof process of making job analysis. But,
the following are the main steps involved in the job analysis.

1. Organizational Job Analysis: Job analysis begins with obtaining pertinent

information about a job. This, according to Terry, is required to know the makeup of a
job, its relation to other jobs, and its contribution to performance of the organization.
This information can be had by dividing the ground information in various forms of (i)
Organization Charts, (ii) Class Specifications,(iii) Job Description and (iv) Flow
Charts.
2. Selecting Representative Jobs for Analysis: Analysing all jobs of an organization is
too costly and time consuming. Therefore, only a representative sample of jobs is
selected for the purpose of detailed job analysis.
3. Collection of Data for Job Analysis: Here, job data features of the job and required
qualifications of the employee are collected. Data can be collected either through
questionnaire, observation or interview.
4. Preparing Job Description: The information collected for job analysis is used to
prepare a job description. Job description is a written statement that describes the tasks,
duties and responsibilities that need to be discharged for effective job performance.

The Job analysis process is now delineated in the following figure:

Organizational Job Analysis

Selection of Representative Jobs

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 Data Collection

Job Description

Job Specification

Techniques of Job Analysis (Methods of Data Collection)

A variety of sources and methods are used to collect data relating to job. The main methods
are given hereunder:

1. Job Performance: Under this method, the job analyst himself performs the job under
study to have first hand information of the job, its nature, physical and social demands
and environment of the job. This is time consuming and only possible for less skilled
jobs and jobs needing less training.
2. Personal Observation: Here, the analyst personally observes the worker or group
performing the activities to know the pace of work done, the working conditions, the
hazards involved, etc. throughout the complete work cycle and records the information
in a standard format. This method is suitable for jobs involving manual/physical,
standardized and short job cycle activities.
3. Interview: The analyst personally interviews the employee, his supervisor and other
concerned persons about the common job activities and records the answers in a
standard form of record. Interview is a widely used method particularly for jobs
wherein direct observation or actual performance is not feasible. Interview is however,
time consuming and costly method. Another problem in this is inaccurate information
may be collected.
4. Questionnaire: In this method a properly drafted questionnaires are answered by the
job holders. These answered are returned to the supervisors, and discussed with the job
holders. After due corrections the duly filled questionnaires are handed over to the job

27
 analyst. Each task or behaviour is described in terms of characteristics such as
frequency, significance, difficulty and relationship to overall performance. The job
holders give their overall ratings of these dimensions. These are analyzed by the job
analyst and a profile of actual job is developed. This method provides comprehensive
information about the job and is also processed through a computer. It is costly and
time consuming to develop a questionnaire. This method also denies a personal rapport
between the analyst and the job holder.
5. Critical Incidents: In this method the job holders are asked to describe the incidents
concerning the job on the basis of their past experience. The incidents so collected are
analyzed and classified according to job areas they describe. Thus, a fairly clear picture
of actual job requirements can be obtained by distinguishing between effective and
ineffective behaviours of the workers on the job. This method is also time consuming.
6. Log Records: In this method, a diary or logbook is given to each job holder. The job
holder daily records the duties performed marking the time at which each task is started
and finished. The record thus collected provides the necessary information to the job
analyst. This method is also time consuming and gives only inadequate information.
It doesn’t provide information about working conditions, equipment used and
supervisory relationship. Moreover, more employees are not disciplined enough to
maintain the diary regularly.

JOB DESIGN

Job Analysis provides job related data as well as the skills and knowledge required for the
incumbent to perform the job. A better job performance also requires deciding on sequence
of job contents. This is called job design. Job design is a logical sequence to job analysis.

Definition: According to Michael Armstrong, “Job analysis is the process of deciding on

the contents of a job in terms of its duties and responsibility, on the methods to be used in
carrying out the job, in terms of techniques, systems and procedures, and on the
relationship that should exist between the job holder and his superiors, subordinates and
colleagues.”

Factors affecting job design

1. Organizational factors:

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 a) Task Features: A task consists of three internal features, i.e.,
i. Planning, ii. Executing, iii. Controlling. An ideal job design needs to integrate all
these three features of tasks to be performed.
b) Work flow: The very nature of a product influences the sequences of jobs, i.e., work
flow. To perform work effectively and efficiently the tasks involved in a job need to
be sequenced and balanced.
c) Ergonomics: It refers to designing and shaping jobs in such a manner it suits the job
holder.
d) Work Practices: Practice means a set way of doing work based on tradition or
collective wishes of workers. F.W. Taylor determines work practices by time and
motion study.
2. Environmental factors:
a) Social and cultural expectations: Gone are days when workers were ready to do any
job under any working conditions. But, with increase in their literacy, education,
knowledge, awareness etc. have raised their expectations from the jobs.
b) Employee ability and availability: The task elements should be included in
accordance with the employee abilities and capabilities. There should not be any
mismatch between the job and the job holder.
3. Behavioural factors:
a) Autonomy: It means freedom to control one’s actions to the environment. Researchers
say that autonomy to workers increases sense of responsibility and self esteem. On the
contrary, absence or lack of autonomy can cause workers apathy to jobs and in turn low
and poor performance.
b) Use of abilities: Workers perform jobs effectively that offers them opportunity to make
use of their abilities. Normally, workers find such jobs as interesting and challenging.
c) Feedback: The work should be designed in such a way that the workers receive
meaningful feedback. It helps workers to improve their performance.
d) Variety: Lack of variety, or say, doing the same work, cause boredom which in turn,
leads to fatigue. Fatigue causes mistakes and accidents.
METHODS AND TECHNIQUES OF JOB DESIGN
1. Work Simplification: Under this method, the job is simplified by breaking it down
into small sub-parts.
Aspects of job design

29
 This enables the worker to gain proficiency and fitness in doing the repetitive tasks. This
increases productivity and profitability. However, due to the repetitive job workers feels
boredom. It also leads to absenteeism, mistakes and accidents. On the whole the quality
and quantity of output gets adversely affected.
2. Job Rotation: One solution to boredom is job rotation. It implies the moving of
employees from job to job without any change in the job. In this employee performs
different jobs but of the same nature.
Advantages: i) It removes boredom ii) it broadens employees’ knowledge and skill.
iii) Employees become competent in several jobs.
Disadvantages: i) It causes interaction on the job routine ii) Employees may feel
alienated when they are rotated from job to job iii) The employee who looks for more
challenging assignments may still feel frustrated.
3. Job Enlargement: It involves adding more task to a job. This is a horizontal expansion
in a job. Job enlargement reduces boredom and monotony by providing the employee
more variety of tasks in the job. Thus, it helps increase interest and efficiency.
4. Job Enrichment: Another approach to designing motivating jobs is job enrichment.
Job enrichment involves adding motivating factors to job. It is a vertical expansion of
a job by adding more responsibility and freedom to do it. Job enrichment can improve
the quality of work output, employee motivation and satisfaction.
How to enrich job?
There is no single way of enriching a job. The technology and the circumstances dictate which
techniques could be appropriate. Some of the important techniques are:
i) Increasing responsibilities of the employees by adding variety of tasks.

30
 ii) Assigning the employee a complete natural unit of work.
iii) Allowing the employee to set his own standards.
iv) Making the employee directly perform for his work.
v) Encouraging the employee participation in planning, innovating new techniques
and reviewing new results.
vi) Introducing new and more difficult and challenging tasks.
vii) Removing some controls from while ensuring that individuals are clearly
accountable for achieving standards.
viii) Allowing the employee to make crisis decision in problem situations rather than
relying on the boss.

UNIT – III

RECRUITMENT AND SELECTION

MEANING: Recruitment is the generating of applications or applicants for specific positions

to be filled up in the organization. In other words it is the process of searching for and obtaining
applicants for jobs so that the right people in right number can be selected.

DEFINITION: According to Flippo, “It is a process of searching for prospective employees

and stimulating and encouraging them to apply for jobs in an organization.”

OBJECTIVES:

1. To attract people with multi-dimensional skills and experiences that suits the present
and future organizational strategies.
2. To induct outsiders with a new perspective to lead the company.
3. To infuse fresh blood at all levels of the organization.
4. To develop an organizational culture that attracts competent people to the company.
5. To search or head hunt/head pouch people whose skills fit the company’s values.
6. To device methodologies for assessing psychological traits.
7. To seek out non-conventional development grounds of talents,
8. To search for talent globally and not just within the company.

31
 9. To design entry pay that competes on quality but not on quantum.
10. To anticipate and find people for positions that does not exist yet.

SOURCES OF RECRUITMENT:

The various sources of recruitment are classified into two broad categories, i.e.,

I. Internal sources
II. External sources

The sources included under each category are depicted in the following figure:

SOURCES OF RECRUITMENT

INTERNAL SOURCES EXTERNAL SOURCES

1. Present Employees 1. Employment Exchanges

2. Employee referrals 2. Advertisements
3. Former Employees 3. Employment Agencies
4. Previous applicants 4. Professional associations
5. Campus recruitments
6. Deputation
7. Word-of-mouth
8. Raiding

INTERNAL SOURCES:

1. Present Employees: Promotions and transfers from among the present employees can be
a good source of recruitment. Promotion implies upgrading of an employee to a higher
position carrying higher status, pay and responsibilities. It is advantageous because the
employees promoted are well acquainted with the organizational culture, they get motivated,
and it is cheaper also. It also reduces the requirement of job training. However, it is not
free from disadvantage i.e., the choice is limited and denying hiring of outsiders who may
be better qualified and skilled. Furthermore, the promotion also results in inbreeding which
creates frustration among those not promoted.

32
Transfer refers to shifting an employee from one job to another without any change in the
position, post, status and responsibilities. Job rotation involves transfer of employees from one
job to another on the lateral basis.

2. Former Employees: Retired or retrenched employees may be interested to come back to

the company to work a part time basis. Similarly, some former employees who left the
organization for any reason may again be interested to come back to work.

3. Employee Referrals: The existing employees refer their family members, friends and
relatives to the company as potential candidates. This source serves as one of the most effective
methods of recruiting people in the organization. The referred individuals are expected to be
similar in type in terms of race and sex, for example, to those who are already working in the
organization.

4. Previous Applicants: The applications from the potential candidates are already lying with
the organization is considered to be another internal source. The organization contact through
mail or messenger these applicants to fill up the vacancies particularly for unskilled or semi
skilled jobs.

Evaluation of Internal Source:

Advantages:

1. Familiarity with own employees: The organization has more knowledge and
familiarity with the strengths and weaknesses of its own employees than of strange and
unknown outsiders.
2. Better use of the talent: It also provides an opportunity to the organization to make a
better use of the talents internally available and to develop them further and further.
3. Economical recruitment: The organization does not need to spend much money, time
and effort to locate and attract the potential candidates.
4. Improves morale: This method makes employees sure that they would be preferred
over the outsiders as and when vacancies will be filled up in their organization
5. A Motivator: The promotion through internal recruitment serves as a source of
motivation for employees to improve their career and income. The employees feel that
organization is a place where they buildup their live long career. It also serves as a
means of attracting and retaining competent employees in the organization.

Disadvantages:

1. Limited Choice: Internal recruitment limits its choice to the talent available within the
organization. Thus, it denies the tapping of talent available in the vast labour market
outside the organization. It also serves as a means for “inbreeding”, which is never
healthy for the future of the organization.
2. Discourages competition: The internal candidates are protected from competition by
not giving opportunity to otherwise competent candidates from outside the
organization. This practice will develop a tendency to take promotion without showing
extra performance.
33
 3. Stagnation of skills: With the feeling that internal candidates will surely get promoted,
their skill in the long run may become stagnant or obsolete. If so, the productivity and
efficiency of the organization will decrease.
4. Creates conflicts: Conflicts and controversies surface among the internal candidates,
whether or not they deserve promotion.

External Sources:

1. Employment Exchanges: The national commission on labour (1969) observed in its

report that in the pre-independence era, the main source of labour was rural areas
surroundings the industries. Immediately after independence National Employment
Service was established to bring employers and job-seekers together. In response to it,
a Compulsory Notification of Vacancies Act of 1959 (commonly called Employment
Exchange Act) was instituted which became operative in 1960. Under Sec.4 of the Act,
it is obligatory for all industrial establishments having 25 workers or more to notify the
nearest employment exchange of vacancies in them, before they are filled. Its main
functions are registration of job seekers and their placement. It is obligatory for the
employer to inform the outcome of selection within 15 days to employment exchange.
These exchanges are particularly useful in recruiting blue color, white color and
technical workers. It is very much preferred for the appointment of clerical personal.
2. Employment Agencies: In addition to government agencies, there are a number of
private employment agencies who register candidates for employment and furnish a list
of suitable candidates from their data bank as and when sought by the prospective
employers.
3. Advertisement: This is the most widely used method for generating many
applications. This is because its reach is very high. This can be used for jobs like
clerical, technical and managerial. For top executive appointment the advertisement
in a national daily like ‘The Hindu’ is preferred.
4. Professional Associations: Very often, recruitment for certain professional and
technical positions is made through professional associations also called ‘headhunters’.
Institute of engineers, Indian Medical Association, All India Management Association,
etc., provide placement services for their members. These associations are useful for
attracting highly skilled and professional personnel.
5. Campus Recruitment: This has made its mark only recently in India. Of late, some
organizations such as HLL, HCL, L&T, Citi Bank, Anz Grindlays, Motorola, Reliance
etc., in India have started visiting educational and training institutes for recruitment
purpose, for example, IIM, IIT and University Departments. For this purpose some
institutions have regular placement cells or officers.
6. Deputation: Sending an employee to another organization for a short duration of two
to three years is called deputation. It is practiced in the Government departments and
public sector organizations. It is useful because it provides ready expertise and the
organization need not have to incur the expense of induction and training. However,
the disadvantage is that the deputation period of two/three years is not long enough for

34
 the deputed employee to prove his/her mettle, on the one hand, and develop
commitment with the organization to become part of it on the other.
7. Word-of-mouth: In this method the word is passed around the possible vacancies, or
openings in the organization. Another form of this method is ‘employee-pinching’, i.e.,
the employee working in another organization is offered an attractive offer by the rival
organizations.
8. Raiding or Poaching: This method the rival firms by offering better terms and
conditions, try to attract qualified employees to join them.

Evaluation of External Source:

Advantages:

1. Open Process: It is likely to attract large number of applicants. This in turn, widens
its options of selection.
2. Availability of talented candidates: With large pool of applicants, it becomes
possible for the organization to have talented candidates from outside. Thus, it
introduces new blood in the organization.
3. Provides healthy competition: As the external members are supposed to be more
trained and efficient, they work with positive attitude and greater vigour. This creates
healthy competition and conducive work environment.

Disadvantages:

1. Expensive and time consuming: There is no guarantee that organization will get good
and suitable candidates even after spending lot of time and money.
2. Unfamiliarity with the organization: The outside candidates are not familiar with the
tasks, job nature and the internal scenario of the organization.
3. Discourages the existing employees: The existing employees are not sure to get
promotion. This discourages them to work hard. This in turn boils down to decreasing
productivity and efficiency.

Recruitment Process

Recruitment is the process of locating, identifying and attracting capable applicants for jobs
available in an organization. Accordingly, the recruitment process comprises the following
five steps.

1. Recruitment Planning: Planning involves drafting a comprehensive job specification

for the vacant position, outlining its major and minor responsibilities, the skills,
experience and qualifications needed, grade and level of pay, starting date, whether
temporary or permanent and mention of special condition if any attached to the job to
be filled.
2. Strategy Development: Once it is known how many, with what qualifications
candidates are required, the next step involved in this regard is to device a suitable
strategy for recruiting the candidates in the organization. It may include issues like
whether to prepare the required candidates themselves or hire it from outside, what type
35
 of recruitment method to be used, what geographical area can be considered, which
source of recruitment to be practiced and what sequence of activities to be followed.
3. Searching: This step involves attracting job seekers to the organization. There are
broadly two sources used to attract candidates. These are 1. Internal sources 2. External
sources.
4. Screening: Though some people view screening as the starting point of selection, we
have considered it as an integral part of recruitment. Because, the selection process
starts only after the applications are screened and shortlisted.
5. Evaluation and control: Taking into consideration the cost involved in the
recruitment process, its evaluation and control is imperative. The cost generally
incurred include salary of recruiters, cost of time spent for preparing job analysis and
advertisement, administrative expenses, cost of outsourcing or overtime while
vacancies remain unfilled and cost incurred in recruiting unsuitable candidates.

Recruitment Practices in India

The Indian firms practice not a single source of recruitment, but a host of sources of
recruitment. These have been classified as within the organization, badly or temporary
workers, employment agencies, casual callers, applicants introduced by the existing
employees, advertisements and labour contractors.

Recruitment in Public sector

The major sources of recruitment practiced in the public sector organizations in order of
preference were

i) Employment exchanges
ii) Advertisements
iii) Internal sources (promotion and transfer)
iv) Casual employment seekers
v) Displaced persons
vi) Employees’ relatives and friends.

Recruitment in Private sector:

In private sector organizations, procedures and methods with regard to recruitment were not
formalized. As such each private sector employer followed his own method. However, the
following methods were found popular in their hierarchical order of importance

i) Advertisements
ii) Employment Exchanges
iii) Relatives and Friends of existing employees
iv) Internal sources (promotion and transfer)
v) Casual callers

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As regards recruitment practices in the government organizations, they follow by and large,
public recruitment policies, viz., employment exchanges in recruitment lower level and semi
skilled jobs. Advertisements are used for filling the higher level jobs. Cadre build vacancies
such as IAS, IPS, IFS etc are filled through competitive examinations through advertisement.

‘Sons of the soil’ claim

In recent years, a controversy has arisen about claims of sons of the soil for preference in
recruitment. As per this claim the vacancies must be first offered to suitable hands hailing from
the immediate vicinity of the organization. In this connection, the National Commission on
Labour has observed and studied this claim and then recommended the following:

1. Young persons from families who surrendered their lands for establishing the
organization must be given first priority with proper training.
2. Second preference is given to suitable hands hailing from immediate vicinity of the
organization.
3. Selection committee be formed with a representative of state government for filling up
vacancies of lower level jobs.
4. Middle and higher level appointments be supervised by the Public Service Commission.
5. State participation must be ensured in the board of directors.
6. Periodic return on status of employment is submitted to the central and state
governments.

Methods of Recruitment

Recruitment methods referred to the means by which an organization reaches to the potential
job seekers. In other words, these are ways of establishing contacts with the potential
candidates. It is important to mention that the recruitment methods are different from the
sources of recruitment. The major distinction between these two is that the recruitment method
is the means of establishing links with the prospective candidates, where as the recruitment
source is location where the prospective employees are available. Dunn and Stephen have
broadly classified the methods into three categories.

1. Direct method
2. Indirect method
3. Third party method.

Direct Methods

In this method the representatives of the organization are sent to the potential candidates in the
educational and training institutes. They establish contacts with the candidates seeking jobs.
These representatives work in co-operation with placement cells in the institutions. Persons
pursuing management, engineering, medical etc. are mostly picked up in this manner.
Sometimes the firms establish direct contact with the professors and solicit information about
students with excellent academic records.

Indirect Methods

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These include advertisement in newspapers, on the radio and TV, in professional journals,
technical magazines etc. This method is useful when

i) Organization does not find suitable candidates to be promoted to fill up the higher
post.
ii) When the organization wants to reach out to a vast territory.
iii) When organization wants to fill up scientific, professional and technical posts.

Third Party Methods

These include the use of private employment agencies, management consultants, professional
bodies/associations, employee referral/recommendations, voluntary organizations, trade
unions, data banks, and labour contractors etc. to establish contacts with the job seekers.

APPLICATION BLANK

Application blank is the commonest device for getting information from a prospective
candidate. This serves as a personal record of the candidate bearing personal history profile,
detailed personal activities, skills and accomplishments. Accordingly, the following data is
generally called on from the applicant through application blank.

i. Biographical information: It includes name, father’s name, age, sex, nationality,

height, marital status, identification marks and number of dependents.
ii. Educational information: These cover candidate’s academic qualification, courses
studied, year of passing, subjects offered, percentage of marks, division or grade,
names of the educational institutions, training acquired, scholarship etc.
iii. Work Experience: It includes positions held, name of the employer, nature of job,
salary, duration of various assignments, reasons for leaving the present job,
membership of professional bodies, etc.
iv. Salary: It refers to the minimum salary acceptable and minimum joining period
required.
v. Extracurricular Information: Participation in games, level of participation, prizes
won, dramas, debates, NSS, NCC, hobbies etc.
vi. References: It includes the names of two or three referees who know the character,
work and abilities of the candidate.

The questions inserted in the question blank should be valid. Superfluous questions should be
avoided. The information supplied by the candidate in the application blank should be
authentic and verifiable. In case of false information given, the selection of the candidate, if
selected, should stand cancelled.

INTERVIEWS

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Interview is the widely used selection method. It is the face-to-face interaction between
interviewee and interviewer. If handled carefully, it can be a powerful technique in having
accurate information of the interviewee.

Definition: According to Scott and others, “An interview is a purposeful exchange of ideas,
the answering of questions and communication between two or more persons.”

Objectives of Interview:

i. To verify the information obtained through application forms and tests.

ii. To obtain additional information from the applicant otherwise not available.
iii. To give the candidate necessary facts and information about the job and the
organization.
iv. To establish mutual understanding between the company and the candidate.

Types of Interviews:

1. Preliminary Interview: The interviews conducted to screen the applicants, to decide

whether further detailed interview will be required are called preliminary interviews. The
candidate is given freedom by giving job details during the interview to decide whether
the job will suit him. Plus point of this interview is it saves money and time for the
company. Minus point is if the interview is not conducted effectively, then many
desirable candidates may be eliminated.
2. Patterned Interview: The pattern of interview is decided in advance. What kind of
information is to be sought or given, how the interview is to be conducted and how much
time is to be allotted, etc are worked out in advance.
3. Depth Interview: Depth interview tries to portray the interviewee in depth and detail.
It accordingly covers the life history of the applicant along with his or her work
experience, academic qualification, health, attitude, interest and hobbies. This is
particularly suitable for selecting executives. It involves more time and money in
conducting it.
4. Group Interview: In this type of interview, groups rather than individuals are
interviewed. Generally, a topic for discussion is given to the group. The applicants enter
into group discussions, knowing that the interview is a test, but do not know which
qualities are being measured or tested. The candidates in the group are carefully watched
as to who takes a lead in the discussion, who tries influencing others, who summarizes
and clarifies issues and who speaks effectively. In this type of interview, the emphasis is
on the analysis of the interviewers’ impressions from discussions rather than factual
information. Such interview is based on the assumption that behaviour displayed in a
group situation is related to potential success in the job.

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 5. Panel Interview: Such interview is conducted by a group of interviewer. It seeks to pool
the collective wisdom and judgement of several interviewers. Questions are asked in turn
or at random.
6. Individual Interview: This is also called as one-to-one interview. It is a face to face
interaction between the interviewer and the candidate. It is a two-way communication
and there should be purposeful exchange of ideas.
7. Walk-In Interview: Walk in interview means conduct of interview in the office
without any call letter or formal call. Candidate may go and appear unlike other forms
of recruitment where once apply in response profile. Mostly selections are done on the
spot....Walk - In - Interview means one can just walk in with their resume and other
credentials and attend for an interview. A walk-in interview occurs when an individual
can interview for a job position without having a pre-scheduled appointment.
8. Stress Interview: These interviews are conducted for the jobs to be performed under
stressful condition. The objective of this is to make deliberate attempts to create stressful
or strained conditions for the interviewee to observe how the applicant behaves under
stressful conditions. The common methods used to induce stress include frequent
interruptions, keeping silent for an extended period of time, asking too many questions at
a time, making derogatory remarks about the candidate, accusing him that he is lying and
so on. The purpose is to observe whether he loses his temper, gets confused or frightened.

However, stress-inducing must be done very carefully by trained and skilled

interviewer; otherwise it may result in dangers. Emotionally charged candidates must
not be subjected to further stressful conditions.

Guidelines for effective interviewing:

1. The interview should have a definite time schedule known to both the interviewer and
the interviewee.
2. It should be conducted by the competent, trained and experienced interviewers.
3. The interviewers should be supplied with specific set of guidelines.
4. The interviewers should ensure an element of privacy for the interviewee.
5. A resume for all the candidates to be interviewed should be prepared and the same be
made available to the interviewers before the interview starts.
6. It should not end abruptly but, it should come to close tactfully.
7. The interviewers should show their sensitivity to the interviewees’ sentiments and also
sympathetic attitude to him/her.
8. The interviewers should also evince emotional maturity and stable personality during
the interview session.

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Unit IV

TRAINING AND DEVELOPMENT

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Meaning: Training is the process of increasing the knowledge and skills for doing a particular
job. It is an organized procedure by which people learn knowledge and skill for a definite
purpose. The purpose of training is to bridge the gap between job requirements and present
competence of an employee. It is aimed at improving the behaviour and performance of a
person. It is a never ending continuous process.

Definition:

According to Edwin B. Flippo, “Training is the act of increasing the knowledge and skills of
an employee for doing a particular job.”

Nature of Training

In simple terms, training and development refer to the imparting of specific skills, abilities and
knowledge to an employee. It is an attempt to improve current or future employee performance
by increasing his ability to perform through learning usually by changing the employees’
attitude or increasing his or her skills and knowledge. The need for training is determined by
the employees’ performance deficiency, computed as follows:

Training need = standard performance – actual performance.

Need for Training

1. Job Requirements: Employees selected for a job might lack the qualifications required
to perform the job effectively. New and inexperienced employees require detailed
instructions for effective performance on their jobs. In some cases the past experience,
attitude and behaviour patterns of experienced personnel might be inappropriate to the
new organization. For such people remedial training should be given to match the needs
of the organization.
2. Technological Changes: Technology is changing very fast. Now, automation and
mechanization have are being increasingly applied in offices and service sector. This
requires training into new technology. No organization can take advantage of latest
technology without trained personnel.
3. Organizational Viability: In order to survive and grow an organization should
continually adopt itself to the changing environment. With increasing economic
liberalization and globalization in India, business firms are experiencing expansion,
growth and diversification. In order to face international competition, the firms must

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 upgrade their capabilities. Therefore, existing employees need refresher training to keep
them abreast of new knowledge. It fosters the initiative and creativity of employees and
help to prevent obsolescence of skills.
4. Internal mobility: Training becomes necessary when an employee moves from one job
to another due to promotion and transfer. Employee chosen for higher level jobs need to
be trained specially.

Importance of Training (or) Training and Development as Source of Competitive

Advantage

The following two Chinese proverbs highlight the importance of the employee training.

”Give a man a fish, and you have given him meal. Teach man to fish, and you have given him
livelihood”

“If you wish to plan for a year sow seeds, if you wish to plan for 10 years plant trees, if you
plan for life-time develop men”.

1. Better Performance: Training improves employee ability and skills and in turn,
improves performance both in quantity and quality. It leads to increased operational
productivity and increased organizational profits.
2. Improved Quality: In formal training programs the best methods of performing jobs are
standardized and then thought to employees. This offers two-fold benefits. Firstly,
uniformity in work performance helps improve the quality of work. Secondly, better
informed or trained workers are less likely to make mistakes.
3. Less Supervision: A trained worker is self reliant. He knows his work and way to
perform it well.
4. Less Learning Period: A well planned and systematically organized training program
reduces the time and cost involved in training.
5. High Morale: It not only improves the ability and skill, but also changes the attitude of
employees towards positive. Higher performance, job satisfaction, job security and
avenues for internal promotion lead to high morale among the employees.
6. Personal Growth: It prevents employees’ obsolescence. This makes employees growth
oriented.
7. Favorable Organizational Climate: The above said advantages combined lead to an
improved and favorable organizational climate – better industrial relations and

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 disciplines, reduced resistance to change, reduced absenteeism and turnover and
improved stability of organization.
8. Low Accident Rate: Trained employee adopts the right work methods and makes use
of the prescribed safety devices. Therefore the frequency of accidents is reduced.

PRINCIPLES OF TRAINING

1. Clear Objectives: The objectives and scope of a training programme should be clearly
defined. A comparison of operational requirements and existing personnel skills will
help to determine the specific training needs of employees. A well defined set of
performance standards should be created.
2. Training Policy: A clearly defined training policy serves as the guide for designing and
implementing training programmes.
3. Motivation: Employees tend to be most responsive to training programmes when they
feel the need to learn. Therefore training must be related to the needs and problems of
the trainees. The information provided in the training material should be meaningful. It
should be presented in a sequential manner from the simple to the more complex. Audio-
visual aids should be used to avoid boredom and fatigue.
4. Reinforcement: According to B.F. Skinner’s Behaviour modification model when a
behaviour is repeatedly rewarded, it becomes a permanent part of one’s personality.
Learning is more effective when there is reinforcement in the form of rewards and
punishment. Pay rise, promotions and praise should, therefore, be used to reward
trainings.
5. Organized Material: The training material should be properly organized. A complete
outline of the whole course should be distributed in advance so that the trainees can
prepare themselves before coming to the class. The material should be prepared in
consultation with the line supervisors.
6. Learning Periods: Learning takes time and teaching in segments is better than in one
go. Several short sessions spread over a long period enable the trainee to learn, reinforce
and review.
7. Preparing the Instructor: The instructor or trainer is the key figure in a training
programme. The trainer should not only be a good teacher, but must know the subject
and the job also. Trainers should be developed both from inside and outside the
organization.

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 8. Feedback: Trainees should be provided information on how much they have learned
and how well they are doing. The trainee must know what behavioural change is needed
on his part and how to improve it. The feedback should be positive, fast and frequent.
Self graded tests and programmed learning can be used to provide feedback.
9. Practice: Practice makes a man perfect. Skills that are practiced often are better learned
and less easily forgotten.
10. Appropriate Techniques: The methods and process of training should be related
directly to the needs and objectives of the organization. It should be conducted at the
actual job environment.

Inputs and Gaps in Training

Inputs

Any training programme must contain inputs which enable the participants to gain skills, learn
theoretical concepts and help acquire vision to look into the distant future. In addition to these
there is a need to impart ethical orientation, emphasize on attitudinal changes and stress upon
decision making and problem solving abilities.

1. Skills: As stated earlier, training is imparting skills to employees. A worker needs skills
to operate machine and use other equipment with least damage and scrap. This is a basic
skill. There is also the need for motor skills. It refers to performance of specific physical
activities. (Walking, Cycling, playing, driving etc.). This skill is needed for all employees.
Interpersonal skills popularly known as people skills are needed to supervisors and
executives. Because they have to understand oneself and others better and act accordingly.
2. Education: The purpose of education is to teach theoretical concepts and develop a sense
of reasoning and judgment. Such programmes can be conducted by university professors
as resource person to enlighten participants about theoretical knowledge. Organizations
normally encourage employees to do courses on a part time basis.
3. Development: Another component a training programme is development which is less
skill oriented but stresses on knowledge. Knowledge about business environment,
management principles and techniques, human relations, specific industry analysis and the
like is useful for better management of a company.
4. Ethics: There is a need for imparting greater ethical orientation to a training and
development programme. There is no denial of the fact that ethics are largely ignored in

44
 businesses. Unethical practices abound in marketing, finance and production functions in
an organization.
5. Attitudinal Change: Attitudes represent feelings and beliefs of individuals towards
others. It affects motivation, satisfaction and job commitment. Negative attitudes need to
be converted into positive attitudes. But, it is difficult because i. employees refuse to
change, ii. They have prior commitments, iii. Information needed to change attitudes may
not be sufficient. Nevertheless, attitudes must be changed so that employees feel
committed to the organization, are motivated for better performance, and derive
satisfaction.

Gaps in Training

The study conducted by the Foundation for Organizational Research and Education reveals that
the study covered 50 undertakings in the central public sector, the respondents were asked to
express the extent of gaps existing in knowledge, skills and attitudinal aspects of the existing
training programmes across top, senior, middle and junior management levels. The ranks in
the areas perceived to have gaps in the order of importance:

Gaps in Existing Training Programmes in the order of Priority

(1 - Largest Gap) (6 - Least Gap) Gap Levels of Management

Areas Top Senior Middle Junior
Knowledge in the functional area 6 6 1 4.5
Leadership and Human relations 4 2 3 2
Managerial skills 2 1 2 3
Job Related attitudes 5 5 5 1
Attitudes – general 1 3 6 6
Teamwork 3 4 4 4.5

METHODS OF TRAINING

I. On the Job Training (OJT)

Every employee from the clerk to company president gets some “on the job training”,
when he joins a firm. This is the most common, the most widely used and accepted and the
most necessary method of training employees. Trainees earn as they learn under the watchful

45
eyes of a master mechanic or craftsman, receive immediate feedback, practice in the actual
work environment, and associate with the same people they will work with after training.
Under this technique an employee is placed in the new job and is told how it may be performed.
It is mostly given for unskilled and semi-skilled jobs – clerical and sales jobs.

Employees are coached and instructed by skilled co-workers, by supervisors, by the

special training instructors. They learn the job by personal observation and practice. It is
learning by doing. And it is most useful for jobs that are either difficult to stimulate or can be
learned quickly by watching and doing.

There are variety of OJT methods such as coaching or under study, job rotation and
special assignments. Under coaching (internship and apprenticeship) method the employee is
trained on the job by his immediate superior. Internship is usually applied to managerial
personnel and provides a wide job experience often involving job rotation. Apprenticeship is
generally used to impart skills requiring long periods of practice as found in trade, crafts and
other technical fields.

In job rotation a management trainee is made to move from job to job at certain intervals.

Special assignments are used to provide lower level executives with firsthand experience in
working on actual problems. The OJT is more effective by the use of a variety of training aids
and techniques (procedure charts, lecture manuals, sample problems, demonstrations, tape
recorders, explanations etc.)

Merits

i. The trainee learns in the actual environment of his job. He therefore gets the feel
of the actual production condition and requirements.
ii. It is highly economical since no additional personnel or facilities are required for
training.
iii. The trainee learns the rules and regulations by observing. He can therefore be easily
sized up by the management.
iv. This method is a suitable alternative for a company in which there are almost as
many jobs as there are employees.
v. Finally, it is most appropriate for teaching the knowledge and skills which can be
acquired in a short period.

46
Demerits

i. The instruction is often highly disorganized and haphazard and not properly
supervised.
ii. There is lack of motivation on the part of the trainee to receive training.
iii. The learners are often subjected to distraction of a noisy shop or office.
iv. There is low productivity especially when the employee is unable to fully develop
his skills.
II. Job instruction training (JIT)

This is very popular in the states for preparing supervisors to train operatives. This requires
skilled trainers, extensive job analysis, training schedules, and prior assessment of the trainee’s
job knowledge. This method is also known as “Training through step by step learning”. It
involves listing all necessary steps in the job in proper sequence.

The actual training follows a four step process.

i. The preparation of the trainee for instruction. This includes putting him at ease,
emphasizing the importance of the task and giving general descriptions of job duties
and responsibilities.
ii. Presentation of the instructions, giving essential information in a clear manner.
iii. Having the trainee try out the job to show that he has understood the instructions, if
there are any errors they will be corrected.
iv. Encouraging questions and allowing the trainee to work along and the trainer
follows up regularly.

The JIT method provides immediate feedback on results, quick correction of errors, and
provision of extra practice when required. However it demands a skilled trainer and can
interfere with production and quality.

1. Vestibule Training (or) Training-centre Training

This method attempts to duplicate on the job situation in a company class room. Expert trainers
are employed to provide training with the help of the equipment and machines which are
identical with those in use in the place of work.

Merits

47
 i. Distractions are minimized.
ii. The training will be more effective because of a trained instructor.
iii. The correct method can be taught without interrupting production.
iv. It permits the trainee to practice without the fear of supervisors.

Demerits

i. The splitting of responsibilities leads to organizational problems.

ii. An additional investment is incurred in creating a duplicate work environment.
iii. The training situation is artificial.

This method is preferred only when there is large number of trainees. But the number of
trainees is small on the job training is preferred.

2. Training by Experienced Workmen

Training is imparted by experienced senior fellow workers. It is particularly adaptable where

experienced workmen need helpers.

3. Training by Supervisors

This is imparted on the job by the workers’ immediate supervisors. It provides to the trainees
opportunities for getting acquainted with their bosses. Similarly, the bosses too have an
opportunity to judge the abilities and possibilities of trainees.

4. Demonstrations and Examples (or) Learning by Seeing

In this method the trainer describes and displays something, as when he teaches an employee
how to do something by actually performing the activity himself and by going through a step
by step explanation of “why and what” he is doing.

Demonstrations are very effective in teaching because it is much easier to show a person how
to do a job than mere oral/written instructions. Demonstrations are often used in combination
with lectures, pictures, discussions, text materials etc.

Teaching by example is effective in mechanical operations or interpersonal relationships for

job duties and responsibilities, for informal group standards, supervisory expectations, and the
like.

5. Simulation

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It is a technique which duplicates, as nearly as possible, the actual conditions encountered on
a job. The vestibule training method or the business game methods are examples of business
simulations. This is widely used in aeronautical industry. Trainee interest and employee
motivation are both high in simulation method.

6. Apprenticeship

In this method theoretical instructions and practical learning are provided to trainees in training
institutes. In India, the government has established Industrial Training Institute (ITI) for this
purpose. Under the Apprenticeship Act 1962 some specified industries are required to train
the prescribed number of persons in “designated trades”.

Merits

i. It combines theory and practice.

ii. The trainee acquire skills which are valuable in the job market
iii. It provides skilled work force in the industry.

Demerits

i. It is time consuming and expensive. Many persons leave the programme in the middle
as the training period ranges from 1 year to 5 years. It is the oldest method of training.
III. Off the Job Training Methods

It simply means that training is not a part of everyday job activity. The actual location may be
in the company class rooms or any other places other than work place. These methods consist
of:

1. Lectures
2. Conferences
3. Group discussions
4. Case studies
5. Role-playing
6. Programmed instructions
1. Lectures: Lecture is regarded as one of the simplest way of imparting knowledge to the
trainees. It is commonly used as a direct method of training. In this method the trainer
provides knowledge to the trainees usually from prepared notes. This method is preferred

49
 when the trainees are large in number. It is a low cost method but, it does not provide
any opportunity to the trainees to have active involvement.
2. Conferences/Seminars: In this method the trainer delivers a lecture on the particular
subject which is followed by queries and discussions. The conference leader must have
the necessary skills to lead the discussion in a meaningful way without losing sight of the
topic or theme. It helps employees in developing problem solving skills.
3. Group Discussion: This is an established method for training. It may be based on a
paper prepared by one or more trainees on a selected subject. The trainees read the papers
and this are followed by a critical discussion. The leader summarizes the contents of the
paper and the discussions which follow their reading. It may be based on the statement
made by the leader. The leader distributes in advance the material to be analyzed.
4. Case Studies: The case is an actual event or situation on organizational problems which
is a written description for discussion purpose. Trainees are asked to analyze the event
with an objective to identify the problem, trace out the causes for it and find out the
solution to solve the problem. This method is also called decision making under
uncertainty. It is highly suitable for developing decision making skills among top and
senior level managers.
5. Role-Playing: This method was developed by Moreno, a Venetian Psychiatrist. This is
just like acting out a given role as in a stage play. In this method of training the trainees
are required to enact defined roles on the basis of oral or written description of a particular
situation. This method is mostly used for developing inter-personals relations and
interactions among the employees.
6. Programmed Instructions: This is a recently developed technique based on the
principle of positive reinforcement developed by B.F. Skinner. This is used to teach non
motor and behavioural skills. The matter to be learned is prepared and condensed into
logical sequence from simple to more complex. The trainer monitors the trainees’
progress and the trainee gets instant feedback on his learning. However, this method is
expensive and time consuming.

Evaluating Training Effectiveness and Need for Evaluation

It is necessary to evaluate the extent to which training programmes has achieved the aims for
which they were designed. Such an evaluation would provide useful information about the
effectiveness of training as well as about the design of future training programmes. The

50
evaluation of training consequences also provides useful data on the basis of which relevance
of training and its integration can be judged.

Principles of Evaluation

1. Evaluation specialist must be clear about the goal and purpose of evaluation.
2. It must be continuous and specific.
3. It must provide the means and focus for trainers to be able to appraise themselves.
4. It must be based on objective methods and standards.
5. Realistic target dates must be set for each phase of the evaluation.

Concept of Training Effectiveness

It is the degree to which trainees are able to learn and apply the knowledge and skills acquired
in the training programme. It depends on the attitudes, interests, values and expectation of the
trainees and the training environment. It is said to be more effective when the trainees want to
learn, or involved in their jobs, have career strategies. Contents of the programme and the
ability and motivation of the trainers also determine training effectiveness.

Evaluation Criteria

Evaluation of training effectiveness is the process of obtaining information on the effects of a

training programme and assessing the value of training in the light of that information.
Evaluation involves controlling and correcting the training programme. According to Hamblin
the training effectiveness can be measured in terms of the following criteria:

i. Reactions: The training programme can be evaluated in terms of the trainees’ reactions
to the objectives, contents and methods of training.
ii. Learning: The extent to which the trainees have learnt the desired knowledge and
skills during the training period is another useful basis of evaluating training
effectiveness.
iii. Behaviour: If there is any improvement in the job behaviour of the trainees, then the
training programme is said to be effective.

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 iv. Results: The ultimate results in terms of improvement in productivity and quality,
reduction in cost, accident, labour turnover and absenteeism are the best criteria for
evaluating training effectiveness.

Methods of Evaluation

Several methods can be employed to collect data on the outcomes of training. Some of these
are:

1. The opinions and judgment of trainers, superiors and peers.

2. Asking the trainees to fill up evaluation forms.
3. Using a questionnaire to know the reactions of trainees.
4. Giving oral and written test to trainees.
5. Arranging structured interviews with the trainees.
6. Comparing trainees’ job performance before and after training.
7. Studying profiles and career development charts of the trainees.
8. Measuring levels of productivity, wastage, cost, and absenteeism and employee
turnover.
9. Employees’ comments and reactions during the training period.
10. Cost benefits analysis of the training programme.

How to make training more effective

1. Specific training objectives should be outlined.

2. Attempt should be made to determine whether the trainee has the intelligence, maturity,
motivation to successfully complete the training programmes.
3. The trainees should be helped to see the need for training, by making him aware of the
personal benefits he can achieve.
4. The training programme should be planned one.
5. Create the organizational conditions that are conducive to a good learning environment.
6. A combination of training methods shall be selected so that there will be variety.
7. Since all the trainees do not progress at the same rate, flexibility should be allowed in
judging the rates of progress.
8. The personal involvement or active participation of the trainee should be encouraged
in the training programme.

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 9. If the trainee acquires new knowledge, skills or attitudes and applies them in his job,
then he should be rewarded for his efforts.
10. He should be provided with regular and constructive feedback concerning his progress.

UNIT – V

Performance and Potential Appraisal

Meaning: To appraise is to assess the worth or value. In the context of an industrial

organization, performance appraisal is a systematic evaluation of personnel by supervisors or
those familiar with their performance. In other words, Performance appraisal is a systematic
and objective way of judging the relative worth or ability of an employee in performing his or
her task.

Definition: According to Flippo, “Performance appraisal is the systematic, periodic and an

impartial rating of an employee’s excellence in matters pertaining to his present job and his
potential for a better job.”

According to Beach, “Performance appraisal is the systematic evaluation of the individual with
regard to his or her performance on the job and his potential for development.”

Purpose of Performance Appraisal

Performance appraisal is broadly used for meeting the following purposes:

1. To identify employees for salary increases, promotions, transfer and lay-off or

termination of services.
2. To create and maintain a satisfactory level of performance.
3. To determine training and development needs of the employees.

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 4. To motivate employees by providing feedback on their performance level.
5. To establish a basis for research and reference for personnel decisions in future.
6. To help the superiors to have a proper understanding about their subordinates.
7. To guide the job changes with the help to continuous ranking.

The above purposes of performance appraisal can be divided into the following two broad
categories:

Purpose of Performance Appraisal

Evaluative Developmental

1. Compensation decisions 1. Performance feedback

2. Staffing decisions 2. Training and Development needs
3. Evaluate selection system 3. Feedback for improvement

Process of Performance Appraisal

The steps in performance appraisal system may vary from organization to organization, yet,
the following are the common steps usually followed by organizations:
1. Establish performance standards.
2. Communicate performance expectation to employee.
3. Measure actual performance.
4. Compare actual performance with standards.
5. Discuss the appraisal with the employee.
6. Initiate corrective actions.
1. Establish performance standards:

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The appraisal process begins with the establishment of performance standards. The manager
must determine what outputs, accomplishments and skills will be evaluated. These standards
should have evolved out of job analysis and job descriptions. These standards should also be
clear and objective, to be understood and measured. The standards should not be expressed in
an articulated or vague manner such as, “A good job” or “A full day’s work”, as these vague
phrases tells nothing.
2. Communicate Performance Expectations to employees:
Once the performance standards are established, this need to be communicated to the respective
employees so that they come to know what is expected of them. Past experience indicate that
not communicating standards compounds the appraisal problem. It must be noted that mere
transference of information from the manager to the employees is not communication. It
becomes communication only when it is received and understood by the employees. The
feedback from the employees on the standards communicated must be obtained. If required,
the standards may be modified or revised in the light of feedback.

3. Measure Actual Performance:

In this step, the actual performance of the employee is measured on the basis of information
available from various sources such as personal observation, statistical reports, oral reports and
written reports. The evaluator’s feelings should influence the performance measurement of the
employee. Measurement must be objective, based on facts and findings.

4. Compare Actual Performance with Standards:

The actual performance is compared with the pre-determined standards. This reveals the
deviation between standard performance and the actual performance and will enable the
evaluator to proceed to the next step in the process.

5. Discuss the Appraisal with the Employee:

This step is to communicate to and discuss with the employees the results of the appraisal. This
is, in fact, one of the most challenging tasks the manager face to present an accurate appraisal
to the employees and then make them accept the appraisal in a constructive manner. The
discussion enables the employees to know their strengths and weaknesses. In turn, this have,
impact on their future performance.

6. Initiate Corrective Action:

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The final step is the initiation of corrective action when it is necessary. The areas needing
improvement are identified and then, the measures to correct or improve the performance are
identified and initiated. The corrective action can be of two types. One is immediate and deals
predominantly with symptoms. This is often called as, “putting out fires”. The other action is
basic and delves into causes of deviations and seeks to adjust the difference permanently. This
type of action involves time to analyze deviations. Hence, managers often opt for the
immediate action or say, “putting out fires”. Training, coaching, counseling etc are the
common examples of corrective actions that managers initiate to improve the employee
performance.

Methods of Performance Appraisal:

I. Traditional Methods II. Modern Methods

1. Ranking Method 1. Management by Objectives (MBO)
2. Paired Comparison 2. Behaviorally anchored rating scales
3. Grading 3. Assessment centers
4. Forced distribution method 4. 360-degree appraisal
5. Forced choice method 5. Cost accounting method
6. Check list method
7. Critical incidents method
8. Graphic scale method
9. Essay method
10. Field review method
11. Confidential report

I. Traditional Methods
i. Ranking Method: It is the oldest and simplest formal systematic method of performance
appraisal in which one employee is compared with all other employees for the purpose of
placing them in a simple rank order of worth. The employees are ranked from the highest
56
 to the lowest or from the best to the worst. If there are 10 employees to be appraised, there
will be 10 ranks from 1 to 10.

Limitations: 1. It does not tell that how much better or worse one is than another. 2. The task
of ranking individuals is difficult when a large number of employees are rated. 3. It is very
difficult to compare one individual with others having varying behavioural traits.

ii. Paired Comparison Method: In this method, each employee is compared with other
employees on one-on-one basis, usually based on one trait only. The rater is provided with
a bunch of slips each containing a pair of names; the rater puts a tick mark against the
employee whom he considers the better of the two. The number of times this employee is
compared as better with others determines his or her final ranking. The number of possible
pairs for a given number of employees is ascertained by the following formula.

N(N-1) / 2

Where N = the total number of employees to be evaluated. Let this be exemplified with an
imaginary example.

If the following five teachers have to be evaluated by the Vice-Chancellor of a University:

Khanka (K), Mohapatra (M), Raul (R), Venkat (V) and Barman (B), The above formula gives
5(5-1)/2 or 10 pairs. These are:

K with M

K with R M with R

K with V M with V R with V

K with B M with B R with B V with B

Thus, the pairs so ascertained give the maximum possible permutations and combinations. The
number of times a worker is considered better makes his or her score. Disadvantage: The
method can become unwieldy when large numbers of employees are being compared.

iii. Grading Method: In this method, certain categories of worth are established in advance
and carefully defined. There can be three categories established for employees:
Outstanding, Satisfactory, and Unsatisfactory. There can be more than three grades. The
employee performance is compared with grade definitions. The employee is then allocated
to the grade that best describes his performance. Such type of grading is done semester
pattern of examinations and in the selection of a candidate in the public service sector.
Major Drawback: The rater may rate most of the employees on the higher side of their
performance.
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 iv. Forced Distribution Method: This method was evolved by Tiffen. To eliminate the
central tendency of rating most of the employees at a higher end of the scale. The method
assumes that employees performance level confirms to a normal statistical distribution, i.e,
10, 20, 40, 20, and 10%. This is useful for rating a large number of employees’ job
performance and promotability. It tends to eliminate or reduce bias. It is highly simple
and easy to apply. Drawback: If all distribution grades improve similarly, no single grade
would rise in a rating.
Forced Distribution on a bell –shaped curve

Excellent Good Average Below Average Unsatisfactory

Scores

v. Forced-Choice Method: This method is developed by J.P. Guilford. It contains a

series of groups of statements, and rater rates how effectively a statement describes
each individual being evaluated. It contains both positive and negative statements.
Examples of positive statements are:
1. Gives good and clear instructions to the subordinates.
2. Can be depended upon to complete any job assigned.

A pair of negative statements:

1. Makes promises beyond his limit to keep these.

2. Inclines to favour some employees.

Each statement carries a score or weight, which is not made known to the rater. The H R
section does rating for all sets of statements. The final rating is done on the basis of all sets of
statements. Thus, employee rating in this manner makes the method more objective.
Drawback: The actual constructing of several evaluative statements, also called, “Forced-
Choice Scales”, takes a lot of time and effort.

vi. Check-List Method: This method is to ease the evaluation burden upon the rater. In this
method, a series of statements i.e, questions with their answers in objective type are
prepared by the HR department. The check list is, then, presented to the rater to tick
appropriate answers. Each question carries a weightage in relation to their importance.
After completion the check-list is sent to the H R department to prepare the final scores.

Sample check-list for appraising university teachers

Particulars Yes No
1. Is regular on the job? - -
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 2. Does maintain discipline well? - -
3. Does show consistent behaviour to all students?
4. Is interested in (teaching) job? - -
5. Does ever make mistakes? - -
6. Does show favouritism to particular student? - -
7. Is willing to help colleagues? - -
8. Does he have good communication skill? - -
- -

vii. Critical Incidents Method:

In this method the rater focuses his or her attention on those key or critical behaviors that make
the difference between performing a job in a note-worthy manner. There are three steps
involved in appraising employees using this method. First, a list of note-worthy (good or bad)
on the job behavior of specific incidents is prepared. Second, a group of experts then assigns
weightage or score to these incidents, depending upon their degree of desirability to perform a
job. Third, finally a check list indicating incidents that describe workers as “good” or “bad” is
constructed. Then, the checklist is given to the rater for evaluating the workers.

viii. Graphic Rating Scale Method

The graphic rating scale is one of the most popular and simplest technique for appraising
performance. It is also known as linear rating scale. In this method, the printed appraisal form
is used to appraise each employee. The form lists traits (such as quality and reliability) and a
range of job performance characteristics (from unsatisfactory to outstanding) for each trait.
The rating is done on the basis of points on the continuum. The common practice is to follow
a five point scale. The rater rates each appraise by checking the score that best describes his
or her performance for each trait. At last, all assigned values for the traits are then totaled. The
following table shows a typical graphic rating scale.

Sample of Graphic Rating Scale Items and Format

Performance Performance Rating

Factor
Quality of
work is the
accuracy, Consistently Occasionally Consistently Sometimes Consistently
skill and unsatisfactory unsatisfactory Satisfactory superior superior

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 completeness
of work

Quality of Consistently Occasionally Consistently Sometimes Consistently

work is the unsatisfactory unsatisfactory Satisfactory superior superior
volume of
work done in
a normal
work day

Job
knowledge is Poorly Occasionally Can answer Understands Has
information informed unsatisfactory most all phases of complete
pertinent to about work questions the job mastery of
the job that duties about the all phases of
an individual job the job
should have
for
satisfactory
job
performance

Dependability
in following Requires Requires Requires Requires
directions and constant occasional Usually can very little absolute
company supervision follow-up be counted supervision minimum of
policies on supervision
without
supervision

This method is good for measuring various job behaviours of an employee. However it is also
subjected to rater’s bias.

ix. Essay Method

This is the simplest one among various appraisal methods available. In this method, the rater
writes a narrative description on an employee’s strengths, weaknesses, past performance,
potential and suggestions for improvement. Its positive point is that it is simple in use. The
quality of appraisal depends more upon rater’s writing skill than the appraisee’s actual level of
performance.

x. Field Review Method

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When there is a reason to suspect rater’s biasedness or his rating appears to be quiet higher than
others, these are neutralised with the help of a review process. The review process is conducted
by the personnel officer in the HR department. It involves the following activities:

a) Identify areas of inter-rater disagreement.

b) Help the group arrive at a consensus.
c) Ensure that each rater conceives of the standard similarity.

This process is a time consuming one and hence is not widely used.

xi. Confidential Report

It is the traditional way of appraising employees mainly in the Government Departments.

Evaluation is made by the immediate boss or supervisor for giving effect to promotion and
transfer. Usually a structured format is devised to collect information on employee’s strength,
weakness, intelligence, attitude, character, attendance, discipline, etc.

Its drawbacks are, it is subjective evaluation based on evaluator’s impression about the appraise
rather than on facts and figures. As the feedback is not given to the appraise, the appraisal
remains confined to evaluation than development. Feedback, if any, is given only in case of
adverse report.

II MODERN METHODS

i. Management by Objectives (MBO)

Most of the traditional methods of performance appraisal are subject to the antagonistic
judgments of the raters. To overcome this problem Peter F. Drucker propounded the concept
of MBO. It is described as a “process whereby the superior and subordinate managers of an
organization jointly identify its common goals, define each individual’s major areas of
responsibility in terms of results expected of him and use these measures as guides for operating
the unit and assessing the contributions of each of its members.”

An MBO program consists of the following four main steps:

1. Goal setting. In goal setting goals are set which each individual is to attain. The
superior and subordinate jointly establish these goals.

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 2. Performance Standards. The standards are set for the employees as per the previously
arranged time period. When the employees start performing their jobs, they come to
know what is to be done, what has been done, and what remains to be done.
3. Comparison. The actual levels of goals attained are compared with the goals agreed
upon. This helps the evaluator to find out the reasons for variation. Such comparison
helps devise training needs for increasing employees’ performance.
4. Periodic Review. Corrective measure is initiated when actual performance deviates
from the standards established in the first step.

Limitations of MBO:

i) Setting immeasurable objectives. MBO suffers from its unclear and

immeasurable objective set for attainment. An objective such as, “will do a better
job of training” is useless as it is immeasurable. Instead, “will have four
subordinates promoted during the year” is a clear and measurable objective.
ii) Time-Consuming. The MBO activities such as goal setting, measuring progress
and providing feedback can take much time.
iii) Tug-of-war. While setting objectives, there will be frequent tug-of-war between
subordinates and managers. As such, the goals so set are likely to be unrealistic.
iv) Lack of trust. MBO is likely to be ineffective in an environment where
management has little trust in its employees. Or say, management makes decisions
autocratically and relies heavily on external controls.

ii. Behaviorally Anchored Rating Scales (BARS)

The problem of judgmental performance evaluation inherent in the traditional methods of

performance evaluation led to some organizations to go for objective evaluation by developing
a technique known as BARS. BARS are descriptions of various degrees of behaviour with
regard to a specific performance dimension. It combines the benefits of narratives, critical
incidents, and quantified ratings by anchoring a quantified scale with specific behavioural
examples of good or poor performance. The proponents of BARS claim that it offers better
and more equitable appraisals than do the other techniques of performance appraisal we
discussed so far.

Developing a BARS typically involves the following five steps.

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1. Generating Critical Incidents: Critical incidents (behaviours) are those which are
essential for the performance of the job effectively. Persons who are knowledgeable of
the job in question are asked to describe specific critical incidents of effective and
ineffective performance.
2. Developing Performance Dimensions: The critical incidents are then clustered into a
smaller set of performance dimensions, usually 5 to 10. Each cluster is then defined.
3. Reallocating Incidents: Various critical incidents are reallocated dimensions by another
group of people who also know the job in question. Various critical incidents so
reallocated to original dimensions are clustered into various categories, with each cluster
showing similar critical incidents. Those critical incidents are retained which meet 50 to
80% of agreement with the cluster as classified in step 2.
4. Scaling Incidents: The same second group as in step 3 rates the behaviour described in
each incident in terms of effectives or ineffectiveness on the appropriate dimension by
using 7 to 9 point scale.
5. Developing Final BARS Instrument: A subset of the incidents (6 or 7 per cluster) is
used as a behavioural anchor for the final performance dimensions. Finally, a BARS
instrument with vertical scales is drawn to be used for performance appraisal.

BARS method of performance appraisal is considered better than the traditional ones because
it provides advantages like a more accurate gauge, clear standards, better feedback, consistency
in evaluation. However it suffers from distortions inherent in most rating scales.

iii. Assessment Centers

The concept of assessment centers is traced back in 1930s in Germany used to appraise its army
officers. This concept is of course, a recent origin in India. In business assessment centers are
mainly used for evaluating executive or supervisory potential. An assessment center is a central
location where managers come together to participate in well designed simulated exercises.
They are assessed by senior managers supplemented by the psychologists and the HR
specialists for 2 to 3 days. Assessees are asked to participate in in-basket exercises, work
groups, simulations, and role playing which are essential for successful performance of actual
job. After recording the behaviour of assessees the raters meet to discuss their pooled
information and observations and based on it they give their assessment.

iv. 360 Degree Appraisal

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This is the feedback method generally used for ascertaining training and development
requirements, rather than for pay increases. Under this method, the performance information
such as employee’s skills, abilities and behaviour is collected “all around” an employee, i.e.,
from his supervisors, subordinates, peers and even customers and clients. Information is
collected through survey questioners from all the above people. The information so collected
is then compiled through the computerized system to prepare individualized reports. These
reports are presented to the employees being rated. They then meet the appraiser be it one’s
superior, subordinates or peers and share the information they feel as pertinent and useful for
developing a self improvement plan.

v. Cost Accounting Method

This method evaluated an employee’s performance from the monetary benefits the employee
yields to his organization. This is ascertained by establishing a relationship between the cost
involved in training the employee, and the benefits as organization derives from him. While
evaluating the performance the following factors are taken into consideration:

i. Unit wise average value of production or service

ii. Quality of product produced or service rendered
iii. Overhead cost incurred
iv. Accidents, damages, errors, spoilage, wastage caused through unusual wear and tear.
v. Human relationship with others
vi. Cost of the time supervisor spent in appraising the employee.

Problems in Performance Appraisal:

None of the methods of performance appraisal available is absolutely valid and reliable.
Because each method has its own strengths and weaknesses. There are some problems and
issues associated with the formal appraisal methods and that make the appraisal ineffective.

i. Judgmental Bias: Most of the appraisal methods involve raters’ judgment of one kind or
the other. These could be within or beyond rater’s control. The inherent error of “Central
Tendency” and “leniency” involved in the process cause the judgments bias. The rater
liking or disliking for the rates may also cause the judgmental biasedness. Another error
in the judgmental bias is “halo effect” or a tendency to assess the ratee on one or two traits
to influence assessment on others. Besides, there are some other biases termed as “critical
biases”, beyond the control of the rater and the rate.

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 ii. Faulty Managerial Assumptions: In this the managers wish to appraise their
subordinates on a fair and accurate basis, based on a criterion once and for all the times,
and make appraisal by instincts or untenable. Also, manager’s assumption that employees
really want to know where they do stand often turns to be a myth, not a reality.
iii. Criterion Problem: The objectives of performance appraisal vary from organization to
organization. Hence, criteria used to appraise employee too vary from one organization
to another. Since criteria are hard to define mainly in measurable terms, these suffer from
ambiguity, vagueness and generality. As such, the results of performance appraisal based
on different criteria are hardly comparable.

POTENTIAL APPRAISAL

What is Potential?
Potential can be defined as ‘a latent but unrealized ability’. Potential includes the possible
knowledge, skills, and attitudes the employee may possess for better performance There are
many people who have the desire and potential to advance through the job they are in and
wanting the opportunity to operate at a higher level of competence in the same type of work.
The potential is the one that the appraiser should be able to identify and develop because of the
knowledge of the job. This requires an in-depth study of the positions which may become
vacant, looking carefully at the specific skills that the new position may demand and also taking
into consideration the more subjective areas like ‘qualities’ required. There may be areas where
the employee has not had a real opportunity to demonstrate the potential ability and there may
be areas with which you, as the appraisers are not familiar.
Meaning: Potential appraisal is an assessment / appraisal of a person’s capability to perform
job with higher responsibilities. In other words, ascertainment of a person’s latent / inherent
capacity to handle higher job is potential appraisal. So, level of competency, capability of a
person to perform higher cadre / grade job is measured through potential appraisal system.

Indicators of Potential:
There exist some indicators of potential which managers meticulously observe and consider
while making decisions about their potential. Some of the indicators are a sense of reality,
imagination, power of analysis, breadth of vision, and persuasiveness.

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a) Sense of reality – People usually act based on their thought process. A sense of reality
refers to the extent to which a person thinks and acts objectively, controls his emotional
pressure, and continues to pursue realistic projects with enthusiasm and achieves business
goals.
b) Imagination – Imagination is the mind’s eye. A man dreams by virtue of his imaginative
power. It is the ability to let the mind range over a wide variety of possible causes of actions
to achieve specific results. Imagination goes beyond conventional approaches to situations
and does not remain confined to, ‘this work is done in only one way’.
c) Power of analysis – Power of analysis refers to the capacity to reformulate, innovate,
break down, and transform an apparently complicated situation into manageable terms.
People with power of analysis believe in, ‘innovate or evaporate’.
d) Breadth of vision – People need visionary skills and their breadth of vision should be
wider. Breadth of vision means the ability to examine a problem in the context of a much
broader framework of reference. People with breadth of vision can detect relationships with
those aspects within a specific situation which could impact the situation.
e) Persuasiveness – Persuasiveness helps one trying as long as it takes to produce results. It
is the ability to sell ideas to others and gain a continuing commitment. Using managerial
authority may not always produce results. Persuasion refers to using personal influence by
way of negotiation.
These five indicators are standard factors that are considered while judging the potential of any
individual. These have helped many organizations in taking decisions.
Objectives of Potential Appraisal
1) Identification of Employees Having Capabilities to Perform Higher Level Jobs: It
identifies people who have potential to take over higher jobs. This task is difficult to
accomplish in industrial settings. It may take the help of assessment centre/development
centres to find out suitable/capable employees for promotion.
2) Assessment of General Potential: It assesses whether the employees have abilities to
perform some types of work. Employees’ aptitudes, level of competency, skill are appraised
for better utilization in the organization activities.
3) Identification of Training Needs of Employees: For growth and development of
organization employees’ development of skill, knowledge, abilities is needed. This is
possible through training. Potential appraisal identifies the area which requires training for
reinforcement/improvement.

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4) Implementing Succession Planning Activities: It helps organization to effectively carry
out succession planning activities by way of providing data / information in respect of
employees who are suitable for filling in vacant posts.
5) Assisting Employees in Personal Development Process: It makes the employees aware
of their strengths and weaknesses through feedback / counselling, discussion programmes
so that they can prepare their personal development plan effectively.
6) Helping Organization to Decide its Strategy: It makes organization know its
competent, effective, potential workforce as also non-achievers, dead woods, non-
performers. Looking into strength of human resources, organization can decide its strategy.
For example, the organization can decide whether it can go for business process
reengineering, diversification of activities, reduction of employees through VRS etc.
7) Helping Organization to Survive, Grow and Develop: In the changing scenario, every
organization has to face tough competition against MNCs and other organizations. For
confrontation against such challenges and for sustenance, growth, development of
organization, it needs dynamic workforce. Potential appraisal helps organization to develop
the employees and to create a reservoir of committed, competent workforce who can give
befitting challenges through production of quality goods and service at low rate.
8) Inform employees about their future roles and to advise them about the work to be done
to enhance their career Opportunities
9) Improve quality and quantity of performance of an employee.
Importance of Potential Appraisal
a) Evaluation of Capabilities: With the help of the potential appraisal form, the employees
are judged on various performance and behavioural parameters. Appraising employee’s
potential helps to evaluate his capability to take greater challenges, responsibilities and
positions in the organisational hierarchy. It helps organization to identify the employees
who are capable of taking more challenging roles & responsibilities in future.
b) Succession Planning: Succession planning is a process for identifying and developing new
leaders, who can replace old leaders when they leave, retire or die. Such planning increases
the availability of experienced and capable employees that are prepared to assume these
roles as they become available. Most organisations incorporate potential appraisal in their
appraisal processes for identifying and developing suitable employee base for succession
planning.
c) Career Development: The potential appraisal results in identification of hidden talents and
skills of an employee. The employee himself might not be aware of his certain
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 competencies. The potential appraisal aids in career development of an employee by giving
him opportunity to work on his potential capabilities.
d) Motivate Employees: It leads to identification of hidden talents & thereby motivates the
employees to further develop their skills and competencies. It also benefits the organization
as it results in versatile workforce who can assume greater roles & responsibilities in future.
e) Identify Training Needs: The potential appraisal helps the organization to identify the
training needs. Such appraisal throws light on the hidden competencies of employees which
could be developed further with the help of appropriate training programmes.
f) Organizational Goals: The potential appraisal concentrates on the future. It helps to
create a pool of experienced and capable employees by giving them opportunity to discover
their hidden talent. It also helps employees to develop their personal interests in
alignment with the organisational goals.

STEPS IN THE PROCESS OF POTENTIAL APPRAISAL:

1. Role Description: A good potential appraisal system would be based on clarity of roles
and functions associated with the different roles in an organisation. This requires extensive
job descriptions to be made available for each job. These job descriptions should spell out
the various functions involved in performing the job.
2. Qualities Required: Besides job descriptions, it is necessary to have a detailed list of
qualities required to perform each of these functions. These qualities may be broadly
divided into four categories:
a) Technical knowledge and skills
b) Managerial capabilities and qualities
c) Behavioural capabilities
d) Conceptual capabilities.
3. Indicators of Qualities: A good potential appraisal system besides listing down the
functions and qualities would also have various mechanisms for judging these qualities in
a given individual. Some of the mechanisms for judging these qualities are:
a) Rating by others
b) Psychological tests
c) Simulation games and exercises
d) Performance appraisal records.
4. Organizing the System: Once the functions, the qualities required performing these
functions, indicators of these qualities, and mechanisms for generating these indicators are
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 clear, the organization is in a sound position to establish and operate the potential appraisal
system. Such establishment requires clarity in organizational policies and systematization
of its efforts.
5. Feedback: If the organization believes in the development of human resources it should
attempt to generate a climate of openness. Such a climate is required for helping the
employees to understand their strengths and weaknesses and to create opportunities for
development. A good potential appraisal system should provide an opportunity for every
employee to know the results of assessment. He should be helped to understand the qualities
actually required for performing the role for which he thinks he has the potential, the
mechanisms used by the organization to appraise his potential, and the results of such an
appraisal.

A good potential appraisal system provides opportunities continuously for the employee to
know his strengths and weaknesses. These are done through periodic counseling and guidance
sessions by either the personnel department or the managers concerned. This should enable the
employee to develop realistic self-perceptions and plan his own career and development.
Advantages of Potential Appraisal:
1. For the Organisation:
a) It enables the organisation to identify the future leaders at various levels.
b) Organisation gets a pool of recognised persons for future vacancies.
c) Corrective actions can be initiated well in time to steer and guide the individuals.
d) Motivates others to perform equally well as the identified potential leaders who set
standards.
e) Company can get rid of employees with below average potential.
2. For the Individuals:
a) Motivates individuals to perform still better.
b) Helps in dealing with weaknesses to achieve desired results.
c) Forces individuals to ensure maintaining of their performance level to a high degree of
proficiency.
d) Helps career planning.
e) Those with low potential in a particular job can plan for a career where there are better
chances.
TECHNIQUES OF POTENTIAL APPRAISAL:

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1) Self-Appraisals: A self-appraisal form is prepared, which is required to be filled by the
employee.
2) Peer Appraisals: The HR Head may design a form for peer appraisal or ask the peers in
confidence in small size companies, to take feedback on the employee
3) Superior Appraisals: The superiors are always required to carry out appraisal in every
setup, which may be defined annual appraisals by way of confidential reports or any other
method
4) MBO: The use of management objectives was first widely advocated in the 1950s by the
noted management theorist Peter Drucker. MBO (management by objectives) methods of
performance appraisal are results-oriented. That is, they seek to measure employee
performance by examining the extent to which predetermined work objectives have been
met. Usually the objectives are established jointly by the supervisor and subordinate. Once
an objective is agreed, the employee is usually expected to self-audit; that is, to identify the
skills needed to achieve the objective. Typically they do not rely on others to locate and
specify their strengths and weaknesses. They are expected to monitor their own
development and progress.
5) Psychological and Psychometric Tests: Since the early 1900’s, psychologists have
employed testing in an effort to quantify people’s intelligence, preferences, and behaviors.
Today these assessments, called psychometric tests are used in schools, the military, mental
health clinics, psychotherapists’ offices, correctional facilities, and in companies. Market
analysts commonly use psychometric testing to determine people’s preferences for
products, packaging, and branding.
A consumer might be asked, for example, if he or she prefers one product color to another,
or which packaging type they are most likely to purchase. Employment specialists use these
tests to determine if someone is a good fit for a job. For example, personality, intelligence,
and aptitude tests can be used to capture specific preferences and skills for required tasks
and responsibilities. Those preferences are then matched by the employer to particular job
functions.
6) Management Games like Role Playing: Employee motivation commonly benefits from
suitable and well run team building games, exercises, and activities, including puzzles and
quizzes. The company can also use team building games and exercises ideas as ice-breakers
and energizers to warm up meetings, workshops, training, and conferences. Many of these
group activities are also effective in specialized training sessions and seminars.

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 Team building games and activities are also useful in serious business project meetings, as
games and activities help delegates to see things differently and use different thinking
styles. Games, exercises and quizzes help to stimulate the brain, improving retention of
ideas, learning, and increasing fun and enjoyment.
7) Leadership Exercises: Team coaching programs have a lot of merit; one-on-one
leadership coaching can be a very fulfilling process. Having some insight into the life of
someone who has walked a similar path can often be encouraging management/HR Head
can give the employee, specific leadership development activities where employees learn
to lead by leading.

POPULAR METHODS / MODELS OF POTENTIAL APPRAISAL BEING USED BY

BIG ORGANISATIONS ARE AS FOLLOWS:
a) Philips’ Hi-Lo Matrix:
In it, a 2 x 2 matrix is used to evaluate performance and potential in a single process as depicted
as follows
The Philips Model
High
Problem Stars
Children

Potential
? Planned
Separation Solid Citizen

Low Performance High

1) Low potential-low performance employees are considered question marks. If they fail to
bring about the desired improvements in their performance, the organisation moves towards
a planned separation of such employees.
2) In the next quadrant of high potential-low performance come the problem children. Such
employees require close monitoring and need a new scenario for work as a strategy so as
to tap their full potential.

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3) The third quadrant of high potential-high performance pertains to ‘star performers’ who
need to be engaged with complex assignments and groomed for top positions in the
organisation.
4) The fourth quadrant of low potential-high performance relates to employees called ‘solid
citizens’. Such employees have high skills but low potential to go beyond their current
jobs.
b) Philips NV Holland Model:
This system includes a five-point scale, ranging from excellent to insufficient, and provides for
evaluation of employees on the following four qualities –
i. Conceptual effectiveness
ii. Operational effectiveness
iii. Interpersonal effectiveness
iv. Achievement motivation.
The employee is also assessed by the management development team. Efforts are also made to
identify star track career development, indicating the highest level they can reach, and then
forecasts are made for 5-10 years or even beyond that.
c) Psychometric Tests:
Through such tests, which have been developed mostly abroad, we try to capture the abilities
of the employee on several fronts such as aptitude, logic, deduction and inference. These tests,
for example, are conducted at Glaxo where potential appraisals is a prerequisite to succession
planning.
At Glaxo, there is also a provision in the performance appraisal form for assessment of an
individual’s potential vis-a-vis attributes such as initiative, attitude, commitment,
accountability, ethics, leadership, judgement and drive by the superior of the employees. In
addition to these, some other exercises are also carried out to identify the true potential of the
employee.
d) Review Appraisal Method:
Through such appraisal, which is carried out by the immediate supervisors and departmental
heads, insights are obtained into the potential of the employee. This method, for example, is
being used at Cadbury since 1993. The review process evaluates potential for growth and also
determines the action plans for career development.
Then, efforts are made to rate the employee on six generic competencies, namely job
knowledge, thinking clarity, goal setting and planning, relationships, leadership and innova-
tion. These competencies are rated at a five-point scale.
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There are also some other methods of potential appraisal, which are generally modified by the
user companies to suit their requirements.
Best Practices of Potential Appraisal:
The following are the best practices of potential appraisal being used by some
organisations:
1. Ensuring to distinguish reward for potential from reward for past performance.
2. Incorporating the appraisal and reward of potential in the assessment system.
3. Communicating potential appraisal to all the employees regularly.
4. Explaining to all employees the attributes used for evaluating potential.
Thus, we find that potential appraisal, if used scientifically, can serve a very useful purpose in
developing employees for their future assignments. The organisation also gets benefited from
the efforts of so developed employees.

SECTION – A (10X2=20)

1 Define HRM.
2 What do you mean by Human Resource Management?
3 Mention the operative functions of HRM.
4 Who is HR Manager?
5 State any three qualities a Human Resource Manager.
6 What do you mean by Human Capital Management?
7 Define human resource planning.
8 What do you understand by HR planning?
9 What is job analysis?
10 Define job evaluation.
11 What is meant by job evaluation?
12 Write a short note on: Job specification.
13 Write a note on job description.
14 What do you mean by ‘Job Rotation’?
15 What do you understand by job design?
16 Write a short note on task Analysis.
17 Define Recruitment.
18 What do you mean by selection?
19 What do you mean by ‘Reference check’?
20 Define training.
21 State any 4 causes of Grievances.
22 What is Negative discipline?
23 Write a short note on selection.
24 What is campus interview?
25 What is meant by an application blank?
26 Give the meaning of the term ‘campus interview’.
27 Define training.

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28 What is vestibule training?
29 What is off – the – job training?
30 What is meant by case study?
31 Write a note on Ranking Method.
32 What do you mean by MBO?
33 What is meant by recruitment?
34 What is probation?
35 What is performance appraisal?
36 What is meant by potential appraisal?
37 What do you mean by Transactional Analysis?
38 Write a note on Graphic Scale Rating Method.
39 Write a note on ‘360 degree appraisal’.
40 What do you understand by potential appraisal?

SECTION – B (5X5=25)

1. Explain the Role of the Human Resource manager.

2. What are the main objectives of human resource management?
3. State the objectives of Human Resource Management.
4. Discuss the scope of HRM.
5. Bring out the importance of HRM.
6. Explain the qualities of a human resource manager.
7. Explain the role of the HR manager.
8. What are the problems of a HR manager?
9. Discuss the problems faced in Human Resource planning.
10. State the importance of HR planning.
11. What are the objectives of HR planning?
12. What are the limitations of HR Planning?
13. Why Job Analysis?
14. Explain the various methods of data collection for job analysis.
15. What are the steps in the process of job analysis?
16. Explain the methods of job design?
17. Explain the advantages of job analysis. How to enrich job?
18. Write short notes on (i) Job analysis and (ii) Job specification
19. State the objectives of job evaluation.
20. Explain the merits and demerits of internal source of recruitment.
21. Explain the recruitment process
22. What are the key attributes that make a recruitment programme effective?
23. Explain the different types of tests.
24. State the various methods of interviews.
25. Explain the steps in the process of Selection.
26. What are the benefits and problems in using selection tests?
27. Explain the Human Resource Culture in MNCs.
28. Explain the need for training.
29. Write down the principles of training.
30. Bring out the importance of training
31. Explain the essentials of a good training programme.
32. How would you evaluate the effectiveness of training programme? Explain.
33. What are the merits and demerits of on – the – job training?
34. How can you evaluate the effectiveness of training?

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35. Training and development as source of competitive advantage – comment on this
statement.
36. Explain the inputs and gaps in training.
37. Describe the importance of performance.
38. What are the main objectives of Performance Appraisal?
39. What are the steps in the process of performance appraisal?
40. State the prerequisites of performance appraisal.
41. Explain the major problems that distort performance appraisal.
42. What are the benefits of performance appraisal?
43. Evaluate the importance of performance appraisal in an industrial organization.
44. What are the limitations of Performance Appraisal?
45. What are the limitations of MBO appraisal?
46. How to evaluate employee potential?

SECTION –C (3X10=30)

1 Explain in detail about the Human Resource management functions.

2 Briefly explain the operative functions of HRM.
3 Discuss the nature of HRM.
4 What are the challenges faced by a human resource manager? Explain.
5 Describe the nature of human resources.
6 Explain the various factors that influence in HR planning.
7 Explain the steps in the process of Human Resource Planning.
8 What are the limitations of HR planning? Suggest remedies.
9 Describe the concept of Job analysis and explain the job analysis process.
10 Explain the factors affecting job design.
11 Explain the methods of job design.
12 Explain in detail the various external sources of recruitment.
13 Discuss the various sources of Recruitment.
14 Discuss the various stages involved in the process of training.
15 Explain in detail the various methods of training.
16 Discuss the essential features of a good training programme.
17 Outline a suitable selection process for a large business organization.
18 Briefly explain the various methods of performance appraisal.
19 Discuss the traditional methods of performance appraisal.
20 Explain the essentials of an effective Performance Appraisal System.
21 Elucidate the traditional methods of performance appraisal.
22 Explain the problems in performance appraisal. How will you make it more effective?

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