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									Human Resource
       An introductory overview of Human
              Resource Management
   HRM can broadly be defined as a common title
    given to all aspects of a business related to
    effective and efficient management of its
   HRM is representative of all issues or problems
    related to people and their management, in a
    manner that is most beneficial for the business.
                   Importance of HRM
             “An organization is only as good as it’s people.”

 Management as a process involves planning, organizing,
 affing, leading and controlling activities that facilitate the
chievement of an organization's objectives. All these
ctivities are accomplished through efficient utilization of
hysical and financial resources by the company’s human
Human resource management is one of the most
complex and challenging fields of modern
management. It ensures the building up of an
effective workforce, the proper handling of
employee expectations and makes sure that they
perform at their very best…
Human resources is one of the most valuable and
unique assets of an organization. The term
human resources refers to the total knowledge,
skills, creative abilities, talents and aptitudes of
an organization‘s workforce, as well as the
values, attitudes and beliefs of the individuals
Sound knowledge of HRM is crucial not just for a
HR manager but for all successful managers.

  As a Manager or Entrepreneur you could do
everything right..
->Have great ideas
->Lay brilliant plans
->Draw clear organization charts
->Get state of the art equipment
and so on, but you could still fail by hiring the
wrong people or by a having a workforce which is
not motivated or negative.
           Some Functions of HRM
   Human resource planning.
   Recruitment and selection.
   Training and development.
   Performance and potential appraisal.
   Internal mobility.
   Compensation management.
   Quality of working life.
   People development and retention.
   Employee satisfaction.
   Job Enrichment.
        Emerging HRM Functions
   Increasing organizational size and its complexity,
    transition from traditional to professional
    management, changing social and cultural
    norms, globalization of industry and availability
    of information technology are constantly
    changing the profile of HRM functions.
  HRM today plays a much more dynamic
role in not only performing the maintenance
   function but in also creating innovative
  ways to satisfy human aspirations and to
      provide a competitive edge to the
     organization on a sustainable basis.
    Division of HRM Functions
Line Functions:            Staff Functions:
                           >Educate employees on humane
>HR Planning                issues
>Job Analysis              >Conduct surveys (ESAT)
                           >Survey & keep track of market trends
>Recruitment & selection   >Dealing with human issues
>Induction                 >Taking care of company's corporate
>Training                  >Ensure smooth flow of business activities
                               by taking care employee issues
>Performance & potential
>Internal Mobility
>Compensation Management
Human Resource Planning

    “If you fail to plan you are
          planning to fail”
Human Resource Planning
   HR planning is the process including
    forecasting, developing and controlling by
    which a firm ensures that it has the right
    number of people and the right kind of
    people, at the right places at the right
    time, doing work for which they are
    economically most useful.
   It is the process deciding what positions the
    firm will have to fill, and how to fill
    them. It embraces all future positions, from
    maintenance clerk to CEO.
Human resource planning can be
described as a series of activities,
consisting the following:
    Forecasting future work force requirements,
     either in terms of mathematical projections of
     economic trends and industrial development
     or through judgmental estimates based upon
     specific future plans of the company.
    Making an inventory of the existing man
     power resources, and analyzing the degree to
     which these resources are employed.
   Anticipating workforce problems, by
    projecting present resources into the future
    and comparing them with the forecast of
    requirements, to determine their adequacy,
    both quantitatively and qualitatively.
   Planning the necessary programs of
    recruitment, selection, training, deployment,
    utilization, transfer, promotion, development,
    motivation, and compensation so that the
    future workforce requirements will be met.
Significance of Human
Resource Planning
    A concrete human resource plan helps
    avoid sudden disruptions in an
    enterprise’s production run, since it
    indicates shortages of particular types
    of personnel, if any, in advance; thus
    enabling the management to adopt
    suitable strategies to scope with the
   All companies irrespective of sector need to
    plan their human resource requirements in
    terms of numbers, skills, and occupation
    groups-to meet increasing demands, either
    due to business growth or expansion.
    Besides, even if none of the above happened,
    within an ongoing enterprise there would be
    attrition, lay offs or internal mobility
    (transfers or promotions), leaving gaps which
    have to be filled in.
   A human resource plan that anticipates the need for
    various types of skill requirements and levels of
    personnel, well in advance, will be able to give
    adequate lead time recruitment, selection, and
    training of such persons. Human resource planning
    becomes all the more crucial because the lead time
    for getting personnel is a delaying factor in many
    cases, and the skills that one may need are not
    always available. No availability of suitable human
    resources results in postponement or delays in
    executing new projects and expansion plans, which
    eventually leads to inefficiency and lower profitability.
    Besides, changing job requirements, due to
    technological change or the growing complexity of
    business operations, make differing demands on the
    number and type of manpower required.
Main objectives of HR Planning

   Searching for and recruiting highly skilled and
    specially qualified employees.
   Getting the best possible employee and assigning
    him/her to the right work, so that the efficiency and
    the production can be maximized.
   Anticipating the changed requirements of personnel,
    and be prepared for it organizationally.
   A forward looking activity plan that will help the
    management in identifying organizational needs, in
    developing people, and in providing them growth
HR Planning Process
   Business Plan
   Workload Analysis
   Job Analysis
   Job Description
   Job Specification
Business Plan
   It is the basic exercise that has to be undertaken in
    order to arrive at the scale of business activity over a
    period of time.
   It is basically a blue print of the desired objectives.
    These objectives, stated in economic terms, would
    incorporate the growth rate of the company,
    diversification plans, market opportunities, etc.
   Involves assessing where the organization is going,
    it’s objectives and strategies for the future which in
    turn determines its future human resource needs.
Workload Analysis
    Can be defined as the studies that are utilized to understand
     the methods and processes of doing a particular job, and
     can thus be helpful in work simplification, higher productivity
     or efficiency, reducing the time and number of people
     required to do a particular job successfully.
    Workload analysis helps in determining the optimum number
     of human resource required perform the task in hand in the
     most effective and efficient manner possible.
    There are a number of methods that could be used to
     develop workload norms. They may vary from being as
     simple as just observation on the job, to highly sophisticated
     statistical models.
    Gives an estimate of the number of employees needed, and
     the nature and extent of the work to be done by them.
Job Analysis
    Job analysis is the process by which data, with
     regard to each job, is systematically observed and
     noted. It provides information about the nature of
     the job and the characteristics or qualifications that
     are desirable in the job holder. It provides
     information in the following areas:
1.   Job identification
2.   Distinctive or significant characteristics of the job
3.   What the typical worker does
4.   Materials or equipment used
5.   How the job is performed
6.   Required personnel attributes
Job Description
    Refers to the job contents and the expectations that an
     organisation has from its employees. Job descriptions usually
     outline the minimum requirements of jobs.
    A job description is a written statement of what the job holder
     does, how it is done and why it is done.
    It should accurately portray job content, environment, and
     conditions of employment.
    It usually includes the following:
1.   The job title
2.   The duties to be performed
3.   Distinguishing characters of the job
4.   The authority and responsibilities of the job holder
 Job Specification
    The job specification states the minimum acceptable
     qualifications that the employee must possess to perform the
     job successfully. These may include:
1.   Academic qualifications
2.   Professional qualifications
3.   Age
4.   Years of experience
5.   Relevance and nature of previous experience
6.   Other skills and attitudes
    They form the minimum eligibility requirements, which a
     candidate must have, to be considered for appointment to a
    A clear indication of specifications helps in generating eligible
     applications, because of self election.
    Lack of clear-cut specifications may generate a large number
     of applicants, leading to high costs, in terms of man hours, in
     processing them.
Demand Forecasting
   Methods of Forecasting
   Major Considerations in Forecasting.
Methods of Forecasting
     Bottom up Technique:
    This method of forecasting starts at the lowest level and
 progresses upwards, through various levels in the organization,
 till an aggregate projection for the organization as a whole is
 ready. The basic idea is that the best person to determine
 human resource requirement is the manager of the unit or
 department. Department managers periodically project their
 workforce requirements, while comparing their present and
 future needs, keeping in mind productivity levels, market
 demands, sales forecast; and mobility of staff in the
    Since this exercise is done periodically, it gives sufficient lead
 time to human resource managers to identify available human
 resources, both internally and externally.
Delphi Technique:
      The objective of this technique is to predict future
developments in a particular area, by integrating the judgments
and opinions provided independently by many experts. It is a
structured approach for reaching a consensus judgment, among
the experts, regarding the number of employees, who will be
required in the future. These experts are well versed with the plan
of the organization, and the internal and external factors that may
influence these planned activities, and hence, the demand for
workforce. These experts can come both from within or outside the
organization. The basic procedure consists of experts presenting
their forecast to other experts without physically meeting them.
Once the first forecast is collected and shared, another round of
forecasting takes place. This process of sharing and revising goes
on till a consensus has emerged,
   One of the major problems of the Delphi technique is
    in the integration of varied opinions of experts. As a
    result, it may drag on for a long time of many
    reiterations. One of the reasons for this maybe the
    physical absence of experts at one place to provide
    timely feedback, or make timely adjustments in their
Trend Analysis:
   Trend analysis means studying variations in your
firm’s employment levels over the last few years. For
eg, you might compute the number of employees at the
end of each of the last five years, or perhaps the
number in each subgroup (like sales, production,
admin,etc),. He purpose is to identify trends that might
continue into the future.
   Trend analysis can provide an initial estimate of future
staffing needs, but employment rarely depends on the
passage of time. Other factors like changes in sales
volume and productivity also affect staffing needs.
Ratio Analysis:
     Means making forecasts based on the historical
     ratio between
1.   Some casual factor (like sales volume)
2.   The number of employees required (for instance,
     For eg, suppose a salesperson traditionally
     generates RS.5,00,000/- in sales. If the sales
     revenue to salespeople ratio remains the same, you
     would require six new salespeople next year
     (assuming each of whom produces an extra
     Rs.5,00,000/-) to produce a hoped-for extra
     Rs.30,00,000/- in sales.
Using Computers to Forecast Personnel
   Computerized forecasts enable the manager to include more
variables into his or her personnel projections. These variables may
include direct labor hours required to produce one unit of product
(measure of productivity), and three sales projections- minimum,
maximum, and probable- for the product line in question. Based on
such input, a typical program generates average staff levels
required to meet product demands, as well as separate
computerized forecasts for direct labor( such as assembly workers),
indirect staff (such as secretaries), and exempt staff (such as
   With programs like these, employers can more accurately
translate projected productivity and sales levels into forecasted
personnel needs. And, they can estimate the affects of various
productivity and sales level assumptions on personnel
Major Considerations in
   Is one of the major sources of unforeseen shortage of
    employees on a given day. Each year organizations seem to
    loose more work time due to absenteeism than due to strikes
    or lockouts. Absenteeism is defined as unauthorized absence
    from work. Such unscheduled absence from work causes
    tremendous problems in planning and execution of the work.
   The annual absentee ratio can be calculated using the
    following formula:
    Absentee ratio= Unauthorized absence x 100
                         Man shift worked
   This will give an estimate of the average absenteeism rate,
    which can be incorporated while projecting the actual number
    of people required.
 Another factor contributing to accurate planning has
 to do with the age profile of the employees,
 particularly close to retirement. Surprisingly, a large
 number of organizations in India do not have any
 idea of the profile of the employees in their
 organizations. Often, the retirement of employees
 comes as a surprise, leaving vacancies unfilled and
 causing disruption in the output. Manning tables
 should be carefully used to get an idea of the number
 of employees who would be retiring during the plan
 period, so that their replacements can be found.
Succession Planning:

   Succession Planning has to do with the upward
movement of staff in the hierarchy of organizations. It is
process that ensures that a qualified person is available
to assume the position once it is made vacant. In the
process of forecasting, the number of people needed in
a planned year, filling up such vacancies has to be
Technology Upgrading:
    Technology is generally conceived in terms of machines and
     equipment used in converting the input into output. However,
     technology is not only the hardware, but it also refers to the
     knowledge and information used in producing goods and
     services. Technology change has caused obsolescence of human
     skills, as the growth of technology has outpaced skill
     development. HR planning has to be done keeping in mind:
    Impact of better and more sophisticated technology on the
     quantity and quality of people.
    Would technology upgradation create redundancy in staff.
    Effect of technology on the size of the workforce.
Supply Sources
   Internal Supply
   External Supply
Internal Supply
   Before going out for the external supply of
    human resources, organizations usually look
    for what is internally available, and can be
   To be able to effectively use the internal
    supply, organizations must conduct a total
    audit of the existing human resources.
   From the information that is gathered, a
    personnel inventory and manning table or
    skill inventory can be prepared.
External Supply
1.   Employment Exchange.
2.   Employment Agencies.
3.   Professional Association.
4.   Campus Recruitment.
5.   Employee referral program.
6.   Advertisements (print, radio and
     electronic media)
Recruitment and
       Meaning Of Recruitment

   According to Edwin B. Flippo, recruitment is the process of
    searching the candidates for employment and stimulating them to
    apply for jobs in the organization‖. Recruitment is the activity that
    links the employers and the job seekers.
    A few definitions of recruitment are:

   A process of finding and attracting capable applicants for
    employment. The process begins when new recruits are sought and
    ends when their applications are submitted. The result is a pool of
    applications from which new employees are selected.

   It is the process to discover sources of manpower to meet the
    requirement of staffing schedule and to employ effective measures
    for attracting that manpower in adequate numbers to facilitate
    effective selection of an efficient working force.
   Recruitment of candidates is the function preceding the selection,
    which helps create a pool of prospective employees for the
    organization so that the management can select the right candidate
    for the right job from this pool. The main objective of the recruitment
    process is to expedite the selection process.

   Recruitment is a continuous process whereby the firm attempts to
    develop a pool of qualified applicants for the future human resources
    needs even though specific vacancies do not exist. Usually, the
    recruitment process starts when a manager initiates an employee
    requisition for a specific vacancy or an anticipated vacancy.

    i.e. the needs arising from changes in organization and retirement policy.

    Anticipated needs are those movements in personnel, which an
    organization can predict by studying trends in internal and external

    Resignation, deaths, accidents, illness give rise to unexpected needs.
The Purpose and Importance of
   Attract and encourage more and more candidates to apply in the

   Create a talent pool of candidates to enable the selection of best
    candidates for the organization.

   Determine present and future requirements of the organization in
    conjunction with its personnel planning and job analysis activities.

   Recruitment is the process which links the employers with the

   Increase the pool of job candidates at minimum cost.
•Help increase the success rate of selection process by decreasing number
 of visibly under qualified or overqualified job applicants.

•Help reduce the probability that job applicants once recruited and selected
 Will leave the organization only after a short period of time.

•Meet the organizations legal and social obligations regarding the composition
 of its workforce.

•Begin identifying and preparing potential job applicants who will be appropriate

•Increase organization and individual effectiveness of various recruiting
 techniques and sources for all types of job applicants.
Recruitment Process

   The recruitment and selection is the major
    function of the human resource department and
    recruitment process is the first step towards
    creating the competitive strength and the
    recruitment strategic advantage for the
    organizations. Recruitment process involves a
    systematic procedure from sourcing the
    candidates to arranging and conducting the
    interviews and requires many resources and
    A general recruitment process is as follows:

   Identifying the vacancy:
    The recruitment process begins with the human resource
    department receiving requisitions for recruitment from any
    department of the company. These contain:

     • Posts to be filled
    • Number of persons
    • Duties to be performed
    • Qualifications required

•Preparing the job description and person specification.

•Locating and developing the sources of required number and
 type of employees (Advertising etc).

•Short-listing and identifying the prospective employee with required

•Arranging the interviews with the selected candidates.

•Conducting the interview and decision making
                                  Step 1

                              Identify vacancy

                                                            Step 2
       Step 7
                                                      Prepare JA, JD, JS
  Decision making

                            Recruitment Process
 Step 6
                                                                  Step 3
                                                           Advertise the vacancy

                                                  Step 4
                   Step 5
                                           Managing response
                Short listing
Sources Of Recruitment

   Every organization has the option of choosing the
    candidates for its recruitment processes from two kinds
    of sources: internal and external sources. The sources
    within the organization itself (like transfer of employees
    from one department to other, promotions) to fill a
    position are known as the internal sources of
    recruitment. Recruitment candidates from all the other
    sources (like outsourcing agencies etc.) are known as
    the external sources of the recruitment.
Factors Affecting Recruitment

   The recruitment function of the
    organizations is affected and governed by
    a mix of various internal and external
    forces. The internal forces or factors are
    the factors that can be controlled by the
    organization. And the external factors are
    those factors which cannot be controlled
    by the organization.
Recruitment Policy
   In today‘s rapidly changing business environment, a well
    defined recruitment policy is necessary for organizations
    to respond to its human resource requirements in time.
    Therefore, it is important to have a clear and concise
    recruitment policy in place, which can be executed
    effectively to recruit the best talent pool for the selection
    of the right candidate at the right place quickly. Creating
    a suitable recruitment policy is the first step in the
    efficient hiring process. A clear and concise recruitment
    policy helps ensure a sound recruitment process. It
    specifies the objectives of recruitment and provides a
    framework for implementation of recruitment program. It
    may involve organizational system to be developed for
    implementing recruitment programs and procedures by
    filling up vacancies with best qualified people.
          The general recruitment policies and terms of the

          Recruitment services of consultants

          Recruitment of temporary employees

          Unique recruitment situations

          The selection process

          The job descriptions

          The terms and conditions of the employment
A recruitment policy of an organization should be such that:
   It should focus on recruiting the best potential people.

   To ensure that every applicant and employee is treated equally with
    dignity and respect.

   Unbiased policy.

   To aid and encourage employees in realizing their full potential.

   Transparent, task oriented and merit based selection.

   Weightage during selection given to factors that suit organization
   Optimization of manpower at the time of selection process.

   Defining the competent authority to approve each selection.

   Abides by relevant public policy and legislation on hiring and
    employment relationship.

   Integrates employee needs with the organizational needs.

   Organizational objectives

   Personnel policies of the organization and its competitors.

   Government policies on reservations.

   Preferred sources of recruitment.

   Need of the organization.

   Recruitment costs and financial implications.
Recent Trends in Recruitment


   In India, the HR processes are being outsourced from more than a decade now. A
    company may draw required personnel from outsourcing firms. The outsourcing
    firms help the organization by the initial screening of the candidates according to the
    needs of the organization and creating a suitable pool of talent for the final selection
    by the organization. Outsourcing firms develop their human resource pool by
    employing people for them and make available personnel to various companies as
    per their needs. In turn, the outsourcing firms or the intermediaries charge the
    organizations for their services.
   Advantages of outsourcing are:

   Company need not plan for human resources much in advance.

   Value creation, operational flexibility and competitive advantage.

   turning the management's focus to strategic level processes of HRM.

   Company is free from salary negotiations, weeding the unsuitable

   Company can save a lot of its resources and time.

   ―Buying talent‖ (rather than developing it) is the latest mantra being followed
    by the organisations today. Poaching means employing a competent and
    experienced person already working with another reputed company in the
    same or different industry; the organisation might be a competitor in the
    industry. A company can attract talent from another firm by offering
    attractive pay packages and other terms and conditions, better than the
    current employer of the candidate. But it is seen as an unethical practice
    and not openly talked about. Indian software and the retail sector are the
    sectors facing the most severe brunt of poaching today. It has become a
    challenge for human resource managers to face and tackle poaching, as it
    weakens the competitive strength of the firm.

 Many big organizations use Internet as a source of recruitment. E-
 recruitment is the use of technology to assist the recruitment
 process. They advertise job vacancies through worldwide web. The
 job seekers send their applications or curriculum vitae i.e. CV
 through e mail using the Internet. Alternatively job seekers place
 their CV‘s in worldwide web, which can be drawn by prospective
 employees depending upon their requirements.
 Advantages of recruitment are:

     Low cost.

     No intermediaries.

     Reduction in time for recruitment.

     Recruitment of right type of people.

   The buzzword and the latest trends in recruitment is the ―E-Recruitment‖.
    Also known as ―Online recruitment‖, it is the use of technology or the web
    based tools to assist the recruitment processes. The tool can be either a
    job website like, the organization's corporate web site or its own
    intranet. Many big and small organizations are using Internet as a source of
    recruitment. They advertise job vacancies through worldwide web. The job
    seekers send their applications or curriculum vitae (CV) through an e-mail
    using the Internet. Alternatively job seekers place their CV‘s in worldwide
    web, which can be drawn by prospective employees depending upon their
    The internet penetration in India is increasing and has tremendous potential.
    According to a study by NASSCOM – ―Jobs is among the top reasons why
    new users will come on to the internet, besides e-mail.‖ There are more
    than 18 million résumé's floating online across the world.
The two kinds of e-recruitment that an organization can
use is –

   Job portals: i.e. posting the position with the job description and the job
    specification on the job portal and also searching for the suitable resumes
    posted on the site corresponding to the opening in the organization.
    Creating a complete online recruitment/application section in the companies
    own website. - Companies have added an application system to its website,
    where the ‗passive‘ job seekers can submit their resumes into the database
    of the organization for consideration in future, as and when the roles
    become available.

   Resume Scanners: Resume scanner is one major benefit provided by the
    job portals to the organizations. It enables the employees to screen and
    filter the resumes through pre-defined criteria‘s and requirements (skills,
    qualifications, experience, payroll etc.) of the job.
    Job sites provide a 24*7 access to the database of the resumes to the
    employees facilitating the just-in-time hiring by the organizations. Also, the
    jobs can be posted on the site almost immediately and is also cheaper than
    advertising in the employment newspapers. Sometimes companies can get
    valuable references through the ―passers-by‖ applicants. Online recruitment
    helps the organizations to automate the recruitment process, save their time
    and costs on recruitments.
    Online recruitment techniques

    Giving a detailed job description and job specifications in the job postings to
     attract candidates with the right skill sets and qualifications at the first stage.

    E-recruitment should be incorporated into the overall recruitment strategy of
     the organization.

    A well defined and structured applicant tracking system should be
     integrated and the system should have a back-end support.

    Along with the back-office support a comprehensive website to receive and
     process job applications (through direct or online advertising) should be
     Therefore, to conclude, it can be said that e-recruitment is the ―Evolving face
     of recruitment.‖
Advantages & Disadvantages Of E-Recruitment
   There are many benefits – both to the employers and the job seekers but
    the e-recruitment is not free from a few shortcomings. Some of the
    advantages and the disadvantages of e-recruitment are as follows:
   Lower costs to the organization. Also, posting jobs online is cheaper than
    advertising in the newspapers.
   No intermediaries.

   Reduction in the time for recruitment (over 65 percent of the hiring time).

   Facilitates the recruitment of right type of people with the required skills.
    Improved efficiency of recruitment process

   Gives a 24*7 access to an online collection of resumes.

   Online recruitment helps the organizations to weed out the unqualified
    candidates in an automated way.

   Recruitment websites also provide valuable data and information regarding
    the compensation offered by the competitors etc. which helps the HR
    managers to take various HR decisions like promotions, salary trends in
    Disadvantages of E-Recruitment
    Apart from the various benefits, e-recruitment has its own share of
    shortcomings and disadvantages. Some of them are:

   Screening and checking the skill mapping and authenticity of million
    of resumes is a problem and time consuming exercise for

   There is low Internet penetration and no access and lack of
    awareness of internet in many locations across India.

   Organizations cannot be dependant solely and totally on the online
    recruitment methods.

   In India, the employers and the employees still prefer a face-to-face
    interaction rather than sending e-mails.
Recruitment Vs Selection
   Both recruitment and selection are the two phases of the employment
    process. The differences between the two are:
    1. The recruitment is the process of searching the candidates for
    employment and stimulating them to apply for jobs in the organization
    WHEREAS selection involves the series of steps by which the candidates
    are screened for choosing the most suitable persons for vacant posts.
    2. The basic purpose of recruitments is to create a talent pool of
    candidates to enable the selection of best candidates for the organization,
    by attracting more and more employees to apply in the organization
    WHEREAS the basic purpose of selection process is to choose the right
    candidate to fill the various positions in the organization.
    3. Recruitment is a positive process i.e. encouraging more and more
    employees to apply WHEREAS selection is a negative process as it
    involves rejection of the unsuitable candidates.
    4. Recruitment is concerned with tapping the sources of human resources
    WHEREAS selection is concerned with selecting the most suitable
    candidate through various interviews and tests.
    5. There is no contract of recruitment established in recruitment WHEREAS
    selection results in a contract of service between the employer and the
    selected employee.
    Recruitment Management System
Recruitment management system is the comprehensive tool to manage
  the entire recruitment processes of an organization. It is one of the
  technological tools facilitated by the information management systems to
  the HR of organizations. Just like performance management, payroll and
  other systems, Recruitment management system helps to contour the
  recruitment processes and effectively managing the ROI on

    The features, functions and major benefits of the recruitment
    management system are explained below:

   Structure and systematically organize the entire recruitment processes.

   Recruitment management system facilitates faster, unbiased, accurate
    and reliable processing of applications from various applications.

   Helps to reduce the time-per-hire and cost-per-hire.
   Recruitment management system helps to incorporate and integrate the various
    links like the application system on the official website of the company, the unsolicited
    applications, outsourcing recruitment, the final decision making to the main
    recruitment process.

   Recruitment management system maintains an automated active database of the
    applicants facilitating the talent management and increasing the efficiency of the
    recruitment processes.

   Recruitment management system provides and a flexible, automated and interactive
    interface between the online application system, the recruitment department of the
    company and the job seeker.

   Offers support to enhance productivity, solutions and optimizing the recruitment
    processes to ensure improved ROI.

   Recruitment management system helps to communicate and create healthy
    relationships with the candidates through the entire recruitment process.
    The Recruitment Management System (RMS) is an innovative information system
    tool which helps to save the time and costs of the recruiters and improving the
    recruitment processes.
ROI On Recruitment
Before making any investment, every organization would want to
 evaluate the investment by answering the following questions in
 quantifiable terms:
 What are the costs and the corresponding and related risks on the

   What are the expected returns of the investment?

   What is the expected pay-back period of the investment?
    An organization makes a tremendous amount of investment in its
    recruitment processes. A lot of resources like time and money are
    spent on recruitment processes of an organization. But assessing or
    quantifying the returns on the recruitment process, or, calculating
    the return on investment (ROI) on recruitment is a complicated task
    for an organization. Indeed, it is difficult to judge the success of their
    recruitment processes. Instead, recruitment is one activity that
    continues in an organization without anyone ever realizing its worth
    or measuring its impact on the organization's business.
    According to a survey, 38 % of organizations do not prepare or
    produce any kind of documents or reports on their The recruitment
    processes, and there is no accountability of the HR department for
    the costs incurred and the opportunities missed.
    With the increasing strategic focus on the human resources, more and more
    organizations are adopting one or the other way for calculating the ROI on
    its recruitments. Many organizations are examining their HR functions and
    processes and are trying to quantify their results and returns.

    A recruitment professional or manager can calculate and maximize the
    return on investments on its organization's recruitment by:
    Clear definition of the results to be achieved from recruitment.

   Developing methods and ways measuring the results like the time – to –
    hire, cost-Per-Hire and effectiveness of the recruitment source etc.

   Estimating the costs associated with the recruitment project

   Estimating the tangible and intangible benefits to the organization including
    the payback period of the recruitments.

   Providing and ensuring proper training and development of the recruitment

    Assessing the ROI on recruitments can assist an organization to
    strengthen its HR processes, improving its recruitment function and to build
    a strategic human resource advantage for the organization.
Outsourcing Recruitment
   Outsourcing Recruitment is the human resource (HR) processes is the
    latest practice being followed by middle and large sized organizations. It is
    being witnessed across all the industries. In India, the HR processes are
    being outsourced from nearly a decade now. Outsourcing industry is
    growing at a high rate.
    Human Resource Outsourcing refers to the process in which an
    organization uses the expert services of a third party (generally professional
    consultants) to take care of its HR functions while HR management can
    focus on the strategic dimension of their function. The functions that are
    typically outsourced are the functions that need expertise, relevant
    experience, knowledge and best methods and practices. This has given rise
    to outsourcing the various HR functions of an organization. HR
    Consultancies such as Ma Foi and Planman Consulting provide such
    services through expert professional consultants. Human resources
    business process outsourcing (HR BPO) is a major component of the
    worldwide BPO market. Performance management outsourcing involves all
    the performance monitoring, measurement, management being outsourced
    from a third party or an external organization.
    Many organizations have started outsourcing its recruitment process i.e.
    transferring all or some part of its recruitment process to an external
    consultant providing the recruitment services. It is commonly known as RPO
    i.e. recruitment process outsourcing. More and more medium and large
    sized organizations are outsourcing their recruitment process right from
    the entry level jobs to the senior level jobs.
   The present value of the recruitment process outsourcing industry (RPO) in India is
    estimated to be $2.5 billion and it is expected to grow at the annual rate of 30-40 per
    cent for the next couple of years. According to a recent survey, only 8-10 per cent of
    the Indian companies are complete recruitment processes. However, the number of
    companies outsourcing their recruitment processes is increasing at a very fast rate
    and so is the percentage of their total recruitment processes being outsourced.
    Outsourcing organizations strive for providing cost saving benefits to their clients.
    One of the major advantages to organizations, who outsource their recruitment
    process, is that it helps to save up to as much as 40 per cent of their recruitment
    costs. With the experience, expertise and the economies of scale of the third party,
    organizations are able to improve the quality of the recruits and the speed of the
    whole process. Also, outsourcing enables the human resource professionals of
    organizations to focus on the core and other HR and strategic issues. Outsourcing
    also gives a structured approach to the whole process of recruitment, with the
    ultimate power of decision making of recruiting with the organization itself. The
    portion of the recruitment cycle that is outsourced range from preparing job
    descriptions to arranging interviews, the activities that consume almost 70 per cent of
    the time of the whole recruitment process.
    Outsourcing the recruitment processes for a sector like BPO, which faces an attrition
    of almost 50-60 per cent, can help the companies in BPO sector to save costs
    tremendously and focus on other issues like retention. The job seekers are also
    availing the services of the third parties (consultants) for accessing the latest job
    In India, the trend of outsourcing recruitment is also catching up fast. For example:
    Vodafone outsources its recruitment activities to Alexander Mann Solutions (RPO
    service provider). Wipro has outsourced its recruitment process to MeritTrac. Yes
    bank is also known to outsource 50 per cent of its recruitment processes.
Advantage Of Outsourcing
   Traditionally, recruitment is seen as the cost incurring process in an
    organization. HR outsourcing helps the HR professionals of the
    organizations to concentrate on the strategic functions and
    processes of human resource management rather than wasting their
    efforts, time and money on the routine work.
    Outsourcing the recruitment processes helps to cut the
    recruitment costs to 20 % and also provide economies of scale to
    the large sized organizations.
    The major advantages of outsourcing recruitment performance
    management are:
    Outsourcing is beneficial for both the corporate organizations that use the
    outsourcing services as well as the consultancies that provide the service to the
    corporate. Apart from increasing their revenues, outsourcing Process provides
    business opportunities to the service providers, enhancing the skill set of the service
    providers and exposure to the different corporate experiences thereby increasing
    their expertise.
    The advantages are:

   turning the management's focus to strategic level processes of HRM

   accessibility to the expertise of the service providers

   freedom from red tape and adhering to strict rules and regulations

   optimal resource utilization

   structured and fair performance management.

   a satisfied and, hence, highly productive employees

   value creation, operational flexibility and competitive advantage

    Therefore outsourcing helps both the organizations and the consultancies to grow
    and perform better.
Outsourcing Process
                 Head Hunting

   Headhunting refers to the approach of
    finding and attracting the best experienced
    person with the required skill set.
    Headhunting is also a recruitment
    process involves convincing the person to
    join your organization.
Headhunting Process
Recruitment Strategies

   Recruitment is of the most crucial roles of the human resource
    professionals. The level of performance of and organization
    depends on the effectiveness of its recruitment function.
    Organizations have developed and follow recruitment strategies to
    hire the best talent for their organization and to utilize their
    resources optimally. A successful recruitment strategy should be
    well planned and practical to attract more and good talent to apply in
    the organization. For formulating an effective and successful
    recruitment strategy, the strategy should cover the following
                            Identifying and prioritizing jobs
 recruitment keep arising at various levels in every organization; it is almost a never-
ending process. It is impossible to fill all the positions immediately. Therefore, there is a
need to identify the positions requiring immediate attention and action. To maintain the
  quality of the recruitment activities, it is useful to prioritize the vacancies whether to
               focus on all vacancies equally or focusing on key jobs first.

                                    Candidates to target
     The recruitment process can be effective only if the organization completely
  understands the requirements of the type of candidates that are required and will be
       beneficial for the organization. This covers the following parameters as well:
Performance level required: Different strategies are required for focusing on hiring high
                            performers and average performers.
  Experience level required: the strategy should be clear as to what is the experience
 level required by the organization. The candidate‘s experience can range from being a
                        fresher to experienced senior professionals.
   Category of the candidate: the strategy should clearly define the target candidate.
He/she can be from the same industry, different industry, unemployed, top performers of
                                       the industry etc.

   Sources of recruitment
    The strategy should define various sources (external and internal) of
    recruitment. Which are the sources to be used and focused for the
    recruitment purposes for various positions. Employee referral is
    one of the most effective sources of recruitment.

   Trained recruiters
    The recruitment professionals conducting the interviews and the
    other recruitment activities should be well-trained and experienced
    to conduct the activities. They should also be aware of the major
    parameters and skills (e.g.: behavioral, technical etc.) to focus while
    interviewing and selecting a candidate.

   How to evaluate the candidates
    The various parameters and the ways to judge them i.e. the entire
    recruitment process should be planned in advance. Like the rounds
    of technical interviews, HR interviews, written tests, psychometric
    tests etc.
Forms Of Recruitment

   The organizations differ in terms of their size,
    business, processes and practices. A few
    decisions by the recruitment professionals can
    affect the productivity and efficiency of the
    organization. Organizations adopt different
    forms of recruitment practices according to the
    specific needs of the organization. The
    organizations can choose from the centralized or
    decentralized forms of recruitment, explained
   The recruitment practices of an organization are centralized when the HR /
    recruitment department at the head office performs all functions of
    recruitment. Recruitment decisions for all the business verticals and
    departments of an organization are carried out by the one central HR (or
    recruitment) department. Centralized from of recruitment is commonly seen
    in government organizations.
    Benefits of the centralized form of recruitment are:

   Reduces administration costs

   Better utilization of specialists

   Uniformity in recruitment

   Interchangeability of staff

   Reduces favoritism

   Every department sends requisitions for recruitment to their central office

 Decentralized recruitment practices are most commonly
 seen in the case of conglomerates operating in different
 and diverse business areas. With diverse and
 geographically spread business areas and offices, it
 becomes important to understand the needs of each
 department and frame the recruitment policies and
 procedures accordingly. Each department carries out its
 own recruitment. Choice between the two will depend
 upon management philosophy and needs of particular
 organization. In some cases combination of both is used.
 Lower level staffs as well as top level executives are
 recruited in a decentralized manner.
Equal Employment Opportunity

   Equal employment opportunity refers to the
    approach of the employers to ensure the
    practice of being fair and impartial in the
    employment process. It protects from
    discrimination against employees on the basis of
    race, sex, creed, religion, color, or national
    origin. It also covers the discrimination on the
    basis of the minority status.
    Discrimination in employment
    Discrimination refers to the any kind of prejudice, biasness or
    favoritism on the basis of
   disability
   race
   age
   sex
   sexuality
   pregnancy
   Marital status
   in employment. No person should be treated less favorably than any
    other on the basis of the specified issues above.
    Diversity in workforce
    With the globalization and the increasing size of the organizations,
    the diversity in the workforce is increasing i.e. people from diverse
    backgrounds, educational background, age groups, race, gender,
    abilities etc come together to work for one organization and common
    objectives. Therefore, it is the responsibility of the employer to
    create an equality-based and discrimination-free working
    environment and practices.
   Equal opportunity means treating people equally and fairly irrespective of
    their race, religion, sex, age, disability etc. Giving women an equal
    treatment and access to opportunities at the workplace. Any employee
    should be ill-treated or harassed by the employer or other employees.
    Equal Employment Opportunity principles help to realize and respect the
    actual worth of the individual on the basis of his knowledge, skills, abilities
    and merit. And the policy should cover all the employees of an organization
    whether permanent or temporary, contractual etc.
    Equal employment opportunity is necessary to ensure:

   To give fair access to the people of all development opportunities
   To create a fair organization, industry and society.
   To encourage and give disadvantaged or disabled people a fair chance to
    grow with the society.
Training and
              What is Training?
   Training means giving new or present employees
    the skills they need to perform their job.

   Training is the most effective tool to convert
    potential into performance.

   It is a learning process that involves the
    acquisition of knowledge, sharpening of skills,
    concepts, rules, or changing of attitudes and
    behaviors to enhance the performance of

   Training is activity leading to skilled behavior.
    A well conceived and conducted
    training program:
   Reduces time required to reach
    maximum efficiency.

   Is cost effective.

   Achieves clear evaluation of results.

   Has an element of predictability.
      Importance Of Training and Development
1.    Optimum Utilization of Human Resources
2.    Development of Human Resources
3.    Development of skills of employees
4.    Helps in increasing the productivity
5.    Helps in inculcating the sense of team work
6.    Helps building the positive perception and feeling
      about the organization
7.    Helps in improving upon the quality of work and
      work- life.

8.    Helps in creating the healthy working environment.
9.    Prevents obsolescence
10.   Helps in improving the morale of the work force
11.   Helps in creating a better corporate image.

12.   Leads to improved profitability and more positive
      attitudes towards profit orientation.
Role of Training

 Training                        Identification of
Evaluation                        Training needs


      Admin of                 Training
       Training                methods
           Objectives of Training

   The basic objective of training is to
    establish a match between employee and
    his/her job.
   Objectives of training differ according to
    the employees belonging to different
    levels of organizations.
   Training is designed to improve
    knowledge, skills and attitude, thus, equip
    the individual to be more effective in his
    present job or to prepare him for a future

Induction/     Process       Skill        Profile
Orientation   Knowledge     Updating   Enhancement

Organizational    Task       Man         Analysis of                   Problem
                                                       Brainstorming             Simulation
   Analysis      Analysis   Analysis     Equipment                      Clinic

                 Simulation   Experiential   Programmed
Lectures   OJT                                              E-Learning
                  Methods      Methods       Instructions
           Admin of

Training    Training   Implementation
Contents   Programs    of Training Plan
          Training Evaluation

   The process of examining a training
    program is called training evaluation.
    Training evaluation checks
    whether training has had the desired
    effect. Training evaluation ensures
    that whether candidates are able to
    implement their learning in their
    respective workplaces, or to the
    regular work routines
When setting any objectives for training we should be using the standard management
practice of using SMART objectives:

  S - Specific

  M - Measurable

  A - Achievable

  R - Realistic

  T - Time-bound
Management and
   Performance management can be defined
    as a process that consolidates Goal
    Setting, Performance appraisal, and
    development into a single, common
    system, the aim of which is to ensure that
    the employee’s performance is supporting
    the company’s strategic aims..
Why Appraise Performance?
1.   From a practical point of view, most employers still base
     pay and promotional decisions on the employees
2.   Appraisals play an integral role in the employer’s
     performance management process. Periodic review of
     performance helps translate the employer’s strategic
     goals into specific employees goals.
3.   Appraisals lets the boss and subordinate develop a plan
     for correcting any deficiencies, and to reinforce the things
     the subordinate does right.
4.   Appraisals serve a useful career planning purpose. They
     provide an opportunity to review the employee’s career
     plans in light of his/her exhibited strengths and

                                        Informing    Supervisors
Promotion   Determining     Training
                                        Employees       know       Personnel
    &          Wage             &
                                        Where they      their       research
 Transfer    increase     Development
                                           stand      employees
Steps in Appraising
   Defining the job means making
    sure that you & your subordinate
    agree on his/her duties and job

   Appraising performance means           Step3:
                                                                     Step 1:
    comparing your subordinate’s          Provide
                                                                  Define the job
    actual performance to the            feedback
    standards that have been set; this
    usually involves some type of
   Providing feedback require the
    two of you to discuss the
    subordinate’s performance and
    progress, and make plans for any                   Step2:
    development required.
  Who should do the appraising?

                                 Can be
                                Done by:

                                                  Appraisals       360
Immediate      Peer         Rating      Self
                                                     By          Degree
supervisor   Appraisals   Committees   Ratings   Subordinates   Feedback
    360 degree feedback
   360 degree appraisals are a powerful developmental method and
    quite different to traditional manager-subordinate appraisals (which
    fulfill different purposes). As such a 360 degree process does not
    replace the traditional one-to-one process - it augments it, and can
    be used as a stand-alone development method.

   360 degree appraisals involve the appraisee receiving feedback
    from people (named or anonymous) whose views are considered
    helpful and relevant. The feedback is typically provided on a form
    showing job skills/abilities/attitudinal/behavioral criteria and some
    sort of scoring or value judgment system. The appraisee should
    also assess themselves using the same feedback instrument or

   360 degree respondents can be the appraisee's peers, up-line
    managers/execs, subordinate staff, team members, other staff,
    customers, suppliers - anyone who comes into contact with the
    appraisee and has opinions/views/reactions of and to the appraisee.
Performance Appraisal
 There are many types of performance appraisal
 methods. Some of them are :
  1) Job results
  2) Essay method
  3) Mixed Standard Scales
 4) Forced Distribution
 5) Graphic Rating Scale
 6) Behavioral Checklist
 7) Behavioral Anchored Rating Scales (BARS)
 8) Management by Objectives (MBO)
Job Results
   Though not an appraisal method per se, job
    results are in themselves a source of data that can
    be used to appraise performance. Typically, an
    employee's results are compared against some
    objective standard of performance. Results
    indexes are often used for appraisal purposes if an
    employee's job has measurable results. Examples
    of job results indexes are volume of sales, and
    quantity and quality of work produced. Results
    indexes such as turnover, absenteeism, grievances,
    profitability, and production rates can be used to
    evaluate the performance of organization units.
Essay Method
   The essay method involves an evaluator's written
    report appraising an employee's performance,
    usually in terms of job behaviors and/or results. The
    subject of an essay appraisal is often justification
    of pay, promotion, or termination decisions, but
    essays can be used for developmental purposes as
   Since essay appraisals are to a large extent
    unstructured and open-ended, lack of
    standardization is a major problem. The open-
    ended, unstructured nature of the essay appraisal
    makes it highly susceptible to evaluator bias, which
    may in some cases be discriminatory
Mixed Standard Scales
   Mixed standard scales are a relatively recent innovation in rating
    scales. They contain statements representing good, average,
    and poor performance based on behavioral examples
    obtained from knowledgeable persons, usually supervisors. An
    evaluator's task is to indicate whether an employee either
    fits the statement, is better than the statement, or worse
    than the statement.
   In a mixed standard scale, each performance dimension has
    three statements relating to it: one illustrating good
    performance, one average, and one poor. Thus, this mixed
    standard scale has nine statements, three for each of the three
    dimensions used. Statements in mixed standard scales are
    randomly mixed, tending to reduce rater errors by making it less
    obvious which statements reflect effective or ineffective
    Example of a mixed standard scale
    Instructions: If the employee fits the statement, put a ?=? in the
    space opposite the statement. If the employee is better than the
    statement, put a ?v?. If the employee is worse than the statement,
    put ?x?.

   1. Is on good terms with everyone. Can get along with people even
    in disagreement.
   2. Employee's work is spotty, sometimes being all right and
    sometimes not. Could be more accurate and careful.
   3. Has a tendency to get into unnecessary conflicts with people.
   4. Is quick and efficient, able to keep work on schedule. Really
    gets going on a new task.
   5. The accuracy of employee's work is satisfactory. It is not often
    that you find clear evidence of carelessness.
   6. Gets along with most people. Only very occasionally has
    conflicts with others on the job, and these are likely to be minor.
   7. Is efficient enough, usually getting through assignments and
    work in reasonable time.
   8. Work is striking in its accuracy. Never any evidence of
    carelessness in it.
   9. There is some lack of efficiency on employee's part. Employee
    may take too much time to complete assignments, and sometimes
    does not really finish them
   1. Is on good terms with everyone. Can get along with people even in
   2. Employee's work is spotty, sometimes being all right and sometimes
    not. Could be more accurate and careful.
   3. Has a tendency to get into unnecessary conflicts with people.
   4. Is quick and efficient, able to keep work on schedule. Really gets going
    on a new task.
   5. The accuracy of employee's work is satisfactory. It is not often that you
    find clear evidence of carelessness.
   6. Gets along with most people. Only very occasionally has conflicts with
    others on the job, and these are likely to be minor.
   7. Is efficient enough, usually getting through assignments and work in
    reasonable time.
   8. Work is striking in its accuracy. Never any evidence of carelessness in
   9. There is some lack of efficiency on employee's part. Employee may take
    too much time to complete assignments, and sometimes does not really
    finish them
Forced Distribution
   Forced distribution is a form of comparative evaluation in
    which an evaluator rates subordinates according to a
    specified distribution. Unlike ranking methods, forced
    distribution is frequently applied to several rather than only one
    component of job performance.
   Use of the forced distribution method is demonstrated by a
    manager who is told that he or she must rate subordinates
    according to the following distribution: 10 percent low; 20
    percent below average; 40 percent average; 20 percent
    above average; and 10 percent high. In a group of 20
    employees, two would have to be placed in the low category, four
    in the below-average category, eight in the average, four above
    average, and two would be placed in the highest category. The
    proportions of forced distribution can vary. For example, a
    supervisor could be required to place employees into top, middle,
    and bottom thirds of a distribution.
Graphic rating scale
   Perhaps the most commonly used method of
    performance evaluation is the graphic rating scale.
    Off course it is also one of the oldest methods of
    evaluation in use. Under this method, a printed form,
    as shown in the table, is used to evaluate the
    performance of an employee. A variety of traits may
    be used in these types of rating devices, the most
    common being the quantity and quality of work.
    The rating scales can also be adapted by including
    traits that the company considers important for
    effectiveness on the job.
Table: Typical Graphic Rating Scale
Employee Name................... Job title .................
Department ......................... Rate ...............
Date ..................................

       Quantity of work: Volume
       of work under normal                                    Fair   Satisfactory   Good   Outstanding
       working conditions

       Quality of work:
       Neatness, thoroughness
       and accuracy of work
       Knowledge of job

       A clear understanding of
       the factors connected
       with the job

       Attitude: Exhibits
       enthusiasm and
       cooperativeness on the

       Conscientious, thorough,
       reliable, accurate, with
       respect to attendance,
       relief's, lunch breaks, etc.

       Cooperation: Willingness
       and ability to work with
       others to produce desired
   From the graphic rating scales, excerpts can be obtained about
    the performance standards of employees. For instance, if the
    employee has serious gaps in technical-professional knowledge
    (knows only rudimentary phases of job); lacks the knowledge to
    bring about an increase in productivity; is reluctant to make
    decisions on his own (on even when he makes decisions they are
    unreliable and substandard); declines to accept responsibility;
    fails to plan ahead effectively; wastes and misuses resources; etc.,
    then it can safely be inferred that the standards of the performance
    of the employee are dismal and disappointing.

   The rating scale is the most common method of evaluation of an
    employee’s performance today. One positive point in favor of the
    rating scale is that it is easy to understand, easy to use and
    permits a statistical tabulation of scores of employees. When
    ratings are objective in nature they can be effectively used as
    Behavioral Checklist
     A behavioral checklist is a rating form containing statements describing both
     effective and ineffective job behaviors. These behaviors relate to a number of
     behavioral dimensions determined to be relevant to the job.
    Items from a behavioral checklist for a salesperson's job

Instructions: Please check those statements descriptive of an employee's behavior.
   1. Calls on customers immediately after hearing of any complaints
    2. Discusses complaints with customer

   3. Gathers facts relevant to customers' complaints

   4. Transmits information about complaints back to customers and
    resolves problems to their satisfaction

   5. Plans each day's activities ahead of time

   6. Lays out broad sales plans for one month ahead

   7. Gathers sales information from customers, other salesmen, trade
    journals, and other relevant sources
   Behavioral checklists are well suited to employee
    development because they focus on behaviors and
    results, and use absolute rather comparative
    standards. An advantage of behavioral checklists is
    that evaluators are asked to describe rather than
    evaluate a subordinate's behavior. For this
    reason, behavioral checklists may meet with less
    evaluator resistance than some other methods. An
    obvious disadvantage of behavioral checklists is that
    much time and money must be invested to construct
    the instrument.
BARS - Behaviorally Anchored
Rating Scales
   Also known as the behavioral expectations scale,
    this method represents the latest innovation in
    performance appraisal. It is a appraisal tool that
    anchors a numerical rating scale with specific
    behavioral examples of good or poor
    performance. It is a combination of the rating
    scale and critical incident techniques of
    employee performance evaluation. The critical
    incidents serve as anchor statements on a scale and
    the rating form usually contains six to eight
    specifically defined performance dimensions. The
    following chart represents an example of a sales
    trainee’s competence and a behaviorally
    anchored rating scale.
Table: An Example of Behaviorally Anchored Rating Scale
Performance            Points                 Behavior

                                              Can expect trainee to make
                                              valuable suggestions for
Extremely good         7                      increased sales and to have
                                              positive relationships with
                                              customers all over the country.

                                              Can expect to initiate creative
Good                   6
                                              ideas for improved sales.

                                              Can expect to keep in touch
Above average          5                      with the customers throughout
                                              the year.

                                              Can manage, with difficulty, to
Average                4                      deliver the goods in time.

                                              Can expect to unload the trucks
Below average          3                      when asked by the supervisor.

                                              Can expect to inform only a part
Poor                   2                      of the customers.

                                              Can expect to take extended
Extremely poor         1                      coffee breaks and roam around
Confidential report
   It is mostly used in government organizations. It is a descriptive
    report prepared, generally at the end of every year, by the
    employee’s immediate superior. The report highlights the
    strengths and weaknesses of the subordinate. The report is not
    data based. The impressions of the superior about the
    subordinate are merely recorded there. It does not offer any
    feedback to the appraisee. The appraisee is not very sure about
    why his ratings have fallen despite his best efforts, why others
    are rated high when compared to him, how to rectify his
    mistakes, if any; on what basis he is going to be evaluated next
    year, etc. Since the report is generally not made public and
    hence no feedback is available, the subjective analysis of the
    superior is likely to be hotly contested. In recent years, due to
    pressure from courts and trade unions, the details of a negative
    confidential report are given to the appraisee.
Management by Objectives

   Management by objectives (MBO) involves setting specific
    measurable goals with each employee and then periodically
    discussing his/her progress toward these goals. The term MBO
    almost always refers to a comprehensive organization-wide goal
    setting and appraisal program that consist of six main steps:

   1. Set the organization's goals. Establish organization-wide plan
    for next year and set goals.

   2. Set departmental goals. Here department heads and their
    superiors jointly set goals for their departments

   3. Discuss and allocate department goals. Department heads
    discuss the department's goals with all subordinates in the
    department (often at a department-wide meeting) and ask them to
    develop their own individual goals; in other words, how can each
    employee contribute to the department's attaining its goals?
   4. Define expected results (set individual goals).
    Here, department heads and their subordinates set
    short-term performance targets.

   5. Performance review and measure the results.
    Department heads compare actual performance for
    each employee with expected results.

   6. Provide feedback. Department heads hold
    periodic performance review meetings with
    subordinates to discuss and evaluate progress in
    achieving expected results.

   MBO emphasizes anticipatively set goals that are tangible, verifiable and

   MBO focuses attention on what must be accomplished (goals) rather than how
    it is to be accomplished (methods).

   MBO, by concentrating on key result areas translates the abstract philosophy
    of management into concrete phraseology. The technique can be put to general
    use (non-specialist technique). Further it is “a dynamic system which seeks to
    integrate the company’s need to clarify and achieve its profit and growth
    targets with the manager’s need to contribute and develop himself”.

   MBO is a systematic and rational technique that allows management to attain
    maximum results from available resources by focusing on achievable goals. It
    allows the subordinate plenty of room to make creative decisions on his own.


How to Avoid Appraisal Problems

         Control                            Use
         Outside                            Right
       influences                           Tool

    Performance Management
    Performance Management is a systematic process of :
•Target setting - Planning work and output expectations

•Performance Appraisal and Monitoring - Continually monitoring performance

•Rewarding good performance and managing poor performance

•Competency Management and Assessment

•Personal Development Planning - Developing and enhancing the capacity to

•Performance and Competency Rating - Periodically rating and assessing
in a summary fashion
 Human Resource is the most vital resource
  for any organization. It is responsible for each
  and every decision taken, each and every work
  done and each and every result. Employees
  should be managed properly and motivated by
  providing best remuneration and
  compensation as per the industry
  standards. The lucrative compensation will
  also serve the need for attracting and
  retaining the best employees.

 Compensation is an integral part of human
  resource management which helps in
  motivating the employees and improving
  organizational effectiveness.
 Compensation is the remuneration received
  by an employee in return for his/her
  contribution to the organization. It is an
  organized practice that involves balancing the
  work-employee relation by providing monetary
  and non-monetary benefits to employees.

 Employee compensation refers to all forms of
  pay going to employees and arising from their
Need of Compensation
    A good compensation package is important to motivate the
     employees to increase the organizational productivity.

    Unless compensation is provided no one will come and
     work for the organization. Thus, compensation helps in
     running an organization effectively and accomplishing its

    Salary is just a part of the compensation system, the
     employees have other psychological and self-actualization
     needs to fulfill. Thus, compensation serves the purpose.

    The most competitive compensation will help the
     organization to attract and sustain the best talent. The
     compensation package should be as per industry


Employee                      Need
Retention                  Satisfaction
 Components of Compensation System

 Compensation
  systems are designed
  keeping in minds the
  strategic goals and
  business objectives.
  Compensation system
  is designed on the
  basis of certain factors
  after analyzing the job
  work and
  Components of a
  compensation system
  are as follows:
Pay structure
refers to the process of setting up the pay for a job in an
organization. The process deals with internal and external
analysis to estimate the compensation package for a job
Objectives of Salary Survey
 To gather information
  regarding the industry

 To know more about the
  market rate i.e.
  compensation offered by the        Salary Survey

 To design a fair
  compensation system

 To design and implement
  most competitive reward
  strategies                    Standard        Custom

 To benchmark the
  compensation strategies
Types of Compensation

  Compensation provided to employees can be
   direct in the form of monetary benefits
   and/or indirect in the form of non-monetary
   benefits known as perks, time off, etc.
   Compensation does not include only salary
   but it is the sum total of all rewards and
   allowances provided to the employees in
   return for their services. If the compensation
   offered is effectively managed, it contributes to
   high organizational productivity.

Direct financial      Indirect financial
  payments               payments



House rent

                                   Leave travel



Flexible                  Retirement
Timings                    Benefits

Strategic Compensation
   Strategic compensation
       Using the compensation plan to support the
        company‘s strategic aims.
       Focuses employees‘ attention on the values of
        winning, execution, and speed, and on being
        better, faster, and more competitive..
Compensation Policy Issues
   Pay for performance
   Pay for seniority
   The pay cycle
   Salary increases and promotions
   Overtime and shift pay
   Probationary pay
   Paid and unpaid leaves
   Paid holidays
   Salary compression
   Geographic costs of living differences
Forms of Equity
   External equity
       How a job‘s pay rate in one company compares to the job‘s pay
        rate in other companies.
   Internal equity
       How fair the job‘s pay rate is, when compared to other jobs within
        the same company
   Individual equity
       How fair an individual‘s pay as compared with what his or her co-
        workers are earning for the same or very similar jobs within the
   Procedural equity
       The perceived fairness of the process and procedures to make
        decisions regarding the allocation of pay.
Methods to Address Equity
   Salary surveys
       To monitor and maintain external equity.
   Job analysis and job evaluation
       To maintain internal equity,
   Performance appraisal and incentive pay
       To maintain individual equity.
   Communications, grievance mechanisms,
    and employees‘ participation
       To help ensure that employees view the pay
        process as transparent and fair.
Establishing Pay Rates
   Step 1. The salary survey
       Aimed at determining prevailing wage rates.
           A good salary survey provides specific wage rates for
            specific jobs.
       Formal written questionnaire surveys are the most
        comprehensive, but telephone surveys and
        newspaper ads are also sources of information.
Establishing Pay Rates (cont’d)

   Step 2. Job evaluation
       A systematic comparison done in order to
        determine the worth of one job relative to another.
Establishing Pay Rates
   Step 3. Group Similar Jobs into Pay Grades
       A pay grade is comprised of jobs of approximately
        equal difficulty or importance as established by
        job evaluation.
Establishing Pay Rates
   Step 4. Price Each Pay Grade
    — Wage Curve
       Shows the pay rates currently paid for jobs in
        each pay grade, relative to the points or rankings
        assigned to each job or grade by the job
       Shows the relationships between the value of the
        job as determined by one of the job evaluation
        methods and the current average pay rates for
        your grades.
Plotting a Wage Curve

                        Figure 11–4
Establishing Pay Rates
   Step 5. Fine-tune pay rates
       Developing pay ranges
         Flexibility in meeting external job market rates

         Easier for employees to move into higher pay grades
         Allows for rewarding performance differences and seniority
       Correcting out-of-line rates
         Raising underpaid jobs to the minimum of the rate range for
          their pay grade.
         Freezing rates or cutting pay rates for overpaid (―red circle‖)
          jobs to maximum in the pay range for their pay grade.

Note: This shows overlapping wage classes
and maximum–minimum wage ranges.

                           Figure 11–5
Pricing Managerial and
Professional Jobs
   Compensating managers
       Base pay: fixed salary, guaranteed bonuses.
       Short-term incentives: cash or stock bonuses
       Long-term incentives: stock options
       Executive benefits and perks: retirement plans,
        life insurance, and health insurance.
Pricing Managerial and
Professional Jobs
   What Really Determines Executive Pay?
       CEO pay is set by the board of directors taking
        into account factors such as the business
        strategy, corporate trends, and where they want
        to be in a short and long term.
       Firms pay CEOs based on the complexity of the
        jobs they filled.
       Boards are reducing the relative importance of
        base salary while boosting the emphasis on
        performance-based pay.
Pricing Managerial and
Professional Jobs
   What Really Determines Executive Pay?
       CEO pay is set by the board of directors taking
        into account factors such as the business
        strategy, corporate trends, and where they want
        to be in a short and long term.
       Firms pay CEOs based on the complexity of the
        jobs they filled.
       Boards are reducing the relative importance of
        base salary while boosting the emphasis on
        performance-based pay.
What Is Competency-based
   Competency-based pay
       Where the company pays for the employee‘s
        range, depth, and types of skills and knowledge,
        rather than for the job title he or she holds.
   Competencies
       Demonstrable characteristics of a person,
        including knowledge, skills, and behaviors, that
        enable performance.
Why Use Competency-Based
   Traditional pay plans may actually backfire if
    a high-performance work system is the goal.
   Paying for skills, knowledge, and
    competencies is more strategic.
   Measurable skills, knowledge, and
    competencies are the heart of any company‘s
    performance management process.
Other Compensation Trends
   Broadbanding
       Consolidating salary grades and ranges into just a
        few wide levels or ―bands,‖ each of which contains
        a relatively wide range of jobs and salary levels.
           Wide bands provide for more flexibility in assigning
            workers to different job grades.
  Structure and
How It Relates to
 Traditional Pay
   Grades and

            Figure 11–7
Motivation, Performance, and
   Incentives
       Financial rewards paid to workers whose
        production exceeds a predetermined standard.
Individual Differences
   Law of individual differences
       The fact that people differ in personality, abilities,
        values, and needs.
       Different people react to different incentives in
        different ways.
       Managers should be aware of employee needs
        and fine-tune the incentives offered to meets their
       Money is not the only motivator.
Types of Incentive Plans
   Pay-for-performance plans
       Variable pay (organizational focus)
           A team or group incentive plan that ties pay to some
            measure of the firm‘s overall profitability.

       Variable pay (individual focus)
           Any plan that ties pay to individual productivity or
            profitability, usually as one-time lump payments.
Why Incentive Plans Fail
   Performance pay can‘t replace good management.
   You get what you pay for.
   ―Pay is not a motivator.‖
   Rewards punish.
   Rewards rupture relationships.
   Rewards can have unintended consequences.
Implementing Effective
Incentive Plans
   Ask: Is effort clearly instrumental in obtaining the reward?
   Link the incentive with your strategy.
   Make sure effort and rewards are directly related.
   Make the plan easy for employees to understand.
   Set effective standards.
   View the standard as a contract with your employees.
   Get employees‘ support for the plan.
   Use good measurement systems.
   Emphasize long-term as well as short-term success.
   Adopt a comprehensive, commitment-oriented approach.
   Benefits
       Indirect financial and nonfinancial payments
        employees receive for continuing their
        employment with the company.
   Types of employee benefit plans
       Supplemental pay: sick leave and vacation pay
       Insurance: workers‘ compensation
       Retirement: Pensions
       Employee services: child-care facilities
                                                                  Private-Sector Employer
                                                                     Compensation Costs,
                                                                                June 2003
Source: ―Total Employer Costs Rose to 22.61 in Second Quarter,‖
                                                                                   Figure 13–2
BNA Bulletin to Management, September 11, 2003, p. 293
Types of Employee Benefits
   Pay for time not worked
   Insurance benefits
   Retirement benefits
   Services
Issues in Developing Benefits
   Benefits to be offered.
   Coverage of retirees in the plan
   Denial of benefits to employees during initial
    ―probationary‖ periods
   Financing of benefits.
   Benefit choices to give employees.
   Cost containment procedures to use.
   Communicating benefits options to
Pay for Time Not Worked
   Unemployment insurance
       Provides for benefits if a person is unable to work
        through no fault of his or her own.
   Vacations and holidays
       Number of paid vacation days varies by employer.
       Number of holidays varies by employer.
       Premium pay for work on holidays.
Pay for Time Not Worked (cont’d)
   Sick leave
       Provides pay to an employee when he or she is
        out of work because of illness.

   Parental leave
       The Family Medical Leave Act of 1993 (FMLA)
           Up to 12 weeks of unpaid leave within a one-year
           Employees must take unused paid leave first.
           Employees on leave retain their health benefits.
           Employees have the right to return to their job or
            equivalent position.
    Pay for Time Not Worked (cont’d)

   Severance pay
       A one-time payment when terminating an
       Reasons for granting severance pay:
           Acts as a humanitarian gesture and good public
           Mirrors employee‘s two week quit notice.
           Avoids litigation from disgruntled former employees.
           Reassures employees who stay on after the employer
            downsizes its workforce of employer‘s good intentions.
Insurance Benefits
   Workers‘ compensation
       Provides income and medical benefits to work-
        related accident victims or their dependents,
        regardless of fault.
           Death or disability: a cash benefit based on earnings
            per week of employment.
           Specific loss injuries: statutory list of losses
       Controlling worker compensation costs
           Screen out accident-prone workers.
           Make the workplace safer.
           Thoroughly investigate accident claims.
           Use case management to return injured employees to
            work as soon as possible.
Insurance Benefits (cont’d)
   Hospitalization, health, and disability
       Provide for loss of income protection and group-
        rate coverage of basic and major medical
        expenses for off-the-job accidents and illnesses.
           Accidental death and dismemberment
           Disability insurance
Retirement Benefits (cont’d)
   Types of pension plans
       Contributory: employees contribute to the plan.
       Noncontributory plans: employer makes all
        contributions to the plan.
       Qualified plans: plans that meet requirements for
        tax benefits for employer contributions.
       Nonqualified plans: plans not meeting
        requirements for favorable tax treatment.
Retirement Benefits (cont’d)
   Types of pension plans (cont‘d)
       Defined contribution: contributions of employees
        and employers are specified; plan payouts are
       Defined benefit plans: plan payouts are specified;
        however, contributions must be sufficient to insure
Family-Friendly Benefits
   On-site or subsidized      Educational subsidies
    child care                 Sabbaticals
   Elder care                 Loan programs for
   Fitness and medical         home office equipment
    facilities                 Stock options
   Food services              Concierge services
   Flexible work              Trauma counseling
   Telecommuting
Flexible Benefits Programs
   The cafeteria (flexible benefits) approach
       Each employee is given a benefits fund budget to
        spend on the benefits he or she prefers.

   Flexible spending accounts
       Enable employees to pay for medical and other
        expenses with pretax dollars by depositing funds
        in their accounts from payroll deductions.
Flexible Work Arrangements
   Flextime
       A plan whereby employees‘ workdays are built
        around a core of mid-day hours when all workers
        are required to be present.
       Workers can arrange their own starting and
        stopping hours before and after the core period.
           Positive effects on employee productivity, job
            satisfaction, satisfaction with work schedule, and
            employee absenteeism.
           Positive effect on absenteeism was much greater than
            on productivity.
Flexible Work Arrangements
   Compressed workweeks
       Increase productivity
           Less disruption from shift changes
           Longer time-off-work periods
           Reduced absenteeism
       Longer workdays; fewer workdays:
           Four-day workweeks, with four 10-hour days.
           Two days on, two days off, three days on, then two
            days off, two days on, and so forth.
           Three 12-hour shifts, and then off for the next four
Other Flexible Work
   Job sharing
       Allowing two or more people to share a single full-
        time job.
   Work sharing
       A temporary reduction in work hours by a group of
        employees during economic downturns as a way
        to prevent layoffs.
   Telecommuting
       Employees work at home using telephones and
        the Internet to transmit letters, data, and
        completed work to the home office.

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