MASTER OF BUSINESS ADMINISTRATION
(INDUSTRY INTEGRATED)
TWO YEAR FULL TIME INDUSTRY INTEGRATED
M.B.A PROGRAMME
SELF LEARNING MATERIAL
HUMAN RESOURCE MANAGEMENT
Detailed Curriculum
Annamalai University Courses
Index
1. Managing People
2. HR Planning and Staffing
3. Development of Human Resources
4. Performance Appraisal and Managing
5. Employee Relations
6. Current Trends, Issues and Evaluation of HRM
1. Managing People
1.1. Introduction
Human Resource Management is all about managing people. People are the most important aspect of the organization. The world of human beings is full of contrasts. Beauty is juxtaposed with ugliness, mercy with cruelty, compassion with indifference, health with disease, happiness with misery, industriousness with laziness, affluence with poverty and as the tidbits told above, mercy with cruelty. These contrasts remain so, despite the passage of time, sweeping political and economic changes, and cultural differences. Contrasts notwithstanding, one thing is certain – it is the people who make an organization a success or allow it to be handed over to the Board for Industrial and Financial Reconstruction. Who are these so-called patrons? How to attract them?. How to retain them? How to motivate them? These and other such questions need an in-depth study.
1.2. Objectives
After reading this chapter, you should be able to:
Understand the nature, scope and objectives of human resource management
Human Resource Department and its structure
HRM as a staff function and line responsibility
Role of HR Executives
Contemporary challenges in HRM – Globalization and future of HRM
Retention Strategies.
1.3. Meaning and Definition
HRM (Human Resource Management) is a management function concerned with hiring, motivating and maintaining people in an organization. It focuses on people in organizations. We will now look into the essentials which must find their place in any definition. The core points are:
Organizations are not mere bricks, mortar, machineries or inventories. They are people. It is the people who staff and manage organizations.
HRM involves the application of management functions and principles. The functions and principles are applied to acquisitioning, developing, maintaining, and remunerating employees in organizations.
Decisions relating to employees must be integrated. Decisions on different aspects of employees must be consistent with other human resource (HR) decisions.
Decisions made must influence the effectiveness of an organization. Effectiveness of an organization must result in betterment of services to customers in the form of high-quality products supplied at reasonable costs.
HRM functions are not confined to business establishments only. They are applicable to non-business organizations, too, such as education, health care, recreation and the like.
The following three definitions collectively cover all the five core points mentioned above.
… is a series of integrated decisions that form the employment relationship; their quality contributes to the ability of the organizations and the employees to achieve their objective.
… concerned with the people dimension in management. Since every organization is made up of people, acquiring their services, developing their skills, motivating them to higher levels of performance and ensuring that they continue to maintain their commitment to the organization are essential to achieving organizational objectives. This is true, regardless of the type of organization – government, business, education, health, recreation, or social action.
… 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.
Thus, HRM refers to a set of programmes, functions and activities designed and carried out in order to maximize both employee as well as organizational effectiveness.
1.4. Scope of HRM.
The scope of HRM is indeed vast. All major activities in the working life of a worker – from time of his/her entry into an organization until he or she leaves – come under the purview of HRM. Specifically, the activities included are – HR planning, job analysis and design, recruitment and selection, orientation and placement, training and development, performance appraisal and job evaluation, employee and executive remuneration, motivation and communication, welfare, safety and health, industrial relations (IR) and the like.
Fig 1.1 Scope of HRM
HRM is a broad concept. Personnel management (PM) and human resource development (HRD) are a part of HRM.
Difference between HRM and PM
Sr. No Dimension Personnel Management Human Resource Management
1 Employment Contract Careful delineation of written contracts Aim to go beyond contract
2 Rules Importance of devising clear rules Can do outlook, impatience with rule
3 Guide to Mgmt Action Procedures Business needs
4 Behaviour Referent Norms/Customs or Practices Values/missions
5 Managerial Task vis-à-vis labour Monitoring Nuturing
6 Key Relation Labour Management Customer
7 Initiative Piece Meal Integrated
8 Speed of decisions Slow Fast
9 Management Role Transactional Transformational Leadership
10 Communication Indirect Direct
11 Prized Management Skills Negotiation Facilitation
12 Selection Separate, marginal task Integrated, Key Task
13 Pay Job evaluation (fixed grades) Performance related
14 Conditions Separately Negotiated Harmonisation
15 Labour Management Collective Bargaining contracts Individual Contracts
16 Job Categories & Grades Many Few
17 Job Design Division of Labour Team Work
18 Conflict Handling Reach Temporary Truce Manage climate and culture
19 Training & Development Controlled access to courses Learning companies
20 Focus of attention for intervention Personnel procedures Wide ranging culture, structural and personnel strategies
21 Request for employees Labour is treated as a tool which is expendable and replaceable People are treated as assets to be used for the benefit of an organization, its employees and the society as a whole
22 Shared Interests Interests of the organization are uppermost Mutuality of interests
23 Evolution Precedes HRM Latest in the evolution of the subjects.
1.5 HRM: Objectives and Functions
Objectives - The primary objective of HRM is to ensure that availability of a competent and willing workforce to an organization. Beyond this, there are other objectives too. Specifically, HRM objectives are four fold – societal, organizational, functional and personal.
Functions – In order to realize the objectives stated above, HRM must perform certain functions. These functions have been stated while outlining the scope of HRM. Generally, it may be stated that there is a correlation between the objectives and functions. In other words, some functions help realize specific objectives.
HRM Objectives Supporting Functions
1. Societal Objectives 1. Legal Compliance
2. Benefits
3. Union-management relations
2. Organizational Objectives 1. Human resource planning
2. Employee relation
3. Selection
4. Training and development
5. Appraisal
6. Placement
7. Assessment
3. Functional Objectives Appraisal
2. Placement
3. Assessment
4. Personal Objectives 1. Training and Developments
2. Appraisal
3. Placement
4. Compensation
5. Assessment
1.6 Organization of HR Department
Two issues become relevant in a discussion of an HR Department.
Place of the HR department in the overall setup
Composition of the HR department itself
The status of the HR department in the total organizational structure depends on whether a unit is small or large.
In most of the small organizations, there is no separate department to co-Oradell activities relating to personnel. In fact, there may not be any personnel managers at all. Send outsiders who specialize in maintaining accounts and records relating to provident fund, pens other statutory requirements are retained for a fee. Alternatively, a low-placed employee I entrusted with the task of attending to these functions.
HRM in a Small-scale Unit
A large-scale unit will have a Manager Director heading the HR department. His or her status will be equal to that of any executive.
This arrangement holds good when the company has a single unit. Where the company has multiple plants located in different parts of the country, there may be a centralized HR/personnel department at the main or registered office and each plant will have separate HR/personnel departments.
Routine activities relating to each plant are handled by the HR/personnel department attached to the work, whereas the broad policies, matters concerning executives, and the like are handled by the central department.
E.g. BHEL, ITI and L&T.
Coming to the composition of the HR department, it may be stated that it depends on the scale of operations and attitude of the top management towards its personnel. However, a typical HR department is headed by a Director, under whom are Managers – Personnel, Administration, HRD, Industrial Relations. The department will grow in size and importance when new demands are placed on it by the top management.
Line and staff management
Definition
Military-type organizational structure, commonly employed in centralized large corporations. It has two separate hierarchies:
Line hierarchy in which the departments are revenue generators (manufacturing, selling), and their managers are responsible for achieving the organization's main objectives by executing the key functions (such as policy making, target setting, decision making);
Staff hierarchy, in which the departments are revenue consumers, and their managers are responsible for activities that support line functions (such as accounting, maintenance, personnel management). While both hierarchies have their own chains of command, a line manager may have direct control over staff employees but a staff manager may have no such power over the line employees. In modern practice, however, the difference in the two hierarchies is not so clear-cut and jobs often have elements of the both types of functions.
LINE-AND-STAFF POSITIONS
A wide variety of positions exist within a line-and-staff organization. Some positions are primary to the company's mission, whereas others are secondary—in the form of support and indirect contribution. Although positions within a line-and-staff organization can be differentiated in several ways, the simplest approach classifies them as being either line or staff.
A line position is directly involved in the day-to-day operations of the organization, such as producing or selling a product or service. Line positions are occupied by line personnel and line managers. Line personnel carry out the primary activities of a business and are considered essential to the basic functioning of the organization.
Line managers make the majority of the decisions and direct line personnel to achieve company goals. An example of a line manager is a marketing executive. Although a marketing executive does not actually produce the product or service, he or she directly contributes to the firm's overall objectives through market forecasting and generating product or service demand. Therefore, line positions, whether they are personnel or managers, engage in activities that are functionally and directly related to the principal workflow of an organization.
Staff positions serve the organization by indirectly supporting line functions. Staff positions consist of staff personnel and staff managers. Staff personnel use their technical expertise to assist line personnel and aid top management in various business activities. Staff managers provide support, advice, and knowledge to other individuals in the chain of command.
Although staff managers are not part of the chain of command related to direct production of products or services, they do have authority over personnel. An example of a staff manager is a legal adviser. He or she does not actively engage in profit-making activities, but does provide legal support to those who do. Therefore, staff positions, whether personnel or managers, engage in activities that are supportive to line personnel.
LINE-AND-STAFF CONFLICT
Due to different positions and types of authority within a line-and-staff organization, conflict between line and staff personnel is almost inevitable. Although minimal conflict due to differences in viewpoints is natural, conflict on the part of line and staff personnel can disrupt an entire organization. There are many reasons for conflict. Poor human relations, overlapping authority and responsibility, and misuse of staff personnel by top management are all primary reasons for feelings of resentment between line and staff personnel. This resentment can result in various departments viewing the organization from a narrow stance instead of looking at the organization as a whole.
Fortunately, there are several ways to minimize conflict. One way is to integrate line and staff personnel into a work team. The success of the work team depends on how well each group can work together in efforts to increase productivity and performance. Another solution is to ensure that the areas of responsibility and authority of both line and staff personnel are clearly defined. With clearly defined lines of authority and responsibility, each group may better understand their role in the organization. A third way to minimize conflict is to hold both line and staff personnel accountable for the results of their own activities. In other words, line personnel should not be entirely responsible for poor performance resulting from staff personnel advice.
Line-and-staff organizations combine the direct flow of authority present within a line organization with staff departments that offer support and advice. A clear chain of command is a consistent characteristic among line-and-staff organizational structures. Problems of conflict may arise, but organizations that clearly delineate responsibility can help minimize such conflict.
Changing Boundaries of HRD
Reorganization & Restructuring
This includes downsizing, right sizing, flattening the structure, outsourcing, etc.
Managing Mergers and acquisition
Initiating and managing Quality initiatives: This includes quality circles, small group activities, ISO certifications, etc.
Conducting a variety of surveys: This includes climate survey, employee satisfaction survey, internal customer satisfaction surveys and bench marking with competitors and others globally.
Restructuring Salary & Reward Systems through compensation surveys, introduction of stock options, performance linked pay or pay-for-performance, compensation planning, etc.
Enhanced emphasis on recruitment or placement:
With the recognition of the need for competent people, the new economy industries like the IT, Telecom, Financial Services, BPO (Call Centers) have further increased their focus on recruitment and outsourcing of recruitment.
Introducing new technologies of training:
This includes e-learning, on-line education, distance learning, off campus learning, web based learning and use of other technologies for learning.
Starting Corporate Universities and in-house training:
Institutions and academies to encourage continuous education programmes and competence building.
Introduction of 360 Degree Feedback by linking with reward system.
Use of Assessment Centers or Development Centers for identifying developing and promoting talented individuals, starting of fast track systems, identification of high potential employees and designing retention strategies.
Increased emphasis on mentoring and coaching
Increased emphasis on training of all employees, particularly operators, workmen, etc, through multi-skilling, etc
Emphasis on leadership and leadership development at all levels.
Participation in strategic thinking, business planning, mergers and acquisitions.
Improving Quality of Work Life.
Recent Trends: Globalization
Globalization means doing a better job than your competitors at satisfying consumers’ needs and the demand for quality, no matter where they live. It means creating the network and infrastructure to efficiently compete in the increasingly homogeneous worldwide marketplace.
The concept of Globalization is not only interdisciplinary, but its utility and aspects have far- reaching implications for the business and policymaking communities at the national and international levels. In addition, the forces that advocate, resist, or are influenced by Globalizations are numerous and espouse dissimilar orientations, objectives and strategies. Nongovernment organizations, academic and research institutions, MNCs and supranational entities are all involved in the Globalization process but follow different paths in pursuing their global goals.
Global Organization
A global organization pursues “thinking and acting” globally with exceptional flexibility and sensitivity to the peculiarity of each market and is willing to cope with the challenge of internalizing similarities while accommodating differences. Furthermore, a global firm considers improving the quality of life for its constituencies as a source of competitive advantage. Specifically, global corporations have three major characteristics – inner security, inner direction, inner coherence:
Inner security: Confidence in the ability to compete and shape the future allows global corporations to expand, recruit personnel from all over the world, and engage in various experimentations that further innovation and strengthen revitalization (e.g. DaimlerChrysler, Ford, P & G).
Inner direction: Clarity of mission, vision and foresight permit global corporations to pursue networking on a global scale, and to engage in mergers, acquisitions and other types of alliances (e.g. ABB, Honda)
Inner coherence: Strength of culture, commitment to clearly defined purposes, and a strong sense of self allow global corporations to expand worldwide and strengthen their role as local players wherever they operate. (e.g. Nestle, ABB).
Benefits of being global
Capitalizes on ideas everywhere.
Produces stronger world-class technology
Accesses the most qualified people.
Networking
Revitalization and growth
World citizen image
RETENTION
Employee retention programme is a significant challenge for most companies today. For most employers it is the most compelling problem they face. A key employee retention programme will help the employer to retain key employees and ensure their commitment to the organisation.
An organisation must have a comprehensive approach to attract and retain good employees so that quality customer service can be given. There cannot be loyal customers without loyal employees. There are six keys to comprehensive employee retention plan.
•1. Have a planned approach.
Retain people as individuals, not groups.
Value people through a strong organisational vision.
Invest in employees.
Boost retention with innovative compensation and training programmes.
Approach retention as a long-term and short-term strategy. There are nine tips to help keep good employees:
Beware of anything that can become an entitlement, because it can become expensive and you may not need it.
Develop processes by which people can increase their employability in the
areas of competencies, skills and intellectual growth.
Use special projects as incentives or rewards.
Have a positive corporate environment to foster employee development.
Realise that retention of valued people is a long-term process, not a knee-jerk reaction.
Create a consistent corporate culture in which managers communicate corporate vision and values uniformly to employees.
Build in reward for supervisors and managers who keep good employees.
Use exit interviews to obtain important data that will provide information about your organisation.
Provide anonymous suggestion programmes to make workers understand the importance of their ideas.
Questions to answer:
What is Human Resource Management?
What is the scope of HRM?
List the difference between HRM and PM.
Define Objective and Function.
What is the difference between small scale unit and large scale unit with suitable diagrams?
Define Line and Staff Management.
What are the conflict areas in Line and Staff Management?
What is Retention?
2. HRM Planning and Staffing
2.1 Introduction
Human resource planning and staffing is one of the toughest task, an organization has before it. Selecting the right man for the right job at the right time is main task of the HR department. The main task is to ensure that the staff of the organization does not leave the organization and ensure that they are satisfied and that the work of the organization is not affected by the absence of the employee and so on.
2.2 Objectives
After reading this chapter, the student will understand the process and problems of HR Planning, job analysis, its process, job description, etc.
2.2 Process and Problems of Human Resource Planning.
HRP Process
Company Objectives & Strategic Plans
P
Market Forecast Production Objectives/Process Capital/Financial Plans
Plans
H
A
S
E
Time Horizon (Short/Long Term) 1
Human Resources Demand Forecast
N Number
O
R Category
M
S Skills
Action Plans
Recruitment
Retraining
Redundancy
Productivity
Retention
Monitoring and Control
Factors affecting HRP
Type and strategy of organization
Organizational growth cycles and planning
Environmental uncertainties
Time horizons
Type and quality of forecasting information
Nature of jobs being filled and
Off-loading the work
Type and strategy of organization
The type of organization is an important consideration because it determines the production processes involved, number and type of staff needed, and the supervisory and managerial personnel required.
Manufacturing organizations are more complex in this respect than those that render services.
The strategic plan of the organization defines the organization’s HR needs.
E.g. A Strategy of internal growth means that additional employees must be hired. Acquisitions or mergers, on the other hand, probably mean that the organization will need to plan for layoffs, since mergers tend to create, duplicate or overlapping positions that can be handled more efficiently with fewer employees.
Primarily, the organization decides either to be proactive or reactive in HRP. It can either decide to carefully anticipate the needs and systematically plan them to fill them in advance, or it can simply react to needs as they arise.
The above diagram summaries the 5 choices faced by the organizations in strategic HRP. An organization will often tend to be to the left or right on some and to the right on the other, although there could be exceptions. A company could be at one end of the extreme on some plan characteristics and at the other end on other.
B. Organization Growth Cycle and Planning
The stage of an organization’s growth can have considerable influence on HRP. Small organizations in the embryonic stage may not have personnel planning.
Need for planning is felt when the organization enters the growth stage. HR forecasting becomes essential. Internal development of people also begins to receive attention in order to keep up with the growth.
A mature organization experiences less flexibility and variability. Growth slows down. The workforce becomes old as few younger people are hired. Planning becomes more formalized and less flexible and innovative. Issues like retirement and possible retrenchment dominate planning.
Finally, in the declining stage, HRP takes a different focus. Planning is done for layoff, retrenchment and retirement. Since decisions are often made after serious financial and sales shocks are experienced by the organization, planning is often reactive in nature.
C. Environmental Uncertainties
HR managers rarely have the privilege of operating in a stable and predictable environment. Political, social and economic changes affect all organizations.
Personnel planners deal with environmental uncertainties by carefully formulating recruitment, selection and training and development policies and programmes.
Balancing mechanisms are built into the HRM programme through succession planning, promotion channels, layoffs, flexitime, job sharing, retirement, VRS and other personnel related arrangements.
D. Time Horizons
Since there are long and short term plans spanning from six months to twenty years, the exact time span depends on the degree of uncertainty prevailing in an organization’s environment.
Plans for companies operating in an unstable environment, computers for example, must be for a short period.
Plans for others where environment is fairly stable, for example a university plan, maybe long-term.
In general, the greater the uncertainty, the shorter the plan’s time horizon and vice-versa.
E. Type and Quality of Information
The information used to forecast personnel needs originates form a multitude of sources.
A major issue in personnel planning is the type of information which should be used in making forecasts.
Closely related to the type of information is the quality of data used.
The quality and accuracy of information depend upon the clarity with which the organizational decision makers have defined their strategy, organizational structure, budgets, production schedules and so on.
In addition, the HR department must maintain well-developed job-analysis information and HR information systems that provide accurate and timely data.
Generally speaking, organizations operating in stable environments are in a better position to obtain comprehensive, timely and accurate information because of longer planning horizons, clearer definitions of strategy and objectives, and fewer disruptions.
F. Nature of Jobs being filled
Personnel planners must consider the nature of jobs being filled in the organization. Job vacancies arise because of separations, promotions and expansion strategies.
It is easy to employ shop-floor workers, but a lot of sourcing is necessary for hiring managerial personnel.
It is, therefore, necessary for the personnel department to anticipate vacancies, as far in advance as possible, to provide sufficient lead time to ensure that suitable candidates are recruited.
G. Outsourcing
Several organizations outsource part of their work to outside parties either in the form of sub-contracting or ancillarisation.
Outsourcing is a regular feature both in private and public sectors.
Most organizations have surplus labour and they do not want to worsen the problem by hiring more people. Hence, the need for off-loading.
Competence Analysis.
Every person in the organization need not have all the competence to do the desired work. The HR department identifies the competence of the individual employee and maps the same with the jobs in the organization. If an employee is capable of doing a particular job, to increase his efficiency, the HR department gives training to improve his competence in doing that job more skillfully and even more effectively and efficiently.
Job Analysis and Design
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.
Job analysis provides precisely what the duties, responsibilities, working environment and other requirements of a job are and to present these in a clear, concise and systematic way
Job Analysis study attempts to provide information in seven basic areas:
Job Identification or its title, including the code number, if any.
Distinctive or significant characteristics of the job, its location setting, supervision, union jurisdiction and hazards and discomforts, if any.
What the typical worker does: specific operations and tasks that make up the assignment and their relative timing and importance; the simplicity, the routine or complexity of tasks, responsibility for others, for property, or for funds.
What materials and equipment the worker uses: Metals, plastics, grain, yarns; and lathes, milling machines, electronic ignition testers, corn huskers, punch presses and micrometers are illustrative.
How the job is performed: the emphasis here is on the nature of operations and may specify such operations as handling, feeding, removing, drilling, driving, setting up and many others.
Required personnel attributes: Experience, training apprenticeship, physical strength, coordination or dexterity, physical demands, mental capabilities, aptitudes, and social skills are some attributes.
The conditions under which the work is performed: Working conditions and work environments is a major contributing factor in the performance of the job, and the satisfaction of the employee.
Job Analysis: Process
To be meaningful and useful for personnel related decision-making, job analysis must be carried more at frequent intervals.
Jobs in the past were considered to be static and were designed on the basis that they would not change.
People working on these jobs were different, the jobs remained unchanged.
For higher efficiency and productivity, jobs must change according to the employees who carry them out. Some of the major reasons leading such changes are:
Technological Change: The pace of change in technology necessitates changes in the nature of job as well as the skills required. E.g. Word processing has drastically changed the nature of secretarial jobs.
Union-Management Agreements: The agreements entered between management and the union can bring about change in the nature of job, duties and responsibilities. For example, under employees participation scheme, the workers are encouraged to accept wider responsibilities.
People: Each employee brings with him his own strengths and weaknesses, his own style of handling a job and his own aptitude.
Steps in Job Analysis Process
Organization Analysis: The first step is to get an overall view of various jobs in the organization with a view to examine the linkages between jobs and the organizational objectives, interrelationships among the jobs and the contribution of various jobs towards achieving organizational efficiency and effectiveness. The organization chart and the work flow or process charts constitute an important source of information for the purpose.
Use of Job Analysis Information: Depending on organizational priorities and constraints, it is desirable to develop clarity regarding the possible uses of the information pertaining to job analysis. It is important to focus on a few priority activities in which the job analysis information could be used.
Selection of Jobs for Analysis: Carrying out job analysis is a time-consuming and costly process. It is therefore, desirable to select a representative sample of jobs for purposes of analysis
Collection of Data: Data will be collected on the characteristics of the job, the required behaviour and personal attributes needed to do the job effectively. Several techniques for job analysis are available. Care needs to be taken to use only such techniques, which are acceptable and reliable in the existing situation within the organization.
Preparation of Job Description: The information collected in the previous step is used in preparing the job description for the job highlighting major tasks, duties and responsibilities for effective job performance
Preparation of Job Specification: Likewise, the information gathered in the “Collection of Data” is also used to prepare the job specification for a job highlighting the personal attributes in terms of education, training, aptitude and experience to fulfill the job description.
Job Analysis thus carried out provides basic inputs to the design of jobs so that it is able to meet the requirements of both the organization (in terms of efficiency and productivity) as well as the employees (in terms of job satisfaction and fulfillment).
Developing appropriate job design is then the outcome of the job analysis process.
JOB DESCRIPTION
Data collected for job analysis provides the basis for preparing job description. It refers to the job contents and the expectations that an organization has from its employees. Job descriptions usually outline the minimum requirements of jobs for many reasons:
First, despite all the attempts, a perfect and fully inclusive job description is not possible. In fact, as one moves up in the hierarchy of an organization, a detailed job description becomes very difficult.
Secondly, most organizations would prefer not to describe the job fully, if it is possible, because employees would then stick to what has been described and would not do anything beyond it.
Thirdly, if a job were fully described, supervision would automatically be taken care of by the duties performed, making some of the duties of the supervisory staff redundant.
Fourthly, technology is ~hanging fast and hence the nature of job is also chang¬ing. Unless an organization continuously updates the job description, it would be difficult to monitor the performance of the employees.
DESIGN OF JOB DESCRIPTION
A primary output or result of job analysis is job description. Information obtained by job analysis is shifted and recorded concisely, clearly and fully in the job description.
The job description must assemble all the important elements of a job, such as essential tasks, responsibilities, qualifications required and the functional relation of the job to other jobs.
There is no universally accepted standard format for job descriptions for the reason that the form and structure of the job descriptions must depend on the kind of work being analyzed and the job evaluation plan being used. For example, if the job evaluation form comprises factors such as physical and intellectual effort, knowledge, skills, and responsibilities and working conditions, it follows that job description should be structured to reflect these factors so as to facilitate factor by factor comparison and evaluation of the jobs. With non- analytical methods, job description may be more flexible and simpler but most specify the title of the job and its position in the organization, summarizes the tasks performed and list the skills and abilities required.
It is helpful to follow the following guidelines when writing a job description:
I. Always be accurate about what is expressed.
Omit expressions which are attributes- such as uninteresting, distasteful, etc.
Personal pronouns should be avoided- if it is necessary to refer to the worker, the word" operator" may be used.
Do not describe only one phase of the job and give the impression that all phases are covered.
Generalized or ambiguous expressions, such as 'prepare', 'assist', 'handle' etc. should be omitted unless supported by data that will clarify them.
All statements should be clearly defined and simply set down- promiscuous use of adjectives only reflects one's own opinion.
Describe the job as is being done, by the majority of workers holding the designation.
Write in simple language-- explain unusual technical terms.
Description of a job, which is part of teamwork, should establish the team relationship.
The length of description is immaterial; it is not expected even with printed form!: that all job descriptions should be of equal length but write concisely.
When the job analyst finds that the data he has to work with is insufficient, s/he should stop until sufficient data is available.
Put the date of completion of each description and revise it as often as changes in jobs and occupation require.
Job description should have the concurrence of the concerned supervisor.
Description should contain the initials of the persons who compile them.
USES OF JOB DESCRIPTION
Apart from being a basis for job evaluation, the job descriptions can be put to many uses. They are as under:
Supervisor- Employee Communication: The information contained in the job description outlines the work, which the incumbent is expected to perform. Hence, it is an extremely useful document for both the supervisor and the subordinate for purposes of communication. Furthermore, it helps employees to understand just what work their associates are expected to perform, thus, facilitating integration of efforts at the work site by the employees themselves.
Recruitment, Selection, Promotion, Transfer: Information pertaining to the knowledge, skills and abilities required to perform the work to an acceptable standard, can be used as a sound basis on which to base standards are procedures for recruitment, selection, promotion and transfer.
Work Performance Appraisal: To be sound and objective, a performance appraisal system must be rooted in the work performed by the employee; such
. work is indicated by the duties in the job description. In such an approach, using each duty as the basis for discussion, the employee and the supervisor agree on work performance goals for the period to be covered by the subsequent evaluation report; they also agree on the criteria to be used to determine the extent to which the goals have been attained. The reports resulting from this methodology minimize subjectivity by focusing attention on the job, as distinct from the personality traits, habits or practices of the employee. As a conse¬quence, the results are more factual; valid and defensible than is the case in other types of systems.
Manpower Planning, Training and Development: These three processes are closely interrelated. The job description showing, in specific terms, the knowledge, skill and ability requirements for effective performance of the duties, is a sound and rational basis for each of these processes. Analysis of various types of jobs at progressively more senior levels will indicate logical sources of supply for more senior posts, as part of manpower planning. It will also indicate the gap to be bridged in terms of knowledge, skill and ability, thus providing a sound basis for preparingj0b- related training and development programmes.
Industrial Relations: Frequently, issues arise in the industrial relations field, which have their origin in the work to be undertaken. In these instances the job description may be used to form a factual basis for discussion and problem resolution.
Organization and Procedure Analysis- The duties and responsibilities outlined in the job description may be used to a great advantage by management in analyzing organisation and procedures, because they reveal how the work is organized, how the procedure operate and how authority and responsibility are appointed.
A Job Description should include a:
I. Job Title: It represents a summary statement of what the job entails.
Job Objective or Overall Purpose Statement: This statement is generally a summary designed to orient the reader to the general nature, level, purpose and objective of the job. The summary should describe the broad function and scope of the position and be no longer than three to four sentences.
List of Duties or Tasks Performed: The list contains an item-by-item list of principal duties, continuing responsibilities and accountability of the occupant of the position. The list should contain each and every essential job duty or respon¬sibility that is critical to the successful performance of the job. The list should begin with the most important functional and relational responsibilities and continue down in order of significance. Each duty or responsibility that comprises at least five percent of the incumbent's time should be included in the list.
Description of the Relationships and Roles: the occupant of the position holds' within the company, including any supervisory positions, subordinating roles and/or other working relationships.
JOB SPECIFICATION
Workload analysis helps in identifying the minimum qualification needed to perform a particular job. These may include academic qualifications, professional qualifications, age, years of experience, relevance and nature of previous experience, and other skills and attitudes. They form the minimum eligibility requirements, which the candidate must have, for the appointment to a job. A clear indication of specifications helps in generating eligible applications, because of self-selection. The candidates who do not possess those qualifications do not apply. On the other hand, lack of clear- cut specifications may generate a large number of applications, leading to high costs, in terms of man-hours, in processing them.
There is a great deal of disagreement with regard to developing complete and correct job specification unlike the job description, which provides more objective assessment of job requirements. The decision to specify minimum human requirements for ajob is a difficult one as it involves considerable degree of subjectivity. There is a general feeling that organisations generally tend to establish relatively high requirements for formal education and training, resulting in a situation where highly qualified people end up doing jobs of routine nature. Particularly, in India, highly qualified personnel are recruited for jobs where their abilities, skills and knowledge are under- utilized.
Despite these problems, however, minimally acceptable human requirements need to be specified for various jobs and category of jobs. The format for job specification should include the following items:
• Position Title
• Education/ Training
• Experience
• Knowledge
• Abilities
• Skills
• Aptitude
• Desirable Attributes
• Contra-indicators, if any any.
From job analysis to jobless world
Job enrichment means redefining in a way that increases the opportunities for workers to experience building of responsibility, achievement, growth and recognition by doing job well.
Analysing together the job
Establishing client recognition
Vertical loading
Job-Sharing
Flexible job doing pattern etc.
Open feedback channels.
Whether specialised, enlarged or enriched, workers skill generally likes to have specific job to do and the job require job descriptions. But in the emerging organisation today jobs are becoming more amorphous and more difficult to define. In other "words' the trend is towards "do-jobbing in many modern organisation. Given this general description of organisation, roles that are clearly defined play a significant part in accomplishing the goals of the organisation. Roles can be seen in a variety of ways.
Role and Role Dynamics
A role is a set of expectations associated with a job or a position. When roles are unclear or complicated performance problem can occur. Role ambiguity occurs when someone is uncertain about what is expected of him or her. To do any job; the people need know what is expected of them. Role clarity is important for every member of the group, but that is more important for new members. Role ambiguity creates problems and the whole efforts is either wasted or of appreciated.
Expecting too much or too little may create problem. Role overload occurs when too much is expected and individual feels overloaded with work/responsibility. Role underload occurs when too little is expected and the individual feels underutilized therefore, a balanced and realistic role load is expected.
Role conflict occurs when a person is unable to meet the expectations of others. The individual understands what needs to be done but for some reasons can not comply. The resulting tension can reduce job satisfaction, affects both work performance and the relationship with other groups members. The Common forms of role conflict are:
intra sender role-conflicting which occurs when the same person sends conflicting expectations.
inter sender role-conflict occurs when different people send conflicting expecta¬tions.
Person-Job-conflict-occurs when one's personal values & needs come into conflict with role expectations.
inter role conflict occurs when the expectations of two or more roles held by the same individual becomes incompatible-such as conflict between work & family demands.
One way of managing role-dynamics in any group or work setting is the role¬negotiation. This is the process through which individual negotiate to clarify the role expectation each holds for the other.
7.2 ROLE DESCRIPTION
Well-written role descriptions define the work of the organisation and its reasons for existence as an employer of human resources. Moreover, they define and help quantify the relative importance of work, what each position contributes to a process and the organisation as a whole. This definition illustrates an important point regarding role descriptions. Used in today's work environment, they describe not only what the role is all about but also how it contributes to the work of the organisation. They describe the nature of the work to be done by stating the purpose and main responsibilities. They may also include information on the type of person who is best suited to perform the job. Role descriptions are a valuable resource. They have the potential to be useful organisational tools; however, to realize their potential they must be properly monitored. There are two main types of role descriptions, the generic or general and the specific or individual.
RECRUITMENT
Recruitment is the development and maintenance of adequate manpower sources. It involves the creation of a pool of available human resources from-which the organisation can draw when it needs additional employees. Recruiting is the process of attracting applicants with certain skills, abilities; and other personal characteristics to job vacancies in an organisation. According to Denerley and Plumblay (1969), recruitment is concerned with both engaging the required number of people, and measuring their quality. It is not only a matter of satisfying a company's needs, it•is also an activity which influences the shape of the company's future. The need for recruitment may arise out of: (i) vacancies due to promotion, transfer, termination, retirement, permanent disability, or death; (ii) creation. of vacancies due to business expansion, diversification, growth, and soon.
Recruitment has been regarded as the most important function of personnel administration. Unless the right types of people are hired, even the best plans, organisation charts and control systems will be of no avail. A company cannot prosper; grow, or even survive without adequate human resources. Need for trained manpower in recent years has created a pressure on some organisations to establish an efficient recruitment function.'
RECRUITMENT PURPOSE
The general purpose of recruitment is to provide a pool of potentially qualified candidates to meet organizational need. Its specific purposes are to:
Determine the present and future requirements of the organisation in conjunction with the personnel planning and job analysis activities.
Increase the pool of job candidates with minimum cost.
Help increase the success rate of the selection process by reducing the number of under qualified or overqualified job applicants.
Help reduce the probability that job applicants, once recruited and selected, will leave the organisation only after a short period of time.
Meet the organisation's legal and social obligations regarding the composition of' its workforce.
Start identifying and preparing potential job applicants who will be appropriate candidates.
Increase organisational and individual effectiveness in the short and long term.
Evaluate the effectiveness of various recruiting. techniques and sources for all types of job applicants.
RECRUITMENT POLICY
Recruitment policy may involve a commitment to broad principles such as filling vacancies with the best qualified individuals. It may embrace several issues such as extent of promotion from within, attitudes of enterprise in recruiting its old employees, handicaps, minority groups, women employees, part-time employees, friends and relatives of present employees. It may also involve the organisation system to be developed for implementing recruitment programme and procedures. A well considered and pre-planned recruitment policy, based on corporate goals, study of environment and the corporate needs, may avoid hasty or ill-considered decisions and may go a "long way to man the organisation with the right type of personnel. A good recruitment policy must contain the following elements:
Organisation's objectives - both short term and long term.
Identification of the recruitment needs.
Preferred sources of recruitment.
Criteria of selection and preferences.
The cost of recruitment and financial implications of the same.
A recruitment policy in its broadest sense involves a commitment by the employer to (i) find the best qualified persons for each job; (ii) retain the best and most promising of those hired; (iii) offer promising opportunities for life-time working careers; and (iv) provide programmes and facilities for personal growth on the job.
RECRUITMENT PROCESS
To be successful, the recruitment process must follow a number of steps. These are:
Defining the job
Establishing the person profile
Making the vacancy known
Receiving and documenting applications
Designing and using the application form
Selecting
Notification and final checks
Induction.
SOURCES OF MANPOWER SUPPLY
Once the job analysis is completed and the job specification or behavioural competencies are identified, the next stage is to consider how to attract people who meet the requirements. A key decision is about whether to recruit internally or externally.
Before an organisation actively begins recruiting applicants, it should have a knowledge of the sources of supply and methods of tapping them. The sources of supply do not remain constant but vary from time to time. The sources of supply of manpower can be divided into two groups - internal and external sources. Internal sources relate to the existing working force of an enterprise while external sources relate to the employment exchanges, colleges, institutes, and universities. The particular sources and means by which workers are recruited vary greatly. It depends upon management policy, the types of jobs involved, the supply of labour relative to demand, and labour market. In deciding which recruitment source to use, consider (a) the nature and size of the company; (b) the level of vacancies to be filled up; (c) the number of vacancies to be filled up; (d) budget allocation; and
(e) the time period to fill the vacancy.
Internal Sources: Internal sources are the most obvious sources. These include personnel already on the pay-roll of an organisation, i.e., its present working force.
Case Study 1:
Powermat, Inc. has encountered difficulty over the last few years in filling its middle-management positions. The company, which manufactures and sells complex machinery, is organised into six semi-autonomous manufacturing departments. Top management believes that it is necessary for these departmental managers to know the product lines and the manufacturing process, because many managerial decisions must be made at that level. Therefore, the company originally recruited employees from within. However, they soon found that employees elevated to the middle-management level often lack the skills necessary to discharge their new duties.
A decision then was made to recruit from outside, particularly from educational institutes with good industrial management programmes. Through the services of a professional recruiter, the company was provided with a pool of well qualified management graduates. Some of them were hired and placed in lower management positions as preparation for advancement to the middle-management jobs. They all left the company, however, within two years of their recruitment.
Management reverted to its former policy of promoting employees from within and experienced basically the same results as before. Faced with the imminent retirement of employees in several key middle management positions, the company decided d to call in a consultant who could suggest solutions.
Discussion Questions
1. What is the problem of recruiting in this company?
2. If you were the consultant, what would you recommend?
SELECTION PROCESS
Recruitment and selection are the two phases of the personnel practices and procedures complimentary to each other. Recruiting consists of whatever activity is necessary to bring in enough applicants for specific positions so that there is opportunity for real selection. Recruiting is done mainly through three common sources i.e., advertisement, employment exchanges or private employment agencies, and present employees. In addition, educational institutions, labour unions, casual applications and deputations are also utilised. After identifying the potential applicants, the next step taken is to evaluate their experience and qualifications for making a selection. As has been quite often said, selection is essentially a process of picking out the best suited personnel for the organisation's requirements.
The selection of unskilled labour or of semi-skilled labour for particular jobs does not cause much of a problem and therefore, an elaborate selection procedure is not required for it. But for supervisory and higher levels and specialist jobs, particularly in the public undertakings, private companies and industries, the need for a sophisticated selection procedure has been felt and is now being introduced. The selection practices and procedures vary from one organisation to another, depending upon the situation and needs of the organisation, as well as the level on which the selection is made.
Generally the selection activities will begin with an initial screening •interview and conclude with the final employment decision. Usually, the selection process consists of seven steps: (I) initial screening interview, (2) completion of the application form, (3) employment tests, (4) comprehensive interview, (5) background investigation, (6) physical examination, (7) final employment decision. Each of these steps represents a decision point requiring some affirmative feedback for the process to continue. Every step in the selection process tries to expand the organisation's knowledge about the applicant's background, abilities and motivation, and it increases the information from which decision makers will make their predictions and final choice.
An important technique in selection is the use of application blanks in which the questions are structured and determined in advance. The main items of information requested on application blanks are the name, address, age, marital status and dependents, education, experience, and references. Other items on the application blanks vary considerably from one organisation to another and from job to job.
These application blanks serve the dual purpose of providing preliminary information about the candidate and aids the interviewer by opening up areas of interest and discussion. An application blank serves the following purpose:
They provide the candidate's first formal introduction to the company.
They generate data in uniform formats and hence make it easy to make cross comparison of the applicants.
The data so generated may serve as a basis to initiate a dialogue in the interview.
Data in the application blank can be used for purposes of analysis and research in personnel
Though the information sought in application blanks may vary according to the level of the position and the organisation, most application blanks seem to contain personal data, marital data, physical data, educational data, employment data, extra-curricular data, and references.
Formal application blanks are of two kinds:
1. Preliminary application blanks which seek only information on the personal and educational qualifications and experience of the applicant, help the company to decide whether a candidate qualifies in the first round. These are used for short-listing the candidates for subsequent selection..
2. The comprehensive application blanks seek very detailed information from applicants who have been short-listed in a preliminary screening. The purpose of this application blank is to develop a comprehensive profile of the applicant and identify areas that would have to be further explored in the interview to assess the suitability of the applicant to the job.
SELECTION PROCEDURES
While selection procedures must satisfy a number of requirements, according to Roe - and Greuter (1989), it is important that they fulfill four main functions:
Information Gathering: This involves generating information about the organisation, the job, career paths, employment conditions on the one hand; and, on the other, about candidates, including their experience, qualifications and personal characteristics.
Prediction: Using information on past and present candidate characteristics as a basis for making predictions about candidates' future behaviour.
Decision-Making: Using the predictions about candidates' future behaviour as a basis for making decisions about whom to accept or reject.
Information Supply: Providing information on the one hand, about the organisation, the job, and employment conditions to candidates, and, on the other, provides information about the results of the selection process to the various parties involved - line managers, personnel specialists, and others. While many options are available to organisations in designing and developing selection procedures, an important consideration is that all the four functions should be carried out adequately.
SELF-ASSESSMENT QUESTIONS
1. Outline the steps in the personnel selection process.
2. What are the common interview problems? How can they be overcome?
3. Explain in some detail how you would go about analysing and evaluating the effectiveness of an employee selection programme.
4. "Tests often do not reflect an individual's true ability." What are your views on this statement?
CASE 2:
The Bharat Paint Company recruits sales people to sell its products to retail stores. The company looks for employees who have the energy, ability to work hard, and ability to speak enthusiastically and intelligently about the company' products. In addition to skill; the company expects flexibility, accuracy, and patience from its sales employees.
Nirmala has applied for a sales job. The interviewer who is going to interview her noted the following entries on her application blank:
Nirmala is 26 years old.
She has completed one year of college education.
She has held two jobs since leaving school- clerk in a school (two years), and sent assistant in a financial organization.
There is a gap of one year in between. Nirmala indicates on her application that sh was sick during that period and was undergoing medical treatment.
Discussion Questions
1. If you were the interviewer, what objectives would you set for your interview with Nirmala?
2. How would you phrase your questions?
AIMS AND OBJECTIVES OF CAREER PLANNING
Career planning aims at matching individual potential for promotion and individual aspirations with organisational needs and opportunities. Career planning is making sure that the organisation has the right people with the right skills at the right time. In particular, it indicates what training and development would be necessary for advancing in the career, altering the career path or staying in the current position. Its focus is on future needs and opportunities and removal of stagnation, obsolescence and dissatisfaction of the employee. In the process, it opens avenues for growth to higher levels of responsibilities for each and every employee of the organisation through hierarchy of position, and training and development activities to equip the individuals with the requisites for succession.
The principal objectives of career planning are:
1. to secure the right man at the right job and at the right time;
2. to maintain a contended team of employees;
3. to provide adequate career avenues to employees to higher levels of responsibilities; and
4. to strengthen the retention programme of the organisation.
An effective career management plan takes care of an individual's interest, aptitude, specialisation and expertise while deciding on the placement. An organisation which believes in a sound career management programme is not only committed to and conscious of the development of human resources but also provides structural facilities for manpower research, manpower training and development.
CAREER PLANNING PROCESS
Career planning is the process of setting individual career objectives and devising developmental activities necessary to achieve them. ~t is, in the broadest sense, the personal process of planning one's future work. In this process, an indivipual analyses his or her interest, values, goals, and capabilities. From the management view point, career planning and development should remain an individual responsibility. However, many individuals lack the insight, skills, or initiative to determ ine their own career progress effectively. Among the techniques to aid individual career planning are career counseling, career and life planning, and self development activities.
Career planning involves four fundamental elements which, when taken together, represent the career planning process.
Direction: This involves the career goals one sets and the organisation's ability to act favourable upon these goals, especially in the light of business objectives and realities.
Career Time: This relates to distance and velocity factors - how far one wants to go in an organisation or on the career path and how fast that person expects to get there.
Transition: This is the resistance one encounters while moving toward career goals. Transition relates to the changes expected, say, in knowledge, skill and attitude en route to a career goal. Outcomes: This relates to the probabilities that one's investment and sacrifices for career progress will pay off.
The important influences on careers are of course the organisation and the individual themselves. Both the organisation and the individual are important and career planning can be seen from the perspective of both parties.
CAREER STRUCTURE
The characteristics of a good career structure (sometimes known as career ladders) are:
1. It has steps consistent with the general value of jobs and with other career structures.
2. It makes clear that getting to the top of the structure is not a right but is based on merit and capability.
3. The entry requirements for each step are clear.
4. There is formal assessment procedure in order to progress from one step to another.
5. The career structure is known and understood by all.
6. It is controlled and implemented with integrity.
7. It links with the development review part of appraisals.
Organisations view careers in a variety of different ways. Some see them as a way of allocating jobs and providing training, i.e. the emphasis is on developing managers. Another way in which organisations view careers is as tracks or ladders, which take people up the management hierarchy. A successful career is one which takes the individual to the top of the ladder. Some organisations view careers as a type of competition - only those managers who are successful in winning the tournament will have a progressive career.
BENEFITS OF CAREER PLANNING
The career planning encourages individuals to explore and gather information which enables them to synthesize, gain competencies, make decisions, set goals and take action. Career planning benefits not only the individual employee, but also the organisation. By developing employees for future-positions, an organisation is assured of a supply of qualified, committed employees to replace the higher-level employees.
This facilitates internal staffing of the organisation and reduces the costs of external recruiting and selection. In addition, a career planning strategy enables organisations to develop and place employees in positions compatible with their individual career interests, needs, and goals. This promotes employee satisfaction and optimal use of employee abilities. Finally, career planning can help to retain and motivate employees. Through the career planning process, employees are helped to set realistic goals and to develop the required skills and abilities for target positions. Planners need to keep lines of communication open. Personnel Policies can also facilitate career planning. All internal recruiting policy, for example, enables employees to plan their career with greater certainty than does a policy of external recruiting. Additionally, a policy of job posting promotes employee awareness of available openings; and necessary qualifications. A policy of making human resource forecasts available to employees also facilitates career planning. Compensation policy can also affect career planning activities. Hall suggests two additional personnel policies to facilitate career planning.
They are: (1) providing incentive for an employee no>t to leave the organisation, and (2) involving families in career decisions. As people's need" for job satisfaction increase, so does the families role •in affecting career decisions. Since family considerations are important to employees, organisations should maintain a policy of actively seeking to involve employees' family members in significant career decisions. More emphasis must be placed on growth opportunities within the organisation than through relocation and transfer.
RESPONSIBILITIES lN CAREER DEVELOPMENT
Three, key players share responsibility for an employee's career development: the employee, the organisation and the manager. Primary responsibility for an employee's career life with the employee, but managers and the organisations can provide vital assistance. To play their roles successfully each must assume a set of responsibilities in career development.
The organisation's responsibilities include:
providing resources for self-understanding and goal setting;
setting and communicating missions, policies, and goals and objectives;
providing information on organisation's options and career paths;
providing training, education and mobility opportunities; and
reinforcing and supporting the manager's role in career development.
The manager's responsibilities include:
giving clear feedback about what employees should reasonably expect;
providing forum s for discussions;
providing support and opportunities;
identifying employee potential;
providing growth opportunities consistent with employee and organisation goals;
communicating the formal and informal realities of the organisation;
providing exposure for employees; and
linking employees to appropriate resources and people.
The employee's responsibilities include:
self-assessment;
setting goals and plans;
expressing expectations; and
making use of opportunities, education and training.
Career development .is an area that organisations must now recognize and address if they hope to find and retain employees who will help them meet their constantly shifting business demands. Most companies do not provide enough, if any, training to their current workforce. Many do not even have adequate knowledge of their employee's skills and talents - particularly large organisations. Companies must figure out a way to create an environment that is more adaptive, collaborative, and skill-ready.
EVALUATING CAREER MANAGEMENT
Career management is the implementation of organisational career planning. Organisations adopting comprehensive career management systems, or parts thereof, would be interested in evaluating their results on the following lines:
Are they used by employees?
Do they provide accurate and useful information?
Do they extend needed career development opportunities to employees?
Are employees' career plans realised?
Do employees experience fewer or less severe career problems than they did before?
Do employees who participate have more successful careers than those which do not?
Are the results worth the costs incurred?
SUCCESSION PLANNING
Forecasting the availability of inside or outside candidates is particularly important in succession planning. In a nutshell, succession planning simply refers to the plans a company makes to fill its most important executive positions. In practice, however, the process often involves a fairly complicated series of steps. A more comprehensive definition of succession planning is that it is "the process of ensuring a suitable supply of successors for current and future senior or key jobs arising from business strategy, so that the careers of individuals can be planned and managed to optimize the organisation's needs and the individuals' aspirations." Succession planning includes these activities:
Analysis of the demand for managers and professionals by company level, function and skill.
Audit for existing executives and projection of likely future supply from internal and external sources.
Planning of individual career paths based on objective estimates of future needs and drawing on reliable performance appraisals and assessments of potential.
Career counseling undertaken in the context of a realistic understanding of the future needs of the firm, as well as those of the individuals.
Accelerated promotions, targeted against the future needs of the business.
Performance-related training and development to prepare individuals for future roles as well as current responsibilities.
Planned strategic recruitment not only to fill short-term needs but also future needs.
The actual activities by which openings are filled.
Succession planning identifies high potential employees as possible replacements for key jobs, by encouraging hiring from within, succession planning helps employees develop careers, not just hold jobs. Succession planning is part of a long¬term HR strategy that plans for future vacancies and changing work requirements. A sophisticated succession planning system is oriented at developing leaders at the levels of the organisation through ongoing training, education and development. Also it involves proactive planning for future talent needs at all levels and implementing programmes designed to ensure that the right leaders are available for the right jobs in the right places and at the right times to meet organisational needs.
The accelerating rate of change, both within the organisations and in the environment which they function has created an ever-increasing need for management succession programmes. Advances in information technology, changing management concepts and requirements have added new dimensions to succession planning. Professional management has to cope successfully with various changes affecting succession planning programmes, particularly in expanding organizations. The expectations, as well as managerial and personal philosophies of today’s younger managerial employees have changed.
They expect to be able to mature and progress in a professional management atmosphere that will permit them to realize their full potential. Each organization, therefore, must have a well-designed and understood system of management succession, with carefully spelt out principles and guidelines. Further, all levels of management must know each of the processes in succession planning and understand how they fit into the total organizational system.
Self Assessment Questions.
1. What is Job analysis?
2. What is the process of job analysis?
3. What is job description and job specification?
4. What is a role? Why is it necessary?
5. What is role description?
6. What is career planning?
7. What is the career structure?
8. Why is career planning important?
9. What is recruitment and why is it important for an organization?
10. What are the steps involved in recruitment?
11. What is succession planning?
3. Development of Human Resources
3.1 Introduction:
This chapter deals with the information about Training, its uses, different types of training methods, etc. This chapter also deals with HRD and HRM, SHRM.
3.2. Objective
To understand the different training methods used in the organizations and also to be aware why training is necessary for an employee.
NATURE OF TRAINING AND DEVELOPMENT
In simple terms, training and development refer to the imparting of specific skills, abilities and knowledge to an employee. A formal definition of training and development is
... it is any attempt to improve current or future employee performance by increasing an employee's ability to perform through learning, usually by changing the employee's attitude or increasing his or her skills and knowledge. The need for training and development is determined by the employee's performance deficiency, computed as follows:
Training and development need = Standard performance - Actual performance.
We can make a distinction among training, education and development. Such distinction enables us to acquire a better perspective about the meaning of the terms. Training, as was stated earlier, refers to the process of imparting specific skills. Education, on the other hand, is confined to theoretical learning in classrooms.
After screening and selecting the new employees, management turns to the task of orienting and training them on their new jobs. Employee orientation provides new employees with the basic background information they need to perform their jobs sat-isfactorily, such as information about company rules. Orientation is one component of the employer's new-employee socialization process. Socialization is the ongoing process of instilling in all employees the prevailing attitudes, standards, values, and patterns of behavior that are expected by the organization and its departments.
Orientation programs range from brief, informal introductions to lengthy, formal programs of a half a day or possibly more. In either, new employees usually get handbooks that cover matters such as working hours, performance reviews, getting on the payroll, and vacations, as well as a tour of the facilities. Other information might cover employee benefits, personnel policies, the employee's daily routine, company organization and operations, and safety measures and regulations. (Because there is a possibility that courts will find that your employee handbook's contents represent a contract with the employee, disclaimers should be included.
Training and Developing Employees
These should make it clear that statements of company policies, benefits, and regula-tions do not constitute the terms and conditions of an employment contract, either express or implied.)
A successful orientation should accomplish four things. The new employee should feel welcome. He or she should understand the organization in a broad sense (its past, present, culture, and vision of the future), as well as key facts such as poli¬cies and procedures. The employee should be clear about what the firm expects in terms of work and behavior. And, hopefully, the person should begin the process of becoming socialized into the firm's preferred ways of acting and doing things.
The HR specialist usually performs the first part of the orientation, and explains such matters as working hours and vacation. The employe~ then meets his or her new supervisor. The latter continues the orientation by explaining the exact nature of the job, introducing the person to his or her new colleagues, and familiarizing the new employee with the workplace.
THE TRAINING PROCESS
Training refers to the methods used to give new or present employees the skills they need to perform their jobs.
Training's focus has broadened in the past few years. Training used to focus on teaching technical skills, such as training assemblers to solder wires or training teachers to make up lesson plans. Today, it might also mean remedial-education training, because quality improvement programs require employees to produce charts and graphs, and analyze data. Similarly, employees today may require team¬building, decision-making, and communication skills training. And, as firms become more technologically advanced, employees require training in technological and computer skills, such as computer-aided design and manufacturing? This change from purely production process training helps explain why an average production worker receives about 37 hours of training per year.
Training therefore plays an increasingly vital role in implementing the employer's strategic plans. As one trainer puts it: "We don't just concentrate on the traditional training objectives anymore .... We sit down with management and help them identify strategic goals and objectives and the skills and knowledge needed to achieve them. Then we work together to identify whether our staff has the skills and knowledge, and when they don't, that's when we discuss training needs."Similarly, training today plays a key role in employers' performance management process. This is the process employers use to make sure employees are working toward organiza¬tional goals. It means taking an integrated, goal-oriented approach to assigning, training, assessing and rewarding employees' goal-oriented efforts. Taking a performance management approach to training assumes that the training effort explicitly makes sense in terms of what the company wants each employee to con¬tribute to achieving the company's goals.
Strategy and HR In the UK, Channel 4's strategy has changed dramatically in the last few years. With the UK's new broadcasting act, Channel 4 had to start selling and transmitting its own air time. And that meant quickly instituting training pro¬grams to support an expanded sales force and new high-tech control system.
Management accomplished this in part by introducing a series of interactive, intranet-based e-learning training programs. Says the managing director of the com¬pany that created the programs for Channel 4, “By working closely with the HR, business affairs and ultimate rights departments at Channel 4, we have produced a series of learning programs that are high on visual impact and fit in with the culture of the channel." Employees access the training modules through Channel 4's intranet. The training programs include animated meetings that demonstrate the different scenarios employees might face on the job.
The Training and Development Process
Typically, the process results in a training manual. This might contain the person's job description, an outline of the training program, and a written description of what the trainee is expected to learn, as well as (possibly) several short self-tests.
Training Needs Analysis The first step in training is to determine what training, if any, is required. Some call this the "skills gapping" process. Employers determine the skills each job requires, and the skills of the job's current or prospective employ¬ees. Training is then designed to eliminate the skills gap.12 Assessing new employees' training needs usually involves task analysis-breaking the jobs into subtasks and teaching each to the new employee. Needs analysis for current employees is more
Task analysis is used for determining the new employees' training needs. Particularly with lower-echelon workers, it is common to hire inexperienced person¬nel and train them. Your aim is to provide them with the skills and knowledge required for effective performance. How do you determine what skills and knowledge are required? Task analysis is a detailed study of the job to determine what specific skills-such as soldering (in the case of an assembly worker) or interviewing (in the case of a supervisor)-are required. The job description and job specification will pro¬vide useful information. They list the specific duties and skills required on the job and become the basic reference point in determining the training required for performing the job.
For current employees whose performance is deficient, task analysis is usually not enough. Performance analysis means verifying that there is a significant perfor¬mance deficiency and determining whether that deficiency should be rectified through training or through some other means (such as transferring the employee or changing the compensation plan).
Employers identify employees' performance deficiencies and training needs in several ways. A typical list would include:
supervisor, peer, self-, and 360-degree performance reviews;
job-related performance data (including productivity, absenteeism and tardiness, accidents, short-term sickness, grievances, waste, late deliveries, product quality, downtime, repairs, equipment utilization, and customer complaints);
observation by supervisors or other specialists;
interviews with the employee or his or her supervisor;
tests of things like job knowledge, skills, and attendance;
attitude surveys;
individual employee daily diaries;
devised situations such as role plays and case studies and other types of tests;
assessment centers;
and management-by-objective type evaluations.
The first step is usually to appraise the employee's performance. Examples of specific performance deficiencies follow:
"1 expect each salesperson to make 10 new contracts per week, but John averages only six."
"Other plants our size average no more than two serious accidents per month; we're averaging five."
Distinguishing between "can't do" and "won't do" problems is the heart of perfor¬mance analysis. First, determine whether it's a "can't do" problem and, if so, its specific causes. For example, perhaps the employees don't know what to do or what your standards are, or there are obstacles in the system such as lack of tools or supplies. Perhaps job aids are needed, such as color-coded wires that show assem¬blers what wire goes where; or poor screening results in hiring people who haven't the skills to do the job; or training is inadequate. On the other hand, it might be a "won't do" problem, in which employees could do a good job if they wanted to. If a combination of classroom instruction and on-the-job training. It is widely used to train individuals for many occupations, including electrician and plumber.
Apprenticeship training involves having the learner/apprentice study under the tutelage of a master craftsman. In Germany, for instance, students ages 15 to 18 often divide their time between classroom instruction in vocational schools and part¬time work under the master craftsman. The apprenticeship lasts about three years and ends with a certification examination.
Several U.S. facilities of Siemens are successfully using such an approach. For example, the Siemens Stromberg-Carlson plant in Florida has apprenticeships for adults and high school students training for jobs as electronics technicians. Here, according to an observer,
Adults work on the factory floor, receive classroom instruction at Seminole Community College, and also study at the plant's hands-on apprenticeship lab. Graduates receive Associates Degrees in telecommunications and elec¬tronics engineering. High school students spend two afternoons per week at the apprenticeship lab.
Simulated Training
Simulated training is a technique in which trainees learn on the actual or simulated equipment they will use on the job but receive their training off the job. Therefore, it aims to obtain the advantages of on-the-job training without actually putting the trainee on the job. Such training is a necessity when it is too costly or dangerous to train employees on the job. Putting new assembly-line workers right to work could slow production, for instance, and when safety is a concern-as with pilots¬ simulated training may be the only practical alternative.
Simulated training may just take place in a separate room with the equipment the trainees will actually be using on the job. (Some therefore call it vestibule training.) However, it often involves the use of equipment simulators. In pilot training, for instance, the main advantages of flight simulators are
Safety. Crews can practice hazardous flight maneuvers in a safe, controlled environment.
Learning efficiency. The absence of the conflicting air traffic and radio chatter that exists in real flight situations allows for total concentration on the business of learning how to fly the craft.
Money. The cost of using a flight simulator is only a fraction of the cost of flying an aircraft. This includes savings on maintenance costs, pilot cost, fuel cost, and the cost of not having the aircraft in regular service.
Audiovisual and Distance Learning Techniques
Audiovisual techniques such as films, closed-circuit television, audiotapes, and videotapes or disks can be very effective and are widely used. The Ford Motor Company uses videos in its dealer training sessions to simulate sample reactions to various customer complaints, for example.
Tele training Firms today also use various forms of distance learning methods for training. Distance learning techniques include the traditional paper-and-pencil correspondence courses, as well as tele training, videoconferencing, and Internet ¬based classes.
For example, companies today are using tele training, through which a trainer in a central location can train groups of employees at remote locations via television hookups. For example, AMP Incorporated (which makes electrical and electronic connection devices) uses satellites to train its engineers and technicians at 165 sites in the United States and 27 other countries. To reduce costs for one training program, AMP supplied the program content. PBS affiliate WITF, Channel 33 of Harrisburg, Pennsylvania, supplied the equipment and expertise required to broadcast the train¬ing program to 5 AMP facilities in North America.Macy's, a New York-based retailer, has established the Macy's Satellite Network, in part to provide training to the firm's 59,000 employees around the country.
In a low-tech twist to televised teletraining, some firms are successfully using the telephone. For example, Cadillac has what it calls the Craftsman's League, which is a training, testing, and motivational program for Cadillac dealers' mechanics. Employees receive Cadillac materials and service manuals regarding factory¬approved service procedures and ongoing technical changes. Then, four times per year, technicians must take a phone exam on anyone of eight categories, including, for instance, paint repair and electrical and mechanical systems.
Videoconference Distance Learning Videoconferencing is an increasingly popu¬lar way to train employees who are geographically separated from each other-or from the trainer. It is "a means of joining two or more distant groups using a combi¬nation of audio and visual equipment. Videoconferencing allows people in one location to communicate live with people in another city or country or with groups in several other cities. The communication links are established by sending spe¬cially compressed audio and video signals over telephone lines or via satellite. Keypad systems allow for audience interactivity. For instance, in a program at Texas Instruments, the keypad system lets instructors determine immediately whether trainees are learning.
Given that videoconferencing is by nature visual, interactive, and remote, there are several things to keep in mind before getting up in front of the camera. For exam¬ple, because the training is remote, it's particularly important to prepare a training guide ahead of time, specifically a manual the learners can use to keep track of the points that the trainer is making. Several other hints are to avoid bright, flashy jew¬elry or heavily patterned clothing; arrive at least 20 minutes before the session is to begin, and test all equipment you will be using.
Computer Based Training.
In computer-based training (CBT), the trainee uses a computer-based system to inter-actively increase his or her knowledge or skills. Although simulated training doesn't necessarily have to rely on computerization, computer-based training almost always involves presenting trainees with computerized simulations, and using multimedia including videodiscs to help the trainee learn how to do the job.
Consider this example of computer-assisted training, aimed at training employ¬ment interviewers to conduct correct and legally defensible interviews. Trainees start with a computer screen that shows the "applicant's" employment application, as well as information about the job. The trainee then begins a simulated interview by typing in questions, which are answered by a videotaped model acting as the applicant and whose responses to a multitude of questions have been programmed into the computer. Some items require follow-up questions. As each question is answered, the trainee records his or her evaluation of the applicant's answer and makes a decision about the person's suitability for the position. At the end of the ses¬sion the computer tells the trainee where he or she went wrong (perhaps in asking discriminatory questions, for instance) and offers further instructional material to correct these mistakes.
CBT programs can be very beneficial. Studies indicate that interactive technolo¬gies reduce learning time by an average of 50%.35 They can also be very cost-effective once designed and produced: FedEx reportedly expects to save more than $100 million by using an interactive system for employee training.
CD ROM Training, Internet Learning
Other types of technology-based learning are booming. Management Recruiters International (MRI) uses the firm's PC-based ConferView system (see Figure 5.3) to train hundreds of employees-each in their individual offices-simultaneously.37 Instead of sending new rental sales agents to weeklong classroom-based training courses, Value Rent-a-Car now provides them with interactive, multimedia-based training programs utilizing CD-ROMs. These programs help the sales agents learn the car rental process. It does this by walking them through various procedures such as how to operate the rental computer system.38 Polls suggest that such training tech¬nology will continue to grow in popularity. For example, one poll of 1,911 trainers found that almost 83% plan to increase their use of multimedia/CD-ROMs, 81 % their use of the Internet, and 80% their use of computer-based training.39 As another exam¬ple, McDonald's developed about 11 different courses for its franchisees' employees and put the programs on CD-ROMs. The programs consist of graphics-supported lessons, and require trainees to make choices to show their understanding.
Internet-based learning programs are another increasingly popular option.
Many firms simply let their employees take online courses offered by online course providers such as Click2Learn.com. Others use their proprietary internal intranets to facilitate computer-based training. For example, Silicon Graphics transferred many of its training materials onto CD-ROMs. However, they were soon replacing the CD-ROM distribution method with distribution of training materials via its intranet. "Now employees can access the programs whenever they want. Distribution costs are zero, and if the company wants to make a change to the program, it can do so at a central location."
Learning Portals Many firms use business portals for various purposes today. Also called Enterprise Information Portals (EIPs), they are, like Yahoo!, windows to the Internet, but also much more. Through its business portal, categories of a firm's employees-secretaries, engineers, salespeople, and so on-are able to access pll the corporate applications they need to use, and "get the tools you need to analyze data inside and outside your company, and see the customized content you need, like industry news and competitive data."
Companies increasingly convey their employee training through such portals..
Business to consumer (B2C) portals such as DigitalThink.com, Headlight.com, and' Click2Learn.com contract with employers to deliver online training courses to the firms' employees. Some B2Cs are "vortals," or vertical industry learning portals; they target specific industries with relevant offerings. For example, KnowledgePlanet.com con-tracted with a firm called VerticalNet to create learning portals for specific industries. Other firms are creating their own learning portals for employees and customers. Called business to employee (B2E) portals, they let the company contract with specific training content providers, who offer their content to the firm's employees via the porta1.
Learning portals put more information into everyone's hands, when they want it. Instead of limiting training opportunities to teacher-led conventional classes or to periodic training sessions, training becomes available "24-7." Employees can learn at their own pace, when they want to. The portals' built-in technology doesn't just let the employee take a course. It also often grades his or her work, tracks what courses he or she has completed, and even reminds the person what courses are scheduled when. Note, however, that while e-learning is beneficial, one study, by Michigan State University researchers, found that on-site employee education programs produced. better results than online training, in terms of subsequent test results. A survey by the American Society for Training and Development (ASTD) found that about 40% of responding firms devoted less than 10% of their training budgets to e-learning. Another 40% devote from 10% to 30% to it.
Training for Special Purposes
Training today does more than just prepare employees to perform their jobs effec¬tively. Training for special purposes-dealing with AIDS and adjusting to diversity, for instance-is required too. A sampling of such special-purpose training programs follows.
Literacy Training Techniques Functional illiteracy-the inability to handle basic reading, writing, and arithmetic-is a serious problem at work. By one estimate, 50% of the U.S. population reads below the eighth-grade level, and about 90 million adults are functionally illiterate.47 One survey of 316 employers concluded that about 43% of all new hires required basic skill improvements, as did 37% of current employees.48 This need reflects, in part, the changing nature of work. Today's emphasis on teamwork and quality requires employees to have a level of analytical skills that's impossible to attain without the ability to adequately read, write, and understand numbers.
Employers take various approaches to teaching literacy and other basic skills.
The Life Skills program implemented at the Bellwood plant of Borg-Warner Automotive, Inc. is one example. Based on test scores, managers chose employee participants and placed them in three classes of 15 students each.
There were two trainers from a local training company. Each session was to run a maximum of 200 hours. However, employees could leave when they reached a pre-determined skill level, so that some were in the program for only 40 hours and others stayed the entire course.49 Classes were five days per week, two hours per day, with classes scheduled so that one hour was during the employee's personal time and the second was on company time. In this program, employees were paired so that they could help each other (for instance, someone good with decimals was paired with someone who was not). The students then helped each other through a series of timed exercises in math and reading.
Another simple approach is to have supervisors teach basic skills by giving employees writing and speaking exercises. After each exercise has been completed, the supervisor can provide personal feedback. One way to do this is to convert materials used in the employees' jobs into instructional tools. For example, if an employee needs to use a manual to find out how to replace a certain machine part, teach that person how to use an index to locate the relevant section. Another approach is to bring in outside professionals (such as teachers from a local high school) to teach, say, remedial reading or writing. Having employees attend adult education or high school evening classes is another option.
Values Training Many training programs today are aimed at educating employ¬ees about the firm's most cherished values and at convincing employees that these should be their values as well.
The orientation program at Saturn Corporation illustrates this. The first two days are devoted to discussions of benefits, safety and security, and the company's pro¬duction process-just-in-time delivery, materials management, and so forth. On the third and fourth days, the focus shifts to values. Each new employee gets a copy of Saturn's mission card. Trainees and trainer then go through each of the Saturn val¬ues listed on the card-teamwork, trust and respect for the individual, and quality, for example-to illustrate its meaning. Short, illustrated exercises are used. The new employees might be asked, "If you saw a team member do this, what would you do?" or "If you saw a team member 'living' this value, what would you see?"
Diversity Training With an increasingly diverse workforce, more firms have implemented diversity training programs. As a personnel officer for one firm put it, "We're trying to create a better sensitivity among our supervisors about the issues and challenges women and minorities face in pursuing their careers." Diversity training refers to "techniques for creating better cross-cultural sensitivity among supervisors and non-supervisors with the aim of creating more harmonious working relationships among a firm's employees." For example, Adams Mark Hotel & Resorts conducted a diversity training seminar for about 11,000 employees. It com¬bined lectures, video, and employee role playing to emphasize sensitivity to race and religion. After settling a huge lawsuit for race discrimination, Coca-Cola imple¬mented an ongoing diversity training program. It includes "Leveraging the Power of People and Ideas," a new two-day diversity training course that all U.S. employees are required to attend annually. (The firm also took other steps, including appointing a diversity director, establishing a diversity advisory council, and tying management compensation to reaching diversity goals.)
Diversity training is no panacea, and a poorly conceived program can backfire.
Potential negative outcomes include "the possibility of post-training participant dis-comfort, reinforcement of group stereotypes, perceived disenfranchisement or back¬lash by white males, and even lawsuits based on managers' exposure of stereotypical beliefs blurted out during 'awareness raising' sessions."
Strictly speaking, it's probably more accurate to talk about diversity-oriented training programs than about diversity training. According to one survey of HR direc¬tors, there are several specific training programs aimed at counteracting potential problems associated with a diverse workforce. These include (from most used, to least used) improving interpersonal skills, understanding/valuing cultural differences, improving technical skills, socializing into corporate culture, reducing stress, indoctri¬nating into U.s. work ethic, mentoring, improving English proficiency, improving basic math skills, and improving bilingual skills for English speaking employees.
Training for Teamwork and Empowerment Many firms today use work teams and employee empowerment to improve their effectiveness. Both the team approach and worker employment are components of what many firms call worker involve¬ment programs and performance improvement programs. These programs aim to boost organizational effectiveness by getting employees to participate in the planning, organizing, and general managing of their jobs.
Most employees must be trained to be good team members. For instance, Toyota devotes many hours to training new employees to listen to each other and to cooper¬ate. Toyota's training process stresses dedication to teamwork. For example, the program uses short exercises to illustrate examples of good and bad teamwork, and to mold new employees' attitudes regarding good teamwork.
Some firm’s use outdoor training such as Outward Bound programs to build teamwork. Outdoor training usually involves taking a firm's management team out into rugged, mountainous terrain. There they learn cooperation and team spirit, and the need to trust and rely on each other by overcoming physical obstacles. As one participant put it, "Every time I climbed over a rock, I needed someone's help." An example of one activity is the trust fall, in which an employee has to slowly lean back and fall backward, perhaps from a height of 10 feet, into the waiting arms of five or 10 team members. The idea is to build trust, particularly in one's colleagues.
MANAGERIAL DEVELOPMENT AND TRAINING
Management development is any attempt to improve managerial performance by imparting knowledge, changing attitudes, or increasing skills. It thus includes in-¬house programs such as courses, coaching, and rotational assignments, professional programs such as American Management Association (AMA) seminars; and univer¬sity programs such as executive MBA programs.It is estimated that well over one million U.s. managers participate in management development programs yearly for a cost to industry of several billion dollars per year.
The ultimate aim of such development programs is, of course, to enhance the future performance of the organization itself. For this reason, the general manage¬ment development process consists of assessing the company's needs (for instance, to fill future executive openings, or to make the firm more responsive), appraising the managers' performance, and then developing the managers themselves.
Globalization and increased competitiveness mean it's more important today for leader development programs to be organizationally relevant and effective. The program should make sense in terms of the company's strategy and goals. There is typically much emphasis on clarifying a program's business purpose and desired outcomes, and linking the program more clearly to the company's mission. This means involving the top management team in formulating the program's aims, and also specifying concrete competencies and knowledge outcomes, rather than just attitudes. There is also today more emphasis on supplementing traditional develop¬ment methods (such as lectures, case discussion groups, and simulations) with realistic methods like action learning projects where trainees solve actual company problems.
On the job training for managers
On-the-job training is not just for non-supervisory employees. It is also a popular manager development method. Important techniques include job rotation, the coaching/understudy method, and action learning. Job rotation means moving man-agement trainees from department to department to broaden their understanding of all parts of the business.66 The trainee-often a recent college .graduate-may spend several months in each department; this helps not only broaden his or her experience but also discover the jobs he or she prefers. The person may be just an observer in each department, but more commonly becomes fully involved in its operations. The trainee thus learns the department's business by actually doing it, whether it involves the New Leadership Development. With the coaching/understudy method, the new manager, of course, receives ongoing advice, often from the person he or she is scheduled to replace.
Action Learning
Action learning gives managers time to work full time on real projects, analyzing and solving problems in departments other than their own. The trainees meet peri¬odically within a four- or five-person project group to discuss their findings.
For example, several CIGNA International Property and Casualty Corporation managers spent four weeks in an action learning group. The group was assigned the problem of analyzing the strategies of one of the insurance company's business units over the previous three years. Each of the four weeks was devoted to a different set of activities. In the first week, the group received training from business profes¬sors as well as a briefing from the division staff that had the business problem. In the second, they split into four teams and traveled the country interviewing about 100 of the division's employees, distributors, and customers on a one-to-one basis. In the third week, the group assimilated and analyzed the data, and in the fourth week, it formulated recommendations and wrote a 40-plus-page paper. The group presented its recommendations to the president and executive staff of the troubled division at the end of the fourth week and fielded questions from the executives.
The Case Study Method
The case study method presents a trainee with a written description of an organiza¬tional problem. The person analyzes the case in private, diagnoses the problem, and presents his or her findings and solutions in a discussion with other trainees.
The case study method has several aims. It aims, first, to give trainees realistic experience in identifying and analyzing complex problems in an environment in which their trained discussion leader can subtly guide their progress. Through the class discussion of the case, trainees also learn that there are usually many ways to approach and solve complex organizational problems. And, they learn that their own needs and values often influence the solutions they suggest.
The case study method ideally has five main features?! (1) the use of actual orga-nizational problems; (2) the maximum possible involvement of participants in stating their views, inquiring into others' views, confronting different views, and making deci¬sions; resulting in (3) a minimal degree of dependence on the faculty members; who, in turn, (4) hold the position that there are rarely any right or wrong answers, and that cases are incomplete and so is reality; and (5) who still strive to make the case study method as engaging as possible through creation of appropriate levels of drama.
Integrated case scenarios expand the case analysis concept by creating long-term, comprehensive case situations. For example, the FBI Academy created an integrated case scenario. It starts "with a concerned citizen/s telephone call and ends 14 weeks later with a simulated trial. In between is the stuff of a genuine investigation, including a healthy sampling of what can go wrong in an actual criminal inquiry." To create such scenarios, scriptwriters (often just creative employees in the firm/s training group) create scripts. The scripts include themes, background stories, detailed personal histories, and role-play instructions. In the case of the FBI, the scenarios are aimed at developing specific training skills, such as interviewing witnesses and analyzing crime scenes.
Management Games
In computerized management games, trainees split into five- or six-person compa¬nies/ each of which has to compete with the others in a simulated marketplace. Each company sets a goal (such as "maximum sales") and can make several decisions. For example, the group may be allowed to decide how much to spend on advertising, how much to produce, how much inventory to maintain, and how many of which product to produce. Usually, the game compresses a two- or three-year period into days, weeks, or months. As in the real world, each company usually can/t see what decisions the other firms have made, although these decisions do affect their own sales. For example, if a competitor decides to increase its advertising expenditures, that firm may end up increasing its sales at the expense of the others.
Management games can be good development tools. People learn best by get¬ting involved in the activity itself, and the games can be useful for gaining such involvement.
Outside Seminars
Many organizations offer seminars and conferences aimed at developing managers. The AMA, for instance, provides thousands of courses in areas such as general man-agement/ human resources, sales and marketing, and international management.
The courses cover topics such as how to sharpen business writing skills, strategic planning, and assertiveness training for managers. Other organizations offering management development services include AMR. International; Inc., the Conference Board, and Cornell University.
Many of these programs offer continuing education units (CEUs) for course completion. Earning CEUs provides a recognized measure of educational accom¬plishment/ says the AMA, one that is today used by more than 1/000 colleges. CEUs generally can't be used to obtain degree-granting credit at most colleges or universi¬ties, but they provide a record of the fact that the trainee participated in and completed a conference or seminar.
University-Related Programs
Colleges and universities provide several types of management development activi¬ties. First, many schools provide continuing education programs in leadership, supervision, and the like. As with the AMA, these range from one- to four-day programs to executive development programs lasting one to four months.
Many also offer individual courses in areas such as business, management, and health care administration. Managers can take these as matriculated or non-matricu¬lated students to fill gaps in their backgrounds. Thus, a prospective division manager with a gap in experience with accounting controls might sign up for a two-course sequence in managerial accounting. Finally, schools offer degree programs such as the master of business administration (MBA).
Some companies have experimented with offering selected employees in-house degree programs in cooperation with colleges and universities. Many also offer a variety of in-house lectures and seminars by university staff. For example, Technicon, a high-tech medical instruments company, asked one university to offer an executive education program for its key middle managers. The coursework cov¬ered topics ranging from finance to executive communication. Schools such as Duke University offer programs (like MBAs) online; some customize the programs for client companies. .
Universities and corporations are also experimenting with video linked class¬room education. For example, the School of Business and Public Administration at California State University, Sacramento, and a Hewlett-Packard facility in Roseville, California, are video linked. A video link allows for classroom learning on campuses with simultaneous broadcasting to other locations via telephone commu¬nication lines.
Behavior Modeling
Behavior modeling involves showing trainees the right, or model, way of doing something, letting each person practice the right way to do it, and providing feed¬back regarding each trainee's performance? It has been used, for example, to train middle managers to better handle interpersonal situations such as performance problems and undesirable work habits.
The basic behavior modeling procedure is as follows:
Modeling. First, trainees watch films or videotapes or disks that show model persons behaving effectively in a problem situation.
Role playing. Next, the trainees are given roles to play in a simulated situation; here, they practice and rehearse the effective behaviors demonstrated by the models.
Social reinforcement. The trainer provides reinforcement in the form of praise and constructive feedback based on how the trainee performs in the role-playing situation.
Global Issues in HR: Executive Development in Global Companies
Selecting and developing executives to run the employer's overseas operations present management with a dilemma. One expert cites "an alarmingly high failure rate when executives are relocated overseas." This fail¬ure rate is usually caused by inappropriate selection and poor expatriate development. Yet in an increasingly globalized economy, employers must develop managers for over¬seas assignments despite these difficulties.
A number of companies, including Dow and Ciba-Geigy, have developed and imple-mented international executive relocation programs that are successful. In addition to the general requirements for successful exec¬utive development programs previously listed, preparing and training executives for overseas assignments should also include the following considerations:
Choose for international assignments candidates whose educational back¬grounds and experiences are appropriate for overseas assignments. For example a person who has already accumulated a• track record of successfully adapting to foreign cultures (perhaps through over¬seas college studies and summer intern¬ships) will more likely succeed as an international transferee.
Choose those whose personalities and family situations can withstand the cultural changes they will encounter in their new environments. When many of these executives fail, it's not because the individuals couldn't adapt, but because their spouses or children were unhappy in the new foreign setting.
Brief candidates fully and clearly on all relocation policies. Transferees should be• given a realistic preview of what the assignment will entail, including the company's policy regarding matters such as moving expenses and salary differentials.
Give executives and their families’ com¬prehensive training in their new coun¬try's culture and language.
Provide all relocating executives with a mentor to monitor their overseas careers and help them secure appropriate jobs with the company when they repatriate. (At Dow, for instance, this person is usually a high-level manager in the expatriate's functional area.) This helps to avoid the problem of having expatriates feel lost overseas, partic¬ularly in terms of career progress.
Establish a repatriation program that helps returning executives and their families readjust to their professional and personal lives in their home country. At Dow, for instance, the expatriate receives his or her new job assignment as much as a year before returning to the United States.
Transfer of training. Finally, trainees are encouraged to apply their new skills when they are back on their jobs.
Studies suggest that behavior modeling can be very effective. For example, 160 novice computer users from the U.S. Naval Construction Battalion at Gulfport, Mississippi, were put through one of three types of training-Behavioral modeling, self-paced study, or lecturing. The researchers concluded, "Behavior modeling was clearly superior across all evaluation measures. Trainees in this condition learned more than other trainees, did best at demonstrating the skills taught in training in a hands-on test, and were most satisfied with the computer system four weeks after training."
In-House Development Centers
Many firms have in-house development centers, which usually combine classroom learning (lectures and seminars, for instance) with other techniques such as assess¬ment centers, in-basket exercises, and role playing to help develop employees and other managers. For example, Fortune magazine calls Crotonville, General Electric's (GE) Management Development Institute, and the "Harvard of corporate America." The firm's management development courses range from entry-level programs in manufacturing and sales to a course for English majors called "Everything You Always Wanted to Know About Finance."
For many firms, their learning portals are becoming their virtual corporate univer¬sities. While firms such as General Electric have long had their own bricks-and-mortar corporate universities, learning portals let even smaller firms have their own corporate universities, on the Web. Bain & Company, a management consulting firm, has such a Web-based virtual university for its employees. It provides a means not only for con-veniently coordinating all the company's training efforts but also for delivering Web-based modules that cover topics from strategic management to mentoring.
Many companies today try to avoid the "country club" atmospheres of earlier corporate universities. For example, at Boeing's Leadership Center, you won't find the golf course that often marks other such universities. And the training experience is described as "intense, but ... one of the most useful intense experiences 'I've ever had."
Organizational Development (OD)
Organizational development (OD) aims to change the attitudes, values, and beliefs of employees so that the employees can identify and implement changes (such as reorganizations), usually with the aid of an outside change agent, or consultant.
Action research is the foundation of most aD programs or interventions. It means gathering data about the organization and its operations and attitudes, with an eye toward solving a particular problem (for example, conflict between the sales and pro¬duction departments); feeding back these data to the parties (employees) involved; and then having these parties team-plan solutions to the problems. In aD, the partici¬pants always get involved in gathering data about themselves and their organization, analyzing these data, and planning solutions based on these analyses.
Specific examples of aD efforts include survey feedback, sensitivity training, and team building. Survey feedback uses questionnaires to survey employees' attitudes and to provide feedback. The aim here is usually to crystallize for the managers the fact that there is a problem that must be addressed, then the depart¬ment managers can use the results to turn to the job of discussing and solving it. Employee attitude surveys have been used since at least the 1930s to assess and doc¬ument employee morale. Their continuing wide use reflects the fact, as several researchers recently concluded, that:
There is validity in employee reports of their experiences and these reports can be very useful as diagnoses of the degree to which a new strategy is being implemented ana the degree to which policies and practices are related to the achievement of strategic goals like customer satisfaction and customer attention.
Sensitivity training aims to increase participants' insights into their behavior and the behavior of others by encouraging an open expression of feelings in the trainer-guided "T-group laboratory" (the "T" is for training). Sensitivity training seeks to accomplish its aim of increasing interpersonal sensitivity by requiring frank, candid discussions in the T-group, discussions of participants' personal feelings, attitudes, and behavior. As a result, it is a controversial method surrounded by heated debate and is used much less today than in the past.
Finally, team building refers to a group of OD techniques aimed at improving the effectiveness of teams at work. The typical team-building program begins with the consultant interviewing each of the group members prior to the group meeting. He or she asks them what their problems are, how they think the group functions, and what obstacles are in the way of the group's performing better. The consultant usually categorizes the interview or attitude survey data into themes and presents the themes to the group at the beginning of the meeting. They might include, for example, "Not enough time to get my job done," or "1 can't get any cooperation around here." The group then ranks the themes by importance. The most important ones form the agenda for the meeting. The group examines and discusses the issues, examines the under¬lying causes of the problem, and begins work on a solution to the problems.
Building High-Performance Learning Organizations
In a fast-changing world, the last thing a company needs is for new information-about competitors' actions, customers' preferences, or technological improvements ¬to be ignored or lost in a bureaucratic sinkhole. For years, for instance, General Motors seemed oblivious to the competitive and technological advances of its foreign competitors; it finally awoke when its board decided that too much market shall had been lost. On the other hand, firms such as Microsoft and GE are tradition¬ally quick on their feet, "adept 'at translating new knowledge into new ways behaving."
HR's Role in Building Learning Organizations Firms such as GE have successfully made the leap into rebuilding themselves as learning organizations. A leading organization "is an organization skilled at creating, acquiring, and transfer knowledge, and at modifying its behavior to reflect new knowledge and insights.
Training can help develop such skills. At Xerox, for instance, employees trained to analyze and display data on special simple statistical charts and to plan actions they will take to solve the problem using special planning charts. GE programs for building the skills required to perform and evaluate experiments, as how to use statistical methods and design experiments.
Providing Employees with Life long Learning.
Employers can't build learning organizations just around managers. In today's empowered organizations, employers must also depend on first-line employees-the team members building Saturn cars, or the Microsoft programmers-to recognize new opportunities, id problems, and react quickly with analyses and recommendations. As a result, need has arisen for encouraging lifelong learning, in other words, for providing extensive continuing training from basic remedial skills to advanced decision-making techniques throughout employees' careers.
One Canadian Honeywell manufacturing plant called its lifelong learning pro¬gram the Honeywell Scarborough Learning for Life Initiative.94 It was "a concerted effort to upgrade skill and education levels so that employees can meet workplace challenges with confidence." It began with adult basic education. In partnership with the employees' union, the company offered courses in English as a second language, basic literacy, arithmetic, and computer literacy. Next the factory formed a partnership with a local community college. Honeywell provides in-house after¬ work college-level courses to all factory employees-hour)? Professional, and managerial-giving them the opportunity to earn college diplomas and certificates. Employees also receive job-related training for two hours every other week. Sessions focus on skills specifically important to the job, "such as the princi¬ples of just-in-time inventory systems, team effectiveness, interpersonal communi¬cation skills, conflict resolution, problem solving and dealing with a diverse workforce."
Organizational Change
Today, intense international competition means companies have to change fast, per¬haps changing their strategies to enter new businesses, or their organization charts, or their employees' attitudes and values.
Major organizational changes like these are never easy, but perhaps the hardest part of leading a change is overcoming the resistance to it. Individuals, groups, and even entire organizations may resist the change, perhaps because they are accus¬tomed to the usual way of doing things; or because of perceived threats to their power and influence; or because of the fear of the unknown; or because of what the employee sees as a violation of the unwritten "personal compact" or agreement he or she has with the company (for instance, in terms of what the employer expects from the employee and vice versa).
Lewin's Process for Overcoming Resistance Psychologist Kurt Lewin formu¬lated a model of change to summarize what he believed was the basic process for implementing a change with minimal resistance. To Lewin, all behavior in organiza¬tions was a product of two kinds of forces: those striving to maintain the status quo and those pushing for change. Implementing change thus meant either reducing the forces for the status quo or building up the forces for change. Lewin's process con¬sisted of three steps:
Unfreezing, which means reducing the forces that are striving to maintain the sta¬tus quo, usually by presenting a provocative problem or event to get people to recognize the need for change and to search for new solutions.
Moving, which means developing new behaviors, values, and attitudes, some¬times through organizational structure changes and sometimes through the other management development techniques (such as team building).
Refreezing, which means building in the reinforcement to make sure the organi¬zation doesn't slide back into its former ways of doing things.
Establish a sense of urgency. For instance, create a crisis by exposing managers to major weaknesses relative to competi¬tors.
Mobilize commitment to change through joint diagnosis of business problems. Next, create one or more task forces to diag¬nose the business problems. Such teams can produce a shared understanding of what can and must be improved and thereby mobilize the commitment of those who must actually implement the change.
Create a guiding coalition. No leader can accomplish any significant change alone. That's why most leaders create a guiding coalition of influential people who can be missionaries and implementers of change.
Develop a shared vision. Create a general statement of the organization's intended direction that evokes emotional feelings in organization members.
Communicate the vision. Use multiple forums, repetition, and leading by exam¬ple to foster support for the new vision.
Remove barriers to the change: Empower employees. Accomplishing the change usually requires the assistance of the employees themselves, but sometimes this requires empowering them-in other words, removing barriers that' stand in the way of their being able to actually assist in making the changes. For example, Sony's CEO removed the former studio executives and installed a new team when he set about fixing SONY'S movie business. Allied Signal CEO Lawrence Bossidy put all of his 80,000 employees through quality train¬ing within two years.
Generate short-term wins. Maintain employees' motivation to stay involved in the change by ensuring that they have short-term goals to achieve from which they will receive positive feedback.
Consolidate gains and produce more change.
As momentum builds and changes are made, the leader has to guard against renewed complacency. To do this, the leader and guiding coalition can use the increased credibility that comes from short-term wins to change all the sys¬tems, structures, and policies that don't fit well with the company's new vision.
Anchor the new ways of doing things in the company's culture. Few organizational changes survive without a corresponding change in employees' shared values. For example, if you want to emphasize more openness, camaraderie, and customer service, you as a leader must get the organization's employees to share those values. Do this by issuing a core value statement, by "walking the talk," and by using signs, symbols, rewards, and cere¬monies to reinforce the values you want your employees to share.
Monitor progress and adjust the vision as required. For example, use regular surveys to monitor customer and employee
Attitudes.
Of course, the devil is in the details, and actually finding the right technique that will help you accomplish each of those three steps and then using them is difficult part. An IO-step process for leading organizational change is summarized the HR in Practice box.
EVAULATING TRAINING AND DEVELOPMENT EFFORT
There are two basic issues to address when evaluating a training program. The first is the design of the evaluation study and, in particular, whether to use controlled experi-mentation. The second is what training effect to measure.
Controlled experimentation is the best method to use in evaluating a training pro¬gram. In a controlled experiment, both a training group and a control group (which receives no training) are used. Data (for instance, on quantity of production or quality of soldered junctions) is obtained both before and after the training effort in the group exposed to training, and before and after a corresponding work period in the control group. In this way it is possible to determine the extent to which any change in perfor¬mance in the training group resulted from the training itself rather than from some orga¬nization wide change such as a raise in pay; we assume that the latter would have equally affected employees in both groups. This approach is feasible and is sometimes used.102 In terms of current practices, however, one survey found that something less than half of the companies responding attempted to obtain before-and-after mea¬sures from trainees; the number of organizations using control groups wasnegligible.103
Training Effects to Measure
Four basic categories of training outcomes can be measured:
Reaction. First, evaluate trainees' reactions to the program. Did they like the pro¬gram? Did they think it worthwhile?
Learning. Second, test the trainees to determine whether they learned the princi¬ples, skills, and facts they were supposed to learn.
Behavior. Next, ask whether the trainees' behavior on the job changed because of the training program. For example, are employees in the store's complaint department more courteous toward disgruntled customers than previously?
Results. Finally, but probably most importantly, ask What final results were achieved in terms of the training objectives previously set? Did the number of customer complaints about employees drop? Did the reject rate improve? Did scrappage cost decrease? Was turnover reduced?
Computerization is facilitating the evaluation process. For example, Bovis Land Lease in New York City offers its 625 employees numerous courses in construction and other subjects. The firm uses special learning management software to monitor which employees are taking which courses, and the extent to which employees are improving their skills.
HRD in Indian Industry
There were days when HRD was interpreted as a highly redundant department! The costs involved in setting up a HRD unit were said to be relatively high with no tangible benefits in sight immediately. Employers were not very sure whether the HR philosophy would yield any concrete gains. In early 1970s the situation was sought to be remedied through the establishment of HRD units in large organizations.
Larsen and Toubro was the first company to design and implement an integrated HRD system. The first workshop on HRD was held way back in 1979. The Xavier Labour Relations Institute (XLRI) was the first academic institution to set up a full-fledged centre for HRD. A National HRD Network was set up in 1985. Looking at the payoffs from HRD systems, several leading Indian companies have gone ahead in ~eating separate HR departments to improve employer-employee relations.
After surveying the HR practices of 53 public and private sector organizations Prof. T.V. Rao (1975) reported thus:
Only 32% of the companies had a formal HRD policy.
Only 30% of these organizations had a separate HR department.
Only 26% of these organisations had development oriented performance appraisal systems.
About 55% of companies, however, had a definite training policy.
About 50% of companies had designated a person to take care of OD activities, focusing mainly on team building and role clarity exercises.
In about 80% companies, employee counseling is actively encouraged.
To judge the prevailing HR climate, another survey was conducted by Prof. T.V. Rao and the survey reported an urgent need for introducing HR practices. Employers were not doing much to improve the quality of work life of employees. The employees themselves were not very enthusiastic about learning new skills in their own self interest.
With increasing competition, companies nowadays have realized the importance of introducing systematic HR practices in a big way. Companies now talk about the New People Management (NPM) with the, following objectives in mind:
Corporate Goals- must factor in individual career growth.
Company profits must be linked to personal rewards.
Organizational learning must involve employee training.
Job responsibilities must facilitate personal development.
Business strategies must consider human resource issues.
HRD vs HRM
HRD & HRM are both related terms were also termed as Personnel Management.
HRM is Human Resource Management. It is the management of Human resource in an organization, taking care of the basic requirements of the employees such as recruiting, staffing maintaining of employee relations and other employee related issues.
HRD is the Human Resource Development, it is the development of the Resources of the Company (Human)
HRD includes the areas of training and development, career development, and organization development. This is related to Human Resource Management -- a field which includes HR research and information systems, union/labor relations, employee assistance, compensation/benefits, selection and staffing, performance management systems, HR planning, and organization/job design.
HRD is complete only with a proper HRM in the company. Also
HRM deals with the day to day operations of the human resources department. this curriculum would include business law, compensation, employee relations, benefits, and medical etc.
HRD: Human resource development deals with the training and the developmental aspect of employees. Most HRD curriculum include classes like t & d, organizational development, industrial psychology
Definition of SHRM
Strategic human resource management can be defined as the linking of human resources with strategic goals and objectives in order to improve business performance and develop organizational culture that foster innovation, flexibility and competitive advantage. In an organisation SHRM means accepting and involving the HR function as a strategic partner in the formulation and implementation of the company's strategies through HR activities such as recruiting, selecting, training and rewarding personnel.
How SHRM differs from HRM
In the last two decades there has been an increasing awareness that HR functions were like an island unto itself with softer people-centred values far away from the hard world of real business. In order to justify its own existence HR functions had to be seen as more intimately connected with the strategy and day to day running of the business side of the enterprise. Many writers in the late 1980s, started clamoring for a more strategic approach to the management of people than the standard practices of traditional management of people or industrial relations models. Strategic human resource management focuses on human resource programs with long-term objectives. Instead of focusing on internal human resource issues, the focus is on addressing and solving problems that effect people management programs in the long run and often globally. Therefore the primary goal of strategic human resources is to increase employee productivity by focusing on business obstacles that occur outside of human resources. The primary actions of a strategic human resource manager are to identify key HR areas where strategies can be implemented in the long run to improve the overall employee motivation and productivity. Communication between HR and top management of the company is vital as without active participation no cooperation is possible.
Key Features of Strategic Human Resource Management
The key features of SHRM are
There is an explicit linkage between HR policy and practices and overall organizational strategic aims and the organizational environment
There is some organizing schema linking individual HR interventions so that they are mutually supportive.
Much of the responsibility for the management of human resources is devolved down the line
Self Assessment Questions
1. What is meant by Training? Why is it important?
2. What are the different training methods adopted in an organization?
3. What is HRD and write the difference between HRD and HRM.
4. What is SHRM? How is it different from HRM?
4. Performance Appraisal and Managing Rewards
4.1. Introduction:
Performance management is one of the key functions of HRM. It focuses on the various methods of performance appraisal and the methods generally used in the organizations.
4.2. Objectives:
The objective is to make the student understand the basics of performance management and the various methods used in performance appraisal.
BASIC CONCEPTS IN PERFORMANCE MANAGEMENT
Performance appraisal means evaluating an employee's current and/ or past perfor-mance relative to his or her performance standards. Although "appraising perfor¬mance" usually brings to mind specific appraisal tools, the actual forms are only part of the appraisal process. Appraising performance also assumes that performance standards have been set, and also that you'll give the employee feedback and incentives to help him or her eliminate per¬formance deficiencies or continue to perform above par.
The idea that appraisals are just one element in the process of improving employee performance is nothing new. However, managers generally take the inte¬grated nature of that process-of setting goals, training employees, and then appraising and rewarding them-much more seriously today than they have in the past. They call the whole, integrated process performance management. This is the process through which companies ensure that employees are working toward orga¬nizational goals, and includes practices through which the manager defines the employee's goals and work, develops the employee's skills and capabilities, evalu¬ates the person's goal-directed behavior, and then rewards him or her in a fashion that hopefully makes sense both in terms of the company's needs and the person's career aspirations. The idea is to make sure that these elements are internally consistent, and that they all make sense in terms of what the company wants to achieve.
The increasing popularity of taking a performance management approach reflects several things. It reflects, first, the popularity of the total quality management (TQM) concepts advocated several years ago by management experts like W. Edwards Deming. Basically, Deming argued that all the business's functions and processes including design, planning, production, distribution, and field service should focus on maximizing customer satisfaction through continuous improve¬ment. TQM proponents like Deming generally argued for eliminating performance appraisals. They said that the organization is a system of interrelated parts, and that an employee's performance is more a function of things like training, communication, tools, and supervision than of his or her own motivation. Today's performance man¬agement approach reflects managers' attempts to more explicitly recognize the inter¬related nature of the factors that influence employee performance. And, it reflects the emphasis managers necessarily place today on fostering high-performance goal¬-directed efforts in a globally competitive world.
Defining the Employee's Goals and Work Efforts
At the heart of performance management is the idea that the employee's efforts should be goal directed. On the one hand, the manager should appraise the employee based on how that person did with respect to achieving the specific stan¬dards by which he or she expected to be measured. On the other hand, the manager should make sure that the employee's goals and performance standards make sense in terms of the company's broader goals. Ideally, in any company, there is a hierarchy of goals. Top management's goals-say, to double sales-imply subordinate goals for each manager and employee down the chain of command. If Nasser wanted to boost Ford's output by 40% in three years, his production managers might have to each boost output by 10 cars per employee-hour each year, to achieve that 40% output gain.
As you can see, clarifying what you expect from your employee is trickier than it may appear. Employers usually write job descriptions, but the descriptions rarely include specific goals. All sales managers in the firm might have the same job description, for instance. Your sales manager's job description may list duties such as "supervise sales force" and "be responsible for all phases of marketing the division's products," but you may also expect your sales manager to personally sell at least $600,000 worth of products per year by handling the division's two largest accounts; to keep the sales force happy; and to keep customers away from the executives (including you). Unfortunately, some supervisors tend to be lax when it comes to setting specific goals for their employees. They then wonder why they have prob¬lems managing those employees' performance.
You therefore have to quantify your expectations. The most straightforward way to do this (for the sales manager job, for instance) is to set measurable standards for each expectation. You might measure tIle "personal selling" activity in terms of how many dollars of sales the manager is to generate personally. Perhaps measure "keep¬ing the sales force happy" in terms of turnover (on the assumption that less than 10% of the sales force will quit in any given year if morale is high). The point is that employees should always know ahead of time how and on what basis you're going to appraise them. You can't expect them to manage their own performance if they don't know quantitatively how you expect them to perform.
Effective Goal Setting
Setting goals is one thing; setting effective goals is another. One way to think of this is to remember that the goals you set should be "SMART." They are specific, and clearly state the desired results. They are measurable, and answer the question how much? They are attainable. They are relevant, and clearly derive from what the man¬ager and company want to achieve. And, they are timely, and reflect deadlines and milestones?
To expand on this a bit, goals are only useful to the extent that employees are motivated to achieve them. Research known as "the goal-setting studies" provides useful insights into setting motivational goals. These studies suggest four things:
Assign Specific Goals: Employees who are given specific goals usually perform better than those who are not.
Assign Measurable Goals: Put goals in quantitative terms and include target dates or deadlines. Goals set in absolute terms (such as "an average daily output of 300 units") are less confusing than goals set in relative terms (such as "improve production by 20 %"). If measurable results will not be available, then "satisfactory completion"-such as "satisfactorily attended workshop" or '(satis¬factorily completed his or her degree" -is the next best thing. In any case, target dates or deadlines should always be set.
Assign Challenging but Doable Goals Goals should be challenging, but not so difficult that they appear impossible or unrealistic. When is a goal too difficult or too hard? One expert says:
A goal is probably too easy if it calls for little or no improvement in perfor¬mance when conditions are becoming more favorable, or if the targeted level of performance is well below that of most other employees in compara¬ble positions. A goal is probably too difficult if it calls for a large improve¬ment in performance when conditions are worsening, or if the targeted level of performance is well above that of people in comparable positions.
Encourage Participation. Throughout your management career (and often several times a day) you'll be faced with this question: should I just tell my employees what their goals are, or should I let them participate with me in set¬ting their goals? The evidence suggests that participatively set goals do not con¬sistently result in higher performance than assigned goals, nor do aligned goals consistently result in higher performance than participatively set ones. It is only when the participatively set goals are more difficult (are set higher) than the assigned ones that the participatively set goals produce higher performance. It doe~ tend to be easier to set higher standards when your employees can participate in the process, and to that extent participation can facilitate standards setting, and performance.
AN INTRODUCTION TO APPRAISING PERFORMANCE
Why Appraise Performance?
There are three main reasons to appraise subordinates' performance. First, appraisals provide important input on which promotion and salary raise decisions can be made. Second, the appraisal lets the boss and subordinate develop a plan for correct¬ing any deficiencies the appraisal might have unearthed, and to reinforce the things the subordinate does correctly. Finally, appraisals can serve a useful career-planning purpose, by providing the opportunity to review the employee's career plans in light of his or her exhibited strengths and weaknesses.
Who Should Do the Appraising?
Appraisals by the immediate supervisor are still at the heart of most appraisal processes. Getting a supervisor's appraisal is relatively straightforward and also makes sense. The supervisor should be-and usually is-in the best position to observe and evaluate his or her subordinate's performance, and is also responsible for that person's performance. Most appraisals (92% in one survey) are made by the employee's immediate supervisor. These appraisals were in turn reviewed by the supervisor's own supervisor in 74% of the respondents in this survey.
Yet although widely used, supervisors' ratings are no panacea and sole reliance on them is not always advisable. For example, an employee's supervisor may not understand or appreciate how people such as customers and colleagues who depend on the employee rate the person's performance. Furthermore, it is conceivable that an immediate supervisor may be biased for or against the employee. One or more other options are therefore sometimes used to obtain appraisal data.
Peer Appraisals with more firms using self-managing teams, appraisal of an employee by his or her peers-peer appraisal-is becoming more popular. At Digital Equipment Corporation, for example, an employee due for an annual appraisal chooses an appraisal chairperson. The latter then selects one supervisor and three peers to evaluate the employee's work.
Research indicates that peer appraisals can be effective. One study involved undergraduates placed into self-managing work groups. The researchers found that peer appraisals had "an immediate positive impact on [improving] perception of open communication, task motivation, social loafing, group viability, cohesion, and satisfaction."
Rating Committees Some companies use rating committees. A rating committee is usually composed of the employee's immediate supervisor and three or four other supervisors.
Using multiple raters can be advantageous. It can help cancel out problems such as bias on the part of individual raters. It can also provide a way to include in the appraisal the different facets of an employee's performance observed by different appraisers. This is probably why composite ratings tend to be more reliable, fair, and valid than those done by individual supervisors.Self-Ratings Employees' self-ratings of performance are also sometimes used, usually in conjunction with supervisors' ratings. The basic problem with self-ratings is that employees usually rate themselves higher than their supervisors or peers would rate them. One study found that, when asked to rate their own job perfor-mances, 40% of employees in jobs of all types placed themselves in the top 10%, and virtually all remaining employees rated themselves at least in the top 50%. At least one recent study concluded that individuals do not necessarily always have such positive illusions about their own performance. However, in rating the performance of their groups, group members still consistently assigned their group unrealistically high performance ratings.
Appraisal by Subordinates Some firms let subordinates evaluate their supervi¬sors' performance, a process many call upward feedback.19 Such feedback can help top managers diagnose management styles, identify potential people problems, and take corrective action with individual managers, as required. Firms such as FedEx use upward feedback to help improve supervisory performance; for example, if a supervisor scores low on the item "I feel free to tell my manager what I think," FedEx managers are trained to ask their groups questions such as "What do I do that makes you feel that I'm not interested?"
Anonymity can have a big impact on the usefulness of upward feedback.
Managers who get feedback from subordinates who identify themselves view the upward feedback process more positively than do managers who get anonymous feedback. However, subordinates are more comfortable giving anonymous re¬sponses, and those who must identify themselves tend to give inflated ratings.
Research supports the idea that upward feedback can improve a manager's per-formance. One study focused on 252 managers during five annual administrations of an upward feedback program. Managers who were initially "rated poor or moderate showed significant improvements in [their] upward feedback ratings over the five¬ year period ....” Furthermore, managers who met with their subordinates to discuss their upward feedback improved more than the managers who did not.
360-Degree Feedback: With 360-degree feedback, performance information is collected all around an employee, from his or her supervisors, subordinates, peers, and internal or external customers.This is generally done for development rather than for pay raises. The usual process is to have the raters complete appraisal sur¬veys on the ratee. Computerized systems then compile all this feedback into individ¬ualized reports that go to ratees. The person may then meet with his or her supervi¬sor to develop a self-improvement plan. Participants, at least, seem to prefer this approach. One study concluded that 360-degree program participants rated their experience of most aspects of training and development as significantly better than did non-program participants.
However, some doubt 360-degree feedback's objectivity. Employees usually do these reviews anonymously, so those with an ax to grind can misuse the system. Office politics can prompt retaliatory assessments. A Dilbert cartoon strip, announc¬ing that evaluations by co-workers will help decide raises, has one character asking, "If my co-workers got small raises, won't there be more available in the budget for me?"25 More seriously, with multiple ratees and multiple raters, noncomputerized 360-degree assessments can be paperwork nightmares.
Self-Ratings Employees' self-ratings of performance are also sometimes used, usually in conjunction with supervisors' ratings. The basic problem with self-ratings is that employees usually rate themselves higher than their supervisors or peers would rate them. One study found that, when asked to rate their own job perfor¬mances, 40% of employees in jobs of all types placed themselves in the top 10%, and virtually all remaining employees rated themselves at least in the top 50%. At least one recent study concluded that individuals do not necessarily always have such positive illusions about their own performance. However, in rating the performance of their groups, group members still consistently assigned their group unrealistically high performance ratings.
Appraisal by Subordinates Some firms let subordinates evaluate their supervi¬sors' performance, a process many call upward feedback. Such feedback can help top managers diagnose management styles, identify potential people problems, and take corrective action with individual managers, as required. Firms such as FedEx use upward feedback to help improve supervisory performance; for example, if a supervisor scores low on the item "I feel free to tell my manager what 1 think," FedEx managers are trained to ask their groups questions such as "What do 1 do that makes you feel that I'm not interested?"
Thus, 360-degree appraisal systems are the subject of considerable debate. One study, by the HR consulting firm Watson Wyatt, found that companies using 360-degree-type feedback have lower market value (in terms of stock price). For example, those using peer review have a market value about 5% lower than similar companies that don't use peer reviews, and those that allow subordinates to evaluate the managers are valued almost 6% lower than similar firms that don't. These find¬ings don't necessarily suggest a cause-and-effect relationship between nontraditional appraisal methods and market value, but they are a red flag. The findings suggest that any firm implementing 360-degree feedback should carefully assess the poten¬tial costs of the program, focus any feedback very clearly on concrete goals, carefully train the people who are giving and receiving the feedback, and not rely solely on 360-degree feedback for performance appraisal.
There are also various ways to reduce the administrative costs associated with this approach. For example, Visual 360 from MindSolve Technologies of Gainesville, Florida, lets the rater log in, open a screen with a rating scale, and then rate the per¬son along a series of competencies with ratings such as "top five percent.
There are also several systems for accomplishing 360-degree assessments via the Internet. For example, in the Internet-based 360 system used at Farmington, Connecticut-based Otis Elevator Company, managers and others are evaluated by their peers, customers, teammates, supervisors, direct subordinates, suppliers, and themselves. The system is fully encrypted. Passwords ensure that only authorized persons can access the actual Internet-based evaluations.
Even if you do not opt for a 360-degree approach, there is wisdom in having more than one supervisor appraise an employee. One of the most consistent findings in appraisal research is that the ratings obtained from different sources rarely match. Multiple raters often do see different facets of an employee's performance. It's therefore advisable to obtain ratings from the supervisor, his or her boss, and perhaps another manager who is familiar with the employee's work.
BASIC APPRAISAL METHODS
The manager usually conducts the appraisal using one or more of the formal meth¬ods described in this section.
Graphic Rating Scale Method
A graphic rating scale lists a number of traits and a range of performance for each. The supervisor rates each subordinate by circling or checking the score that best describes the subordinate's performance for each trait, then totals the scores for all traits.
Alternation Ranking Method
Ranking employees from best to worst on a trait or traits is another popular appraisal method. Because it is usually easier to distinguish between the worst and best employees than to rank them, an alternation ranking method is useful. With this method a form is used to indicate the employee who is highest on the trait being measured and also the one who is the lowest, alternating between highest and lowest until all employees to be rated have been addressed.
Paired Comparison Method
With the paired comparison method, every subordinate to be rated is paired with and compared to every other subordinate on each trait. For example, suppose there are five employees to be rated. With this method, a chart shows all possible pairs of employees for each trait. Then for each trait, the supervisor indicates (with a plus or minus) who is the better employee of the pair. Next, the number of times an employee is rated better is added up.
Forced Distribution Method
With the forced distribution method, the manager places predetermined percentages of subordinates in performance categories, as when a professor "grades on a curve."
More firms are adopting this practice. Sun Microsystems recently began forced ranking of all its 43,000 employees. Managers appraise employees in groups of about 30. There is a top 10%, a middle 70%, and a bottom 10%. The bottom 10% can either take a quick exit package or embark on a 90-day performance improvement action plan. If they're still in the bottom 10% in 90 days, they get a chance to resign and take severance pay. Some decide to stay, but "if it doesn't work out," the firm fires them without severance.
Strategy and HR: Ford CEO Jacques Nasser opted for just such an approach for his firm's 18,000 managers. His new corporate strategy aimed to make Ford one of the world's top-performing companies. He therefore wanted the new appraisal sys¬tem to convey the fact that performance was paramount, and that underperformers had no place at the new world-class Ford.
He modeled the new management appraisal process on one used by firms like IBM, Sun, and GE. Under his program, managers received A, B, or C grades. Executives rated "C" risked losing their bonuses or raises. And C grades two years in a row meant that Ford may demote or fire the executive. Nasser initially wanted 10% of managers to be graded C, but quickly reduced that to 5% when the complaints began. He apparently imposed the new system with little warning or discussion.
His forced distribution approach immediately triggered a storm. Executives called it unfair, and several sued. Some claimed Ford was targeting middle-aged male executives as a way of clearing them out. Ford's initial response to the suits was that "the program is going to continue." Soon, though, they were saying, "there is always review going on of all of our processes."
Ford soon discontinued the program. Some say that what works at a firm like GE or Sun may not work at one where one family controls 40% of the votes, and where the apparent toughness may reflect badly on the Fords. Soon, Nick Scheele, chairman of Ford of Europe, was brought in to help Nasser run the firm and execute its strat¬egy.31 Nasser left the firm within a year. Some on the board may have felt that Nasser's high-performance strategy had diverted too much attention from the firm's core car business. Others probably felt that he could have handled imposing the new forced-choice appraisal system more diplomatically.
As most students know, forced distribution grading systems are more unforgiv¬ing than most other means of appraising performance. With a forced distribution system, you're either in the top 5% or 10% (and thus get that" A"), or you're not. And, if you're in the bottom 5% or 10%, you get an "F", no questions asked. Your pro¬fessor hasn't the wiggle room to give everyone As, Bs, and es. Some students have to fulfill. Given this, employers need to be doubly careful to protect their appraisal plans from managerial abuse. Office politics and managerial bias can taint ratings. To pro¬tect against bias claims, employers should therefore take several steps.32 Appoint a review committee to review any employee's low ranking. Train raters to be objective. And consider using 360-degree appraisals (or at least multiple raters) in conjunction with the forced distribution approach.
Critical Incident Method
The critical incident method entails keeping a record of uncommonly good or un-desirable examples of an employee's work-related behavior and reviewing it with the employee at predetermined times.
Employers often use the critical incident method to supplement a rating or rank¬ing method. This helps ensure that the supervisor thinks about the subordinate's appraisal all during the year, because the incidents must be accumulated; therefore, the rating does not just reflect the employee's most recent performance. Keeping a running list of critical incidents should also provide concrete examples of what specifically your subordinates can do to eliminate any performance deficiencies.
Behaviorally Anchored Rating Scales
A behaviorally anchored rating scale (BARS) is an appraisal method that combines the benefits of narrative critical incidents and quantitative ratings by anchoring a quantified scale with specific narrative examples of good and poor performance.
The Management by Objectives Method
The management by objectives (MHO) method requires the manager to set specific measurable goals with each employee and then periodically discuss the latter's progress toward these goals. The term MBO usually refers to an organization wide
goal-setting and appraisal program that consists of six steps:
Set the organization's goals. Establish an organization wide plan for next year and set goals.
Set departmental goals. Department heads and their superiors jointly set goals for their departments.
Discuss departmental goals. Department heads discuss the department's goals with all subordinates in the department and ask them to develop their own individual goals. In other words, how can each employee contribute to the department's attaining its goals?
Define expected results (set individual goals). Department heads and their subordi¬nates set short-term performance targets.
Conduct performance reviews and measure the results. Department heads compare the actual performance of each employee with expected results.
Provide feedback. Department heads hold periodic performance review meetings with subordinates to discuss and evaluate the subordinates' progress in achiev¬ing expected results.
Computerized and Web-Based Performance Appraisals
Several relatively inexpensive performance appraisal software programs are on the market.These generally enable managers to log notes on their subordinates during the year, and then to rate these subordinates on a series of computerized performance traits. The programs then generate written text to support each part of the appraisal.
For example, Employee Appraiser (developed by the Austin-Hayne Corporation, San Mateo, California) presents a menu of more than a dozen evaluation dimen¬sions, including dependability, initiative, communication, decision making, lead¬ership, judgment, and planning and productivity. Within each dimension are various performance factors, again presented in menu form. For example, under "Communication" are separate factors for writing, verbal communication, receptiv¬ity to feedback and criticism, listening skills, ability to focus on the desired results, keeping others informed, and openness.
When the user clicks on a performance factor, he or she is presented with a rela¬tively sophisticated version of a graphic rating scale. However, instead of numbers, Employee Appraiser uses behaviorally anchored examples. For example, for verbal communication there are six choices, ranging from "presents ideas clearly" to "lacks structure." After the manager picks the phrase that most accurately describes the worker, Employee Appraiser generates an appraisal with sample text.
Performance Now, from Knowledge Point of Petaluma, California, lets managers evaluate employees based on their competencies, goals, and development plans. Managers can choose from standard competencies such as "communications," or create their own. Clicking on the "rate" button in the dialog boxes then brings .up rat¬ings from 1 to 5.
PerformancePro.net from the Exxceed Company of Chicago, Illinois, is an Internet-based performance review system. It helps the manager and his or her sub¬ordinates develop performance objectives for the employee, and to conduct the annual review.
The Web site improvenow.com lets employees fill out a 60-question assessment online with or without their supervisor's approval, and then give the supervisor the team's feedback with an overall score.36
Electronic Performance Monitoring
With electronic performance monitoring (EPM), computer network technology is used to provide managers with access to their employees' computer terminals and tele¬phones, thus "allowing managers to determine at any moment throughout the day the pace at which employees are working, their degree of accuracy, log-in and log-off times, and even the amount of time spent on bathroom breaks."3? It appears that more than 10 million workers-more than 10% of the U.S. workforce-are subject to EPM.
Research studies indicate that EPM can improve productivity under certain cir-cumstances. For example, for more routine, less complex jobs, highly skilled and monitored subjects keyed in more data entries than did highly skilled unmonitored participants. However, EPM can also backfire. In this same study, low-skilled but highly monitored participants did more poorly than did low-skilled, unmonitored participants. Empirical studies also provide strong evidence linking EPM with increased stress.
THE APPRAISAL FEEDBACK INTERVIEW
An appraisal usually culminates in an appraisal interview, in which the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths. Interviews like these can be uncomfortable because few people like to receive-or give-negative feedback. Adequate preparation and effective implementation are therefore essential.
Preparing for the Appraisal Interview
Adequate preparation involves three steps. First, give the subordinate at least a week's notice to review his or her work, and to read over his or her job description, analyze problems, and compile questions and comments. Next, study his or her job description, compare the employee's performance to his or her standards, and review the files of the person's previous appraisals. Finally, choose the right place for the interview and schedule enough time for it. The interview should be done in a pri¬vate area where you won't be interrupted by phone calls or visitors. Find a mutually agreeable time for the interview and leave enough time-perhaps one-half hour for lower-level personnel such as clerical workers and maintenance staff, and an hour or so for management employees.
Conducting the Interview
There are several things to keep in mind when actually conducting appraisal inter¬views. First, the interview's main aim is to reinforce satisfactory performance or to diagnose and improve unsatisfactory performance. One way to help accomplish this is to be direct and specific. Talk in terms of objective work data, using' examples such as absences, quality records, inspection reports, and tardiness. Second, get agreement before the subordinate leaves on how things will be improved and by when. An action plan showing' steps and expected results can be useful. Related to this, there are times when an employee's performance is so poor that a for¬mal written warning is required. Such warnings should identify the standards under which the employee is judged, make it clear that the employee was aware of the standard, specify any violation of the standard, and show that the employee had an opportunity to correct his or her behavior.
The aim of the appraisal is often to get the employee to improve, and to that extent you should ensure that the process is fair. Letting the employee participate in the appraisal process by at least letting his or her opinions be heard is therefore essential. .
Supervisors may also have to deal with defensiveness. For example, when a per¬son is accused of poor performance, the first reaction is usually denial. By denying the fault, the employee avoids having to question his or her own competence. Such defensiveness is normal. It is prudent not to attack the person's defenses (for instance, by trying to "explain someone to themselves" by saying things like, "You know the real reason you're using that excuse is that you can't bear to be blamed for anything"). Another tactic is to postpone action-for instance, by giving the person a five-minute breather to cool down after being informed of unsatisfactory performance.
TOWARD MORE EFFECTIVE APPRAISALS
Few of the manager's jobs are fraught with more peril than appraising subordinates' performance. Employees in general tend to be overly optimistic about what their rat¬ings are, and also know that their raises, career progress, and peace of mind may hinge on how they are rated. This alone should make it somewhat difficult to rate performance. Even more problematic, however, are the numerous structural prob¬lems (discussed below) that can cast doubt on just how fair the process is.
Dealing with Common Appraisal Problems
Several chronic problems undermine appraisals and graphic rating scales in particu¬lar. Fortunately, as explained in this section, there are also ways to avoid or solve these problems.
Unclear Standards The unclear standards appraisal problem means that an appraisal scale is too open to interpretation. The rating scale may seem objective, but would probably result in unfair appraisals because the traits and degrees of merit are open to interpretation. For example, different supervisors would probably define "good" performance differently. The same is true of traits such as "quality of work." The best way to rectify this problem is to develop and include descriptive phrases that define each trait and degree of merit.
Halo Effect The halo effect means that the rating of a subordinate on one trait (such as "gets along with others") influences the way you rate the person on other traits (such as "quantity of work"). Thus, an unfriendly employee might be rated unsatisfactory for all traits rather than just for the trait "gets along with others." Being aware of this problem is a major step toward avoiding it.
Central Tendency The central tendency problem refers to a tendency to rate all employees about average. For example, if the rating scale ranges from 1 to 7, a super-visor may tend to avoid the highs (6 and 7) and lows (1 and 2) and rate most of his or her employees between 3 and 5. Such a restriction can distort the evaluations, mak¬ing them less useful for promotion, salary, and counseling purposes. Ranking employees instead of using a graphic rating scale can eliminate this problem because all employees must be ranked and thus can't all be rated average.
Leniency or Strictness Conversely, some supervisors tend to rate all their subor¬dinates consistently high or low, a problem referred to as the strictness/leniency problem. Again, one solution is to insist on ranking subordinates, because that forces the supervisor to distinguish between high and low performers.
The appraisal you do may, in fact, be less objective than you realize. One study focused on how personality influenced the peer evaluations students gave their peers. Raters who scored higher on "conscientiousness" tended to give their peers lower ratings; those scoring higher on "agreeableness" gave higher ratings.
Bias Bias refers to the tendency to let individual differences like age, race, and sex affect the appraisal ratings employees receive. A study illustrates how bias can influence the way one person appraises another. In this study researchers sought to determine the extent to which pregnancy is a source of bias in performance appraisals. The results suggest that pregnant women may face additional work¬place discrimination above and beyond any gender bias that may already exist against women in general. Despite having been exposed to otherwise identical behavior by the same female "employee," the student raters of this study "with a remarkably high degree of consistency" assigned lower performance ratings to preg¬nant women than to non pregnant women. Furthermore, men raters seemed more susceptible to negative influence than did women. One implication is that raters must be forewarned of such problems and trained to use objectivity in rating subor¬dinates.
Steps to take to ensure your appraisals are legally defensible include:
Develop appraisal criteria from docu¬mented job analyses. Specifically, a for¬mal job analysis should be conducted as a prerequisite for the development of valid performance appraisal criteria.
Communicate performance standards to employees in writing. .
Base appraisals on separate evaluations of each of the job's performance dimen¬sions. In particular, use of a single over¬all rating of performance or ranking of employees on a similar global standard is not acceptable to the courts.46 Such systems are often characterized as vague by the courts. Courts generally require that separate ratings along each perfor¬mance dimension be combined through some formal weighting system to yield a summary score.
Include an employee appeals process. Employees should have the opportunity to review and make comments, written or verbal, about their appraisals before they become final and should have a formal appeals process through which to appeal their ratings.
One appraiser should never have absolute authority to determine a per¬sonnel action. This is one reason why multiple-raters procedures are becoming more popular.
Document all information bearing on a 'personnel decision in writing. Three experts assert that "without exception, courts condemn informal performance evaluation practices that eschew documentation."
Train supervisors in the use of the appraisal instruments. If formal rater training is not possible, at least provide raters with written instructions for using the rating scale for evaluating personnel.
Legal Issues in Performance Appraisal
Since passage of litle VII, courts have often found that inadequate employee appraisal systems lay at the root of illegal discriminatory actions (such as failure to promote an otherwise qualified minority candidate). The courts' view is under¬standable. The performance appraisal affects raises, promotions, training opportuni¬ties, and other career-related HR actions. If the manager is inept or biased in the appraisals he or she does, how can the promotion decisions that stem from those appraisals be defended? The employer's appraisal process must therefore be legally defensible. You will find recommendations in the HR in Practice box for ensuring the legal defensibility of an employer's performance appraisal system.
PERFORMANCE AND CAREER MANAGEMENT
We may define a career as the "occupational positions a person has had over many years." Many people look back on their careers with satisfaction, knowing that what they might have achieved they did achieve, and that their career hopes were satis¬fied. Others are less fortunate and feel that, at least in their careers, their lives and their potential went unfulfilled.
Employers, of course, have a significant impact on their employees' careers, and thereby on their career satisfaction and success. Recruiting, selecting, placing, training, appraising, rewarding, promoting, and separating the employee all affect the person's career, and therefore his or her career satisfaction and success. Some firms institute rel-atively formal career management processes. We can define career management as a process for enabling the employees to better understand and develop their career skills and interests, and to use these skills and interests most effectively both within the com-pany and, if necessary, after they leave the firm. Other firms do relatively little.
Career-Oriented Appraisals
Ideally, the firm's career management processes should dovetail with its perfor¬mance management system. In particular, performance appraisals should not just focus on telling someone how he or she has done. They also provide an ideal chance for the supervisor and employee to discuss and link the employee's performance, career interests, and developmental needs into a rational career plan. Thus, the career goals the employee sets, and the training and development he or she goes on to, should reflect the career plans that evolve from the appraisal process.
As an example, we will consider J. C. Penney's management appraisal form.
It requires both a "promotability recommendation" and "projections for associate development." Before the annual appraisal, the associate and his or her manager review J. C. Penney's Management Career Grid. The grid itemizes all supervisory positions at J. C. Penney (grouped by kind of job) and includes specific job titles such as "regional catalog sales manager," "cosmetic market coordinator," "regional training coordinator," and "project manager, public affairs." The firm also provides a "work activities scan sheet." This contains thumbnail job descriptions for all the grid's jobs.
The management career grid's instructions identify typical promotional routes.
They also stipulate that, "When projecting the next assignment for a management associate, you should consider not only merchandise positions but also operations and personnel positions as well as general management positions." Promotional plans can thus cross these four groups, as well as up one or two job levels. Thus, a senior merchandising manager might aim for promotion to assistant buyer (a general management job at J. C. Penney's) or general merchandise manager. The system helps managers to think through their career plan at the firm, and hopefully nurtures their commitment to J. C. Penney's and to its goals.
Managing the Early Career Management Stages
Ideally, the employer's support of the employee's career begins well before the appraisal, and often before the person is even hired. Before hiring, realistic job previews can help prospective employees more accurately gauge whether the job is for them, and particularly whether the job's requirements fit the candidate's interests and skills. Then, the first job can be crucial for building confidence and a more realis¬tic picture of what he or she can and cannot do. Hopefully, the job and the new employee's expectation about what to expect will coincide. If not, reality shock, a phe¬nomenon that occurs when a new employee's high expectations confront the reality of an unchallenging job, may set in.
Mentoring-having a senior person assist and help guide the protege's career¬can positively affect the younger person's career, including faster promotions and salary progression, and reduced anxiety. However, mentoring relationships can also backfire. For example, personality problems or an unrealistically high sense of enti¬tlement on the part of the protege (regarding access to the mentor's time and advice) can adversely affect the mentor and protege.
Mentors don't have to be formally assigned, and there's evidence that informal mentoring may actually be superior. In one study, proteges with informal mentors reported their mentors provided more career development and support than did those with formal mentors. Employees with histories of informal mentors also earned significantly more than did those with histories of formal mentors. Employees with both formal and informal mentors received more compensation and promotions than did those without mentors, however. It would appear that, at a minimum, employees would do well to find themselves mentors.
Employers take various other steps to support their employees' career-related needs. As noted above, career-oriented appraisals can help ensure that the person's current position makes sense in terms of his or her skills, and that the person has a sensible career path. Similarly, providing periodic, planned job rotation can help the person develop a more realistic picture of what he or she is (and is not) good at, and thus the sort of future career moves that might be best. Many employers, such as Saturn Corporation, provide employees with career planning workshops. Here they use tests and similar exercises to learn more about what careers might be best for them.
Formal career development programs like these benefit the employer, too. For example, Sun Microsystems maintains a career development center staffed by seven certified counselors, for helping employees fill in the gaps in their development and to choose internal career opportunities at Sun. The firm believes its program helps explain why their average employee tenure of four years is more than twice what it is estimated to be at other Silicon Valley firms.
Managing Promotions and Transfers
Promotions (either domestically or internationally, sees the Global Issues box) are, of course, one of the more significant HR decisions to result from the performance appraisal. In developing promotion policies, employers need to address several issues.
One concerns seniority versus competence. Competence is normally the basis for promotions, although in many organizations civil service or union requirements and similar constraints still give an edge to more senior applicants.
Furthermore, if competence is to be the basis for promotion, how should we measure it? Defining past performance is usually straightforward. Managers use performance appraisals for this. However, sizing up how even a high-performing employee will do in a new; more challenging job is not so easy. Innumerable great salespeople turn out to be awful managers, for instance. As we have discussed else¬where in this book, many employers therefore choose to use formal selection devices like tests and assessment centers to supplement the performance appraisals.
With more firms downsizing and flattening their organizations, "promotions" today often mean lateral moves or transfers. In such situations, the promotional aspect is not so much a higher-level job or more pay, but the opportunity to assume new, same-level responsibilities (such as a salesperson moving into HR) or increased, enriched decision-making responsibilities within the same job.
A transfer is a move from one job to another, usually with no change in salary or grade. Employees may seek transfers not just for advancement, but for non-career reasons, such as better hours, location of work, and so on. One familiar question is whether transferring employees from locale to locale upsets the employee's family life. Studies suggest that "mobile" families are no less satisfied with their family lives than "stable" ones. However, approximately 50% of top managers are reluctant to relocate.
Women and men face different challenges as they advance through their careers.
Women report greater barriers (such as being excluded from informal networks) than do men, and report greater difficulty getting developmental assignments and geographic mobility opportunities. Men are more likely to get developmental oppor¬tunities. Women historically had to be more proactive to get such assignments. Because developmental experiences like these are so important, "organizations that are interested in helping female managers advance should focus on breaking down the barriers that interfere with women's access to development experiences.
Retirement
For many employees, years of appraisals and career development may end with retirement. About 30% of the employers in one survey said they therefore offered for¬mal preretirement counseling aimed at easing the passage of their employees into retirement. Among employers that did not have preretirement education programs, 64% believed that such programs were needed, and most of these said their firms had plans to develop them within two or three years. The most common preretire¬ment practices were:
Explanation of Social Security benefits (reported by 97% of those with
Pre-retirement education programs) Leisure-time counseling (86%)
Financial and investment counseling (84%) Health counseling (82%)
Psychological counseling (35%)
Counseling for second careers outside the company (31%) Counseling for second careers inside the company (4%)
Many employees today are choosing not to fully retire, or, if they do retire, to take a full- or part-time position with the same or another company. This trend reflects two things: (1) Increased life expectancies, and the fact that retirees today often have many useful years ahead of them, and (2) the catastrophic effects that the stock market bust of the early 2000s had on many pension funds.
In any event, more firms are granting part-time employment to employees as an alternative to outright retirement. Several surveys of blue- and white-collar employ¬ees showed that about half of all employees over age 55 would like to continue work¬ing part time after they retire.
Technology and Career Planning
Software programs are available for improving the employer's career planning process. For example, workforce vision from Criterion, Inc., in Irving, Texas, helps the company analyze an employee's training needs. Clicking on the employee's name launches his or her work history, competencies, career path, and other information. For each competency (such as leadership and customer focus), it shows a "gap analysis" graphically on a bar chart, to highlight the person's strengths and weak¬nesses. The supervisor and employee can then organize developmental activities around the person's needs.
Many people use the Web to help analyze and advance their careers. Well-known Web-based career assessment tools include www.self-directed-search.com; www.review.com/birkman; www.keirsey.com; and www.careerdiscovery.com. Some firms have created their own internal career development Web sites. For exam¬ple, Unisys's Web-based career center helps its employees identify their strengths and improve their career understanding and progress.
Self Assessment Questions
1. Discuss the objectives of performance appraisal.
2. Describe the methods used in performance appraisal.
3. What is the purpose and significance of performance review?
4. Highlight the significance of performance counseling in developing employees.
5. Employee Relations
5.1. Introduction
This unit basically deals with employee relations in the company/organization with special reference to union management relations, employee grievances, health and safety measures, welfare and employee participations, collective bargaining.
5.2. Objective:
To understand the employee’s relationship with that of the organizations management, what the organization has for the employee through safety measures, etc.
Union Management Relations:
A trade union is a formal association of workers, acting collectively, who seek to protect and promote their mutual interests through collective action.
The main objective of any trade union is to protect and promote the interests of its members.
Unions perform certain social, political and fraternal functions as well.
Political interference, outside leaders, multiple unions, union rivalry, weak financial condition, uneven growth, and low membership are some of the important problems of Indian trade unions.
Of late, unions have been pushed to the wall due to growing competition, need to cut costs an restructure operations, apathy on the part of workers, lack of support from the government an various sections of society, failure in many cases, absence of strong leadership etc.
In order to strengthen the trade union movement in the country, there is an urgent need to improve trade unions' finances, to develop leaders internally, to recognize a bargaining agent on the basis of strong membership figures, to promote 'one union industry' principle etc.
Employee Grievance:
Every employee has certain expectations which he thinks must be fulfilled by the organization working for. When the organization fails to do this, he develops a feeling of discontent or dissatisfaction. When an employee feels that something is unfair in the organization, he is said to have a grief. According to Jucius, a grievance is "any discontent or dissatisfaction, whether expressed or not, whether valid or not, arising out of anything connected with the company which an employee thinks, believe even feels to be unfair, unjust or inequitable.
A grievance refers to any form of discontent or dissatisfaction with any aspect of organization.
The dissatisfaction must arise out of employment and not due to personal or family problems.
The discontent can arise out of real or imaginary reasons. When the employee feels that injustice has been done to him, he has a grievance. The reasons for such a feeling may be valid or legitimate or irrational, justifiable or ridiculous.
The discontent may be voiced or unvoiced. But it must find expression in some form. Ho discontent per se is not a grievance. Initially, the employee may complain orally or in writing is not looked into promptly; the employee feels a sense of lack of justice. Now the discontent and takes the shape of a grievance.
Broadly speaking, thus, a grievance is traceable to perceived non-fulfillment of one's exp from the organization.
Forms of Grievances
A grievance may take anyone of the following forms: (a) factual, (b) imaginary, (c) disguised.2
Factual: A factual grievance arises when legitimate needs of employees remain un fulfill wage hike has been agreed but not implemented citing various reasons.
Imaginary: When an employee's dissatisfaction is not because of any valid reason but be a wrong perception, wrong attitude or wrong information he has. Such a situation may c imaginary grievance. Though management is not at fault in such instances, still it has to clear the 'fog' immediately.
Disguised: An employee may have dissatisfaction for reasons that are unknown to himself she is under pressure from family, friends, relatives, neighbours; he/she may reach the work with a heavy heart. If a new recruit gets a new table and almirah, this may become an eyesore other employees who have not been treated likewise previously.
Need for a Grievance Procedure
Thus, grievances affect not only the employees and managers but also the organisation as a whole. In view of these adverse effects, the management has to identify and redress the grievances in a prompt manner. If the individual grievances are left ignored and unattended, there is a danger that these grievances ay result in collective disputes. They affect the employee morale adversely. Hence, it is essential to have roper grievance handling procedure for the smooth functioning of the organisation.
Advantages of having a Grievance Handling Procedure
The following are some of the distinct advantages of having a grievances handling procedure:
The management can know the employees' feelings and opinions about the company's policies and practices. It can feel the 'pulse' of the employees.
With the existence of a grievance handling procedure, the employee gets a chance to ventilate his feelings. He can let off steam through an official channel. Certain problems of workers cannot be solved by first line supervisors, for these supervisors lack the expertise that the top management has, by virtue of their professional knowledge and experience.
It keeps a check on the supervisor's attitude and behaviour towards their subordinates compelled to listen to subordinates patiently and sympathetically.
The morale of the employees will be high with the existence of proper grievance handling procedure. Employees can get their grievances redressed in a just manner.
The Discovery of Grievances
Grievances can be uncovered in a number of ways. Gossip and grapevine offer vital clues about employee grievances. Gripe boxes, open door policies periodic interviews, exit surveys could also be undertaken to uncover the mystery surrounding grievances. These methods are discussed below:
Observation: A manager/supervisor can usually track the behaviours of people working him. If a particular employee is not getting along with people, spoiling materials due to carelessness or recklessness, showing indifference to commands, reporting late for work or is remaining absent the signals are fairly obvious. Since the supervisor is close to the scene of action, he can always out such unusual behaviours and report promptly.
Grievance procedure: A systematic grievance procedure is the best means to highlight empl dissatisfaction at various levels. Management, to this end, must encourage employees to whenever they have anything to say. In the absence of such a procedure, grievances pile up explode in violent forms at a future date. By that time things might have taken an ugly s altogether, impairing cordial relations between labour and management. If management fails induce employees to express their grievances, unions will take over and emerge as powe bargaining representatives.
Gripe boxes: Gripe boxes may be kept at prominent locations in the factory for lodging anonym complaints pertaining to any aspect relating to work. Since the complainant need not reveal identity, he can express his feelings of injustice or discontent frankly and without any fear victimization.
Open door policy: This is a kind of walk-in-meeting with the manager when the employee express his feelings openly about any work-related grievance. The manager can cross-check the details of the complaint through various means at his disposal.
Exit interview: Employees usually leave their current jobs due to dissatisfaction or better prospects outside. If the manager tries sincerely through an exit interview, he might be able to find out t real reasons why 'X' is leaving the organisation. To elicit valuable information, the manager m encourages the employee to give a correct picture so as to rectify the mistakes promptly. If the employ is not providing fearless answers, he may be given a questionnaire to fill up and post the same after getting all his dues cleared from the organisation where he is currently employed.
Opinion surveys: Surveys may be conducted periodically to elicit the opinions of employees about the organisation and its policies. It is better to use as many channels as possible, if the intention is to uncover the truth behind the curtain
Essential Pre-requisites of a Grievance Procedure
Every organisation should have a systematic grievance procedure in order to redress the grievance effectively. As explained above, unattended grievances may culminate in the form of violent conflict later on. The grievance procedure, to be sound and effective should possess certain pre-requisites:
Conformity with statutory provisions: Due consideration must be given to the prevailing legislation while designing the grievance handling procedure.
Unambiguity: Every aspect of the grievance handling procedure should be clear and unambiguous. All employees should know whom to approach first when they have a grievance, whether the complaint should be written or oral, the maximum time in which the redressal is assured, etc. The redressing official should also know the limits within which he can take the required action.
Simplicity: The grievance handling procedure should be simple and short. If the procedure is complicated it may discourage employees and they may fail to make use of it in a proper manner.
Promptness: The grievance of the employee should be promptly handled and necessary action must be taken immediately. This is good for both the employee and management, because if the wrong doer is punished late, it may affect the morale of other employees as well.
Training: The supervisors and the union representatives should be properly trained in all aspects of grievance handling beforehand or else it will complicate the problem.
Follow up: The Personnel Department should keep track of the effectiveness and the functioning of grievance handling procedure and make necessary changes to improve it from time to time.
Steps in the Grievance Procedure
Identify grievances: Employee dissatisfaction or grievance should be identified by the management if they are not expressed. If they are ventilated, management has to promptly acknowledge them.
Define correctly: The management has to define the problem properly and accurately after it is identified/acknowledged.
Collect data: Complete information should be collected from all the parties relating to the grievance. Information should be classified as facts, data, opinions, etc.
Analyse and solve: The information should be analysed, alternative solutions to the problem should be developed and the best solution should be selected.
Prompt redressal: The grievance should be redressed by implementing the solution.
Implement and follow up: Implementation of the solution must be followed up at every stage in order to ensure effective and speedy implementation.
Health and Safety
Health is a general state of physical mental and emotional well-being. Safety involves protecting the physical well being of people.
The legal provisions governing health cover areas such as cleanliness, waste disposal, proper ventilation and temperature control, preventing accumulation of dust, avoiding overcrowding, providing wholesome drinking water, proper lighting, having a requisite number of latrines and urinals etc.
Health promotion covers areas such as healthy living, physical fitness, smoking cessation, stress management etc.
Employee assistance programmes offer counseling, medical help and rehabilitation opportunities to all troubled employees.
The main purpose of effective safety programmes in an organization is to prevent work-related injuries and accidents.
Safety members in factories cover slipping and falling hazards, collision and obstruction hazards, equipments hazards, fire hazards, hazards from falling objects etc.
Supervisor’s play a great role in reducing unsafe conditions and unsafe acts. Effective safety management includes establishing a safety policy, ensuring top management support, creating safety committees, promoting safety discipline, and instituting safety engineering procedures, offering safety training, investigating reasons for accidents thoroughly, and evaluating safety efforts from time to time.
The legal provisions regarding safety cover areas such as fencing of machinery, not employing young person’s near dangerous machines, using safe devices to cut off power, using good hoists and lifts, giving enough room for workers to move around safely, quality flooring, providing ventilators for pumping out fumes, gases; and precautions to be taken to prevent fire accidents, etc.
Employee Participation and Empowerment:
Participation is a way of sharing the decision making power with the lower ranks of the organisation in an appropriate manner.
Workers' participation in management (WPM) aims at improving the quality of working life and thereby secure cooperation and commitment from workers.
WPM is not something that is imported from outside. It has native flavour and has been accepted by corporate houses in India even before Independence.
Mill Committees were created to take care of workers' grievances. The Royal Commission on Labour recommended the establishment of a joint consultative machinery for settling disputes between labour and management. The Industrial Disputes Act 1947 created a formal mechanism through the Works Committees to resolve differences between labour and management over matters relating to conditions of work. The Second Five Year Plan advocated the setting up of joint management councils; the idea of workers assuming the role of board member came into being in 1970; shop and joint councils have gained increasing acceptance afterwards
.
The various schemes of participation have failed to deliver satisfactory results due to reasons such as employers' reluctance; workers' apathy; illiteracy, lack of knowledge; inter-union and intra-union rivalry; lack of support from the government etc. The experiment, however, did prove to be a hit with some well known public sector and private sector units.
Empowerment implies granting employees power to initiate change, thereby encouraging them to take charge of what they do.
Empowerment allows employees to take the initiative, try out new ideas, use resources freely, and work toward predetermined goals independently.
'Quality circles' is a small group of employees who monitor productivity and quality and suggest solutions to problems.
QWL efforts are systematic attempts by organisations to give employees a greater opportunity to affect the way they do their jobs and the contributions they make to the organisation's overall effectiveness.
Collective Bargaining
Collective bargaining is the process by which representatives of management and workers negotiate over wages, hours and other terms and conditions of employment.
The objective of collective barganing is to agree upon an acceptable contract, voluntary through negotiations. Traditionally, collective bargaining between labour and management has been adversarial. Presently, negotiations are carried out in non-adversarial way, in an atmosphere of mutual trust and faith.
Traditionally wages and working conditions have been the primary focus areas of collective bargaining.
Over the years, four distinctive types of bargaining have evolved namely conjunctive bargaining, cooperative bargaining, productivity bargaining, and composite bargaining.
The collective bargaining process comprises the following steps: identification of the problem, collection of data, selection of negotiators, climate of negotiations, bargaining tactics, formalising and enforcing the agreement.
In recent times, the bargaining scenario between labour and management in India has changed quite dramatically. Unions have become somewhat flexible in negotiating the terms with management. Productivity bargaining has gained ground; militant postures more or less, seem to have been a thing of the past; political and ideological pressures have also taken the back seat and both parties seem to have realised the importance of resolving knotty issues to mutual satisfaction.
Collective bargaining could not make much headway in India due to a) Employer's reluctance, b) The presence of weak unions and, c) Inadequate, legal support and interventions.
To strengthen collective bargaining both parties must carry out negotiations in an atmosphere of mutual trust and faith. All controversial issues must be put to an open debate, encouraging active participation and suggestions from workers. Agreements, once finalised, must be adhered to and implemented sincerely.
Self Assessment Questions:
1. What is collective bargaining?
2. What is the process used in collective bargaining?
3. Why collective bargaining could not make much headway in India?
4. What is participation?
5. Explain health and safety.
6. What is Employee Grievance? What are the steps in Grievance Procedure?
6. Current Trends, Issues and evaluation of HRM
6.1. Introduction
This unit deals with the current trends in HRM, its issues and evaluation to the current scenario.
6.2. Objective
To understand the HR Audit process, Six Sigma, HR Outsourcing and the evaluation of HRM as a whole.
NATURE OF HUMAN RESOURCE AUDIT
An HR audit is a tool for evaluating the personnel activities of an organization. The audit may include one division or an entire company. It gives feedback about the HR functions to operating managers and HR specialists. It also provides feedback about how well managers are meeting their HR duties. In short, the audit is an overall quality control check on HR activities in a division or company and an evaluation of how these activities support the organization’s strategy
BENEFITS OF HUMAN RESOURCE MANAGEMENT AUDIT
Several benefits that result from an HR audit are:
• Identification of the contributions of the HR department to the organization,
• Improvement of the professional image of the HR department,
• Encouragement of greater responsibility and professionalism among members of
• department,
• Clarification of the HR department's duties and responsibilities,
• Stimulation of uniformity of HR policies and practices,
• Finding critical personnel problems,
• Ensuring timely compliance with legal requirements,
• Reduction of HR costs through more effective personnel procedures,
• Creation of increased acceptance of the necessary changes in the HR department, and
• A thorough review of the department's information system.
The HR manager himself or herself is interested in knowing his or her department's effectiveness. It is not that the department is infallible. Errors do happen. Policies and practices become outdated. By auditing itself, the department finds problems before they become serious. Done correctly, evaluation process can build a strong rapport between the department and operating managers, can reveal outdated assumptions that can be changed to meet the department's objectives and challenges. Systematic assessment instills discipline in the personnel staff and encourages move away from intuitive techniques to more rigorous assessment of the likely benefits to be ac Further, a personnel function must establish credibility with the management by justify' programmes and clearly demonstrating how it contributed to the attainment of organizational goals.
SCOPE OF AUDIT
An HR audit must cover the activities of the department and extend beyond, because the people's problems are not confined to the HR department alone. Thus, the audit should be broad in its scope. It must evaluate the personnel function, the use of its procedures by the managers and the impact of these activities on the employees.
Specifically, an HR audit covers the following areas:
Audit of human resource function,
Audit of managerial compliance,
Audit of the human resource climate, and
Audit of corporate strategy.
Audit of Human Resource Function
This involves audit of all HR activities discussed till now in this book. For each activity, the auditors must (i) determine the objective of each activity, (ii) identify who is responsible for its performance, (iii) review the performance, (iv) develop an action plan to correct deviations, if any, between results and goals, and (v) follow up the action plan.
The following 20 criteria would help measure effectiveness of the HR function of an organisation. Each statement has a four-point rating scale varying from 'very true' to 'not true'.
1. In your company, all issues are closely linked to every other business process.
2. The HR department is represented in strategy-building sessions of the top management.
3. HR issues are discussed explicitly when strategic plans are formulated.
4. The performance of the HR department and of the organisation are linked.
5. The HR function is given as much, or more significance, as other functions.
6. HR managers have sufficient power to suggest strategic initiative to the top management.
7. The HR department can easily compete for funds and management involvement.
8. The structure of the HR department is effective in delivering competent services.
9. Line managers are recruited along with trained specialists in the HR department.
10. The services of the HR department are equally available to everyone.
11. The head of the HR department is always accessible to all employees.
12. The HR department plans the company's manpower needs proactively.
13. The HR department conveys organisational goal to everyone.
14. The HR department links appraisal and compensation to corporate objectives.
15. The HR department meets the company's and individual's training needs.
16. The HR department disseminates information down the ranks.
17. The HR department does not handle staff-welfare, canteens, or payrolls management.
18. The HR department has knowledge of behavioural sciences and industrial psychology.
19. The HR department gets feedback on its performance from other employees.
20. HR practices are audited, their costs computed, and then effectiveness evaluated.
Evaluation of an HR function is useful to justify the existence of the department and the expenses incurred on it. If the department fails to contribute to the company's bottom line, it has no reason to function. Similarly, if the expenses incurred on the HR department far exceed its benefits to the organisation, they must be pruned drastically to make the department economically viable.
Audit of Corporate Strategy
Besides functions, compliance and satisfaction, audit may extend to corporate strategy also. HR professionals do not set corporate strategy, but they strongly determine its success. Corporate strategy helps the organisation gain competitive advantage. By assessing the company's internal strengths and weaknesses and its external threats and opportunities, the senior management devises ways of gaining an advantage. Whether the company stresses superior marketing channels, service, innovation, lowcost production, or some other approach, HRM is affected. Understanding the strategy has strong implications for HR planning, staffing, remuneration, industrial relations, and other HR activities.
AUDIT AND PERSONNEL RESEARCH
HR auditors depend on personnel or HR research for data. Research is understood as the systematic and goal-oriented investigation of the facts to establish a relationship between two or more phenomena. Specifically, research can lead to an increased understanding of and improvement in HR practices. The major topics covered in HR research are:
1. Wage surveys,
2. Effectiveness of various recruitment sources,
3. Effectiveness of training efforts, .
4. Survey of supervisor's effectiveness,
5. Recent industrial settlements,
6. Job analysis,
7. Job satisfaction survey,
8. Survey of employee needs,
9. Attitude survey towards reward system, and
10. Areas of high accident frequency.
Findings on the topics listed above and other related areas constitute the basis for HR audit.
APPROACHES TO HUMAN RESOURCE AUDIT
Auditors may adopt any of the five approaches for the purpose of evaluation:6 (i) comparative approach, (ii) outside authority approach, (ill) statistical approach, (iv) compliance approach, and (v) Management By Objectives (MBO) approach. It may be stated that irrespective of the approach, the data for assessment are provided by HR research.
In the comparative approach the auditors identify another company as the model. The results of their organisation are compared with those of the model company. Often, the auditors use standards set by an outside consultant as benchmark for comparison of own results. This approach is called the outside authority approach. The third approach is the statistical approach. Here, statistical measures of performance are developed based on the company's existing information. Examples of such measures are absenteeism and turnover rates. These data help auditors assess the performance. In the compliance approach, auditors review past actions to determine if those activities comply with legal requirements and company policies and procedures. A final approach is for specialists and operating managers to set objectives in their areas of responsibility. The MBO approach creates specific goals against which performance can be measured. Then the audit team researches actual performance and compares it with the objectives.?
Introduction
Human resources, along with financial and material resources, contribute to the production of goods and services in an organisation. Physical and monetary resources by themselves cannot improve efficiency or contribute to an increased rate of return on investment. It is through the combined and concerted efforts of people that monetary and material resources are harnessed to achieve organisational goals. Human resources, therefore, are the most important assets of an organisation. Unlike physical assets, human resources do not depreciate over a period of time. In fact, with additional training and experience gained over a period of time, they tend to do well on the job. This fact, however, is ignored when a firm's balance sheet is prepared. All expenses relating to recruitment, training and development of employees are charged against the revenues of a particular accounting period. In fact, as pointed out by Rensis Likert, the expenses on human resources are fixed in nature and do not offer any immediate return.!
The Costs of Human Resources
Recruitment costs: Include advertising, travel expenses, consultant's fee, incidental expenses.
Selection costs: Include costs of application forms, testing and interview expenses and other administrative costs.
Orientation costs: Costs incurred in offering orientation courses to new employees (about company policies, procedures, programmes, rules, regulations, etc.).
Training costs: Trainers' salary, facilities cost, trainees' time spent in the programme measured financially, low productivity during training.
Development costs: Costs incurred in enhancing employee skills and expertise.
The returns accrue to the firm over a long period, i.e., as long as the employee remains with the firm. Hence such costs should be capitalised and amortised over the entire period so that the balance sheet gives a 'true and fair' view of the state of affairs of a business. Since human resources are capable of enlargement over a period of time, there should be innovative ways of showing how the organisation makes investment in its people and how the value of people changes over a period of time. Human Resource Accounting is one such method which endeavours to measure both the cost and the value of people to an organisation. In India, several companies in the 1970s began to show the value of their human resources in their annual reports - such as BHEL, Engineers India, Associated Cement Corporation of India, ONGC, etc.
The Concept
Human Resource Accounting (HRA) is similar in principle to the preparation of an accounting statement. Just as financial accounting reflects the cost of assets such as buildings, land, machinE;lry, HRA tries to place a value on organisational human resources by formulating a human resource balance sheet. Here human resources are presented as assets, not as expenses. HRA, thus, shows the investment the organisation makes in its people and how the value of these people changes over time. According to the American Association of Accountants (AAA), HRA is "a process of identifying and measuring data about human resources and communicating this information to interested parties". Flamhoitz defined HRA as "accounting for people as an organisational resource. It involves measuring the costs incurred by organisations to recruit, select, hire, train and develop human assets. It also involves measuring the economic value of people to the organisation".
Objectives
According to Likert, the objectives of HRA are:
Provide cost value information about acquiring, developing, allocating and maintaining human resources so as to meet organisational goals.
Enable management to effectively monitor the use of human resources.
Find whether human assets are appreciating or depreciating over a period of time.
Assist in the development of effective management practices by classifying the financial consequences of various practices.
Advantages
HRA offers the following advantages:
It throws light on the strengths and weaknesses of the existing workforce in an organisation. This, in turn, helps management in recruitment planning, whether to hire people or not.
It provides valuable feedback to mangers regarding the effectiveness of HR policies and practices.
For example, high training costs may warrant a change in policy, additional recruitment expenses in respect of a particular category of employees may indicate the need for a better compensation package, high training costs may compel managers to look at the returns over a period of time, etc.
It helps potential investors judge a company better on the strength of the human assets utilised therein. If two companies offer the same rate of return on capital employed, information on human resources can help investors decide which company to be picked up as an investment.
It helps management in taking appropriate decisions regarding the use of human assets in an organisation, i.e., whether to hire new recruits or promote people internally, transfer people to new locations or hire people locally, incur additional training costs or hire consultants keeping the im pact on the long-run profitability in mind.
Limitations
HRA suffers from the following limitations:
1. It is not easy to value the human assets in an organisation: There are no guidelines differentiating the' cost' and 'value' of human resources. After valuing human resources in a specific way, many of them may leave the organisation. Human life itself is uncertain and hence valuing the asset under such 'foggy' conditions is not proper. Like physical assets, human assets cannot be owned, retained and utilised at the sweet will and pleasure of an organisation. The 1:50 called 'asset' after getting itself enriched within a company - may simply disappear, causing irreparable loss to the company.
2. BRA is full of measurement problems: There is no agreement among the accountants and finance professionals regarding the measurement process. In what form and manner are the human assets to be included in the financial statements? To compound the problems further, there is the question of deciding the recovery rates. How should the HR costs be amortised? Should it be increasing, constant or decreasing? Should it remain the same or different for different classes of employees?
3. Employees and unions may not like the idea, because HRA may lead to division among the ranks of employees. A group of employees may be valued lower than their real worth owing to reasons beyond the control of management. The employees may resist the idea of being treated like second-class citizens, despite their useful contribution over a period of time. Unions may fight such manipulative practices on the part of management. They may even demand higher compensation and better rewards when things turn rosy and employees are valued at a 'premium'.
4. There is no empirical evidence to support the idea that HRA is an effective tool to measure the economic value of people to the organisation. There is very little data to support the contention that it facilitates better and effective management of human resources.
Six Sigma:
Six Sigma is a business management strategy originally developed by Motorola, USA in 1981. As of 2009, it enjoys widespread application in many sectors of industry, although its application is not without controversy.
Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization ("Black Belts", "Green Belts", etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified targets. These targets can be financial (cost reduction or profit increase) or whatever is critical to the customer of that process (cycle time, safety, delivery, etc.)
HR outsourcing is a process in which a company uses the services of a third party to take care of its HR functions. A company may outsource a few or all of its HR related activities to a single or combination of service provides located in offshore destinations like India, China, Philippines, etc.
In this sense the HR outsourcing service providing firms or hr outsourcing company can be divided into four categories depending on the services they offer as, PEOs (professional employer organization), BPOs (business process organization), ASPs (application service providers), or e-services. In these categories the PEOs are the ones that assume full responsibility of a company's hr functions where as others such a BPOs, ASPs and e services provide web based hr solutions like database maintenance, HR data warehousing, maintaining records, developing and maintaining hr software's etc.
Advantages of HR Outsourcing
HR outsourcing including personal outsourcing case studies have indicated that managing human resources involves specialized activities such as training, payroll administration, employee database management, employee retention, employee benefits and a lot more that many companies either don't have the proper resources or time to manage on their own. By outsourcing their HR functions companies can save huge amounts of money and be free of complications that are otherwise involved in maintaining an internal HR department. By doing so, companies can concentrate on their core competencies saving their valuable time and resources.
To sum it up, human resources outsourcing that includes hr recruiting outsourcing helps cut costs, helps concentrate on core business and most importantly helps in ensuring employee satisfaction.
Global Outsourcing - Benefits and Losses
Global outsourcing in recent times has come into negative scrutiny by workers of the developed countries for all the wrong reasons. People in the developed countries tend to blame outsourcing for their job losses, low paying jobs and a lot more. But little do they realize that offshore outsourcing is an inevitable phenomenon that has many viable benefits to the world economy as a whole.
Outsourcing Helps
Global outsourcing helps in creating newer international markets, promotes global citizenship, helps recognize global talent and in a larger sense helps in the development of economics of all the countries taking part in it. Evolution in world economies is bound to happen and outsourcing as a phenomenon is not new but has been going on since ages. The only difference can be seen in the pace and in the type of services being outsourced.
The cynical views of people on outsourcing that makes them see it as an enemy of their economy is mostly a very temporary view that is bound to change in the future as newer and better jobs are created.
Job losses due to Outsourcing
Job outsourcing overseas has come into much scrutiny in the recent times particularly among the US and UK technical workers. Total it outsourcing and along with that the white collar jobs has lead to large scale backlash.
But is it really justifiable to blame job losses merely on outsourcing? Before jumping to conclusions, one has to bear in mind that it's not outsourcing but the evolution in technology that has given rise to a situation when companies can actually think of shifting white collar jobs offshore. But it won't be practical to blame technology for job losses which is why outsourcing in itself that is the resulting implication of technology cannot be blamed.
People as of now are more worried looking at jobs getting lost rather than realizing that new jobs are getting created. According to Robert B Reich, former Labour Secretary, newer and better jobs will take the place of routine jobs as the US economy flourishes.
So ultimately it all comes down to the fact that outsourcing as a phenomena is to be seen as nothing but an evolution that is revolutionizing our societies and laying the foundation for a better world economy.
Many experts are of the opinion that software development outsourcing and other ITES outsourcing will only help improve the US and UK economies. Many IT outsourcing articles and whitepapers have been written to clearly demonstrate this. Most of these papers discuss the various issues and examples of IT outsourcing in the most comprehensive manner. The offshore business process outsourcing backlash on communities thus will only be a temporary one.
India Offshore Outsourcing
The Indian outsourcing market has seen a huge leap in the recent years with more and more companies making India their offshore outsourcing destination. The competition for a share in the offshore outsourcing market is heating up with most nations stepping up efforts to attract companies; but in the midst of all this India still seems to maintain its unique lure.
India Offshore Outsourcing Advantage
India offshore outsourcing has the advantage of cheap, computer literate, English speaking manpower in more than enough numbers in comparison to other nations. Indian outsourcing destinations like Bangalore, Chennai, Pune, Mumbai, Delhi and Kolkota are developing with lots of money being invested in revamping the infrastructure in terms of power, road and communications. India also has the expertise of quality certified software firms and outsourcing suppliers that not many countries can boast of. So as of now, India seems to hold its position as the leader in outsourcing service market.
Chennai Outsourcing effect
Chennai as the most popular outsourcing destination only next to Bangalore is starting to attract more top notch companies than it ever had. Big multinational like IBM, Dell, Bank Of America and the like have started setting-up/expanding their operations here with the advantage going to the Chennai real estate industry. The real estate industry has turned into a major money making market with top notch multinationals deciding to expand their current operations here with most of them looking for huge facilities that run into a few lakh square fts.
The major reason for this demand hike in Chennai is attributed to the successful operations of these companies in Chennai and the city's booming infrastructure. The city has stepped up its efforts to attract more business through carrying out ad campaigning in international media, road shows and involvement in international exhibitions and fairs.
Self Assessment Questions:
1. What is HR Audit and how is useful for an organization.
2. What the benefits and limitations of HRA?
3. What is Six Sigma? List its features.
4. What is outsourcing?
5. What is the effect of Global and Indian Outsourcing?
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