Menu

HUMAN RESOURCE MANAGEMENT

Employee Remuneration: Wage vs. Salary & Compensation Strategies

, , , , , , , , 0

Employee Remuneration: Meaning, Components & Strategy

Employee Remuneration refers to the total compensation provided to employees in exchange for their services or labor. It is one of the most critical functions of Human Resource Management because it directly impacts employee motivation, satisfaction, and productivity.

Remuneration is not just “cash.” It encompasses all forms of financial and non-financial rewards.

Wage vs. Salary: What is the Difference?

While often used interchangeably, there is a distinct difference between wages and salaries in business contexts:

BasisWageSalary
DefinitionPayment made to workers usually on an hourly, daily, or piece-rate basis.A fixed regular payment made to employees, usually monthly or annually.
Target GroupUsually associated with Blue-collar workers (labourers, factory workers).Usually associated with White-collar employees (managers, admin staff).
StabilityVariable (depends on hours worked or output produced).Fixed (does not fluctuate based on hours worked in the short term).
Payment CycleDaily or Weekly.Monthly.
Extra PayEligible for overtime pay if they work extra hours.Usually not eligible for overtime (expected to complete tasks regardless of time).

Components of Remuneration

A well-structured remuneration system consists of two main parts:

1. Financial Compensation (Monetary)

  • Base Pay: The basic wage or salary.

  • Incentives: Performance-based rewards (e.g., sales commissions, production bonuses).

  • Allowances: Payments for specific needs (e.g., House Rent Allowance, Travel Allowance).

  • Benefits: Insurance, retirement plans (PF/Gratuity), and paid time off.

2. Non-Financial Compensation

  • Recognition: Praise, awards, and job titles.

  • Work Environment: Flexible schedules, remote work options, and supportive leadership.

  • Growth: Opportunities for training, upskilling, and career advancement.

Factors Influencing Employee Remuneration

When a company decides how much to pay, they consider several factors:

  1. Nature of the Job: The complexity, risk, and responsibilities involved.

  2. Industry Standards: What are competitors paying? (Benchmark rates).

  3. Employee Profile: Qualifications, experience, and skill set.

  4. Company’s Financial Health: The organization’s ability to pay.

  5. Performance: Individual productivity and contribution to goals.

Case Study Analysis: T.R. Venkatachalam Chetty Cashews

To understand remuneration in the real world, let’s look at a study conducted at T.R. Venkatachalam Chetty (TRV) Cashews, a leading manufacturer and exporter.

Objective of the Study:

To analyze if employees are satisfied with their wages, benefits, and incentives, and how this affects their motivation.

Key Findings:

  • Satisfaction Levels: About 52% of employees expressed high overall satisfaction. Leadership was viewed positively.

  • Incentives: While 80% of employees receive performance-based incentives, many felt the process lacked transparency and fairness.

  • Disparities: Significant compensation gaps were found across different departments.

  • Non-Monetary Benefits: Employees valued paid time off but felt other benefits (like flexible hours) were inconsistent.

Suggestions for Improvement (Managerial Takeaways):

  1. Standardize Pay: Align salaries with current industry benchmarks to remain competitive.

  2. Skill-Based Pay: Introduce incentives for employees who learn new skills or get certified.

  3. Transparency: Be clear about how bonuses are calculated so employees trust the system.

  4. Expand Perks: Offer non-monetary benefits like childcare support and educational opportunities.

Importance of a Good Remuneration System

Why should a company care about paying well?

  1. Attracts Talent: Competitive pay brings in the best candidates.

  2. Retains Employees: Reduces labor turnover (people leaving for better pay).

  3. Boosts Morale: Fair pay makes employees feel valued and respected.

  4. Increases Productivity: Financial incentives motivate employees to work harder.

  5. Ensures Compliance: Adhering to minimum wage laws avoids legal trouble.

Conclusion:

An effective remuneration system is a balance. It must be fair (internal equity), competitive (external equity), and transparent. As seen in the TRV Cashews case, even if employees are generally satisfied, issues like transparency and fairness in incentives must be addressed to maintain a highly motivated workforce.

For additional financial and non-financial rewards, please study Reward Management & Fringe Benefits. Click here to read the full article.

Get Notified When New Notes Are Uploaded.

Reward Management in HRM: Strategy, Total Reward & Systems

, , , , , , , , , , , 0

What is Reward Management? (Concept & Definition)

Reward Management is the process of formulating and implementing strategies and policies to reward employees fairly, equitably, and consistently in accordance with their value to the organization.

It is much more than just “payroll.” It is a strategic approach to managing people. It deals with the design, implementation, and maintenance of reward systems (pay, benefits, and non-financial rewards) that meet the needs of both the organization and its employees.

In simple terms: It is about deciding how much to pay, why to pay it, and what else to offer besides money to keep employees happy and productive.

The Aims & Philosophy of Reward Management

Why do companies have a reward system? It’s not just because they have to. A good system achieves specific goals:

  1. Reward Value: To pay people according to the value they create. If an employee brings in high revenue, they should be rewarded accordingly.

  2. Motivation & Commitment: To encourage employees to work harder (engagement) and stay loyal to the company (commitment).

  3. Attraction & Retention: To offer a package good enough to hire the best talent and stop them from leaving for a competitor.

  4. Alignment: To ensure that what the company pays for (e.g., sales targets) aligns with the company’s business goals.

  5. Performance Culture: To create an environment where high performance is recognized and celebrated.

The Philosophy (Guiding Principles): A reward system is built on certain beliefs:

  • Fairness (The “Felt-Fair” Principle): Employees must feel that they are treated justly.

  • Equity:

    • Internal Equity: Is my pay fair compared to my colleague’s?

    • External Equity: Is my pay fair compared to the market rate?

  • Transparency: Employees should understand how their pay is calculated. Nothing should be hidden.

  • Consistency: Decisions on pay shouldn’t vary arbitrarily between different managers.

Economic Theories: How are Pay Levels Determined?

Have you ever wondered why a software engineer earns more than a clerk? Or why salaries go up in some years and down in others? Economists have different theories to explain this.

TheoryExplanationReal-World Example
1. Law of Supply & DemandIdeally: Pay is a price. If labor is scarce (low supply) and companies need it (high demand), pay goes up. If there are too many workers (high supply), pay goes down.IT Boom: When there was a shortage of coders, their salaries skyrocketed because demand exceeded supply.
2. Efficiency Wage TheoryIdeally: Some firms intentionally pay more than the market rate. Why? They believe high pay motivates superior performance and attracts the best talent.Google/Microsoft: They pay top-tier salaries to ensure they get the smartest people and keep them highly productive.
3. Human Capital TheoryIdeally: Skills, education, and experience are “capital.” The employee invests time and money to get them. Pay is the “return on investment” for these skills.MBA vs. High School: An MBA graduate gets paid more because they have invested more in their “human capital” (education).
4. Agency TheoryIdeally: Owners (Principals) and Employees (Agents) have different interests. Owners want profit; employees want less work. Pay incentives align their interests.Stock Options: Giving a CEO shares in the company ensures they work hard to increase profit, benefiting both them and the owners.
5. The Effort BargainIdeally: Employment is a deal. The worker says, “I will give this much effort if you give me this much reward.”Performance Bonus: “If you hit 100 sales, you get a bonus.” The worker agrees to the extra effort for the extra reward.

The Elements of a Reward System

A complete reward system is made up of several interconnected parts. It acts like a machine where every gear serves a purpose.

  1. Reward Strategy: The “Big Picture” plan. It defines the long-term direction of how the company will pay and reward staff.

  2. Reward Policies: The rules of the game.

    • Market Stance: Do we want to pay above the market (market leaders) or just the average (market matchers)?

  3. Base Pay: The fixed salary or wage (hourly/monthly) for doing the job. This is guaranteed pay.

  4. Job Evaluation: A systematic process to determine the “size” or “worth” of a job compared to others in the company. This ensures Internal Equity.

  5. Market Rate Analysis: Checking what competitors are paying for similar jobs. This ensures External Competitiveness.

  6. Contingent Pay: “Pay at Risk” or variable pay. This is extra money paid for performance, skill, or competence (e.g., Sales Commission, Annual Bonus).

  7. Employee Benefits: Indirect rewards like pensions, sick pay, health insurance, and company cars. These provide security.

  8. Non-Financial Rewards: Rewards that don’t involve money but provide satisfaction, such as recognition, praise, better job titles, or career growth.

Total Reward: The Holistic Approach

Modern HR doesn’t just focus on salary. It focuses on Total Reward. Total Reward combines financial (tangible) and non-financial (intangible) rewards to create a complete package for the employee.

Definition: “Total reward includes all types of rewards – indirect as well as direct, and intrinsic as well as extrinsic.” — Manus & Graham

Shutterstock
Explore

(Note: While this tag was in context history, a specific “Total Reward Model” diagram would be better here if available, but we will describe it conceptually below).

The Two Main Components of Total Reward

1. Transactional Rewards (Tangible / Financial)

These are rewards you can touch or see in your bank account. They arise from the financial transaction between employer and employee.

  • Base Pay: Salary.

  • Contingent Pay: Bonuses, incentives, shares.

  • Benefits: Pensions, holidays, insurance.

  • Nature: Essential to recruit and retain people, but competitors can easily copy them. (If you pay ₹50k, a competitor can offer ₹55k).

2. Relational Rewards (Intangible / Non-Financial)

These are psychological rewards related to the work environment and learning. They touch the heart and mind.

  • Learning & Development: Training, mentoring, career progression.

  • Work Environment: Leadership style, company culture, recognition, work-life balance.

  • Nature: Essential for motivation and engagement. These are very hard for competitors to copy. You cannot easily “copy” a great company culture.

Why is Total Reward Important?

  • Greater Impact: Money motivates to an extent, but recognition and growth sustain that motivation.

  • Talent Magnet: It helps the company become an “Employer of Choice.”

  • Cost-Effective: You can motivate employees through recognition (free) rather than just increasing salaries (expensive).

Developing a Reward Strategy

How does a company decide its reward system? It creates a Reward Strategy. This is a declaration of intent—a roadmap showing where the company wants to go with its rewards.

The 3 Components of an Effective Strategy (Brown, 2001)

  1. Clear Goals: The strategy must support the business. (e.g., If the business goal is “Innovation,” the reward strategy should be “Bonus for new ideas”).

  2. Well-Designed Programs: The pay structure must fit the company’s specific needs.

  3. Supportive Processes: HR must have good systems to manage payroll and performance.

The Development Process (4 Phases)

  1. Diagnosis Phase: Look at the current situation. Are employees happy with pay? Are we losing staff? What is the business goal?

  2. Detailed Design Phase: Create the new plan. Test it. (e.g., Designing a new bonus scheme).

  3. Final Testing: Run a pilot program to see if it works.

  4. Implementation: Launch the new system and train managers on how to use it.

The Role of Line Managers: In modern companies, HR designs the system, but Line Managers (Team Leaders) implement it. They are the ones who decide the performance ratings and communicate pay raises. Therefore, HR must train managers to be fair and consistent.

You may also refer to Performance Appraisal to see how employee performance affects pay. Click here to read the full article.

Get Notified When New Notes Are Uploaded.

Approaches to Industrial Relations & The Role of Trade Unions

, , , , , , , , , , , , , 0

Approaches to Industrial Relations

Industrial relations (IR) are complex and influenced by social, economic, and psychological factors. Different schools of thought offer different approaches to explain and manage these relationships.

1. Psychological Approach

This approach attributes IR problems to differences in perception. Labour and Management see things differently.

  • Workers: Dissatisfaction with pay or conditions makes them aggressive (strikes).

  • Employers: Feel restricted by regulations and demanding workers, leading to lockouts.

  • Key Insight: Conflict arises from motives like power, status, and recognition, not just money.

2. Sociological Approach

This looks at societal changes affecting workers.

  • Factors: Urbanization, housing shortages, pollution, and the breakdown of the joint family system cause stress and “culture pollution.”

  • Key Insight: External social misery impacts workplace behavior, requiring continuous analysis of social factors.

3. Human Relations Approach

This approach argues that people are motivated by social and psychological factors, not just money.

  • Core Belief: Employees are not machines. Their behavior is shaped by feelings, sentiments, and informal groups.

  • Solution: Managers need social skills. They must explain the importance of jobs, encourage participation, and integrate individual goals with organizational goals to reduce conflict.

4. Giri Approach (V.V. Giri)

Proposed by V.V. Giri (former President of India), this approach emphasizes collective bargaining and internal settlement.

  • Key Belief: Outside interference (like courts) should be avoided.

  • Solution: Disputes should be settled through voluntary negotiations and bipartite machinery within the industry.

5. Gandhian Approach

Based on truth and non-violence (Satyagraha).

  • Right to Strike: Accepted, but only for a just cause and in a peaceful manner.

  • Trusteeship Theory: Wealth belongs to society, not the owner. The employer is a “trustee” who should serve society’s interests. Workers are co-partners.

  • Solution: If employers fail, workers should appeal to their conscience or use non-violent non-cooperation.

6. HRD (Human Resource Development) Approach

This modern approach views employees as the organization’s greatest asset.

  • Core Belief: People have unlimited potential that can be developed with the right climate.

  • Manager’s Role: Shifts from “policeman” to “developer, coach, and mentor.”

  • Tools: Team building, training, open communication, and empowering employees to take decisions.

Trade Unions: Voice of the Workforce

Trade Union Definition:

  • British Ministry of Labour: “All organizations of employees… known to include among their functions that of negotiating with their employees with the object of regulating conditions of employment.”

  • Dale Yoder: “A continuing long-term association of employees… formed for the purpose of protecting their mutual interests.”

Objectives & Role of Trade Unions

  1. Improve Conditions: Secure fair wages and better working/living conditions.

  2. Cooperation: Offer cooperation to improve production and discipline.

  3. Growth: Enlarge opportunities for training and promotion.

  4. Identity: Promote an identity of interests between workers and the industry.

  5. Welfare: Provide educational, cultural, and recreational facilities.

  6. Security: Safeguard tenure (job security).

Advantages of Trade Unions

  • For Labour: Prevents exploitation, unites the workforce, provides education, and increases bargaining power.

  • For Employers: Helps avoid/pacify conflicts through collective talks, provides a stable workforce, and promotes unity.

  • For Society: Represents the manpower of the country, helping the government frame better labor laws.

Weaknesses of Trade Unions in India

Despite having over 43,000 registered unions, the movement in India suffers from significant weaknesses:

  1. Fragmentation: Too many small unions with small memberships prevent them from hiring experts or having strong bargaining power.

  2. Political Influence: Unions are often controlled by political parties/leaders rather than workers, turning them into political tools.

  3. Outside Leadership: Dependence on outsiders (social workers, politicians) retards the growth of internal leadership.

  4. Intra-Union Rivalry: Conflicts between rival unions weaken the movement.

  5. Financial Crunch: Low membership fees lead to weak financial positions.

  6. Concentration: Activity is concentrated mostly in metropolitan areas and large industries, leaving other sectors unrepresented.

Causes of Slow Progress

The National Commission on Labour identified key reasons for slow progress and recommended:

  • Settling rivalries (“One Union, One Industry”).

  • Reducing political influence by building internal leadership.

  • Canceling registration of dormant unions.

  • Raising membership fees to improve finances.

History: Growth of Trade Unions in India

The movement evolved through six key phases:

  1. 1875-1918 (Origin): Started with agitations against poor conditions. First registered union: Amalgamated Society of Railway Workmen of India (1897).

  2. 1918-1924 (Early Growth): Post-WWI economic distress spurred growth. AITUC formed in 1920. Trade Union Act passed in 1926.

  3. 1924-1935 (Split): Ideological differences led to splits (communists vs. non-communists).

  4. 1935-1939 (Unity): New constitution led to unity among unions.

  5. 1939-1946 (WWII Era): INTUC established in 1946.

  6. 1947-Present (Modern Era): Rapid increase in the number of unions after independence, driven by new spirit and economic distress

To understand how conflicts are resolved in organizations, please read Grievance & Disciplinary Procedure. Click here to read the full article.

Get Notified When New Notes Are Uploaded.

Industrial Conflicts: Causes, Prevention & Settlement

, , , , , , 0

What is an Industrial Dispute?

Industrial conflict is a general concept, but when it acquires specific dimensions, it becomes an Industrial Dispute.

According to Section 2(k) of the Industrial Disputes Act, 1947, an industrial dispute is:

“Any dispute or difference between workmen and employers, or between workmen and workmen, or between employers and employers, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person.”

Essentials of an Industrial Dispute

For a conflict to be legally recognized as an industrial dispute:

  1. There must be a difference or dispute.

  2. It must be between employers/workmen, workmen/workmen, or employer/employer.

  3. It must be connected with employment, non-employment, or terms of labor.

  4. There must be an industry, employer, and workmen involved.

  5. There must be a “collective will” (a substantial number of workmen must support the cause).

Forms of Industrial Disputes

Disputes manifest in various forms of protest.

1. Strikes

A strike is a spontaneous and concerted withdrawal of labor. It is a collective stoppage of work to pressure employers.

  • Sympathetic Strike: Striking to show support for workers in other industries.

  • General Strike: A strike by all or most unions in a region/industry.

  • Sit-down / Tool-down Strike: Workers stop working but refuse to leave the workplace.

  • Slowdown Strike: “Go-slow” tactics; workers deliberately reduce output without stopping work completely.

  • Lightning Strike: A surprise strike without notice.

  • Hunger Strike: Fasting to gain public sympathy and bring moral pressure on the employer.

2. Lock-outs

The counterpart to a strike. This is a weapon used by the employer to close the factory or suspend work until workers agree to certain conditions.

3. Gherao

Meaning “to surround.” A group of workers surrounds management members and prevents them from leaving the office (sometimes without food/water) to inflict physical duress.

4. Picketing and Boycott

  • Picketing: Displaying banners and signs at the workplace entrance to persuade others not to work.

  • Boycott: Disrupting normal functioning by persuading others not to cooperate with the employer.

Causes of Industrial Disputes

Why do conflicts happen?

  1. Employment Issues: Wages, bonuses, unjust dismissals, retrenchment, and working conditions (approx. 30% of disputes).

  2. Nationalisation/Automation: Fear of job loss due to computers or modernization.

  3. Administration: Ill-treatment, verbal abuse, or physical assault by supervisors.

  4. Recognition: Failure to recognize a union as a bargaining agent.

  5. Political Causes: Politicians using unions to build tension for private ends.

  6. Psychological/Social: Family or community pressures instigating workers.

Preventive Machinery (How to Avoid Disputes)

The goal is to prevent disputes before they start.

1. Tripartite Bodies (Govt, Employer, & Employees)

  • Indian Labour Conference (ILC): Advises the government on labor matters and promotes uniformity in labor legislation. Meets once a year.

  • Standing Labour Committee (SLC): Considers questions referred by the ILC or Central Government. Meets as needed.

  • Industrial Committees: Discuss specific problems of specific industries (e.g., Coal, Textiles, Cement).

2. Bipartite Bodies (Employer & Employees Only)

  • Works Committees: Required for enterprises with 100+ workers.

    • Composition: Equal number of representatives from management and workmen.

    • Function: To promote amity, resolve day-to-day friction, and serve as a grievance-resolving body.

  • Joint Management Councils (JMC): Aim to give labor a sense of participation. They are consulted on matters like retrenchment, welfare measures, and safety.

Settlement Machinery (How to Resolve Disputes)

If a dispute arises, the following legal machinery helps resolve it.

1. Conciliation

A process where a neutral third party (Conciliator) brings the two sides together to reduce differences and arrive at an amicable settlement.

  • Voluntary Conciliation: Both parties agree to use a conciliator.

  • Compulsory Conciliation: The government mandates the procedure and prohibits strikes during the process.

2. Arbitration

A process where a dispute is submitted to an impartial outsider (Arbitrator) whose decision is binding.

  • Difference from Conciliation: An Arbitrator gives a judgment (Award) based on justice, whereas a Conciliator tries to reach a compromise.

  • Voluntary Arbitration: Parties agree to submit the dispute.

  • Compulsory Arbitration: The government forces the parties to accept arbitration (usually to prevent strikes in essential services).

3. Adjudication (The Legal Remedy)

This involves intervention by a third party appointed by the government to give a final, binding legal decision. It is the ultimate remedy.

The Three-Tier System:

  1. Labour Courts: Adjudicate matters like the legality of standing orders, discharge/dismissal of workers, and withdrawal of privileges (Schedule II matters).

  2. Industrial Tribunals: Adjudicate broader issues like wages, allowances, hours of work, bonus, and retrenchment (Schedule II or III matters).

  3. National Tribunals: Constituted by the Central Government for disputes involving questions of national importance or affecting establishments in multiple states.

To understand how disputes originate in industrial environments, please explore Trade Unionism & Collective Bargaining. Click here to read the full article.

Get Notified When New Notes Are Uploaded.

Grievance, Discipline & Employee Exit

, , , , , , , , , , 0

What is a Grievance? (Concept & Definition)

Grievance is any discontent or dissatisfaction arising out of anything connected with the company that an employee thinks, believes, or feels is unfair, unjust, or inequitable.

It is a feeling of injustice related to one’s employment situation. If not addressed, a grievance turns into a complaint, which can lead to indiscipline and low productivity.

According to the National Commission on Labour:

“Complaints affecting one or more individual workers in respect of their wage payments, overtime, leave, transfer, promotion, seniority, work assignment, and discharges constitute Grievances.”

Causes of Grievance

Grievances usually stem from three main areas:

  1. Working Conditions: Improper job matching, poor conditions, unavailable tools, bad relationships.

  2. Management Policy: Issues with wage payment, leave, overtime, promotion, or transfer.

  3. Personal Reasons: Over-ambition or excessive self-esteem.

Grievance Handling Procedure

An effective procedure is essential for maintaining industrial peace.

Principles of a Good Procedure:

  • Should be dealt with at the lowest level first (immediate superior).

  • Clear line of appeal must be available.

  • Must be resolved speedily.

  • Must be set up with the participation of employees.

The Model Grievance Procedure (India)

Adopted by the Indian Labour Conference (1957), this provides a 5-step time-bound framework:

  1. Step 1: Employee presents grievance verbally to the designated officer. Response required within 48 hours.

  2. Step 2: If unsatisfied, the employee goes to the Department Head. Response required within 3 days.

  3. Step 3: If still unsatisfied, the grievance goes to the Grievance Committee. Recommendation required within 7 days.

  4. Step 4: If the committee is not unanimous, the matter goes to the Manager. Decision required within 3 days.

  5. Step 5: The employee can appeal to the manager for revision (with a union official). Decision within 7 days.

  6. Final Resort: If still unresolved, it may go to Voluntary Arbitration.

What is Discipline? (Meaning & Concept)

Discipline is an approach aimed at instilling orderly behavior and respect for willing obedience to a recognized authority. It is the “employee’s self-control” which motivates them to comply with the organization’s goals and objectives.

In an industrial setting, discipline is crucial for a healthy environment, escalating production, and ensuring smooth functioning.

Key Definitions:

  • Webster’s Dictionary: “Training that corrects, moulds, strengthens or perfects individual behavior.”

  • Dr. Spriegel: “The force that prompts an individual or a group to observe the rules, regulations and procedures which are deemed to be necessary to the attainment of an objective.”

Aspects of Discipline

  1. Negative Aspect: Uses “fear” as a force. If an employee defies rules, strict punishment is levied. This is the traditional concept.

  2. Positive Aspect: Focuses on “self-discipline.” It asserts cooperative efforts and willing approval from employees to abide by the rules. This is the modern, progressive outlook.

Indiscipline and Misconduct

Indiscipline is the non-compliance with formal and informal rules and regulations. It has detrimental effects on morale and the organization.

Misconduct is a specific action or behavior that is prejudicial to the employer’s interests, inconsistent with duties, or unsafe.

Categories of Misconduct:

  1. Minor Contravention: Negligence, minor disobedience (few serious consequences).

  2. Major Contravention: Lying, cheating, stealing (partially hinders work).

  3. Intolerable Offences: Threat to use weapons, drug use, smoking near inflammables (endangers the relationship).

Examples of Misconduct (Model Standing Orders Act, 1946):

  • Willful insubordination or disobedience.

  • Theft, fraud, or dishonesty.

  • Habitual late coming or absence without leave.

  • Taking or giving bribes.

  • Engaging in strikes or inciting others to strike illegally.

McGregor’s Hot Stove Rule

Douglas McGregor gave a model for enforcement of discipline called the “Hot Stove Rule.” It compares disciplinary action to touching a red-hot stove. It has four key characteristics:

  1. Advance Warning: A red-hot stove warns you (“don’t touch me, you will burn”). Similarly, employees must know the rules and the consequences of breaking them beforehand.

  2. Immediate Effect: Touching the stove burns you instantly. Discipline should also be immediate; the penalty must be imposed soon after the violation.

  3. Consistency: Every time you touch the stove, you get burned. Similarly, every time a rule is broken, the penalty must be consistent.

  4. Impersonal Approach: The stove burns everyone who touches it, regardless of who they are. Management should punish the act, not the person, without discrimination or favoritism.

The Disciplinary Action Procedure

Administering discipline requires a fair and systematic process.

  1. Ascertaining the Problem: Look into the violation. Who was involved? What was the gravity of the offence?

  2. Searching for Facts: Thoroughly examine the case and gather evidence. Give the employee a chance to explain (Principles of Natural Justice).

  3. Deciding the Penalty: The punishment should fit the offence and discourage future occurrences.

  4. Application of Penalty: Impose the penalty on the wrongdoer.

  5. Follow-up: Vigilant supervision of the employee to ensure behavior correction.

Code of Discipline in Indian Industry

Adopted by the Indian Labour Conference in 1957, this code lays down principles for maintaining discipline:

  • Voluntary Agreement: It is a state-induced voluntary agreement between unions and management.

  • No Unilateral Action: Both parties must avoid taking action without exploring all avenues of settlement.

  • Existing Machinery: Utilize existing machinery for dispute settlement.

  • No Coercion: Avoid violence, intimidation, or victimization.

  • Recognition: Employers must recognize the majority union.

  • Fairness: Awards and agreements should be implemented promptly.

Objectives of Discipline

  • To obtain willing approval of employees.

  • To ensure uniformity and assurance.

  • To improve quality of production and morale.

  • To generate respect for human relations.

Employee Exit & Exit Interviews

Employee Exit is the separation of an employee from the organization. It can be voluntary or involuntary.

Types of Exit

  1. Resignation: Voluntary termination by the employee.

  2. Retirement: Leaving upon reaching the age of superannuation.

  3. Dismissal: Termination as a punishment for major offences.

  4. Discharge: Permanent separation due to incompetence, health, or redundancy.

  5. Downsizing: Reducing the workforce to cut costs or restructure.

The Exit Interview

This is a meeting between HR and a departing employee.

  • Purpose: To collect honest feedback about the organization’s culture, policies, and reasons for leaving.

  • Benefit: Since there is no pressure, employees reveal true feelings, helping the company improve and reduce future turnover.

For legal dimensions of conflicts, don’t forget to explore Industrial Disputes. Click here to read the full article.

Get Notified When New Notes Are Uploaded.

Performance Appraisal: Methods, Process & Objectives

, , , , , , , , , , , 0

What is Performance Appraisal? (Meaning & Concept)

Performance Appraisal (PA) is the systematic evaluation of an individual with respect to his or her performance on the job and their potential for development.

It is a formal, structured system of measuring and evaluating an employee’s job-related behaviors and outcomes. The goal is to discover how and why the employee is performing the way they are and how they can improve in the future to benefit the employee, the organization, and society.

  • Key Focus: It measures both past performance and future potential.

  • Key Requirement: Successful appraisal requires a consistent approach, clear standards, and bias-free ratings.

Objectives of Performance Appraisal

Why do organizations conduct appraisals? Here are the 5 main objectives:

  1. Compensation Decisions: It serves as a basis for pay raises and bonuses. It supports the idea of “pay for performance” rather than just seniority.

  2. Promotion Decisions: It acts as a guide for job changes, transfers, or promotions based on competence.

  3. Training & Development: It identifies skill gaps. It tells employees what skills they need to develop to move up the ladder.

  4. Feedback: It provides constructive feedback to employees about where they stand and how they can improve.

  5. Personal Development: It helps reveal the root causes of good or poor performance, aiding in self-improvement.

The Performance Appraisal Process

The appraisal process is a systematic cycle:

1. Objectives of Performance Appraisal

  • The first step is to clearly define why the appraisal is being done.

  • Objectives may include improving employee performance, deciding promotions or salary increments, identifying training needs, and evaluating strengths & weaknesses.

  • Clear objectives make the appraisal system meaningful and useful.

2. Establish Job Expectations

  • Employees must know what is expected from them.

  • HR and managers set performance standards, job responsibilities, and key result areas (KRAs).

  • When expectations are clear, employees can perform better and meet targets.

3. Design an Appraisal Program

  • HR decides the method of appraisal to be used (e.g., ranking method, rating scale, 360-degree feedback, MBO, etc.).

  • The program includes who will evaluate (manager, peers, customers, or self-appraisal), when evaluation will take place, and how the process will be recorded.

  • A good design ensures fairness and transparency.

4. Appraise the Performance

  • Actual evaluation of the employee takes place.

  • Performance is measured by comparing actual performance with standards set earlier.

  • Data is collected through observation, reports, tests, checklists, feedback, etc.

  • The goal is to get a realistic and unbiased assessment.

5. Performance Interview / Feedback

  • The manager discusses results with the employee.

  • Strengths and areas for improvement are communicated.

  • It helps in motivation, understanding problems, and setting future goals.

  • This should be a two-way discussion, not just criticism.

6. Use Appraisal Data for Appropriate Purpose

    • The final step is using the appraisal results for HR decisions.

    • Used for:

      • Promotions, transfers, rewards, salary hikes

      • Training and development

      • Career planning

      • Corrective actions (if necessary)

    • Ensures that the appraisal process leads to action and improvement.

Objectives of Performance Appraisal Establish Job Expectation Design an Appraisal Programme Appraise Performance Performance Interview Use Appraisal Data for Appropriate Purpose

Techniques & Methods of Performance Appraisal

Appraisal methods are broadly classified into Past-Oriented and Future-Oriented methods.

A. Past-Oriented Methods (Traditional)

1. Rating Scales

The most common method. It consists of numerical scales representing job-related criteria (e.g., dependability, output, attitude). The rater marks the employee on a scale from “Poor” to “Excellent.”

  • Pros: Easy to use for large numbers of employees.

  • Cons: Prone to rater bias and the “illusion of precision.”

2. Checklists

A list of statements about employee traits (e.g., “Is regular?”, “Works hard?”). The rater simply ticks ‘YES’ or ‘NO’. HR assigns weights/scores to these answers later.

  • Pros: Economical and standardized.

  • Cons: Biased if weights are improper.

3. Forced Choice Method

The rater must choose from a block of statements (e.g., “Learns fast” vs. “Works hard”) to describe the employee. This reduces personal bias as the rater doesn’t know the scoring value of each statement.

4. Critical Incident Method

The superior records specific “critical” incidents of behavior that led to success or failure (e.g., “Handled a difficult client perfectly” or “Missed a key deadline”). In this manager records specific good or bad incidents of employee behavior.

  • Pros: Based on actual behavior and events, not vague traits.

  • Cons: Negative incidents are often noticed more than positive ones.

5. Behaviorally Anchored Rating Scales (BARS)

A modern technique that combines rating scales with critical incidents. It uses descriptive statements of behavior (anchors) to define points on the scale (e.g., a “5” rating is defined by specific, excellent behavior).

  • Pros: Very accurate and job-specific.

  • Cons: Time-consuming to develop.

6. Field Review Method

An outsider (from HR or corporate) conducts the appraisal by interviewing the supervisor. This reduces supervisor bias but is time-consuming.

B. Future-Oriented Methods (Modern)

1. Management by Objectives (MBO)

Proposed by Peter F. Drucker (1954).

  • Process: The superior and subordinate jointly set specific goals for a time period. At the end, performance is measured against these agreed goals or achievement of the goals.

  • Pros: Increases motivation and clarity.

  • Cons: Not suitable for rigid jobs (like assembly lines).

2. 360-Degree Feedback

A multi-source appraisal where data is collected from everyone around the employee: Supervisors, Peers, Subordinates, Customers, and Self evalution.

  • Pros: Provides a holistic view; excellent for soft skills and leadership development.

  • Cons: Can be intimidating; analysis is complex.

3. Assessment Centers

Employees are evaluated by a team of experts using various exercises like role-playing, case studies, and business games over 2-3 days. Ideally used for identifying potential managers.

  • Judges managerial and leadership skills.

4. Psychological Appraisal

Conducted by psychologists using in-depth interviews and tests to assess personality, intellectual, emotional, and motivational characteristics. It focuses on future potential.

Problems & Errors in Appraisal

Even the best systems fail if raters are biased. Common errors include:

  1. Halo Effect: Rating an employee high on everything just because they are good at one thing (e.g., Communication).

  2. Horn Effect: Rating an employee low on everything because of one negative trait.

  3. Central Tendency: Playing it safe by rating everyone as “Average.”

  4. Leniency/Strictness: Being too nice or too harsh to everyone.

  5. Recency Effect: Judging based only on the last few weeks rather than the whole year.

  6. Stereotyping: Judging based on gender, race, or background rather than performance.

Performance Management System (PMS)

Performance Management is broader than just “Appraisal.” It is a continuous process of:

  • Identifying performance parameters.

  • Setting standards.

  • Planning performance in participation with employees.

  • Identifying competency gaps.

  • Planning development activities.

  • And improve employee performance.

While Appraisal is a one-time event (evaluation), Management is an ongoing cycle of goal-setting, monitoring, and feedback to ensure organizational goals are met.

Get Notified When New Notes Are Uploaded.

Job Evaluation: Meaning, Methods & Process

, , , , , , , , , , , 0

What is Job Evaluation?

Job Evaluation is the output provided by Job Analysis. While Job Analysis describes the duties, authority relationships, and skills required for a job, Job Evaluation uses that information to evaluate the worth of each job.

It is a formal and systematic process of comparing jobs to determine the value of one job relative to another. The primary goal is to establish a logical job hierarchy to fix fair wages and salaries.

Crucial Concept: Job Evaluation rates the JOB, not the MAN (person) performing it. It assesses the demands the job makes on a normal worker, ignoring individual abilities.

Key Definitions

  • ILO (International Labour Organization): “An attempt to determine and compare demands which the normal performance of a particular job makes on normal workers without taking into account the individual abilities or performance of the workers concerned.”

  • Kimball and Kimball: “An effort to determine the relative value of every job in a plant to determine what the fair basic wage for such a job should be.”

Principles of Job Evaluation (The Kress Model)

According to Kress, a successful job evaluation programme must follow these six principles:

  1. Rate the Job, Not the Person: The focus must remain strictly on the requirements of the role, not the person currently holding it.

  2. Use Definable Elements: The factors used for rating (e.g., skill, effort) should be explainable, limited in number, and cover all job requisites without overlapping.

  3. Clear Definitions: The elements selected must be clearly defined and properly selected to avoid ambiguity.

  4. Foreman Participation: Supervisors and foremen should participate in rating the jobs within their own departments to ensure accuracy.

  5. Employee Cooperation: Employees should be given an opportunity to discuss job ratings; this secures their cooperation and trust.

  6. Avoid Too Many Wage Rates: It is unwise to create a unique wage rate for every single point total. Instead, jobs should be grouped into occupational wages.

The 7 Key Objectives

Why do organizations perform Job Evaluation?

  1. Standardization: To provide a standard procedure for determining the relative worth of each job.

  2. Accurate Descriptions: To secure and maintain complete and impersonal descriptions of every distinct job in the plant.

  3. Equal Pay for Equal Work: To ensure that like wages are paid to all qualified employees for similar work.

  4. Fair Promotion: To promote fair and accurate consideration of employees for advancement and transfer.

  5. Benchmarking: To provide a factual basis for comparing wage rates with similar jobs in the community or industry.

  6. HR Decisions: To provide information for selection, placement, training, and work organization.

  7. Equitable Pay Structure: To determine a rate of pay that is fair relative to other jobs in the plant.

The Job Evaluation Process

The process is a logical flow that transforms job data into a wage structure.

  1. Job Analysis: Collecting data via questionnaires, interviews, or observation.

  2. Job Description: A written statement of what the job holder does.

  3. Job Specification: A statement of the human qualities required to do the job.

  4. Job Evaluation Programme: Choosing the method (Ranking, Point, etc.) to assess the jobs.

  5. Employee Classification: Grouping similar jobs into grades or categories.

  6. Wage Survey: Checking market rates for “Key Jobs” to ensure external competitiveness.

Objective of Job Evaluation Job Analysis Job Description Job specification Job Evaluation programme Employee classification Wage survey

Methods of Job Evaluation

Methods are broadly classified into Non-Analytical (Qualitative) and Analytical (Quantitative).

A. Non-Analytical Methods (Qualitative)

These methods treat the job as a whole and do not break it down into detailed factors.

1. Ranking Method

This is the simplest form. The committee assesses the worth of each job based on its title or content and arranges them in order of importance.

: Methods of Job Evaluation Job Evaluation Analytical Point-Ranking Method Factor Comparison Method Non-analytical Ranking-Method Job-grading Method

The 5-Step Mechanism:

  1. Preparation of Job Description: Essential to resolve disagreements among raters.

  2. Selection of Raters: Usually a committee. Jobs are often ranked by department (clusters) to avoid comparing dissimilar jobs (e.g., factory vs. clerical).

  3. Selection of Key Jobs (Benchmark Jobs): 10 to 20 representative jobs are selected first to establish a rough rating scale.

  4. Ranking of All Jobs: All other jobs are compared to the Key Jobs and ranked from “lowest to highest.”

  5. Job Classification: The ranked list is divided into groups (usually 8 to 12), and wage ranges are assigned to each group.

Factors used for Ranking:

  • Supervision of subordinates.

  • Cooperation with associates.

  • Probability/Consequences of errors.

  • Minimum experience requirement.

  • Minimum education required.

Pros & Cons:

  • Merit: Simple, inexpensive, less time-consuming.

  • Demerit: Subjective (based on personal bias), does not tell how much more valuable one job is than another.

2. Job Classification (Grading) Method

In this method, the number of grades is decided first, and then jobs are fitted into these grades.

The 5-Step Mechanism:

  1. Job Description: Gather basic job info.

  2. Grade Description: Define specific levels or grades (e.g., Grade 1 = Routine work, Grade 2 = Skilled work). Each grade must be distinct.

  3. Selection of Key Jobs: Select 10-20 jobs covering all departments.

  4. Grading Key Jobs: Assign key jobs to appropriate grade levels.

  5. Classification: All remaining jobs are matched against the grade definitions and classified.

Pros & Cons:

  • Merit: Administratively easy for pay determination. Widely used in government services.

  • Demerit: Rigid system. It is difficult to write grade descriptions that fit a large, diverse organization.

B. Analytical Methods (Quantitative)

These methods break jobs down into components (factors) and assign scores.

3. Point Ranking Method

This is the most widely used and systematic method.

The 5-Step Mechanism:

  1. Select Job Factors: Choose compensable factors like Skill, Responsibility, Effort, and Working Conditions.

  2. Construct a Scale: Assign point values to each factor (e.g., Skill = 50% weight). Divide factors into degrees (Degree 1, Degree 2) and assign points to degrees.

  3. Evaluate Jobs: Analyze every job and award points for each factor based on the scale.

  4. Design Wage Structure: Sum the points to find the total job worth.

  5. Adjust Wages: Convert points into monetary values.

Pros & Cons:

  • Merit: The worth is determined by distinct factors, not just “overall feel.” It is systematic and easy to explain to employees.

  • Demerit: Developing the point scale is complex and time-consuming.

4. Factor Comparison Method

This method ranks jobs by comparing them factor-by-factor against “Key Jobs.”

The 5 Universal Factors Used:

  1. Mental Requirements

  2. Skill Requirements

  3. Physical Exertion

  4. Responsibility

  5. Job Conditions

Mechanism: Instead of points, this method often assigns a monetary value to each factor. Each job is ranked against others for each of the five factors individually.

Pros & Cons:

  • Merit: Can evaluate unlike jobs (manual vs. clerical) using the same set of factors.

  • Demerit: Highly complicated and expensive to install.

Critical Appraisal: Advantages vs. Limitations

Advantages (Why use it?)

  1. Removes Inequality: Helps maintain consistent wage differentials.

  2. Reduces Grievances: Provides an objective basis for wages, improving labor relations.

  3. Standardization: Replaces accidental wage bargaining with impersonal standards.

  4. Better Recruitment: Information from analysis improves selection, transfer, and promotion.

  5. Simplifies Administration: Leads to greater uniformity in wage rates.

Limitations (The Drawbacks)

  1. Rapid Changes: Technology changes job contents quickly, making evaluations outdated.

  2. Market Mismatch: Internal evaluation may not match external market rates (supply and demand).

  3. Cost & Time: It takes a long time to install and requires specialized technical personnel.

  4. Employee Anxiety: It creates fear and doubt in the minds of employees when first introduced.

  5. Rigidity: Implementing substantial wage changes may be restricted by the firm’s financial limits.

If you have doubt in above topic you can prefer watching this video. (LINK)

Get Notified When New Notes Are Uploaded.

Training & Job Design Career Planning meaning, Process, Methods

, , , , , , , , , , 0

What is Training? (Meaning & Definition)

Training is the act of increasing the knowledge and skills of an employee for doing a particular job. It is a planned program designed to improve performance and bring about measurable changes in knowledge, skills, attitude, and social behavior.

Key Definitions:

  • Flippo: “The act of increasing the knowledge and skills of an employee for doing a particular job.“

  • General Definition: A process of learning a sequence of programmed behavior relevant to a specific job.

Characteristics of Training:

  • Increases knowledge and skills for the job.

  • Bridges the gap between job needs and employee skills.

  • Job-oriented and vocational in nature.

  • A short-term activity designed essentially for operatives.

Training vs. Development vs. Education

It is crucial to understand the difference between these three concepts.

BasisTrainingDevelopmentEducation
FocusSpecific Skills & Job PerformanceGeneral Knowledge & PersonalityConceptual Learning & Understanding
Target AudienceNon-managerial personnel (Operatives)Managerial personnelStudents/General Public
Time FrameShort-term processLong-term educational processLifelong/Long-term
NatureReactive (current needs)Proactive (future needs)General & Broad
PurposeVocational (Job-oriented)General Purpose (Person-oriented)Theory-based Knowledge

🛠️ Types of Training

Organizations use various types of training to meet different needs:

  1. Skills Training: The most common type. Focuses on basic skills like reading, writing, computing, and problem-solving.

  2. Refresher Training: Used to update employees on the latest developments and technologies (e.g., new software).

  3. Cross-functional Training: Training employees to perform operations in areas other than their assigned job (e.g., Job Rotation).

  4. Team Training: Focuses on content tasks (goals) and group processes (interaction, cooperation).

  5. Creativity Training: Encourages “out of the box” thinking, brainstorming, and breaking away from restrictions.

  6. Diversity Training: Creates sensitivity towards race, gender, culture, and backgrounds to foster harmonious relationships.

  7. Literacy Training: Improving basic reading, writing, and arithmetic skills to improve productivity.

  8. Orientation Training: Introducing new employees to the company culture and “learning the ropes.“

The 6-Step Training Process

Training is most effective when it is systematic.

Step 1: Identification of Objectives

Identify the business objectives to determine the direction the organization needs to move.

Step 2: Determining Training Needs

Identify needs through:

  • Organizational Analysis: Study of objectives, resource utilization, and climate.

  • Task/Role Analysis: Detailed examination of the job and its components.

  • Person Analysis: Determining if specific individuals need training or if poor performance is due to other factors.

Step 3: Identify Training Objectives

Set specific goals for what the training should achieve to meet the identified needs.

Step 4: Determine Content & Schedule

Decide on the technical and behavioral content, select instructors, and set the timeline.

Step 5: Coordination

The HR department arranges the faculty, support services, refreshments, and materials.

Step 6: Evaluation

Determine the effectiveness of the training. Did it achieve its objectives? (evaluated through reaction, learning, behavior, and results).

Methods of Training

Training methods are classified by location:

1. On-the-Job Training Methods

Learning while working at the actual workplace.

  • Job Instruction Training (JIT): A 4-step process: Prepare, Present, Try out, Follow up.

  • Coaching: Daily training and feedback from an immediate supervisor.

  • Mentoring: A senior manager grooms a junior person (protégé) in technical and political skills.

  • Job Rotation: Moving a trainee from one job to another to provide a broader perspective.

  • Apprenticeship: A long-term program combining on-the-job work with classroom instruction (common for trades like plumbing).

  • Committee Assignments: Trainees work together to solve actual organizational problems.

2. Off-the-Job Training Methods

Learning at a location away from the work spot.

  • Vestibule Training: Simulating actual work conditions in a classroom setting (common for clerical jobs).

  • Role Playing: Acting out realistic behaviors in imaginary situations to develop interpersonal skills.

  • Lecture Method: Traditional direct instruction to a large group. Low cost but low transfer of training.

  • Conference/Discussion: A group-centered approach where ideas and procedures are clarified.

  • Programmed Instruction: Self-paced learning through sequential units (expensive to develop).

  • E-learning: Online learning at the trainee’s own pace (requires internet and self-motivation).

  • Behaviorally Experienced Training: Business games, case studies, and sensitivity training to improve behavioral skills.

Benefits of Training,Benefits to the Business Benefits to the Employee

Approaches & Techniques of Job Design

Job Design is the process of deciding the contents of a job. It involves determining the duties, responsibilities, and the methods of doing the work. Proper job design contributes significantly to employee satisfaction and productivity.

If you have doubt in above topic you can prefer watching this video. (LINK)

Techniques to Improve Job Design

  1. Job Rotation:

    • What is it? Systematically moving employees from one job to another.

    • Benefit: Relieves boredom, broadens the employee’s perspective, and increases workforce flexibility.

    • Drawback: Can be expensive and disruptive if done too frequently.

  2. Job Enlargement:

    • What is it? Adding more tasks to a job at the same level of difficulty (Horizontal expansion).

    • Benefit: Reduces monotony by increasing the variety of tasks.

  3. Job Enrichment:

    • What is it? Adding more responsibility, autonomy, and control to a job (Vertical expansion).

    • Benefit: Increases motivation and job satisfaction by giving employees a sense of ownership and achievement.

  4. Work Simplification:

    • What is it? Breaking down jobs into smaller, simpler tasks.

    • Benefit: Increases efficiency for repetitive tasks but can lead to boredom.

Career Planning & Development

Career Planning is the process by which an individual selects career goals and the path to achieve them. It matches personal goals with the opportunities available in the organization.

Need for Career Planning:

  • Employees desire growth and clear career paths.

  • Without it, frustration leads to high turnover and loss of key talent.

  • It aligns employee aspirations with organizational needs.

The Career Planning Process

  1. Identify Individual Needs: Help employees understand their aspirations and skills.

  2. Analyze Opportunities: The organization outlines career paths and progression possibilities.

  3. Align Needs & Opportunities: Match employee potential with organizational charts.

  4. Action Plans: Undertake development programs to bridge gaps and review periodically.

Succession Planning

Succession Planning is the process of ensuring a suitable supply of successors for key senior jobs. It protects the organization from a leadership vacuum.

  • Purpose: To identify and develop people to replace current job holders in key positions.

  • Replacement Charts: Visual representations of who will replace whom. They show details of key executives and their potential successors.

  • Difference from Career Planning: Succession planning focuses on key positions (mostly top level), while Career Planning covers all employees and their individual growth.

Steps in Career Development System

Career development is the lifelong process of managing your career. Key steps for individuals include:

  1. Performance: Delivering excellent results is the foundation.

  2. Exposure: Becoming known by decision-makers.

  3. Networking: Building professional contacts inside and outside the firm.

  4. Mentors & Sponsors: Finding senior guides who offer advice and create opportunities.

  5. Expand Ability: Acquiring new degrees and skills proactively.

To learn how job roles are valued after designing them, please read Job Evaluation: Concept & Methods. Click here to read the full article.

Get Notified When New Notes Are Uploaded.

Employee Selection: Process, Tests & Interviews

, , , , , , , , , , , , , , , , , , , 0

What is Selection? (Concept & Definition)

Selection is the process of differentiating between applicants to identify and hire those with the greatest likelihood of success in a job. It is basically a “matching” process—finding the right fit between the person and the job.

Recruitment vs. Selection: What’s the Difference?

Basis Recruitment Selection
Meaning Searching for candidates and stimulating them to apply. Choosing the right candidate from the pool of applicants.
Nature A Positive process (adds people to the pool). A Negative process (rejects/screens out unsuitable people).
Goal Creates a large pool of applicants. Selects the best fit.
Complexity Simple process. Complex, time-consuming process with many hurdles.

The Selection Procedure (Steps)

Selection involves a series of steps, or “hurdles,” that a candidate must clear.

1. Preliminary Interview (Screening)

A courtesy interview to screen out undesirable or unqualified candidates at the very beginning. This saves time for both the company and the applicant.

2. Application Form

A formal record of the candidate’s bio-data, education, work experience, and references.

  • Evaluation: Can be done clinically (psychological analysis) or using a weighted method (scoring system).

  • Usefulness: It introduces the candidate and serves as a basis for the interview.

3. Employment Tests

Tests provide information that isn’t available from an application form. They measure skills, intelligence, and personality.

  • Intelligence Tests: Measure mental ability, memory, and learning speed.

  • Achievement Tests: Measure current skills (e.g., a typing test).

  • Aptitude Tests: Measure potential to learn new skills.

  • Personality Tests: Measure motivation, emotional balance, and interpersonal behavior.

  • Integrity Tests: Measure honesty to predict theft or unethical behavior.

  • Polygraph Tests: Lie detector tests (used mainly in security jobs).

  • Graphology: Handwriting analysis.

Standards for Tests: A good test must be Reliable (consistent results) and Valid (measures what it claims to measure).

4. Employment Interview

An oral examination of candidates. It allows the recruiter to ask questions not covered in tests, judge enthusiasm, and assess appearance.

  • Types of Interviews:

    • Structured: Fixed, job-related questions asked to everyone.

    • Unstructured (Non-directive): Questions asked as they come to mind.

    • Panel Interview: A group of interviewers assesses the candidate together.

    • Stress Interview: The applicant is made uncomfortable to test their ability to handle pressure.

5. Reference Checks

Verifying character and experience references provided by the applicant.

6. Medical Examination

Ensures the candidate is physically fit for the job requirements and protects the organization from unwarranted compensation claims.

7. Job Offer

The final step. A letter of appointment is issued with a reporting date.

Recruitment Applicaton and screening Checking background and References Intervewing Hiring decision Physical examination Orientation

Induction and Placement

Once selected, the employee’s journey isn’t over. Now the real journey starts.

Employee Induction (Orientation)

Induction is the process of guiding and counseling new employees to familiarize them with the job and the organization.

  • General Orientation: Guided tours, introduction to history, mission, and fellow employees.

  • Specific Orientation: Job-specific training and vocational guidance by the supervisor.

  • Objectives: Create a positive attitude, build confidence, and reduce anxiety.

Placement

Placement is assigning a specific rank and responsibility to an employee. It matches the employee’s competence and interest with the job requirements. Most organizations have a probation period to review the employee’s performance before permanent placement.

Requisites & Problems

  • Retention is Key: Many Indian organizations neglect retention after spending lakhs on recruitment. A weak induction program leads to high turnover.

  • Performance Review: Organizations must review progress during probation. Automatic confirmation of unproductive employees is a major problem.

Get Notified When New Notes Are Uploaded.

Recruitment: Definition, Sources & Process

, , , , , , , , , , , 0

What is Recruitment? (Meaning & Definition)

Recruitment is the process of discovering manpower sources to meet the staffing needs of an organization and employing effective measures to attract that manpower in adequate numbers. It is a positive process of searching for prospective employees and stimulating them to apply for jobs.

Key Definitions:

  • Edwin B. Flippo: “The process of searching for prospective employees and stimulating them to apply for jobs in the organization.”

  • General Definition: A process to discover sources of manpower to meet the requirement of staffing schedules and to employ effective measures for attracting that manpower.

Nature of Recruitment:

  • It is the first step of appointment.

  • It is a continuous process.

  • It is a positive process (unlike selection, which is negative/elimination).

  • It fulfills both present and future needs.

Sources of Recruitment (Internal vs. External)

Organizations can look for candidates either within their own walls or outside in the job market.

1. Internal Sources

Recruiting personnel already on the payroll (present workforce) already working in the company as employee.

  • Methods:

    • Promotions & Transfers: Moving employees to higher or different positions.

    • Job Posting: Advertising the vacancy internally so interested employees can apply.

    • Employee Referrals: Current employees recommend friends or family.

    • Retrenched/Retired Employees: Re-hiring former employees.

Merits:

  • Improves morale and promotes loyalty.

  • The employer already knows the candidate’s track record.

  • Less costly than external recruitment.

Demerits:

  • Leads to “inbreeding” (no new ideas/blood).

  • Internal sources may “dry up.”

  • Seniority-based promotion may overlook capable talent.

2. External Sources

Looking outside the organization for fresh talent.

  • Methods:

    • Campus Recruitment: Hiring young, fresh talent from colleges.

    • Advertisement: Newspapers, TV, Radio to attract attention.

    • Employment Exchanges: Government-run lists of job seekers.

    • Private Search Firms: Consultants (like ABC Consultants) who find talent for a fee.

    • Websites (E-Recruitment): Job sites (Naukri, linkedin) and company career pages.

    • Gate Hiring/Walk-ins: Casual applicants who come to the factory gate or office.

Merits:

  • Brings in “new blood,” new ideas, and experiences.

  • Provides a wider choice of candidates.

  • Essential for rapid expansion.

Role Profiles & Person Specifications

Before recruiting, you need to know who you are looking for.

1. Role Profile: Defines the overall purpose of the role means (what the job requires), reporting relationships, and key result areas. It lists the technical skills and behavioral competencies required. 2. Person Specification: Also known as recruitment specification it describes the type of person needed to perform the job well, this is the essential element on which selection is based. It summarizes the education, training, experience, and qualifications a person must have.

Models for Specifications:

  • Seven-Point Plan (Alec Rodgers):

    Used for recruitment and selection (deciding if a candidate is suitable).

    1. Physical Make-up – Health, appearance, energy level.

    2. Attainments – Education and previous achievements.

    3. General Intelligence – Ability to learn and understand quickly.

    4. Special Aptitudes – Special skills like typing, languages, creativity.

    5. Interests – Hobbies and activities showing personality.

    6. Disposition – Attitude, behaviour, and ability to work with others.

    7. Circumstances – Personal background, family, place of living, etc.

  • Five-Fold Grading System (Munro Fraser):

    Also used to evaluate candidates during interviews.

    1. Physical Qualities – Health, appearance, speaking ability.

    2. Attainments – Education and work experience.

    3. General Intelligence – Thinking ability and problem-solving.

    4. Special Aptitudes – Job-related skills.

    5. Disposition – Personality, confidence, teamwork, leadership.

The 5-Step Recruitment Process

Recruitment is not just “hiring.” It is a systematic journey.

Step 1: Job Design

The most important part. This phase involves designing the job profile and agreeing on the essential skills and competencies between the line manager and HR.

Step 2: Opening Job Position

The HR recruiter decides on the right mix of recruitment sources to find the best candidates.

Step 3: Collecting & Presenting Resumes

Collecting resumes and pre-selecting suitable candidates. This step saves time for the interviewers.

Step 4: Job Interviews

Designed and agreed upon by HR and line management, the interview aims to discover the candidate who meets the requirements and fits the culture best.

Step 5: Job Offer

The final step where the “winner” of the interview process receives a formal offer to join the organization.

What are Modern Recruitment Techniques?

E-Recruitment (Online Recruitment)

Using IT to speed up the process. It ranges from online job ads to back-office applicant tracking.

  • Advantages:

    • Cost Savings: Reduces advertising spend.

    • Speed: Faster application and screening.

    • Reach: Global coverage.

    • Data: Better management information on applicants.

Competency-Based Approach

A modern method where selection is based on competencies (characteristics) rather than just the job description.

  • Focus: Analysis of people, not just jobs.

  • Benefit: Improves accuracy in predicting suitability and potential.

Evaluating Recruitment

The process isn’t over until you check if it worked. Key metrics include:

  1. Return Rate: Number of applications received.

  2. Selection Ratio: Number of suitable candidates vs. applicants.

  3. Retention: How many recruits stayed after 6 months.

  4. Cost: Cost per hire.

  5. Time Lapsed: How long it took to fill the vacancy.

Get Notified When New Notes Are Uploaded.

Load More