HR Encyclopedia

Human Resource Management (MGT501) VU
Copyright © Virtual University of Pakistan 1
his subject/course is designed to teach the basic principles of Human Resource Management
(HRM) to diverse audience/students, including those who are studying this as a supporting subject
for their bachelor degree program. This course is designed to provide you the foundations of HRM
whether you intend to work in HRM or not, most of these elements will affect you at some point in your
career. Either you will be working with some organizations or having people working for you, in both cases
you will be dealing with people.
To be understandable and lively means that we need to communicate you. We start every chapter with
learning objectives. The most important thing you will get out of this course are the basic skills required to
succeed in today’s environment which are, you must be able to communicate, think creatively, plan
effectively and deal with people.
T
MGT - 501

Lesson 1
INTRODUCTION TO HRM
After studying this chapter, students should be able to understand the following:
Describe HRM?
Explain why are we concerned about HRM?
Discuss Road-map of HRM
LESSON OVERVIEW
This chapter introduces the students with the basic concepts of the human resource management (HRM).
During the lecture, we will be discussing the three
main things, i.e. the introduction to HRM, the
importance of HRM, and a brief discussion of the
topics that will follow today’s lecture.
A basic concept of management states that manager
works in organizations. Organization has three basic
components, People, Purpose, and Structure. HRM is
the study of activates regarding people working in an
organization. It is a managerial function that tries to
match an organization’s needs to the skills and abilities
of its employees. Let’s see what is meant by the three
key terms… human, resource, and management.
• Human (Homo-sapiens – Social Animal)
• Resources (Human, Physical, Financial, Technical, Informational etc)
• Management (Function of Planning, Organizing, Leading & Controlling of organizational
resources to accomplish goals efficiently and effectively)
Functions of HRM
Basic functions that all managers perform: planning, organizing, staffing, leading, and controlling. HR
management involves the policies and practices needed to carry out the staffing (or people) function of
management.
HRM department regardless of the organization’s size must perform following human resource
management functions…
• Staffing (HR planning, recruitment and selection)
• Human resource development
• Compensation and benefits
• Safety and health
• Employee and labor relations
• Records maintaining, etc.
• HR research (providing a HR information base, designing and implementing employee
communication system).
• Interrelationship of HR functions.
A. What is human resource management?
As we said that HRM is the management of people working in an organization, it is a subject related to
human. For simplicity, we can say that it is the management of humans or people. HRM is a managerial
function that tries to match an organization’s needs to the skills and abilities of its employees. Human
Resource Management is responsible for how people are managed in the organizations. It is responsible for
bringing people in organization helping them perform their work, compensating them for their work and
solving problems that arise.
Growing Importance of HRM
The success of organizations increasingly depends on people-embodied know-how- the knowledge, skill,
Dr. Mukhtar Ahmed
Resource
HRM
ManagementHuman

and abilities imbedded in an organization's members. This knowledge base is the foundation of an
organization' core competencies (integrated knowledge sets within an organization that distinguish it from
its competitors and deliver value to customers).
HRM plays important role in creating organizations and helping them survive. Our world is an
organizational world. We are surrounded by organizations and we participate in them as members,
employees, customers, and clients. Most of our life is spent in organization, and they supply the goods and
services on which we depend to live. Organizations on the other hand depend on people, and without people,
they would disappear.
Factors Contributing to the Growing Importance of HRM
a. Accommodation to workers' needs
Workers are demanding that organizations accommodate their personal needs by instituting such programs
as flexible work schedules, parental leave, child-care and elder-care assistance, and job sharing. The human
resource department plays a central role in establishing and implementing policies designed to reduce the
friction between organizational demands and family responsibilities.
b. Increased complexity of the Manager’s job
Management has become an increasingly complex and demanding job for many reasons, including foreign
competition, new technology, expanding scientific information, and rapid change. Therefore, organizations
frequently ask human resource managers for assistance in making strategic business decisions and in match-
ing the distinctive competencies of the firm's human resources to the mission of the organization.
Executives need assistance from the human resource department in matters of recruitment, performance
evaluation, compensation, and discipline.
c. Legislation and litigation
The enactment of state laws has contributed enormously to the proliferation and importance of human
resource functions. The record keeping and reporting requirements of the laws are so extensive that to
comply with them, many human resource departments must work countless hours and often must hire
additional staff.
Four areas that have been influenced most by legislation include equal employment, Compensation, safety,
and labor relations. An organization's failure to comply with laws regulating these areas can result in
extremely costly back-pay awards, class action suits, and penalties.
d. Consistency
Human resource policies help to maintain consistency and equity within an organization. Consistency is
particularly important in compensation and promotion decisions. When managers make compensation
decisions without consulting the human resource department the salary structure tends to become very
uneven and unfair promotion decisions also may be handled unfairly when the HR department does not
coordinate the decision of individual manger.
e. Expertise
Now a days there exist sophisticated personnel activities that require special expertise. For example,
researchers have developed complex procedures for making employee-selection decisions; statistical
formulas that combine interviews, test scores, and application-blank information have replaced the
subjective interviews traditionally used in making selection decisions. Similarly, many organizations have
developed compensation systems with elaborate benefits packages to replace simple hourly pay or piece rate
incentive systems
f. Cost of Human Resource
Human resource activities have become increasingly important because of the high cost of personal
problem. The largest single expense in most organizations is labor cost, which is often considerably higher
than the necessary because of such problems as absenteeism tardiness and discrimination.

B. Why are we concerned with HRM?
1. Helps you get results - through others.
Different managerial techniques help mangers to direct the performance of employees in desirable direction
in order to achieve the organizational objectives. Through the efforts of others working in an organization,
managers get things done that require effective human resource management.
2. Helps you avoid common personnel mistakes
Qualified HR mangers utilize organization resources in such a way that helps to avoid common personnel
mistakes like the following…
a. Hiring the wrong person for the job
b. Experiencing high turnover
c. Finding employees not doing their best
d. Having your company taken to court because of your discriminatory actions
e. Having your company cited under federal occupational safety laws for unsafe practices
f. Allowing a lack of training to undermine your department’s effectiveness
g. Committing any unfair labor practices
3. Helps you to gain Competitive Advantage
Among all the resources possessed by the organizations it is only Manpower or the Human resources that
create the real difference. Because all organizations can have the same technology, they can possess same
type of financial resources, same sort of raw material can be used to produce the goods and services but the
organizational source that can really create the difference is work force of the organization. Therefore they
are the main sources of innovation creativity in the organizations that can be used as a competitive
advantage. In today’s competitive environment,
these are the people which can create competitive
advantageous for the organizations.
The world around us is changing. No longer can we
consider our share of the “good Life” given. If we
are to maintain some semblance of that life, we as
individual, as organizations, as society will have to
fight actively for it an increasingly competitive
global environment. If organizations are able to
mange its work force efficiently/effectively this will
be beneficial for all stakeholders (Organization,
Employees and Society).
Challenges/Issues of Managing Human Resources in present era
Following are the main issues that are faced by the mangers to manage the workforce of today’s
organization for achievement of objectives.
a. To Attract People
People will be interested to join any organization if it is providing them quality working environment,
attractive benefit and opportunities to excel in future. Keeping in view the opportunities in the market, the
first issues will be to attract good people for your organization.
b. To Develop People
Development is related to provide the opportunities for training and development to match the skills to job
in particular areas. It requires careful need assessment for training and selecting effective training methods
and tools. After attracting/selecting, Continuous development of workforce of the organization leads
towards development of the organization. So that they will start playing their important role in the
organization.
D r. M u kh ta r A h m ed
O rg a n iza tio n : H ig h le v e l o f p ro fita b ility ,
H ig h e r a n n u a l sa le s p e r e m p lo y e e , H ig h
m a rk e t v a lu e .
E m p lo y e e : M o re e m p lo y m e n t se c u rity ,
M o re jo b o p p o rtu n itie s, H ig h w a g e s.
S o c ie ty : Ele v a tin g th e sta n d a rd o f liv in g ,
Stre n g th e n in g e th ic a l g u id e lin e s.
S u c c e ssfu l H R M

c. To Motivate
Motivation means to influence performance of others and to redirect the efforts in desirable direction by
using different motivational tools that can help in fulfilling the mission of organization. Third important
issues/concern will be to keep your workforce motivated so that they should keep on delivering effectively.
d. To Keep Talented People
This is related to retention of workforce in organization and to take steps that can prevent undesirable
detachments of talented and motivated workers from the organization.
C. Discussion on the road-map of HRM
For the convenience and attainment of our course objectives, we divide our course into 42 modules. Each
module includes information for you to acquire and understand, issues for you to consider, and skills for
you to develop.
Road Map of the Course
The list of topics, which we call the ‘road map’ of this course, is given below…
1. Introduction
2. Basic concepts of management and its relationships with HRM
3. Components of an organization
4. Concepts of people working together
5. Individual vs. Group behavior and Teams
6. History of HRM
7. New trends at workplace with changing environment
8. Workforce diversity, pros and cons
9. Functions of HRM
10. Relationship between HR specialist and line managers
11. Legal and ethical issues in HRM
12. Human resource planning (HRP)Human resource information system (HRIS)
14. Job analysis
15. Job analysis continued Job analysis outcomes.
16. Recruitment
17. Source of recruitment
18. Selection
19. Selection Tests
20. Selection process, continued
21. Socialization
22. Training & development
23. Maximizing learning
24. Career management
25. Performance Performance Appraisal
27. Job evaluation and pricing
28. Compensation system
29. Benefits
30. Role of money in performance of employee
31. MotivationOccupation health and safety
33. Stress management
34. Communication in organization
35. Trade union
36. Conflict and Negotiation
37. Power & politics
38. Discipline
39. HR auditing

40. HR control process
41. Leadership
42. Leadership in organization
43. Employee separation
44. International dimension of HRM
45. Conclusion & Review.
Key Terms
Human Resource
Management The staffing functions of the management process. Or the policies and
practices needed to carry out the “people” or human resource aspects of a
management position, including recruiting, screening, training, rewarding,
and appraising etc.
Manager Individuals in an organization who direct the activities of others. Member
of the organization performing the management function
Motivation: Motivation means to influence performance of others and to redirect the
efforts in desirable direction by using different motivational tools that can
help in fulfilling the mission of organization
Organization A systematic arrangement of people to accomplish some specific purpose.
Competitive Advantage Any factor that allows an organization to differentiate its product or
service from those of its competitors to increase market share.
Stakeholders All individuals and groups that are directly or indirectly affected by an
organization’s decisions

Dr. Mukhtar Ahmed
Controlling
Planning
Organizing
Leading
Functions of Management
Lesson 2
ESSENTIALS OF MANAGEMENT
LESSON OUTLINE
Concepts and Essential of Management
Management and its relationship with HRM
LESSON OVERVIEW
This lecture discusses the management process and its role in the organization. To start with, first of all we
will define the Management and then we will go through the functions of management as well as
relationship between management and HRM
.
A. Concepts and Essential of Management
i. What is Management?
Management is the process of working with different resources to accomplish organizational goals. Good
managers do those things both effectively and efficiently. To be effective is to achieve organizational goals. To
be efficient is to achieve goals with minimum waste of resources, that is, to make the best possible use of
money, time, materials, and people. Some managers fail on both criteria, or focus on one at the expense of
another. The best managers maintain a clear focus on both effectiveness and efficiency.
ii. The Functions of Management
What can managers do to be effective and efficient? The management process, properly executed, involves
a wide variety of activities including planning, organizing, leading, and controlling.
These activities, described below, are
the traditional functions of
management
a. Planning
Planning is specifying the goals to be
achieved and deciding in advance the
appropriate actions taken to achieve
those goals. Planning activities include
analyzing current situations,
anticipating the future, determining
objectives, deciding what types of
activities the company will engage in,
choosing corporate and business strategies, and determining the resources needed to achieve the
organization's goals. The outcome of the planning process is the organization’s strategy.
b. Organizing
Organizing is assembling and coordinating the human, financial, physical, informational, and other
resources needed to achieve goals. Activities include attracting people to the organization, specifying job
responsibilities, grouping jobs into work units, marshalling and allocating resources, and creating conditions
so that people and things work together to achieve maximum success. The outcome of organizing is an
organizational structure.
c. Leading
Leading is stimulating people to be high performers. It is directing, motivating, and communicating with
employees, individually and in groups. Leading involves close day-to-day contact with people, helping to
guide and inspire them toward achieving team and organizational goals. Leading takes place in teams,
departments, divisions, and at the tops of entire organization. The outcome of leading is a high level of
motivation and commitment.

‘‘MMaannaaggiinngg iiss lliikkee hhoollddiinngg aa ddoovvee iinn yyoouurr hhaanndd..
IIff yyoouu ssqquueeeezzee ttoooo ttiigghhtt,, yyoouu kkiillll iitt.. OOppeenn yyoouurr
hhaanndd ttoooo mmuucchh,, yyoouu lleett iitt ggoo’’ -- TT.. LLaassoorrddaa
Dr. Mukhtar Ahmed
ORGANIZATIONAL
GOALS
Planning
Leading
Controlling
O
rganizing
HUMAN
RESOURCES
INFORMATION
RESOURCES
PHYSICAL
RESOURCES
FINANCIAL
RESOURCES
The Management Process
d. Controlling
Comprehensive plans; solid organization, and outstanding leaders do not guarantee success. The fourth
functional controlling, monitors progress and implements necessary changes. When managers implement
their plans, they often find that things are not working out as planned. The controlling function makes sure
that goals are met. It asks and answers the question, "Are our actual outcomes consistent with our goals?" It
makes adjustments as needed. Specific controlling activities are to set performance standards that indicate
progress toward long-term goals; to identify performance problems by comparing performance data against
standards; and to take actions to correct
problems. Budgeting, information systems, cost
cutting, and disciplinary action are just a few of
the tools of control. Successful organizations,
large and small, pay close attention to how well
they are doing. They take fast action when
problems arise, and are able to change as needed.
The outcome of controlling is an accurate
measurement of performance and regulation
of efficiency and effectiveness
iii. Effectiveness & Efficiency
Productivity = Efficiency x Effectiveness
a. Efficiency is the ratio of
outputs to inputs.
b. Effectiveness is the degree
to which the organizations
output correspond to the
need and wants of the
external environment that
include customers’ suppliers’
competitors and regulatory
agencies.
iv. Manager
The member of the organization who
participates in the management process by planning, organizing, leading, or controlling the organization's
resources.
v. Types of Mangers
There are three types of mangers…
1. Strategic Manager: Strategic
managers are the senior executives
of an organization and are
responsible for its overall
management. Major activities include developing the company's goals and plans. Typically
strategic managers focus on long-term
issues and emphasize the survival, growth,
and overall effectiveness of the
organization.
2. Tactical Managers: Tactical managers are
responsible for translating the general goals
and plans developed by strategic managers
into objectives that are more specific and activities. These decisions, or tactics, involve both a
Dr. Mukhtar Ahmed
Efficiency: A measure of how well resources
are used to achieve a goal
“Doing Things Right”
Effectiveness: A measure of the
appropriateness of the goals chosen (are these
the right goals?), and the degree to which they
are achieved
“Doing the Right Things Right”
Organizational Performance

Top
Managers
Middle
Managers
Line
Managers
Conceptual Human Technical
Managerial Skills & Managerial Level
shorter time horizon and the coordination of resources. Tactical managers are often called middle
managers, because in large organizations they are located between the strategic and operational
managers. Today's best middle managers have been called "working leaders." They focus on rela-
tionships with other people and on achieving results. They are hands-on, working managers. They
do not just make decisions, give orders, wait for others to produce, and then evaluate results.
They get dirty, do hard work themselves, solve problems, and produce value.
3. Operational Managers: Operational managers are lower-level managers who supervise the
operations of the organization. These managers often have titles such as supervisor or sales
manager. They are directly involved with non-management employees, implementing the specific
plans developed with tactical managers. This role is critical in the organization, because opera-
tional managers are the link between management and non-management personnel. Your first
management position probably will fit into this category.
vi. Managers are Universal:
Managers work in all types of organizations, at all levels, and in all functional areas. Large and small
businesses, hospitals, schools and governments benefit from efficient and effective management. The
leaders of these organizations may be called executives, administrators, or principals, but they are all
managers and are responsible for the success or failure of the organization. This success or failure is
reflected in a manager's career. For example, when a CEO saves a failing corporation, the board rewards
this success with bonuses and stock options. When a professional football team starts losing, the owner
fires the coach, not the team.
vii. The Managerial Skills
Managers need three basic sets of skills: technical, interpersonal, and conceptual.
a. Technical Skills
The skills that include knowledge of and
proficiency in a certain specialized field Managers
need to be technically competent. They need to
know how to plan, organize lead and control. Line
managers need this skill the most while top
manager will need minimum of technical skills.
b. Interpersonal Skills/Human Skills
Interpersonal skills include the ability to work well
with other people both individually and in a
group. Mangers need good interpersonal skills,
knowledge about human behaviors and group
processes, ability to understand the feelings, attitudes and motives of others, and ability to communicate,
clearly and persuasively. Human skills are very
important at each level of management.
c. Conceptual Skills
Conceptual skills include the ability to think and to
conceptualize about abstract and complex situations,
to see the organization as a whole, and to
understand the relationships among the various
subunits, and to visualize how the organization fits
into its broader environment. Conceptual skills
include analytical ability, logical thinking, concept
formation, and inductive reasoning. They manifest
themselves in things like good judgment, creativity,
and the ability to see the big picture. Top
mangers/CEO needs this type of skill the most. Dr. Mukhtar Ahmed
Top
Managers
Middle
Managers
First-line
Managers
Levels of Managers

Dr. Mukhtar Ahmed
Effective
HRM
Effective
HRM
Effective
Organization
Effective
Organization
viii. Levels of Management Three level in the organization can classify managers, particularly for
traditionally structured organizations…
1. First-line managers are the lowest level of management. They’re often called supervisors
2. Middle managers include all levels of management between the first-line level and the top level of
the organization.
3. Top managers include managers at or near the top of the organization who are responsible for
making organization wide decisions and establishing the plans and goals that affect the entire
organization.
Manager’s Roles:
a. Interpersonal roles
• Figurehead—duties that are ceremonial and symbolic in nature
• Leadership—hire, train, motivate, and discipline employees
• Liaison—contact outsiders who provide the manager with information. These may be individuals or
groups inside or outside the organization.
b. Informational roles
• Monitor—collect information from organizations and institutions outside their own
• Disseminator—a conduit to transmit information to organizational members
• Spokesperson—represent the organization to outsiders
c. Decisional roles
• Entrepreneur—managers initiate and oversee new projects that will improve their organization’s
performance
• Disturbance handlers—take corrective action in response to unforeseen problems
• Resource allocators—responsible for allocating human, physical, and monetary resources
• Negotiator role—discuss issues and bargain with other units to gain advantages for their own unit
All managers are mostly concerned with following activities:
• Staffing
• Retention
• Development
• Adjustment
• Managing change
HR Professionals’ Responsibilities:
Line manager
Authorized to direct the work of subordinates—they’re always someone’s boss. In addition, line managers
are in charge of accomplishing the organization’s basic goals.
Staff manager
Authorized to assist and advise line
managers in accomplishing these basic
goals. HR managers are generally staff
managers.
B. Management and its
relationship with HRM
There are five basic functions that all
managers perform: planning,
organizing, staffing, leading, and
controlling. HR management involves
the policies and practices needed to
carry out the staffing (or people)

function of management.
HRM can help to manage the following factors in the organization.
• Productivity
• Operations
• Relationships
• Conflict
• Stress
• Reward systems
Effectiveness and success of entire organization depends upon effective manpower of organization.
Key Terms
Controlling: Specific activities are to set performance standards that indicate progress toward long-term
goals
Decisional roles included those of entrepreneur, disturbance handler, resource allocator, and negotiator
activities.
Disseminator is a conduit to transmit information to organizational members
Disturbance handlers take corrective action in response to unforeseen problems
Effectiveness: A measure of the appropriateness of the goals chosen (are these the right goals?), and the
degree to which they are achieved
Efficiency measure of how well resources are used to achieve a goal
Entrepreneur: managers initiate and oversee new projects that will improve their organization’s
performance
Figurehead: duties that are ceremonial and symbolic in nature
Informational roles included monitoring, disseminating, and spokesperson activities
Interpersonal roles included figurehead, leadership, and liaison activities
Leadership: hires, train, motivate, and discipline employees
Leading: Leading is stimulating people to be high performers It is directing, motivating, and com-
municating with employees, individually and in groups.
Liaison: contact outsiders who provide the manager with information. These may be individuals or groups
inside or outside the organization.
Line manager: Authorized to direct the work of subordinates—they’re always someone’s boss. In
addition, line managers are in charge of accomplishing the organization’s basic goals.
Management: Management is the process of working with different resources to accomplish organizational
goals.
Manager: The member of the organization who participates in the management process by planning,
organizing, leading, or controlling the organization's resources
Monitor: collect information from organizations and institutions outside their own
Negotiator role: discuss issues and bargain with other units to gain advantages for their own unit
Organizing is assembling and coordinating the human, financial, physical, informational, and other
resources needed to achieve goals.
Planning: Planning is specifying the goals to be achieved and deciding in advances the appropriate actions
taken to achieve those goals.
Resource allocators: responsible for allocating human, physical, and monetary resources
Spokesperson: represent the organization to outsiders
Staff manager: Authorized to assist and advise line managers in accomplishing these basic goals.

Organization’s basic systems view
Environment
INPUTS
Human, physical,
financial, and
information
resources
OUTPUTS
Products
and
Services
TRANS-
FORMATION
PROCESS
Feedback loops
Lesson 3
ORGANIZATION AND COMPONENTS OF ORGANIZATION
After studying this chapter, students should be able to understand the concepts about:
Organization
Components of an Organization
LESSON OVERVIEW
This lecture discusses the organization, its types, and the components of organization. An organization is a
managed system designed and operated to achieve a specific set of objectives. We will also discuss the
components of an organization. Remember Managers operate in organizations.
A. Organization
An organization is not a random group of people
who come together by chance. They consciously
and formally establish it to accomplish certain goals
that its members would be unable to reach
individually. A manager's job is to achieve high
performance relative to the organization's
objectives. For example, a business organization has
objectives to (1) make a profit (2) furnish its
customers with goods and services; (3) provide an
income for its employees; and (4) increase the level
of satisfaction for everyone involved.
An organization is a social entity, which is goal
orients and deliberately structured. Organizations
are not functioning in isolated but are linked to
external dynamic environment. Virtually all
organization combines (1) Raw material, (2) Capital and (3) labor & knowledge to produce Goods and
Services.
Types of organization
a) Formal: The part of the organization that has legitimacy and official recognition.
b) Informal: The unofficial part of the organization.
B. Components of Organization:
1. Task
2. People
3. Structure
4. Technology
1. Task: This component can be defined as a mission or purpose of the existence of organization.
Every organization is having a purpose of
existence that is accomplished by
producing certain goods and services as
an output, which is termed as task.
2. People: The workforce or human part of
organization that performs different
operations in the organization.
3. Structure: Structure is the basic
arrangement of people in the
organization.
4. Technology: The intellectual and
mechanical processes used by an
organization to transform inputs into products or services.
7
What is an Organization?What is an Organization?

Systematic Approach to Management:
A system is an entity with a purpose that has interdependent parts. The systems approach suggests viewing
the organization as a system. All systems have four basic characteristics: 1) they operate within an
environment; 2) they are composed of building blocks called elements, components, or subsystems; 3) they
have a central purpose against which the organization’s efforts and subsystems can be evaluated; and 4)
essential systems thinking places focus on the interrelatedness among the subsystems and its environment.
Systematic management emphasized internal operations because managers were concerned primarily with
meeting the explosive growth in demand brought about by the Industrial Revolution. In addition, managers
were free to focus on internal issues of efficiency, in part because the government did not constrain
business practices significantly. Finally, labor was poorly organized. As a result, many managers were
oriented more toward things than toward people.
The influence of the systematic management approach is clear in the following description of one
organization's attempt to control its workers.
Open versus Closed Systems
A closed system does not interact with the outside environment. Although few systems actually take this
form, some of the classical approaches treated organizations as closed systems. The assumption was that if
managers improve internal processes, the organization would succeed. Clearly, however, all organizations
are open systems, dependent on inputs from the outside world, such as raw materials, human resources, and
capital, and output to the outside world that meet the market's needs for goods and services.
Above figure illustrates the open-system perspective. The organizational system requires inputs, which the
organization transforms into outputs, which are received by the external environment. The environment
reacts to these outputs through a feedback loop, which then becomes an input for the next cycle of the
system. The process continues to repeat itself for the life of the system.
As above Figure shows, a system is a set of interdependent parts that processes inputs (such as raw
materials) into outputs (products). Business inputs typically known as resources including human, physical,
financial etc resources. Most businesses use a variety of human, financial, physical, and informational
resources. Manager’s function is to transform these resources into the outputs of the business. Goods and
services are the outputs of the business. Some of the major components of the external environment
include customers, competitors, suppliers, and investors.
Efficiency and Effectiveness
The closed-system focus of the classical theorists emphasized the internal efficiency of the organization;
that is, these perspectives addressed only improvements to the transformation process. Efficiency is the
ratio of outputs to inputs. Systems theory highlights another important dimension for managers:
effectiveness. Effectiveness is the degree to which the organization's outputs correspond to the needs and
wants of the external environment. The external environment includes groups such as customers, suppliers,
competitors, and regulatory agencies. Even a firm that has mastered Taylor's scientific management
techniques and become extremely efficient is vulnerable if, it does not consider the effectiveness of its
output
Subsystem
Systems theory also emphasizes that an organization is one level in a series of subsystems. For instance,
Pakistan Air force is a subsystem of our defense industry and the flight crews are a subsystem of Pakistan
Air force. Again, systems theory points out that each subsystem is a component of the whole and is
interdependent with other subsystems.
Synergy
Systems theory also popularized the concept of synergy, which states that the whole is greater than the sum
of its parts. For example, 3M have applied its core technology of adhesives to many products, from
industrial sealers to Post-it notes. 3M has not had to start from scratch with each product; its adhesives
expertise provides synergies across products.
Human Relation Approach
Another approach to management, human relations, developed during the early 1930s. This approach aimed

at understanding how psychological and social processes interact work situation to influence performance.
Human relations were the first major approach to emphasize informal work relationships and worker
satisfaction.
This approach owes much to other major schools of thought.
The Hawthorne Studies
Western Electric Company, a manufacturer of communications equipment, hired a team of Harvard
researchers led by Elton Mayo and Fritz Roethlisberger. They were to investigate the influence of physical
working conditions on workers' productivity and efficiency in one of the company's factories outside
Chicago. This research project, known as the Hawthorne Studies provided some of the most interesting and
controversial results in the history of management.
The Hawthorne Studies were a series of experiments conducted from 1924 to 1932. During the first stage
of the project (the Illumination Experiments), various working conditions, particularly the lighting in the
factory, were altered to determine the effects of these changes on productivity. The researchers found no
systematic relationship between the factory lighting and production levels. In some cases, productivity
continued to increase even when the illumination was reduced to the level of moonlight. The researchers
concluded that the workers performed and reacted differently because the researchers were observing them.
This reaction is known as the Hawthorne Effect.
This conclusion led the researchers to believe productivity may be affected more by psychological and social
factors than by physical or objective influences. With this thought in mind, they initiated the other four
stages of the project. During these stages, the researchers performed various work group experiments and
had extensive interviews with employees. Mayo and his team eventually concluded that the informal work
group influenced productivity and employee behavior.
The Human Relations Viewpoint
Human relations proponents argued that managers should stress primarily employee welfare, motivation,
and communication. They believed social needs had precedence over economic needs. Therefore,
management must gain the cooperation of the group and promote job satisfaction and group norms
consistent with the goals of the organization.
Another noted contributor to the field of human relations was Abraham Maslow. In 1943, Maslow
suggested that humans have five levels of needs. The most basic needs are the physical needs for food,
water, and shelter; the most advanced need is for self-actualization, or personal fulfillment. Maslow argued
that people try to satisfy their lower level needs and then progress upward to the higher-level needs.
Managers can facilitate this process and achieve organizational goals by removing obstacles and encouraging
behaviors that satisfy people's needs and organizational goals simultaneously.
Although the human relations approach generated research into leadership, job attitudes, and group
dynamics, it drew heavy criticism. Critics believed the philosophy, while scientific management
overemphasized the economic and formal aspects of the workplace; human relations ignored the more
rational side of the worker and the important characteristics of the formal organization. However, human
relations were a significant step in the development of management thought, because it prompted managers
and researchers to consider the psychological and social factors that influence performance.
The Challenges of today’s organization
Organizations are facing different challenges in
today’s environment like:
Technology
Only 20 years ago, few workers used fax machines
or e-mail, and computers occupied entire rooms,
not desktops. Advances in information and
communication technology have permanently
altered the workplace by changing the way
information is created, stored, used, and shared.
Diverse Workforce
A diverse workforce refers to two or more groups,
30
Today’s
organizations
Rapid
Changes
Globalization
Technology
Diverse
Workforce
Multiple
Stakeholders
Responsiveness

each of whose members are identifiable and distinguishable based on demographic or other characteristics
like gender, age group, education etc. Several barriers in dealing with diversity include stereotyping,
prejudice, ethnocentrism, discrimination, tokenism, and gender-role stereotypes.
Multiple Stakeholders
Stakeholders are those who have interests in the organization. Multiple stakeholders for an organization
include the customers, suppliers, consumers, investors, lenders, etc.
Responsiveness
An organization has to be responsive to the challenges and threats that it faces from within the internal or
external environment. It requires quick responsiveness to meet the challenges and opportunities arising out
of these changes.
Rapid Changes
Due to changing internal and external environment, rapid changes in the organization occur. Organization
has to be flexible to adjust to those changes.
Globalization
Managers are faced with a myriad of challenges due to an array of environmental factors when doing
business abroad. These managers must effectively plan, organize, lead, control, and manage cultural
differences to be successful globally.
Key Terms
Diverse Workforce: A diverse workforce refers to two or more groups, each of whose members are
identifiable and distinguishable
Effectiveness: A measure of the appropriateness of the goals chosen (are these the right goals?),
and the degree to which they are achieved
Efficiency: Efficiency is the ratio of outputs to inputs
Organization: Organization is a managed system designed and operated to achieve a specific
set of objectives.
Stakeholders: Stakeholders are those who have interests in the organization
Structure: Structure is the basic arrangement of people in the organization.
Synergy: This concept states that the whole is greater than the sum of its parts
System: A system is an entity with a purpose that has interdependent parts
Task: This component can be defined as a mission or purpose of the existence of
organization

Lesson 4
PEOPLE AND THEIR BEHAVIOR
After studying this chapter, students should be able to understand:
A. Concepts of people working together
B. Organizations and human behavior
LESSON OVERVIEW
As we discussed in the earlier lectures that human resource management is the management of human as
important resources of organization. Each human is different from one another. This difference is due to
the difference of behavior of each employee. In order to manage the humans well, managers need to know
the behavior of people in order to take the best out of them. Today we will be discussing some basic
concepts of the Organizational Behavior. We will have detail discussion on individual behaviors and the
factors influencing the individual behavior.
A. Concepts of people working together
Why to work in organizations?
People can be more productive when working in groups than when working alone. What Managers can do
and what Managers cannot do while managing people,
organizations and society is the myths of management.
Basic purpose of the working or existence of
organization is:
• Link individuals into relationships
• Allocate the tasks to fulfill the objective
• Allocate authority to perform individual tasks
• Coordinate the objectives and activities of separate
units
• Facilitate the flow of work
Organizational Behavior
• OB is concerned specifically with the actions of
people at work. Managers need to develop their interpersonal or people skills if they are going to be
effective in their jobs. Organizational behavior (OB) is a field of study that investigates the impact that
individuals, groups, and structure have on behavior within an organization, and then applies that
knowledge to make organizations work more effectively. Specifically, OB focuses on how to improve
productivity, reduce absenteeism and turnover, and increase employee citizenship and job satisfaction.
We all hold generalizations about the behavior of people. Some of our generalizations may provide
valid insights into human behavior, but many are erroneous. Organizational behavior uses systematic
study to improve predictions of behavior that would be made from intuition alone. Yet, because people
are different, we need to look at OB in a contingency framework, using situational variables to
moderate cause-effect relationships.
• OB addresses some issues that are not obvious, such as informal elements. It offers both challenges and
opportunities for managers. It recognizes differences and helps managers to see the value of workforce
diversity and practices that may need to change when managing in different situation and countries. It
can help improve quality and employee productivity by showing managers how to empower their
people as well as how to design and implement change programs. It offers specific insights to improve
a manager’s people skills. In times of rapid and ongoing change, faced by most managers today, OB can
help managers cope in a world of “temporariness” and learn ways to stimulate innovation. Finally, OB
can offer managers guidance in creating an ethically healthy work environment.
Focus of Organizational Behavior
OB looks at individual behavior, which includes personality, perception, learning, and motivation. It is also
concerned with group behaviors specifically in areas of norms roles, team building, conflicts and
negotiation.
People Working Together

Organizational
Behavior
Research
Understand
organizational
events
Predict
organizational
events
Influence
organizational
events
Components of AttitudesComponents of Attitudes
Cognitive -- thinking
Affective -- feeling
Behavioral -- doing
The Goals of Organizational Behavior
1. The emphasis will be on employee productivity, reduce absenteeism, and turnover.
2. Organizational citizenship—a fourth type of behavior becoming important in determining employee
performance.
3. Attitudes are evaluative statements—favorable or unfavorable—concerning objects, people, or events.
4. An attitude is made-up of three components:
cognition, affect, and behavior.
5. The cognitive component consists of a
person’s beliefs, opinions, knowledge, and
information held by a person.
6. The affective component of an attitude is the
emotional, or feeling, segment of an attitude.
7. The behavioral component of an attitude
refers to an intention to behave in a certain
way.
8. The three most important job-related
attitudes are job satisfaction, job involvement,
and organizational commitment.
Contribution of OB to effectiveness of
Organization:
Wouldn’t a Manager’s job be easier if he or she could explain and predict behavior? This is the focus of
organizational behavior (OB), the study of the actions of people at work. The goal of OB is to explain and
predict behavior of employees at work.
OB focuses on both individual behavior and
group behavior. Managers must understand
behavior in both the formal and informal
components of an organization. Managers are
particularly concerned with three types of
employee behaviors: productivity, absenteeism,
and turnover. A fourth type of behavior,
organizational citizenship, is emerging as a vital
concern.
Managers must also be attentive to employee
attitudes. Attitudes are value statements, either
favorable or unfavorable, concerning people,
events, or objects. Attitudes of special interest to managers pertain to those related to job satisfaction, job
involvement, and organizational commitment. Can you think of ways in which your personal attitudes
(values) have impact on your behavior at work?
Sometimes an individual experiences an inconsistency between two or more attitudes or between behavior
and attitudes. Are happy workers productive workers? The answer to this question is not as simple as it
might appear. Review the relationship between employee happiness and productivity and see what you
think. Many researchers now believe that managers should direct their attention primarily to what might
help employees become more productive.
Five specific personality traits have proven most powerful in explaining individual behavior in
organizations. These are locus of control, Machiavellians, self-esteem, self-monitoring, and risk propensity.
Review these traits so you can be prepared to predict practical work-related behaviors.
Sometimes different people will hear or witnesses the same situations yet interpret them differently. This
happens because of differences in perception. Perception is the process of organizing and interpreting
sensory impressions in order to give meaning to the environment. Managers need to recognize that
employees react to perceptions, not to reality (if there is such a thing as “reality”). Thus, managers must pay

The Environment
• Organization
• Work group
• Job
• Personal life
The Person
• Skills & abilities
• Personality
• Perceptions
• Attitudes
•Values
• Ethics
Behavior
B =B = ff(P,E(P,E))
close attention to how employees perceive both their jobs and management practices.
We constantly learn from our experiences. Sometimes we learn from rewards and punishments that are a
consequence of our behavior. We learn to behave in order to get something we want or to avoid something
we do not want. This is called operative conditioning. An extension of operant conditioning is social
learning theory. Social learning theory emphasizes that we can learn through observation as well as direct
experience. Managers can influence an employees learning through the rewards they allocate and the
examples they set. Does this advice seem equally applicable to parenting?
The behavior of individuals in groups is not the same as the sum total of all of the individuals’ behavior.
Individuals often act differently in groups than when they are alone. This means that managers must also
understand the elements of group behavior. This chapter describes the basic concepts of group behavior.
It is clear that the ability to understand and predict employee behavior is a powerful tool for managers. To
illustrate, a movie director must often “get into the mindset” of characters in a script. Understanding a
character’s perceptions and motivation can help the director guide actors toward an award-winning
performance. Managers, too, can serve as a guide and coach, helping employees meet organizational goals.
B. Organizations and human behavior
Variables Influencing the Individual Human Behaviors:
In simple word behavior is the function of Person and Environment in which he/she is working.
The following two factors mainly influence the individual behaviors…
1. The Persons
2. The Environment of the Organization
The PersonsNo single measure of individual
differences can provide a complete understanding of
an individual or predict all the behaviors of an
individual. It is therefore more useful to consider a
variety of differences that explain aspects of
employee behavior. These can be
• Skills & Abilities
• Personality
• Perceptions
• Attitudes
• Values
• Ethics
Skills & Abilities:
Mental and physical capacities to perform various tasks. This comes from knowledge, learning, and
experiences.
Personality:
Research has shown five major dimensions to be
consistent components of personality. The Big Five
personality dimensions are conscientiousness,
extroversion/introversion, and openness to experience,
emotional stability, and agreeableness.
Conscientiousness - defined as being reliable and
dependable, being careful and organized, and being a
person who plans - is the dimension most strongly
correlated to job performance.
Extroversion/introversion refers to the degree to which
a person is sociable, talkative, assertive, active, and
ambitious. Openness to experience is the degree to
which someone is imaginative, broad-minded, curious, and seeks new experiences. Emotional stability is the
degree to which someone is anxious, depressed, angry, and insecure. Agreeableness refers to the degree to
Personality
Self-concept
Internal
processes
Values
Attitudes
Emotions
Abilities
Behavior

which a person is courteous, likable, good-natured, and flexible. Managers must remember that the
relevance of any personality dimension depends on the situation, the type of job, and the level at which a
person is working.
Four personality traits that have been consistently related to work-related behavior are locus of control,
Type-A behavior, self-monitoring, and Machiavellianism. Locus of control indicates an individual's sense of
control over his/her life, the environment, and external events. Those with an internal locus of control
believe that their actions affect what happens to them, while those with an external locus of control believe
that outside factors affect what happens to them. People who exhibit Type-A behavior try to do more in
less and less time in an apparently tireless pursuit of everything. Type-A people feel great time urgency, are
very competitive, try to do many things at once, and are hostile.
Self-monitoring, the fourth personality trait is the degree to which people are capable of reading and using
cues from the environment to determine their own behavior. Strong self-monitoring skills can help
managers and employees read environmental and individual cues quickly and accurately and adjust behavior
accordingly. People with elements of a Machiavellian personality put self-interest above the group's interests
and manipulate others for personal gain.
Perceptions:
We use the mental process of perception to pay attention selectively to some stimuli and cues in our
environment. There are two types of perception. Social perception process is the process of gathering,
selecting, and interpreting information about how we view themselves and others. In contrast, physical
perception focuses on gathering and interpreting information about physical objects rather than people.
Closure permits us to interpret a stimulus by filling in missing information based on our experiences and
assumption.
Attitudes:
Attitudes are comprised of feelings, beliefs, and behaviors. One important work-related attitude is job
satisfaction, the general attitude that people have toward their jobs. Main five factors contribute to job
satisfaction: pay; the job itself; promotion opportunities; the supervisor; and relations with co-workers. The
relationship between job satisfaction and work performance is complex and influenced by multiple
organizational and personal factors. Managers have more influence over job satisfaction than any other
individual difference discussed in this chapter.
Values:
Values are long-lasting beliefs about what is important, worthwhile, and desirable. A person's value system
is the way he/she organizes and prioritizes values. Terminal values are goals for behavior or for a certain
result that someone wants to achieve. Instrumental values are the means—the instruments—that people
believe they should use to attain their goals. Cultural values can affect personal valuesETHICS. A key
work-related value is the employee's ethics. Those who hold a relativist's view of ethics believe that what is
right or wrong depends on the situation or culture. Those with a Universalist’s view believe that ethical
standards should be applied consistently in all situations and cultures. Value conflict occurs when there is
disagreement among values that an individual holds or between individual and organizational values. To
avoid value conflict, managers should work toward integrating and fitting the values of different employees
with the values of the organization.
The Environment Of Organization
• Work group
• Job
• Personal life
Inside the organization, the work group or the relationship between the group members can affect the
individual behavior. Organizational culture can also have impact on the individual behavior.
Cultural values indicate what a cultural group considers important, worthwhile, and desirable. People share
the values of their culture, which form the basis for individual value systems composed of terminal values
and instrumental values. A key work-related value is a person's ethics. Value systems affect ethical behavior
in organizations. Managers must be most concerned with interpersonal and person-organization value
conflicts. Interpersonal value conflicts occur when two or more people have opposing values, which can

prevent co-workers from working together effectively. Person-organization value conflicts occur when
someone's values conflict with the organization's culture, causing frustration and possibly disrupting
personal performance.
The factors that influence job satisfaction are pay; the job itself; promotion opportunities; supervisors; and
co-workers. The link between job satisfaction and work performance is complex and influenced by multiple
organizational and personal factors. The link appears to be stronger for professionals than for employees at
higher organizational levels.
The Basic OB Model
The basic OB model suggests study of the organization at
following three levels:
1. Organization
2. Group
3. Individual
The purpose of understanding organizations from all three
levels (individual, group, and organization) is to develop a
well-rounded view that will prepare us for the challenges that managers face in today's business
environment. Focusing on the individual level allows us to understand individual differences, perception,
motivation, and learning. Focusing on the group level shows us how more than two people can work
together in groups or teams within an organization. Focusing on the organization level allows us to see the
effects of the organizational environment, technology, strategy, structure, and culture.
Key Terms
Organizational Behavior: OB is concerned specifically with the actions of people at work
Cognitive component: The cognitive component consists of a person’s beliefs, opinions,
knowledge, and information held by a person.
Skills & Abilities: Mental and physical capacities to perform various tasks. This comes from
knowledge, learning, and experiences.
Personality: The unique combination of psychological traits that describes a person.
OR behaviors or trends that influence other people.
Perceptions: Perception is the mental process to pay attention selectively to some
stimuli and cues in our environment.
Attitudes: Attitudes are comprised of feelings, beliefs, and behaviors.
Values: Basic convictions about what is right and wrong.
Ethics: Rules and principles that define right and wrong conduct.

A lot of athletes say they
want to be part of a
cohesive team—but they
also want their name printed
on the back of their jerseys
in 6-inch-high block letters.
S P R bbi
Lesson 5
INDIVIDUAL VS. GROUP BEHAVIOR
After studying this chapter, you should be able to understand the concepts about…
A. Individuals
B. Groups
C. Teams
LESSON OVERVIEW
In this lecture, we will look at individuals, groups, and teams in organizations. We will explore the role and
functioning of groups within organizations and factor affecting the behavior. We will starts by defining a
team, discussing its key characteristics, examining its fit in the organization, and exploring the effect of
national culture and diversity on teams. Next, we will look at various types of teams in organizations
including simple work teams, administrative teams, cross-departmental teams, and process teams.
Organizations that use teams are facing with the critical challenge of making their teams effective through
team building, a process that is examined in detail in this chapter, followed by an in-depth look at teams in
context. The manager needs to understand why employees engage in some behaviors rather than others and
to predict how employees will respond to various actions by the manager. The emphasis will be on
employee productivity, reduce absenteeism and turnover, and increase job satisfaction.
A. Individual
Why to Focus on Individuals:
Individuals are important units of any organization. If we understand the behavior of individuals, we can
predict the outcomes; it will become easy to manage the behaviors of individuals in desirable directions.
We have to look at three individual variables—
biographical characteristics, ability, and learning.
Biographical characteristics are readily available to
managers. Generally, they include data that are contained
in an employee’s personal file. The most important
conclusions are that, age seems to have no relationship to
productivity; older workers and those with longer tenure
are less likely to resign; and married employees have fewer
absences, less turnover, and report higher job satisfaction
than do unmarried employees. But what value can this
information have for managers? The obvious answer is
that it can help in making choices among job applicants.
Ability directly influences an employee’s level of
performance and satisfaction through the ability-job fit.
Given management’s desire to get a compatible fit, what
can be done? First, an effective selection process will
improve the fit. A job analysis will provide information
about jobs currently being done and the abilities that
individuals need to perform the jobs adequately.
Applicants can then be tested, interviewed, and evaluated on the degree to which they possess the necessary
abilities. Second, promotion and transfer decisions affecting individuals already in the organization’s employ
should reflect the abilities of candidates. With new employees, care should be taken to assess critical abilities
that incumbents will need in the job and to match these requirements with the organization’s human
resources. Third, the fit can be improved by fine-tuning the job to better match an incumbent’s abilities.
Often modifications can be made in the job that while not having a significant impact on the job’s basic
activities, better adapts it to the specific talents of a given employee. Examples would be to change some of
the equipment used or to reorganize tasks within a group of employees. A final alternative is to provide
training for employees. This is applicable to both new workers and present job incumbents. Training can
keep the abilities of incumbents current or provide new skills as times and conditions change.
Any observable change in behavior is prima facie evidence that learning has taken place. What we want to

do, of course, is ascertain if learning concepts provide us with any insights that would allow us to explain
and predict behavior. Positive reinforcement is a powerful tool for modifying behavior. By identifying and
rewarding performance-enhancing behaviors, management increases the likelihood that they will be
repeated. Our knowledge about learning further suggests that reinforcement is a more effective tool than
punishment. Although punishment eliminates undesired behavior more quickly than negative reinforcement
does, but punished behavior tends to be only temporarily suppressed rather than permanently changed.
Punishment may produce unpleasant side effects such as lower morale and higher absenteeism or turnover.
In addition, the recipients of punishment tend to become resentful of the punisher. Managers, therefore, are
advised to use reinforcement rather than punishment.
Finally, managers should expect that employees would look to them as models. Managers who are
constantly late to work, or take two hours for lunch, or help themselves to company office supplies for
personal use should expect employees to read the message they are sending and model their behavior
accordingly.
Individual differences do not dictate people’s behavior. Instead, they limit a person’s behavioral range,
making some behavior easier than others.
B. Group
A group is defined as two or more interacting and interdependent individuals who come together to achieve
particular objectives.
Types of Groups
a. Formal groups are work groups established by the organization and have designated work
assignments and established tasks. The behaviors in which one should engage are stipulated by and
directed toward organizational goals.
b. Informal groups are of a social nature and are natural formations. They tend to form around
friendships and common interests.
Why Do People Join Groups?
There is no single reason why individuals join groups.
1. Security reflects a strength in numbers.
• The group helps the individual to feel stronger, have fewer self-doubts, and be more resistant to threats.
2. Status indicates a prestige that comes from belonging to a particular group.
• Inclusion in a group viewed as important provides recognition and status.
3. Self-esteem conveys people's feelings of self-worth.
• Membership can raise feelings of self-esteem--being accepted into a highly valued group.
4. Affiliation with groups can fulfill one's social needs.
• Work groups significantly contribute to fulfilling the need for friendships and social relations.
5. One of the appealing aspects of groups is that they represent power.
• What often cannot be achieved individually becomes possible through group action.
• Power might be desired to protect themselves from unreasonable demands.
• Informal groups additionally provide opportunities for individuals to exercise power.
6. Finally, people may join a group for goal achievement.
• There are times when it takes more than one person to accomplish a particular task.
• There is a need to pool talents, knowledge, or power in order to get a job completed.
Group Roles
What Are Roles?
1. The concept of roles applies to all employees in organizations and to their life outside the
organization as well.
2. A role refers to a set of expected behavior patterns attributed to someone who occupies a given
position in a social unit.
3. Individuals play multiple roles.
4. Employees attempt to determine what behaviors are expected of them.
5. An individual who is confronted by divergent role expectations experiences role conflict.

6. Employees in organizations often face such role conflicts.
Following are the different types of group roles:
1. Task-oriented roles
2. Relationship-oriented roles
3. Individual roles
Task-oriented roles
• Initiator-Contributors
• Information seekers/providers
Relationship-oriented roles
• Encouragers
• Harmonizers
Individual roles
• Blockers
• Jokers
Characteristics of a well-functioning, effective group
A group is considered effective if it is having following characteristics.
• Relaxed, comfortable, informal atmosphere
• Task to be performed are well understood & accepted
• Members listen well & participate in given assignments
• Clear assignments made & accepted
• Group aware of its operation & function
• People express feelings & ideas
• Consensus decision making
• Conflict & disagreement center around ideas or method
C. Team
A team is a mature group with highly independent members who are completely committed to a common
goal. All teams start out as groups, but not all groups become teams. The elements that distinguish teams
from groups are …
• full commitment by members to a common
goal and mission
• interdependent
• mutual accountability
• shared leadership
• trust and a collaborative culture, and
• achievement of synergy
Differentiating Groups and Teams:
Groups and teams are different. All teams are groups, but a group is not always a team. A team is always
distinguished by the fact that its members are committed to a common purpose, a set of performance goals,
and an approach for which they hold themselves mutually accountable. A group is defined as two or more
persons who are interacting with one another in such a manner that each person influences and is
influenced by each other person.
Types of Teams
Organizations use four types of teams, which differ according to the complexity of their task and the
fluidity of their membership.
1. Self managed Teams

2. Cross Departmental Team
3. Quality Circles
4. Virtual Teams
Self-Directed /managed Work Teams:
A self-managed work team is a formal group of employees who operate without a manager and are
responsible for a complete work process or segment that delivers a product or service to an external or
internal customer. This kind of team has control over its work pace, determination of work assignments,
etc. Fully self-managed work teams even select their own members and evaluate performance.
As a result, supervisory positions take on decreased importance and may even be eliminated.
Cross Departmental Team
Cross-departmental teams work on simpler tasks, and their membership fluidity is high, which means that
members come and go over time. Process teams, which address complex tasks, have highly fluid
membership.
Problem solving Team
Problem solving also known as Quality circles, which are simple work teams, consist of eight to ten
volunteers from a common work area who meet to find solutions to specific problems about the quality of
work processes, products, or services. Quality circles have a clear and specific focus on quality improvement
within a single work unit. They meet regularly and have limited power to implement their ideas.
Organizations can establish quality circles without making major organizational changes, because they
operate in parallel to the rest of the structure.
Are Virtual Teams a Reality Today?
A virtual team is an extension of the electronic meetings; virtual team allows groups to meet without
concern for space or time and enables organizations to link workers together that in the past couldn't have
been done. Team members use technology advances to solve problems-even though they may be
geographically dispersed or a dozen time zones away.
Process Teams:
Today's team-based organizations rely mainly on process teams, which do not have departmental affiliation
but function independently to undertake broad organizational-level process improvements. In many cases,
organizations that implement process teams then partially or totally disband their traditional departments.
Self-managed teams (SMTs) are process teams of employees who have full managerial control over their
own work. Functioning without outside supervision, they have the power to manage their own work and to
implement their own decisions.
A team leader within the SMT provides internal facilitation to remove work obstacles and obtain needed
resources. As a team, members coordinate and cooperate with other teams and individuals who are affected
by their decisions and activities. Using SMTs requires a total change in organizational structure; not
surprisingly, lack of commitment is the common reason for failure.
Making Teams Effective Through Team Building
Team building—activities aimed at improving the internal work and relationship processes of teams—
requires attention to both task and interpersonal relationships. In team building, organizations apply the
principles of group dynamics to select complementary members, support more cohesion, manage stages of
group development, and establish constructive norms that foster high performance. Membership in teams is
based on expertise in areas that are necessary for task accomplishment. The shamrock team combines a
core of permanent members with part-time members and outside subcontractors.
Turning Individuals in to teams:
Productive teams require careful selection, training, and management. Guidelines for building effective
teams include: seek employee input; establish urgent, demanding performance standards; select members
for skill and skill potential; pay special attention to first meetings and actions; set clear rules of behavior;
move from “boss” to “coach;” set a few immediate performance-oriented tasks and goals; challenge the

group regularly with fresh facts and information; use the power of positive feedback; shoot for the right
team size; choose people who like teamwork; and train, train, train.
Turning Individuals In to Team Players
1. Introduction
a. Some individuals prefer to be
recognized for their individual
achievements.
b. In some organizations, too, work
environments are such that only
the "strong" survive.
c. Creating teams in such an
environment may meet some
resistance.
d. Teams fit well with countries that
score high on collectivism.
2. What Are the Management Challenges of Creating Team Players?
a. Employees' success, when they are part of teams, is a function of how well the team as a
whole performed.
b. To perform well as team members, individuals must be able to communicate openly and
honestly with one another, to confront differences and resolve conflicts, and to place lower
priority on personal goals for the good of the team.
c. The challenge of creating team players will be greatest where
i. The national culture is highly individualistic.
ii. The teams are being introduced into an established organization that has
historically valued individual achievement.
iii. This describes, for instance, what faced managers at AT&T, Ford, Motorola, and
other large U.S. companies.
d. In contrast, the challenge for management is less demanding when teams are introduced
where employees have strong collectivism values--such as in Japan or Mexico.
e. The challenge of forming teams will also be less in new organizations that use teams as
their initial form of structuring work.
Saturn Corporation, the ability to be a good team player was a hiring prerequisite.
3. What Roles Do Team Members Play?
a. High-performing work teams properly match people to various roles.
b. There are nine potential roles that work team members often can "play."
c. Creator-innovators are imaginative and good at initiating ideas or concepts.
i. They are typically very independent and prefer to work at their own pace in their
own way--and very often on their own time.
d. Explorer-promoters like to take new ideas and champion their cause.
i. They are good at picking up ideas from the creator-innovator and finding the
resources to promote those ideas.
ii. They often lack the patience and control skills to ensure that the ideas are
implemented.
e. Assessor-developers have strong analytical skills.
i. They're at their best when given several different options to evaluate and analyze
before a decision is made.
f. Thruster-organizers like to set up operating procedures to get things done.
i. They set goals, establish plans, organize people, and establish systems to ensure
that deadlines are met.
g. And, somewhat like thruster-organizers, concluder-producers are concerned with results.
i. Their role focuses on insisting that deadlines are kept and commitments fulfilled
SelectionSelection RewardsRewardsTrainingTraining
Turning Individuals Into Team PlayersTurning Individuals Into Team Players

ii. Concluder-producers take pride in producing a regular output to a standard.
h. Controller-inspectors have a high concern for establishing and enforcing rules and policies.
i. They are good at examining details and making sure that inaccuracies are avoided.
ii. They want to check all the facts and figures to make sure they're complete.
i. Upholder-maintainers hold strong convictions about the way things should be done.
i. They will defend the team and fight its battles strongly supporting fellow team
members.
ii. These individuals provide team stability.
j. Reporter-advisers are good listeners and don't tend to press their point of view on others.
i. They tend to favor getting more information before making decisions.
ii. They perform an important role in encouraging the team to seek additional
information and discouraging the team from making hasty decisions.
k. The linkers overlap the others.
i. This role can be "played" by any of the previous eight roles.
ii. Linkers try to understand all views.
iii. They are coordinators and integrators.
iv. They dislike extremism and try to build cooperation among all team members.
l. If forced to, most individuals can perform in any of these roles.
i. Most have two or three they strongly prefer.
m. Managers need to select team members on the basis of an appropriate mix of individual
strengths, and allocate work assignments that fit with each member's preferred style.
4. How Can a Manager Shape Team Behavior?
a. The three most popular ways include proper selection, employee training, and rewarding
the appropriate team behaviors.
5. What Role Does Selection Play?
a. When hiring team members, the organization should ensure that applicants can fulfill their
team roles.
i. Some job applicants lack team skills.
ii. If team skills are woefully lacking, don't hire that candidate.
iii. A candidate who has some basic team skills but needs more refinement can be
hired on a probationary basis and be required to undergo training.
6. Can We Train Individuals to Be Team Players?
a. Performing well in a team involves a set of behaviors, which can be learned.
b. People who were raised on the importance of individual accomplishment can be trained to
become team players.
c. Training specialists can conduct exercises that allow employees to experience the
satisfaction that teamwork can provide.
d. The workshops offered usually cover such topics as team problem solving,
communications, negotiations, conflict resolution, and coaching skills.
e. Outside consultants can provide a learning environment in which workers can gain
practical skills for working in teams.
7. What Role Do Rewards Play in Shaping Team Players?
a. The organization's reward system needs to encourage cooperative efforts rather than
competitive ones.
b. Lockheed Martin's Space Launch Systems has organized its 1,000+ employees into teams.
i. Rewards are structured to return a percentage increase in the bottom line to the
team members on the basis of achievement of the team's performance goals.
c. Promotions, pay raises, and other forms of recognition should be given to employees for
how effective they are as a collaborative team member.
i. Individual contribution is balanced with selfless contributions to the team.
d. Managers cannot forget the inherent rewards that employees can receive from teamwork.
i. Work teams provide camaraderie.

e. There are inherent rewards being on a team-it's exciting and satisfying to be part of a
successful one.
8. How Can a Manager Reinvigorate a Mature Team?
a. Effective teams can become stagnant.
i. Initial enthusiasm can give way to apathy.
ii. Time can diminish the positive value from diverse perspectives as cohesiveness
increases.
iii. Teams don't automatically stay at the "performing" stage.
iv. Familiarity and team success can lead to contentment and complacency.
b. Mature teams, also, are particularly prone to suffer from groupthink.
i. Mature teams early successes are often due to having taken on easy tasks.
ii. As time passes, the team has to begin to tackle the more difficult issues.
c. What a manager can do to reinvigorate mature teams, four suggestions.
i. Prepare team members to deal with the problems of team maturity.
ii. Remind team members that they are not unique.
iii. Offer refresher training.
iv. Provide them with refresher training in communication, conflict resolution, team
processes, and similar skills.
v. Offer advanced training.
vi. Mature teams can benefit from training to develop stronger problem-solving,
interpersonal, and technical skills.
vii. Encourage teams to treat their development as a constant learning experience.
viii. Just as organizations use continuous improvement program, teams should
approach their own development as part of a search for continuous improvement.
Key Terms
Individuals: Individuals are important units of any organization
Group: A group is defined as two or more interacting and interdependent individuals who
come together to achieve particular objectives.
Team: A team is a mature group with highly independent members who are completely
committed to a common goal.
Role: A role refers to a set of expected behavior patterns attributed to someone who
occupies a given position in a social unit.
Self Esteem: Self-esteem conveys people's feelings of self-worth.

Lesson 6
PERSONNEL MANAGEMENT TO HUMAN RESOURCE MANAGEMENT
After studying this chapter, students should be able to understand the following concepts:
A. The Personnel Management
B. History of Personnel Management
C. Shifting from Personnel Management to HRM
LESSON OVERVIEW
This lecture provides meaning about the basic concept of personnel management, historical perspective of
the development of HRM department in organization and the factors that played important role in
conversion of personnel management department to Human Resource management Department.
A. The Concept of Personnel Management
The term personnel Management and Human Resource management refer to the same processes. Human
resource management is a modern term that emerged during the 1970s and won final acceptance in 1989.
Both terms, however referred to the same thing; the personnel who work for a company represent that
company’s human resources.
Although Human Resource Management department as we know them did not generally exist until the
1940s, the activities performed by these departments were not all brand new; in fact, many of the Human
Resource practices and programs that we see today ace roots in the earlier times.
Human Resource Management (HRM) historically known as personal management, deals with formal
system for the management of the people within the organization. As many well-known companies report
that they are trying to transform their workforce into a source of completive advantage.
HR mangers have many concerns regarding their workers. These concerns include how to mange layoffs,
address reduced employee loyalty, create a well trained highly motivated work force that can deliver higher
quality and productivity. Mange and increase diverse workforce and contain health care cost.
HRM has been undergoing transformation. In 1970s, the job of the HR manger was to keep their
companies out of court and in compliance with the increasing number of regulations governing the work
place. In the 1980s HR mangers had to address staffing costs related to mergers and acquisitions and
downsizing. The economic issues related to an increasingly global and completive workplace characterize
the 1990s. Beside these concerns Firms are also facing some other challenges regarding workforce before
we take up the HR challenges that face managers, we need to define manager and say a word about where
human resources fit into the organization. Managers are people who are in charge of others and are
responsible for the timely and correct execution of actions that promote their units' successful performance.
B. History of Personnel Management
A group of people becomes an organization when they cooperate with each other to achieve common
goals. Communication among them is therefore important. But people have individual motivations, which
often differ, from the corporate goals. An effective organization is one which succeeds in getting people to
accept that cooperating to achieve organizational goals also helps them to achieve their own goals provided
they are adequately rewarded through extrinsic and intrinsic rewards. This is achieved primarily through
leadership and motivation.
Employers therefore increasingly view human resource management from a strategic perspective, and as an
appropriate means through which the chasm between organizational and individual goals can be narrowed.
As it has been aptly observed:
"Part of the problem is that we have split off human resource management from the general management
problem, as if there were some other kind of management other than human resource management. As long
as organizations are based upon the coordinated action of two or more people, management is by definition
human resource management.
Despite the proliferation of writings and studies on HRM, there is a wide gap between the rhetoric and the
reality, though the gap has been narrowing in the 1990s. There is as yet inadequate research to ascertain the
extent to which practice matches corporate policy statements, and the impact of HRM policies and practices

on employee behavior and morale. To have a major impact on enterprises, HRM has to be diffused across
an economy, rather than remain islands of excellence. Nevertheless, promoting excellent models of HRM
stimulates interest in better people management.
HRM has three basic goals, which contribute to achieving management objectives. The first is integration of
HRM in two senses: integrating HRM into an organization's corporate strategy, and ensuring an HRM view
in the decisions and actions of line managers. Integration in the first sense involves selecting the HRM
options consistent with (and which promote) the particular corporate strategy. The option is determined by
the type of employee behavior expected (e.g. innovation) needed to further the corporate strategy. For
instance, the HRM policies in relation to recruitment, appraisal, compensation, training, etc. differ according
to whether the business strategy is one of innovation, quality enhancement or cost reduction. A strategy of
innovation may require a pay system less influenced by market rates but which rewards creativity, and the
pay rates would even be low so long as there are ways of making up the earnings package. A cost reduction
strategy may lead to pay rates being strongly influenced by market levels. Similarly, training and
development would receive less emphasis in a cost reduction strategy than in one where the objective is
innovation or quality. But such integration is difficult without securing the inclusion of a HRM view in the
decisions and practices of line managers. This requires that HRM should not be a centralized function.
A second goal of HRM is securing commitment through building strong cultures. This involves promoting
organizational goals by uniting employees through a shared set of values (quality, service, innovation, etc.)
based on a convergence of employee and enterprise interests, which the larger Japanese enterprises have
been particularly adept at.
A third goal of HRM is to achieve flexibility and adaptability to manage change and innovation in response
to rapid changes consequent upon globalization. Relevant to HRM policies in this regard are training and
multi-skilling, re-organization of work and removal of narrow job classifications. Appropriate HRM policies
are designed, for instance, to recruit, develop and retain quality staff, to formulate and implement agreed
performance goals and measures, and to build a unified organizational culture.
C. Shifting from Personnel Management to HRM
The increasingly important role of HRM is reflected in the transformation of the personnel management
function from one of concentrating on employee welfare to one of managing people in a way, which
matches organizational and individual goals and providing employees with intrinsic and extrinsic rewards.
Therefore, today Human Resource Management (HRM), historically known as personal management, deals
with formal system for the management of the people within the organization. Many well-known companies
report that they are trying to transform their workforce into a source of completive advantage.
Stages of shifting of Personnel Management to HRM:
First, HRM earlier reacted piece-meal to problems as they arose. Effective HRM seeks to link HRM issues
to the overall strategy of the organization, with the most effective HRM policies and practices integrated
into such corporate policies and strategies to reinforce or change an organization's culture. Integration is
needed in two senses - integrating HRM issues in an organization's strategic plans and securing the
acceptance and inclusion of a HRM view in the decisions of line managers. The HRM policies in respect of
the various functions (e.g. recruitment, training, etc.) should be internally consistent. They must also be
consistent with the business strategies and should reflect the organization's core values. The problem of
integrating HRM view business strategy arises, for example, in a diversified enterprise with different
products and markets. In such cases it is difficult to match HRM policies with strategies that could vary
among different business activities, each of which may call for different HRM policies.
Second, building strong cultures is a way of promoting particular organizational goals, in that "a 'strong
culture' is aimed at uniting employees through a shared set of managerially sanctioned values ('quality',
'service', 'innovation' etc.) that assume an identification of employee and employer interests.
However, there can be tension between a strong organizational culture and the need to adapt to changed

circumstances and to be flexible, particularly in the highly competitive and rapidly changing environment in
which employers have to operate today. Rapid change demanded by the market is sometimes difficult in an
organization with a strong culture. IBM has been cited as a case in point. Its firmly-held beliefs about
products and services made it difficult for it to effect changes in time, i.e. when the market required a radical
change in product and service (from mainframe, customized systems, salesmen as management consultants
to customer-as-end-user, seeking quality of product and service) to personal computers (standardized
product, cost competition, dealer as customer). Nevertheless, in the long term a strong organizational
culture is preferable to a weak one.
Third, the attitude that people are a variable cost is, in effective HRM, replaced by the view that people are
a resource and that as social capital can be developed and can contribute to competitive advantage.
Increasingly, it is accepted that competitive advantage is gained through well-educated and trained,
motivated and committed employees at all levels. This recognition is now almost universal, and accounts for
the plausible argument that training and development are, or will be, the central pillar of HRM.
Fourth, the view that the interests of employees and management or shareholders are divergent and
confliction - though substantially true in the past - is giving way to the view that this need not necessarily be
so. As organization, which practices, effective HRM seeks to identify and promote a commonality of
interests. Significant examples are training which enhances employment security and higher earning capacity
for employees while at the same time increasing the employee's value to the enterprise's goals of better
productivity and performance; pay systems which increase earnings without significant labor cost increases,
and which at the same time promote higher performance levels; goal-setting through two-way
communication which establishes unified goals and objectives and which provides intrinsic rewards to the
employee through a participatory process.
Fifth, top-down communication coupled with controlled information flow to keep power within the
control of management giving way to a sharing of information and knowledge. This change facilitates the
creation of trust and commitment and makes knowledge more productive. Control from the top is in
effective HRM being replaced by increasing employee participation and policies, which foster commitment
and flexibility that help organizations to change when necessary. The ways in which the larger Japanese
enterprises have installed participatory schemes and introduced information-sharing and two-way
communication systems are instructive in this regard.
In enterprises that tend to have corporate philosophies or missions, and where there are underlying values
that shape their corporate culture, HRM becomes a part of the strategy to achieve their objectives. In some
types of enterprises such as ones in which continuous technological change takes place, the goal of
successfully managing change at short intervals often requires employee cooperation through emphasis on
communication and involvement. As this type of unit grows, "If there is strategic thinking in human
resource management these units are likely to wish to develop employee-relations policies based on high
individualism paying above market rates to recruit and retain the best labor, careful selection and
recruitment systems to ensure high quality and skill potential, emphasis on internal training schemes to
develop potential for further growth, payment system designed to reward individual performance and
cooperation, performance and appraisal reviews, and strong emphasis on team work and communication ...
In short, technical and capital investment is matched by human resource investments, at times reaching near
the ideals of human resource management.
Shift of personnel management to HRM took place in three stages:
Records and
1. Records and Administration
2. Accountability Regulations
3. Competitive Advantage
1. Records and Administration
In first stage the primary activities, which were carried out by personnel department, were, Planning
Company picnics Scheduling vacations, Enrolling workers for health-are coverage, Planning retirement
parties These concerns include how to mange layoffs, address reduced employee loyalty, create a well

trained highly motivated work force that can deliver higher quality and productivity, mange and increase
diverse workforce and contain health care cost.
2. Accountability Regulations
During this stage primary framework of rules and regulations started emerging tin the organization. In
1970s, the job of the HR manger was to keep their companies out of court and in compliance with the
increasing number of regulations governing the work place. In the 1980s HR mangers had to address
staffing costs related to mergers and acquisitions and downsizing. The economic issues related to an
increasingly global and completive workplace characterize the 1990s. Beside these concerns
3. Competitive Advantage
The aim of this shift stage is from merely securing compliance to the more ambitious one of winning
commitment. The employee resource, therefore, becomes worth investing in, and training and development
thus assume a higher profile. These initiatives are associated with, and maybe are even predicated upon, a
tendency to shift from a collective orientation to the management of the workforce to an individualistic
one. Accordingly management looks for 'flexibility' and seeks to reward differential performance in a
differential way. Communication of managerial objectives and aspirations takes on a whole new importance.
What separates or distinguishes HRM from the traditional personnel function is the integration of HRM
into strategic management and the pre-occupation of HRM with utilizing the human resource to achieve
strategic management objectives. HRM "seeks to eliminate the mediation role and adopts a generally unitary
perspective. It emphasizes strategy and planning rather than problem solving and mediation, so that
employee cooperation is delivered by programme of corporate culture, remuneration packaging, and team
building and management development for core employees, while peripheral employees are kept at arm's
length.
HRM strategies may be influenced by the decisions taken on strategy (the nature of the business currently
and in the future) and by the structure of the enterprise (the manner in which the enterprise is structured or
organized to meet is objectives). In an enterprise with effective HRM polices and practices, the decisions on
HRM are also strategic decisions influenced by strategy and structure, and by external factors such as trade
unions, the labor market situation and the legal system. In reality most firms do not have such a well
thought out sequential HRM model. But we are considering here is also effective HRM, and thus a model
where HRM decisions are as strategic as the decisions on the type of business and structure.
At a conceptual level the interpretations of HRM indicate different emphases, which lead to concentration
on different contents of the discipline. The various distinctions or interpretations indicate that HRM "Can
be used in a restricted sense so reserving it as a label only for that approach to labor management which
treats labor as a valued asset rather than a variable cost and which accordingly counsels investment in the
labor resource through training and development and through measures designed to attract and retain a
committed workforce. Alternatively it is sometimes used in an extended way so as to refer to a whole array
of recent managerial initiatives including measures to increase the flexible utilization of the labor resource
and other measures, which are largely directed at the individual employee. But another distinction can also
be drawn. This directs attention to the 'hard' and 'soft' versions of HRM. The 'hard' one emphasizes the
quantitative, calculative and business-strategic aspects of managing the headcounts resource in as 'rational' a
way as for any other economic factor. By contrast, the 'soft' version traces its roots to the human-relations
school; it emphasizes communication, motivation, and leadership. There are several ways in which HRM
has changed earlier attitudes and assumptions of personnel management about managing people. The new
model of HRM includes many elements vital to the basic management goal of achieving and maintaining
competitiveness.

Lesson 7
HRM IN A CHANGING ENVIRONMENT
A. HRM in a Changing Environment
B. New trends at work place
LESSON OVERVIEW
This lecture will primarily help students who intend to be managers, deal effectively with the challenges of
managing people. Firms that deal with these challenges effectively are likely to outperform those that do
not. These challenges may be categorized according to their primary focus: the environment, the
organization, or the individual.
A. HRM in a Changing Environment: The Challenges
Today’s organizations are facing challenges upon following levels:
i. Environmental Challenges
ii. Organizational Challenges
iii. Individual Challenges
i. Environmental Challenges
Environmental challenges refer to forces external to the firm that are largely beyond management’s control
but influence organizational performance. They include: rapid change, the internet revolution, workforce
diversity, globalization, legislation, evolving work and family roles, and skill shortages and the rise of the
service sector.
Six important environmental challenges today are:
a) Rapid change,
b) Work force diversity,
c) Globalization,
d) Legislation,
e) Technology
f) Evolving work and family roles,
g) Skill shortages and the rise of the service sector
a) Rapid Change
Many organizations face a volatile environment in which change is nearly constant. If they are to survive
and prosper, they need to adapt to change quickly and effectively. Human resources are almost always at the
heart of an effective response system. Here are a few examples of how HR policies can help or hinder a
firm grappling with external change:
b) Work Force Diversity.
All these trends present both a significant challenge and a real opportunity for managers. Firms that
formulate and implement HR strategies that capitalize on employee diversity are more likely to survive and
prosper.
c) Globalization.
One of the most dramatic challenges facing as they enter the twenty-first century is how to compete against
foreign firms, both domestically and abroad. Many companies are already being compelled to think globally,
something that doesn't come easily to firms long accustomed to doing business in a large and expanding
domestic market with minimal foreign competition.
Weak response to international competition may be resulting in upwards layoffs in every year. Human
resources can play a critical role in a business's ability to compete head-to-head with foreign producers. The
implications of a global economy on human resource management are many. Here are a few examples:
Worldwide company culture
Some firms try to develop a global company identity to smooth over cultural differences between domestic
employees and those in international operations. Minimizing these differences increases cooperation and

can have a strong impact on the bottom line. For instance, the head of human resources at the European
division of Colgate Palmolive notes, "We try to build a common corporate culture. We want them all to be
Colgaters."
Global alliances”
Some firms actively engage in international alliances with foreign firms or acquire companies overseas to
take advantage of global markets. Making such alliances work requires a highly trained and devoted staff.
For instance, Phillips (a Netherlands lighting and electronics firm) became the largest lighting manufacturer
in the world by establishing a joint venture with AT&T and making several key acquisitions.
These illustrations show how firms can use HR strategies to gain a worldwide competitive advantage.
d) Legislation
Much of the growth in the HR function over the past three decades may be attributed to its crucial role in
keeping the company out of trouble with the law. Most firms are deeply concerned with potential liability
resulting from personnel decisions that may violate laws enacted by the state legislatures, and/or local
governments. These laws are constantly interpreted in thousands of cases brought before government
agencies, federal courts, state courts, and t Supreme Court.
How successfully a firm manages its human resources depends to a large extent on its ability to deal
effectively with government regulations. Operating within the legal framework requires keeping track of the
external legal environment and developing internal systems (for example, supervisory training and grievance
procedures) to ensure compliance and minimize complaints. Many firms are now developing formal policies
on sexual harassment and establishing internal administrative channels to deal with alleged incidents before
employees feel the need to file a lawsuit.
Legislation often has a differential impact on public- and private sector organizations. (Public sector is
another term for governmental agencies; private sector refers to all other types of organizations.) Some
legislation applies only to public-sector organizations. For instance, affirmative action requirements are
typically limited to public organizations and to organizations that do contract work for them. However,
much legislation applies to both public- and private sector organizations. In fact, it's difficult to think of any
HR practices that are not influenced by government regulations.
e) Technology
The world has never before seen such rapid technological changes as are presently occurring in the
computer and telecommunications industries. One estimate is that technological change is occurring so
rapidly that individuals may have to change their entire skills three or four times in their career. The
advances being made, affect every area of a business including human resource management.
f) Evolving Work and Family Roles
The proportion of dual-career families, in which both wife and husband (or both members of a couple)
work, is increasing every year. Unfortunately, women face the double burden of working at home and on
the job, devoting 42 hours per week on average to the office and an additional 30 hours at home to
children. This compares to 43 hours spent working in the office and only 12 hours at home for men.
More and more companies are introducing "family-friendly" programs that give them a competitive
advantage in the labor market. These programs are HR tactics that companies use to hire and retain the
best-qualified employees, male or female, and they are very likely to payoff. For instance, among the well
known organizations / firms, half of all recruits are women, but only 5% of partners are women. Major
talent is being wasted as many women drop out after lengthy training because they have decided that the
demanding 10- to 12-year partner track requires a total sacrifice of family life. These firms have started to
change their policies and are already seeing gains as a result. Different companies have recently begun
offering child-care and eldercare referral services as well to facilitate women workers as well as are
introducing alternative scheduling to allow employees some flexibility in their work hours.
g) Skill Shortages and the Rise of the Service Sector.
Expansion of service-sector employment is linked to a number of factors, including changes in consumer
tastes and preferences, legal and regulatory changes, advances in science and technology that have
eliminated many manufacturing jobs, and changes in the way businesses are organized and managed.
Service, technical, and managerial positions that require college degrees will make up half of all

manufacturing and service jobs by 2000. Unfortunately, most available workers will be too unskilled to fill
those jobs. Even now, many companies complain that the supply of skilled labor is dwindling and that they
must provide their employees with basic training to make up for the shortcomings of the public education
system. To rectify these shortcomings, companies currently spend large amount year on a wide variety of
training programs.
ii. Organizational Challenges
Organizational challenges refer to concerns that are internal to the firm. However, they are often a
byproduct of environmental forces because no firm operates in a vacuum. These issues include:
competitive position (cost, quality, and distinctive capability), decentralization, downsizing, organizational
restructuring, self-managed work teams, small businesses, organizational culture, technology, and
outsourcing.
Organizational challenges are concerns or problems internal to a firm. They are often a byproduct of
environmental forces because no firm operates in a vacuum. Still, managers can usually exert much more
control over organizational challenges than over environmental challenges. Effective managers spot
organizational issues and deal with them before they become major problems. One of the themes of this
text is proactively: the need for firms to take action before problems get out of hand. Only managers who
are well informed about important HR issues and organizational challenges can do this. These challenges
include the need for a competitive position and flexibility, the problems of downsizing and organizational
restructuring, the use of self-managed work teams, the rise of small businesses, the need to create a strong
organizational culture, the role of technology, and the rise of outsourcing.
An organization will outperform its competitors if it effectively utilizes its work force's unique combination
of skills and abilities to exploit environmental opportunities and neutralize threats. HR policies can
influence an organization's competitive position by
a) Controlling costs,
b) Improving quality, and
c) Creating distinctive capabilities
d) Restructuring
a) Controlling costs
One way for a firm to gain a competitive advantage is to maintain low costs and a strong cash flow. A
compensation system that uses innovative reward strategies to control labor costs can help the organization
grow. A well-designed compensation system rewards employees for behaviors that benefit the company.
Other factors besides compensation policies can enhance a firm's competitiveness by keeping labor costs
under control. These include: better employee selection so that workers are more likely to stay with the
company and to perform better while they are there, training employees to make them more efficient and
productive; attaining harmonious labor relations); effectively managing health and safety issues in the
workplace and structuring work to reduce the time and resources needed to design, produce, and deliver
products or services
b) Improving quality.
The second way to gain a competitive advantage is to engage in continuous quality improvement. Many
companies are implementing total quality management (TQM) initiatives, which are programs designed to
improve the quality of all the processes that lead to a final product or service. In a TQM program, every
aspect of the organization is oriented toward providing a quality product or service.
c) Creating Distinctive Capabilities
The third way to gain a competitive advantage is to utilize people with distinctive capabilities to create
unsurpassed competence in a particular area (for example, 3M's competence in adhesives, Carlson
Corporation's leading presence in the travel business, and Xerox's dominance of the photocopier market).
d) Restructuring
A number of firms are changing the way the functions are performed. For example, some companies are
restructuring HR for reasons such as time pressures, financial considerations, and market pressures. This

restructuring often results in a shift in terms of who performs each function. Organizations still perform the
majority of a firm’s HR functions inside the firm.
Adjusting to HR restructuring trends—who performs the human resource management tasks? The
traditional human resource manager continues to be in place in most organizations, but some organizations
are also using shared service centers, outsourcing, and line managers to assist in the delivery of human
resources to better accomplish organizational objectives. Additionally, the size of some HR departments is
getting smaller because certain functions are now being accomplished by others. This shift permits the HR
managers to focus on more strategic and mission-oriented activities.
i. The Human Resource Manager--An individual who normally acts in an
advisory or staff capacity, working with other managers to help them deal with
human resource matters. One general trend is that HR personnel are servicing an
increasing number of employees. The human resource manager is primarily
responsible for coordinating the management of human resources to help the
organization achieve its goals. There is a shared responsibility between line
managers and human resource professionals.
ii. Shared Service Centers—Take routine, transaction-based activities that are
dispersed throughout the organization and consolidate them in one place.
iii. Outsourcing Firms—The process of transferring responsibility for an area of
service and its objectives to an external provider. The main reason for this
movement was to reduce transaction time, but other benefits include cost
reductions and quality improvements. Companies found that administrative,
repetitive tasks are often performed in a more cost-effective manner by external
sources.
iv. Line Managers—Line managers, by the nature of their jobs, are involved with
human resources. Line managers in certain firms are being used more to deliver
HR services. When implemented, this change reduces the size of the HR
department.
v. Decentralization: In the traditional organizational structure, most major
decisions are made at the top and implemented at lower levels. It is not
uncommon for these organizations to centralize major functions, such as human
resources, marketing, and production, in a single location (typically corporate
headquarters) that serves as the firm's command center. Multiple layers of
management are generally used to execute orders issued at the top and to control
the lower ranks from above. Employees who are committed to the firm tend to
move up the ranks over time in what some have called the internal labor market.
However, the traditional top-down form of organization is quickly becoming
obsolete, both because it is costly to operate and because it is too inflexible to
compete effectively. It is being replaced by decentralization, which transfers
responsibility and decision-making authority from a central office to people and
locations closer to the situation that demands attention. HR strategies can play a
crucial role in enhancing organizational flexibility by improving decision-making
processes within the firm. The need for maintaining or creating organizational
flexibility in HR strategies is addressed in several chapters of this book, including
those dealing with work flows, compensation and training.
vi. Downsizing – Periodic reductions in a company's work force to improve its
bottom line-often called downsizing-are becoming standard business practice,
even among firms that were once legendary for their "no layoff' policies, such as
AT&T, IBM, Kodak, and Xerox. In addition to fostering a lack of emotional
commitment, transient employment relationships create a new set of challenges

for firms and people competing in the labor market, as well as for government
agencies that must deal with the social problems associated with employment
insecurity (including loss of health insurance and mental illness). However, the
good news for laid-off employees is that the poor-performance stigma traditionally
attached to being fired or laid off is fading.
iii. Individual Challenges
Human resource issues at the individual level address concerns that are most pertinent to decisions
involving specific employees. These issues almost always reflect what is happening in the larger
organization. How individuals are treated also is likely to have an effect on organizational issues. For
instance, if many key employees leave a firm to join its competitor, it will affect the competitive posture of
the firm. The individual issues include matching people and organization, ethics and social responsibility,
productivity, empowerment, brain drain, and job insecurity.
Human resource issues at the individual level address the decisions most pertinent to specific employees.
These individual challenges almost always reflect what is happening in the larger organization. For instance,
technology affects individual productivity; it also has ethical ramifications in terms of how information is
used to make HR decisions (for example, use of credit or medical history data to decide whom to hire).
How the company treats its individual employees is also likely to affect the organizational challenges we
discussed earlier. For example, if many key employees leave the firm to join competitors, the organization's
competitive position is likely to be affected. In other words, there is a two-way relationship between
organizational and individual challenges. This is unlike the relationship between environmental and
organizational challenges, in which the relationship goes only one way few organizations can have much
impact on the environment. The most important individual challenges today involve, productivity, ethics
and social responsibility, productivity, empowerment, brain drain, job security and matching people and
organizations. Here we discuss each of them…
a. Productivity is a measure of how much value individual employees add to the goods or services
that the organization produces. The greater the output per individual, the higher the organization's
productivity. Two important factors that affect individual productivity are ability and motivation.
Employee ability, competence in performing a job, can be improved through a hiring and placement
process that selects the best individuals for the job. It can also be improved through training and
career development programs designed to sharpen employees' skills and prepare them for additional
responsibilities. Motivation refers to a person's desire to do the best possible job or to exert the
maximum effort to perform assigned tasks. Motivation energizes, directs, and sustains human
behavior. A growing number of companies recognize that employees are more likely to choose a
firm and stay there if they believe that it offers a high quality of work life (QWL).
b. Ethics and Social Responsibility – Corporate social responsibility refers to the extent to which
companies should and do channel resources toward improving one or more segments of society
other than the firm’s owners or stockholders. Ethics is the bedrock of socially responsible behavior.
People’s expectations that their employers will behave ethically are increasing, so much that many
firms and professional organizations have created codes of ethics outlining principles and standards
of personal conduct for their members. Unfortunately, these codes often do not meet employees'
expectations of ethical employer behavior. These negative perceptions have worsened over the
years. In a recent poll of Harvard Business Review readers, almost half the respondents indicated their
belief that managers do not consistently make ethical decisions. The widespread perceptions of
unethical behavior may be attributed to the fact that managerial decisions are rarely clear-cut. Except
in a few blatant cases (such as willful misrepresentation), what is ethical or unethical is open to
debate. Even the most detailed codes of ethics are still general enough to allow much room for
managerial discretion. In other words, many specific decisions related to the management of human
resources are subject to judgment calls. A company that exercises social responsibility attempts to
balance its commitments-not only to its investors, but also to its employees, its customers, other
businesses, and the community or communities in which it operates. For example, McDonald's
established Ronald McDonald houses several years ago to provide lodging for families of sick

children hospitalized away from home. Sears and General Electric support artists and performers,
and many local merchants support local children's sports teams.
c. Empowerment – In recent years many firms have reduced employee dependence on superiors and
placed more emphasis on individual control over (and responsibility for) the work that needs to be
done. This process has been labeled empowerment because it transfers direction from an external
source (normally the immediate supervisor) to an internal source (the individual's own desire to do
well). In essence, the process of empowerment entails providing workers with the skills and
authority to make decisions that would traditionally be made by managers. The goal of
empowerment is an organization consisting of enthusiastic, committed people who perform their
work ably because they believe in it and enjoys doing it (internal control). This situation is in stark
contrast to an organization that gets people to work as an act of compliance to avoid punishment
(for example, being fired) or to qualify for a paycheck (external control).
d. Brain Drain - With organizational success more and more dependent on knowledge held by
specific employees, companies are becoming more susceptible to brain drain-the loss of intellectual
property that results when competitors lure away key employees. High-Tec firms are particularly
vulnerable to this problem. Such important industries as semiconductors and electronics suffer from
high employee turnover as key employees, inspired by the potential for huge profits, leave
established firms to start their own businesses. This brain drain can negatively affect innovation and
cause major delays in the introduction of new products. To make matters worse, departing
employees, particularly those in upper management, can wreak considerable havoc by taking other
talent with them when they leave. To combat the problem of defection to competitors, some firms
are crafting elaborate ant defection devices. For example, Compaq computer has introduced a policy
that revokes bonuses and other benefits to key executives if they take other employees with them
when they quit. Micron Technology staggers key employees' bonuses; they lose un-awarded portions
when they leave.
e. Job Insecurity – In this era of downsizing and restructuring, many employees fear for their jobs.
For most workers, being able to count on a steady job and regular promotions is a thing of the past.
Even the most profitable companies have laid off workers. Companies argue that regardless of how
well the firm is doing, layoffs have become essential in an age of cutthroat competition. In addition,
the stock market often looks favorably on layoffs. For employees, however, chronic job insecurity is
a major source of stress and can lead to lower performance and productivity. Though union
membership has been declining in recent years, many workers still belong to unions, and job security
is now a top union priority. In return for job security, though, many union leaders have had to make
major concessions regarding pay and benefits.
f. Matching People and Organizations Research suggests that HR strategies contribute to firm
performance most when the firm uses these strategies to attract and retain the type of employee
who best fits the firm's culture and overall business objectives. For example, one study showed that
the competencies and personality characteristics of top executives could hamper or improve firm
performance, depending on what the firm's business strategies are. Fast-growth firms perform better
with managers who have a strong marketing and sales background, who are willing to take risks, and
who have a high tolerance for ambiguity. However, these managerial traits actually reduce the
performance of mature firms that have an established product and are more interested in
maintaining (rather than expanding) their market share. Other research has shown that small high-
tech firms benefit by hiring employees who are willing to work in an atmosphere of high
uncertainty, low pay, and rapid change in exchange for greater intrinsic satisfaction and the financial
opportunities associated with a risky but potentially very lucrative product launch
B. New Trends at Work Place:
a. Education
b. Work time
c. Standard of living

d. Expectations & demand
e. Diversity and gender issues at work place
f. QWL
g. TQM
The past two decades have witnessed a dramatic transformation in how firms are structured. Tall
organizations that had many management levels are becoming flatter as companies reduce the number of
people between the chief executive officer (CEO) and the lowest-ranking production employee in an effort
to become more competitive. This transformation has had enormous implications for the effective
utilization of human resources. Since the late 1980s, many companies have instituted massive layoffs of
middle managers, whose traditional role of planning, organizing, implementing, and controlling has come to
be equated with the kind of cumbersome bureaucracy that prevents businesses from responding to market
forces. It is estimated that two thirds of the jobs eliminated in the 1990s were supervisory/middle
management jobs. New relationships among firms are also fostering hybrid organizational structures and
the blending of firms with diverse histories and labor forces. Mergers and acquisitions, in which formerly
independent organizations come together as a single entity, represent two important sources of
restructuring. A newer and rapidly growing form of inter organizational bonding comes in the form of joint
ventures, alliances, and collaborations among firms that remain independent, yet work together on specific
products to spread costs and risks. To be successful, organizational restructuring requires effective
management of human resources. For instance, flattening the organization requires careful examination of
staffing demands, workflows, communication channels, training needs, and so on. Likewise, mergers and
other forms of inter organizational relations require the successful blending of dissimilar organizational
structures, management practices, technical expertise, and so forth…
a. Education: Now a day organizations are available with the opportunity of having more
knowledge and skilled workers, increase in the education level of society’s continuously
providing the highly educated work force in the organizations.
b. Work time: Flextime—the practice of permitting employees to choose, with certain
limitations, their own working hours. Compressed Workweek—any arrangement of work hours
that permits employees to fulfill their work obligation in fewer days than the typical five-day
workweek. This approach adds many highly qualified individuals to the labor market by
permitting both employment and family needs to be addressed.
c. Standard of living: High employment rate, low inflation and Steady economic growth provide
opportunity and rising living standards. Technological advance has enabled the world’s
population to grow with improved living standards for most.
d. Expectations & demand: People's expectations that their employers will behave ethically are
increasing, so much that many firms and professional organizations have created codes of ethics
outlining principles and standards of personal conduct for their members. Figure 1-5 shows the
code of ethics for members of the American Marketing Association. Unfortunately, these codes
often do not meet employees' expectations of ethical employer behavior. These negative
perceptions have worsened over the years.
e. Diversity and gender issues at work place: Managing diversity means planning and
implementing organizational systems and practices to manage people so that the potential
advantages of diversity are maximized while its potential disadvantages are minimized. Managers
are striving for racial, ethnic, and sexual workplace balance as a matter of economic self-interest.
A study found that cultural diversity contributes to improved productivity, return on equity, and
market performance.
f. QWL: High quality of work life is related to job satisfaction, which in turn is a strong predictor
of absenteeism and turnover. A firm's investments in improving the quality of work life also
payoff in the form of better customer service. We discuss issues covering job design and their

effects on employee attitudes and behavior.
g. TQM: Many companies are implementing total quality management (TQM) initiatives, which
are programs designed to improve the quality of all the processes that lead to a final product or
service. In a TQM program, every aspect of the organization is oriented toward providing a
quality product or service
Key Terms
Brain Drain: the loss of intellectual property that results when competitors lure away key employees.
Downsizing: Periodic reductions in a company's work force to improve its bottom line-often called
downsizing
Ethics and Social Responsibility: Corporate social responsibility refers to the extent to which companies
should and do channel resources toward improving one or more segments of society other than the firm’s
owners or stockholders. Ethics is the bedrock of socially responsible behavior.
Outsourcing Firms: The process of transferring responsibility for an area of service and its objectives to
an external provider
Restructuring: A number of firms are changing the way the functions are performed. OR
Restructuring is the corporate management term for the act of partially dismantling and reorganizing a
company for the purpose of making it more efficient and therefore more profitable. It generally involves
selling off portions of the company and making severe staff reductions
Re-engineering is the radical redesign of an organization's processes, especially its business processes.
Rather than organizing a firm into functional specialties (like production, accounting, marketing, etc.) and
looking at the tasks that each function performs, we should, according to the reengineering theory, be
looking at complete processes from materials acquisition, to production, to marketing and distribution. The
firm should be re-engineered into a series of processes.

Lesson 8
WORK PLACE DIVERSITY
A. Work Force Diversity
B. Sources of work force diversity
C. Managing the diversified work force
LESSON OVERVIEW
One of the greatest challenges facing organizations today is managing workforce diversity in a way that both
respects the employees' unique attitudes and promotes a shared sense of corporate identity. This chapter
explores the issues that are intrinsic to diversity management. In the United States, as abroad, the design and
implementation of HR programs cannot ignore the diverse nature of the work force. Thus, by the end of
this chapter the reader should have a better grasp of diversity issues and how to handle them successfully
A. Work Force Diversity
Any perceived difference among people: age, functional
specialty, profession, sexual orientation, geographic origin, life
style, tenure with the organization, or position. Diversity simply
refers to human characteristics that make people different. The
sources of individual variations are complex, but they can
generally be grouped into two categories: those over which
individuals have little or no control and those over which
individuals have more control. Unless effectively managed,
diversity among employees may have a negative impact on
productive teamwork. Affirmative action is not diversity
management. Affirmative action emerged from government
pressure on business to provide greater opportunities for women
and minorities. Managing diversity is an outgrowth of natural or
environmental trends such as demographic changes and
international competition. Moreover, diversity is considered an
asset in terms of improving organizational functioning and
reflecting the customer market.
B. Sources of work force Diversity
Today diversity refers to far more than skin color and gender. It is a broad term used to refer to all kinds of
differences. These differences include women in business, dual-career families, workers of color, older
workers persons with disabilities, immigrants, young persons with limited education or skills, educational
level of employees.
i. Racial & Ethnical Groups
ii. Older Workers
iii. Gender
iv. Education
v. Dual-career Families
vi. Religions & Culture
vii. Persons with Disabilities
viii. Immigrants
ix. Young persons with limited education or skills
x. Competitive advantage though work force diversity
xi. Marketing
xii. Creativity, innovation, and problem solving
xiii. Flexibility

i. Racial & Ethical Groups: Workers of color often experience stereotypes about their group
(Hispanics, African Americans, Asians, etc.). At times, they encounter misunderstandings and
expectations based on ethnic or cultural differences.
ii. Older Workers—as the world population is growing older, a trend that is expected to continue
through the year 2000. In addition, the trend toward earlier retirement appears to be reversing itself.
iii. Gender (Women in Business): Women represent almost 11.9 percent of corporate officers at
largest companies. However, the number of women in entry and midlevel managerial positions has
risen from 34 percent in 1983 to 46 percent in 1998, meaning many more women are in the
pipeline to executive spots. Today, there are more than 9 million women-owned businesses, up
from 400,000 in 1972. The number of nontraditional, single-parent households in the United States
is growing. Because more than half of all marriages today end in divorce, this trend is expected to
continue. Often, one or more children are involved. Of course, there are always widows and
widowers who have children as well, and there are some men and women who choose to raise
children outside of wedlock.
iv. Education: Another form of diversity that is now found in the workplace is that of the educational
level of employees. The United States is becoming a bipolar country with regard to education, with
a growing number of very educated people on one side and an alarming increase in the illiteracy
rate on the other.
v. Dual-Career Families: The increasing number of dual-career families presents both challenges
and opportunities for organizations. As a result of this trend, some firms have revised their policies
against nepotism to allow both partners to work for the same company. Other firms have
developed polices to assist the spouse of an employee who is transferred. When a firm wishes to
transfer an employee to another location, the employee’s spouse may be unwilling to give up a
good position or may be unable to find an equivalent position in the new location. Some companies
are offering assistance in finding a position for the spouse of a transferred employee.
vi. Religion and Culture: Due to globalization religion and culture based diversity is also increasing
in organizations.
vii. Persons with disabilities: A handicap, or disability, limits the amount or kind of work a person
can do or makes achievement unusually difficult. The Americans with Disabilities Act (ADA),
passed in 1990, prohibits discrimination against qualified individuals with disabilities.
viii. Immigrants: Today the permitted level of legal immigration is increasing. Some are highly skilled
and well educated, and others are only minimally qualified with little education. They have one
thing in common—an eagerness to work. They have brought with them attitudes, values, and
mores particular to their home-country cultures.
ix. Young persons with limited education or skills: Each year thousands of young, unskilled
workers are hired, especially during peak periods, such as holiday buying seasons. In general, they
have limited education—high school or less. More jobs can be de-skilled, making it possible for
lower-skilled workers to do them.
x. Competitive advantage through Work Force Diversity: For many years’ organizations, the
original impetus to diversify their workforces was social responsibility and legal necessity. Morally
ethically it was right to do so. Today many organizations are approaching diversity efforts from a
moral practical, business oriented perspective,. Increasingly, diversity can be a powerful tool for
building completive advantage. Companies with a reputation for providing opportunities for
diverse workforce will have a completive advantage in a labor market and will be sought out by the
most qualified employees, In addition when employee believe their differences are not merely
tolerated but valued , they may become more loyal, productive and committed.

xi. Marketing: Companies are realizing that consumers, like the workforce, are changing
demographically. Just as women and minorities may prefer to work for an employer that values
diversity, they may prefer to patronize such organizations. A multicultural workforce can provide a
company with greater knowledge of th preferences and consuming habits of thus market place.
This knowledge can assist companies in designing products and developing market campaigns to
meet those consumer needs. A diverse workforce can also give company competitive edge in a
global economy by facilitating understanding of other customers, cultures, and market place needs.
xii. Creativity, innovation, and problem Solving: Work team diversity promotes creativity and
innovation, because people from different backgrounds hold different perspective on issues.
Diverse groups have a broader base of experience from which to approach problem; when
effectively managed, they invent more options and create more solutions than homogeneous
groups do. In addition, diverse workgroups are freer to deviate from traditional approaches and
practices.
xiii. Flexibility: A diverse workforce can enhance organizational flexibility because successfully
managing diversity requires a corporate culture that tolerates many different styles and approaches.
Less restrictive polices and procedures and less standardized operating methods enable
organization to become more flexible and thus better able to respond quickly to environmental
changes.
xiv. Diversity Management and Affirmative Action Programs: We can define the workforce
diversity management as set of activities involved in integrating diverse employees into the work
force and using their diversity to the firm’s competitive advantage
C. How organization Cultivate a Diverse Workforce:
An Organization’s plans for becoming multicultural and making the most of its diverse workforce should
include:
I. Securing top management support and Commitment
II. Organizational Assessment
III. Attracting employees
IV. Developing Employees
V. Retaining employees
I. Securing top management support and commitment: Obtaining top-level commitment
and support is critical for diversity programs to succeed. One way to communicate this
commitment to all employees as well as to the external environment is to incorporate the
organization’s attitudes toward diversity into the corporate mission statement and into
strategic plans and objectives. Managerial compensation can be directly linked to
accomplishing diversity objectives. Adequate funding must be allocated to diversity effort
to ensure its success. Also, top management can set an example for other organization
members by participating in diversity programs and making participation mandatory for all
managers. Top management or diversity directors alone cannot do the work fof mamnagin
diversity. Many companies rely on minority advisory groups or task forces to monitor
organizational policies, practices, and attitudes; access their impact on the diverse groups
within the organization; and provide feedback and suggestions to top management.
II. Organizational Assessment: The next step in managing diversity is to assess the
organization’s workforce, culture, policies, and practices in areas such as recruitment,
promotions, benefits, and compensation. In addition, the demographics of the labor pool
and the customer base should be evaluated. The objective is to identify problem areas and
make recommendations where changes are needed.

III. Attracting Employees: Companies can attract a diverse, qualified workforce through using
effective recruiting process, accommodating employees’ work and family needs, and
offering alternative work arrangements.
IV. Developing Employees: Employees can be developed in a variety of ways. Here we will
focus on skills training and diversity training.
V. Retaining Employees: As replacing qualified and experienced workers become more difficult
and costly, retaining good workers will become much more important. A number of
policies and strategy will increase retention of all employees, especially those who are
“different” from the norm.
STEPS TOWARD MANAGEMENT OF DIVERSITY
a. Managing Diversity means taking steps to maximize diversity’s potential advantages while
minimizing the potential barriers, such as prejudices and bias that can undermine the functioning of
a diverse workforce.
b. Boosting Workforce Diversity – Employers use various means to boost workforce diversity: start
diversity programs; have departmental diversity meetings; form special
networking and mentoring groups; and/or direct recruiting ads to one or
more of the online minority-oriented job markets
c. Equal Employment Opportunity Versus Affirmative
Action – Equal employment opportunity aims to ensure that
anyone, regardless of race, color, sex, religion, national origin,
or age, has an equal chance for a job based on his/her
qualifications. Affirmative action goes beyond equal
employment opportunity by requiring the employer to make
an extra effort to recruit, hire, promote, and compensate
those in protected groups to eliminate the present
effects of past discrimination.
d. Affirmative Action: Two Basic Strategies – The good
faith effort strategy is aimed at changing the practices
that contributed to minority groups’ or females’ exclusion or
underutilization. The quota strategy mandates bottom-line results through hiring
and promotion restrictions.
Challenges in Managing Employee Diversity
Diversity offers opportunities as well as challenges. The challenges include appropriately valuing diversity,
balancing individual needs and group fairness, dealing with resistance to change, ensuring group
cohesiveness and open communication, avoiding employee resentment, keeping the focus on performance,
retaining valued performers, and maximizing opportunity for all employees.
a. Resistance to Change: Although employee diversity is a fact of life, the dominant groups in
organizations are still composed of white men.
b. Segmented Communication Networks: One study found that most communication within
organizations occurs between members of the same sex and race. Therefore diversified workforce
organization may face the challenge of segmented communication networks.
c. Resentment: Equal employment opportunity that can be defined as fairness of employment that is
free from all sort of discrimination in majority of organizations was a forced change rather than a
voluntary one.
d. Backlash: While women and minorities may view a firm's “cultural diversity policy” as a
commitment to improving their chances for advancement, white men may see it as a threat.
How to avoid Backlash: Many organizations that have instituted diversity programs have experienced

adverse reactions from employee groups, particularly white men. Here are some guidelines for HR professionals and
company managers who are attempting to manage diversity without adversity.
i. Adopt an inclusive definition of diversity that addresses all kinds of differences among employees, including
(but not limited to) race and gender.
ii. Make sure that top management is not only committed to establishing a diversity program but also
communicates that commitment directly to all employees
iii. Involve everyone, including white men, in designing the diversity program.
iv. Avoid stereotyping groups of employees, such as white men, when explaining cultural or ethnic differences
v. Recognize and reward white men who are part of the solution rather than blaming men who are part of the
problem.
vi. Avoid one-time training efforts that stir up emotions without channeling them in productive directions. Use
ongoing training that encompasses diversity as only one facet of needed change in the corporate culture.
e. Retention: The job satisfaction levels of women and minorities are often lower than those of white
men.
f. Competition for Opportunities: As minority populations grow in the U.S., competition for jobs
and opportunities is likely to become much stronger.
g. Lower Cohesiveness: Diversity can create a lack of cohesiveness. Cohesiveness’ refers to how
tightly knit the group is and the degree to which group members perceive, interpret and act on their
environment in similar or mutually agreed upon ways. Because of their lack of similarities language,
culture, and/ or experience, diverse workforce typically are less cohesive than homogeneous groups.
Often mistrust, miscommunication, stress and attitudinal differences cohesiveness, which inurn can
diminish productivity.
h. Communication problem: Perhaps the most common negative effect of diversity is
communication problems. These difficulties include misunderstanding, inaccuracies, and slowness.
speed is lost when not all group members are fluent in the same language or when additional time is
required to explain things.
i. Diversity also increases errors and misunderstandings. Group members may assume they
interpret things similarly when in fact they do not ,or they may disagree because of their different
frames of references .
j. Mistrust and tension: People prefer to associate with others who are like themselves. This
tendency often leads to mistrust and misunderstanding of those who are different because of lack of
contact and low familiarity. it also causes stress and tension ,and reaching agreement on problems
can be difficult.
k. Stereotyping: We learn to see the world in a certain way based on our backgrounds and
experiences. Our interests, values and cultures act as filters and distort, block and select what we see
and hear. We see and hear what we expect to see and hear. Group members often inappropriately
stereotype their “different” colleagues rather than accurately perceiving and evaluating those
individual’s contributions, capabilities aspirations and motivations. Such stereotypes inurn affect
how people employee stereotyped as unmotivated or emotional will be given less -stress –
provoking jobs than their coworkers. Those job assignments will create frustrated employees,
perhaps resulting in low commitment, higher turnover, and underused skills.
Key Terms
Affirmative Action: Steps that are taken for eliminating the present effects of past discrimination
Cohesiveness: Refers to how tightly knit the group is and the degree to which group members
perceive, interpret and act on their environment in similar or mutually agreed upon
ways

Lesson 9
FUNCTIONS AND ENVIRONMENT OF HRM
A. Functions of Human Resource Management Department
B. Environmental Factors influencing HRM operations
Human Resource Functions in Small Businesses
Some aspects of the human resource function may actually be more significant in smaller firms than in
larger ones.
Human Resource Management Functions in Medium-Sized Firms
As firms grow and become more complex, the human resource function becomes more complex, and its
function achieves greater importance. The basic purpose of human resource management remains the same,
but the approach followed in accomplishing its objectives changes.
As a firm grows, a separate staff function may be required to coordinate human resource activities. In a
larger firm, the person chosen to do so will be expected to handle most of the human resource activities.
For a medium-sized firm, there is little specialization.
Traditional Human Resource Functions in a Large Firm
When the firm’s human resource function becomes too complex for one person, separate sections are often
created and placed under a human resource manager. These sections will typically perform tasks involving
training and development, compensation and benefits, employment, safety and health, and labor relations.
AN EVOLVING HR ORGANIZATION FOR LARGE FIRMS
The HR organizational structure of large-sized firms changes as firms outsource, use company service
centers, and evolve in other ways to make HR more strategic. Regardless of an organization’s design, the
five functional areas must still be accomplished. The organizational mission and corporate culture have a
major impact in determining an appropriate HR organization.
A. Functions of HRM department:
a. Staffing
An organization must have qualified individuals, in specific jobs at specific places and times, in order to
accomplish its goals. Obtaining such people involves
job analysis, human resource planning, recruitment,
and selection. Job analysis is the systematic process of
determining the skills, duties, and knowledge required
for performing specific jobs in an organization. Human
resource planning (HRP) is the process of systematically
reviewing human resource requirements to ensure that
the required numbers of employees, with the required
skills, are available when needed. Recruitment is the
process of attracting such individuals in sufficient
numbers and encouraging them to apply for jobs with
the organization. Selection is the process through which
the organization chooses, from a group of applicants,
those individuals best suited both for open positions
and for the company.
b. Human Resource Development
A major HRM function that consists not only of training and development but also individual career
planning and development activities and performance appraisal, an activity that emphasizes T&D needs.
Training is designed to provide learners with the knowledge and skills needed for their present jobs.
Human Res ource Management
Functions
Staffing
HUMAN RESOURCEHUMAN RESOURCE
MANAGEMENTMANAGEMENT
FUNCTIONSFUNCTIONS
Employee
& Labor
Relations
Safety &
Health
Compensation
& Benefits
Human
Resource
Development

Development involves learning that goes beyond today’s job; it has a more long-term focus. Human resource
development (HRD) helps individuals, groups, and the entire organization become more effective. It is
essential because people, technology, jobs, and organizations are always changing.
Career planning is an ongoing process whereby an individual sets career goals and identifies the means to
achieve them. Career development is a formal approach used by the organization to ensure that people with
the proper qualifications and experiences are available when needed. Through performance appraisal,
employees and teams are evaluated to determine how well they are performing their assigned tasks.
c. Compensation and Benefits
The term compensation includes all rewards that individuals receive as a result of their employment. The
reward may be one or a combination of the following:
Pay: The money that a person receives for performing a job.
Benefits: Additional financial rewards other than base pay include paid vacations, sick leave, holidays,
and medical insurance.
Non financial rewards: Non monetary rewards, such as enjoyment of the work performed or a
pleasant working environment.
d. Safety And Health
Safety involves protecting employees from injuries caused by work-related accidents. Health refers to the
employees’ freedom from illness and their general physical and mental well-being. These aspects of the job
are important because employees who work in a safe environment and enjoy good health are more likely to
be productive and yield long-term benefits to the organization.
e. Employee And Labor Relations
Since 1983, union membership has fallen approximately 8 percent, to only 13.9 percent of the workforce,
the lowest level since the Great Depression. Subtracting government employees, unions represent only 9.5
percent of the private industry workforce. Even so, a business firm is required by law to recognize a union
and bargain with it in good faith if the firm’s employees want the union to represent them. In the past, this
relationship was an accepted way of life for many employers. But most firms today would like to have a
union-free environment.
f. Human Resource Research
Although human resource research is not listed as a separate function, it pervades all HRM functional areas,
and the researcher’s laboratory is the entire work environment.
g. Interrelationships of HRM Functions
All HRM functional areas are highly interrelated. Management must recognize that decisions in one area will
affect other areas. The interrelationships among the five HRM functional areas will become more obvious
as we address each topic throughout the book.

Prentice Hall, © 2003
Key HR Challenges for Today’s Managers
Environment
• Rapid Change
• Workforce Diversity
• Globalization
• Rise of Internet
• Legislation
• Evolving Work and Family Roles
• Skill Shortages and the Rise
of the Service Sector
Organization
• Competitive Position: Cost,
Quality, Distinctive Capabilities
• Decentralization
• Downsizing
• Organizational Restructuring
• Self-Managed Work Teams
• Small Businesses
• Organizational Culture
• Technology
• Outsourcing
Individual
• Matching People and Organization
• Ethical Dilemmas and Social Responsibility
• Productivity
• Empowerment
• Brain Drain
• Job Insecurity
B. The Dynamic Human Resource Management Environment
Many interrelated factors affect
human resource management.
Such factors are part of either
the firm’s external
environment or its internal
environment. The firm often
has little, if any, control over
how the external environment
affects management of its
human resources. In addition,
there are certain
interrelationships that
complicate the management of
human resources.
I. External Environmental Factors
External Environmental factors Comprised of those factors that affect a firm’s human resources from
outside the organization’s boundaries.
a. The Labor Force
The labor force is a pool of individuals external to the firm from which the organization obtains its workers.
The capability of a firm’s employees determines to a large extent how well an organization can perform its
mission.
b. Legal Considerations
Another significant external force affecting human resource management relates to federal, state, and local
legislation and the many court decisions interpreting this legislation. In addition, many presidential executive
orders have had a major impact on human resource management.
c. Society
Society may also exert pressure on human resource management. If a firm is to remain acceptable to the
general public, it must be capable of accomplishing its purpose in line with societal norms. Social
responsibility is an implied, enforced, or felt obligation of managers, acting in their official capacities, to
serve or protect the interests of groups other than themselves.
d. Unions
Union is a group of employees who have joined together for the purpose of dealing collectively with their
employer. Although unions remain a powerful force, union membership as a percentage of the
nonagricultural workforce slipped from 33 percent in 1955 to 9.5 percent today.
e. Shareholders
The owners of a corporation are concerned about shareholders. Because shareholders have invested money
in a firm, they may at times challenge programs considered by management to be beneficial to the
organization.
f. Competition
For a firm to succeed, grow, and prosper, it must be able to maintain a supply of competent employees.
Other organizations are also striving toward that objective.

g. Customers
Because sales are critical to the firm’s survival, management has the task of ensuring that its employment
practices do not antagonize the members of the market it serves.
h. Technology
As technological changes occur, certain skills are no longer required. This necessitates some retraining of
the current workforce. The trend toward a service economy also affects the type and amount of technology
needed.
i. The Economy
The economy of the nation—on the whole—and of its various segments is a major environmental factor
affecting human resource management. As a generalization, when the economy is booming, it is often more
difficult to recruit qualified workers. On the other hand, when a downturn is experienced, more applicants
are typically available.
THE EXTERNAL ENVIRONMENT: PROACTIVE VERSUS REACTIVE APPROACH
Managers approach changes in the external environment proactively or reactively.
a. Proactive Response
Proactive responsiveness involves taking action in anticipation of environmental changes.
b. Reactive Response
Reactive response involves simply reacting to environmental changes after they occur. Organizations exhibit
varying degrees of proactive and reactive behavior.
II. The Internal Environment
Factors that affect a firm’s human resources from inside its boundaries are termed as internal environmental
factors. The primary internal factors include the firm’s mission, policies, corporate culture, management
style of upper managers, employees, the informal organization, other units of the organization, and unions.
a. Mission
the organization’s continuing purpose or reason for being. Each management level should operate with a
clear understanding of the firm’s mission. In fact, each organizational unit (division, plant, and department)
should clearly understand objectives that coincide with that mission.
b. Policies
A predetermined guide established to provide direction in decision making. As guides, rather than as hard-
and-fast rules, policies are somewhat flexible, requiring interpretation and judgment in their use. They can
exert significant influence on how managers accomplish their jobs.
c. Corporate Culture
The system of shared values, beliefs, and habits within an organization that interacts with the formal
structure to produce behavioral norms.
d. Management Style of Upper Managers
Closely related to corporate culture is the way in which the attitudes and preferences of one’s superiors
affect how a job is done. This situation deserves special emphasis here because of the problems that can
result if the managerial style of upper-level managers differs from that of lower-level managers.
e. Employees
Employees differ in many ways including their capabilities, attitudes, personal goals, and personalities. As a
result, behavior that a manager finds effective with one worker may not be effective with another.
f. Informal Organization
the informal organization is the set of evolving relationships and patterns of human interaction within an

organization that are not officially prescribed. Such informal relationships are quite powerful.
g. Other Units of the Organization
Managers must be keenly aware of interrelationships that exist among divisions or departments and should
use such relationships to their best advantage.
h. Labor-Management Agreement
Upper management typically negotiates labor-management agreements, but managers throughout the
organization must implement the terms of the agreements. In most instances, agreements place restrictions
on the manager’s actions.
C. MANAGING THE DIVERSE WORKFORCE
Any perceived difference among people: age, functional specialty, profession, sexual orientation, geographic
origin, life style, tenure with the organization, or position.
a. Single Parents and Working Mothers
The number of nontraditional, single-parent households in the United States is growing. Because more than
half of all marriages today end in divorce, this trend is expected to continue. Often, one or more children
are involved. Of course, there are always widows and widowers who have children as well, and there are
some men and women who choose to raise children outside of wedlock.
b. Women In Business
The number of women in entry and midlevel managerial positions has risen from 34 percent in 1983 to 46
percent in 1998, meaning many more women are in the pipeline to executive spots. Today, there are more
than 9 million women-owned businesses, up from 400,000 in 1972.
c. Dual-Career Families
The increasing number of dual-career families presents both challenges and opportunities for organizations.
As a result of this trend, some firms have revised their policies against nepotism to allow both partners to
work for the same company. Other firms have developed polices to assist the spouse of an employee who is
transferred. When a firm wishes to transfer an employee to another location, the employee’s spouse may be
unwilling to give up a good position or may be unable to find an equivalent position in the new location.
Some companies are offering assistance in finding a position for the spouse of a transferred employee.
d. Workers Of Color
Workers of color often experience stereotypes about their group (Hispanics, African Americans, Asians,
etc.). At times, they encounter misunderstandings and expectations based on ethnic or cultural differences.
e. Older Workers
The world population is growing older, a trend that is expected to continue through the year 2000. In
addition, the trend toward earlier retirement appears to be reversing itself.
f. Persons With Disabilities
A handicap, or disability, limits the amount or kind of work a person can do or makes achievement
unusually difficult.
g. Young Persons With Limited Education Or Skills
Each year thousands of young, unskilled workers are hired, especially during peak periods, such as holiday
buying seasons. In general, they have limited education—high school or less. More jobs can be de-skilled,
making it possible for lower-skilled workers to do them.
h. Educational Level Of Employees
Another form of diversity that is now found in the workplace is that of the educational level of employees.
The United States is becoming a bipolar country with regard to education, with a growing number of very
educated people on one side and an alarming increase in the illiteracy rate on the other.

i. Corporate Culture
Corporate Culture is the system of shared values, beliefs, and habits within an organization that interacts
with the formal structure to produce behavioral norms. It is the pattern of basic assumptions, values,
norms, and artifacts shared by organizational members.
Key Terms
Corporate Culture The system of shared values, beliefs, and habits within an organization that interacts
with the formal structure to produce behavioral norms
Mission: The organization’s continuing purpose or reason for being.
Policies: A predetermined guide established to provide direction in decision-making
The Labor Force: The labor force is a pool of individuals external to the firm from which the organization
obtains its workers
Unions: Union is a group of employees who have joined together for the purpose of dealing collectively
with their employer.

Lesson-10
LINE AND STAFF ASPECTS OF HRM
A. Line and Staff Aspects
LESSON OVERVIEW
After reading this chapter student should know the basic concept of authority, different types of the
authority and difference between the line and staff hangers. Although most firms have a human resource
department with its own manager, all other managers tend to get involved in activities like recruiting,
interviewing, selecting, and training.
A. Line and staff aspects of HRM
I. Authority
Authority is the right to make decisions, to direct the work of others, and to give orders.
Authority refers to the rights inherent in a managerial position to give orders and expect the orders to be
obeyed. Authority was a major tenet of the early management writers, the glue that held the organization
together. It was to be delegated downward to lower-level managers. Each management position has specific
inherent rights that incumbents acquire from the position's rank or title.
Authority is related to one's position and ignores personal characteristics. When a position of authority is
vacated, the authority remains with the position.
The early management writers distinguished between two forms of authority.
a. Line Authority
b. Staff Authority
c. Functional Authority
Let’s have brief view about the different types of authorities.
a. Line Authority
Line authority entitles a manager to direct the work of an employee. It is the employer-employee authority
relationship that extends from top to bottom. A line manager directs the work of employees and makes
certain decisions without consulting anyone. Sometimes the term line is used to differentiate line managers
from staff managers. Line emphasizes managers whose organizational function contributes directly to the
achievement of organizational objectives.
b. Staff Mangers and Staff Authority
Staff managers have staff authority. A manager's function is classified as line or staff based on the
organization's objectives. As organizations get larger and more complex, line managers find that they do not
have the time, expertise, or resources to get their jobs done effectively. They create staff authority functions
to support, assist, advice, and generally reduce some of the informational burdens they have.
c. Functional control
The authority exerted by a personnel manager as a coordinator of personnel activities. Here the manager
acts as “the right arm of the top executive.”
II. Line versus Staff Authority
1. Line Versus Staff Authority – Authority is the right to make decisions, to direct
the work of others, and to give orders. Line managers are authorized to direct the work of subordinates.
Staff managers are authorized to assist and advise line managers in accomplishing their basic goals. HR
managers are generally staff managers.
2. Line Managers’ HRM Responsibilities – Most line managers are responsible
for line functions, coordinative functions, and some staff functions.

III. Cooperative line and staff hr management:
In recruiting and hiring, it’s generally the line manager’s responsibility to specify the qualifications
employees need to fill specific positions. Then the HR staff takes over. They develop sources of qualified
applicants and conduct initial screening interviews. They administer the appropriate test. Then they refer
the best applicants to the supervisor (line manager), who interviews and selects the ones he/she wants.
IV. Line Manager
Authorized to direct the work of subordinates—they’re always someone’s boss. In addition, line managers
are in charge of accomplishing the organization’s basic goals.
Line Managers’ Human Resource Management Responsibilities
1. Placement
2. Orientation
3. Training
4. Improving job performance
5. Gaining creative cooperation
6. Interpreting policies and procedures
7. Controlling labor costs
8. Developing employee abilities
9. Creating and maintaining departmental morale
10. Protecting employees’ health and physical condition
V. Staff Manager
Authorized to assist and advise line managers in accomplishing these basic goals. HR managers are
generally staff managers.
Responsibilities Of Staff Managers
Staff managers assist and advise line managers in accomplishing these basic goals. They do, however, need
to work in partnership with each other to be successful. Some examples of the HR responsibilities of staff
managers include assistance in hiring, training, evaluating, rewarding, counseling, promoting, and firing of
employees, and the administering of various benefits programs.
VI. Human Resource Manager:
An individual who normally acts in an advisory or staff capacity, working with other managers to help them
deal with human resource matters. One general trend is that HR personnel are servicing an increasing
number of employees. The human
resource manager is primarily
responsible for coordinating the
management of human resources to
help the organization achieve its
goals. There is a shared responsibility
between line managers and human
resource professionals.
The recognition of HR as a legitimate
business unit has made it highly
strategic in nature and more critical
to achieving corporate objectives. To
succeed, HR executives must
understand the complex
organizational design and be able to
determine the capabilities of the
company’s workforce, both today
and in the future. HR involvement in
strategy is necessary to ensure that human resources support the firm’s mission. The future appears bright
for HR managers willing to forge a strategic partnership with other business units.
HR E xec utives , Generalis ts &
S pec ialis ts
VP
HUMAN RESOURCES
*1 & *2
MANAGER,
COMPENSATION
& BENEFITS
*3
MANAGER,
TRAINING &
DEVELOPMENT
*3
MANAGER,
EMPLOYMENT
*3
BENEFITS
ANALYST
*3
VP
INDUSTRIAL
RELATIONS
*1 & *3
*1--Executive
*2--Generalist
*3--Specialist
*1--Executive
*2--Generalist
*3--Specialist

VII. Distinguish among human resource executives, generalists, and specialists.
a. HR Executives
Executives are top-level managers, who report directly to the corporation’s chief executive officer or the
head of a major division.
b. HR Generalists:
Generalists are people who perform tasks in a wide variety of human resource-related areas. The generalist
is involved in several, or all, of the human resource management functions.
c. HR Specialist:
Specialist may be a human resource executive, manager, or non-manager who typically is concerned with
only one of the functional areas of human resource management.
Key Terms
Authority: Authority is the right to make decisions, to direct the work of others, and to give orders.
Executives: Executives are top-level managers, who report directly to the corporation’s chief executive
officer or the head of a major division.
Generalists: Generalists are people who perform tasks in a wide variety of human resource-related areas.
The generalist is involved in several, or all, of the human resource management functions.
Line Authority: Line authority entitles a manager to direct the work of an employee.
Specialist: Specialist may be a human resource executive, manager, or non-manager who typically is
concerned with only one of the functional areas of human resource management.

Lesson 11
LEGAL CONTEXT OF HR DECISIONS
A. Legal context of HR decisions
LESSON OVERVIEW
This chapter examines the aspects of HR law and regulations. The goal is to identify and discuss the
laws themselves and how best to comply with them and do what is best for the organization. The
chapter unveils why understanding the legal environment is important and the context in which HR
regulation occurs. The chapter further explores the challenges to legal compliance. It ends with ways
for the effective manager to avoid the pitfalls in the EEO legal environment.
A. Legal context of HR decisions
Legal considerations are significant external force
affecting human resource management relates to
federal, state, and local legislation and the many court
decisions interpreting this legislation. In addition,
many presidential executive orders have had a major
impact on human resource management. If company is
having compliance with the legal considerations it will
be contribution towards enhancement of good will
reputation as well as fair operations of the organization
that will be leading towards attaining competitive
advantage.
Keeping in view the importance of legal considerations mangers must understand the legal issues that
affect the practices of HRM Like Which employee to hire?
How to compensate employees?
What benefits to offer?
How to handle conflicts?
How and when to fire employees? etc.
Why Understanding the Legal Environment is Important?
Understanding and complying with HR law is important for three reasons. It helps the company to do
the right thing, to realize the limitations of the HR and legal departments, and it limits potential liability.
Doing the Right Thing
Compliance with the law is the right thing to do. The primary requirement of these laws is to mandate
good management practice. Operating within these laws has benefits beyond simple legal compliance.
Discriminatory practices not only create potential legal liability, but also lead to poor employee morale
and low job satisfaction, which can lead to poor job performance.
Realizing the Limitations of the HR and Legal Departments
If managers make poor decisions, the HR department neither always be able to resolve the situation nor
can a firm’s legal department solve problems created by managers. The function of the legal
department is to try to limit damage after it has already occurred.
Limiting Potential Liability
Considerable financial liabilities can occur when HR laws are broken or perceived to be broken.
Legal regulation of HRM
Legal environment and considerations can influence potential and prospective as well as current
employees of the organization to Prospective Employees. It provides Protection from discrimination in
selection, initial job placement, and initial compensation
While to Current Employees Protection from discrimination in all dimensions of work in the
L egal
C om pliance
C om petitive
A dvan tage

organization
Employment discrimination
To make an employment decision, not on the basis of legitimate job-related factors...Any employment
decision: hiring, promotions, pay, discipline, etc fail to use job-related factors (e.g., essential job
qualifications, job performance, etc.), and for employment decisions Instead, of legitimate factors
employer uses false stereotypes and prejudices. Law Prohibits Discrimination in Hiring, Compensation,
terms, conditions or privileges of employment based on Race, religion, color, sex, national origin and
Physical Disability.
Fair employment
A situation in which employment decisions are not affected by discrimination.
Laws affecting HRM:
The laws affecting HRM can be divided into two broad categories: equal employment opportunity
(EEO) laws and other laws. The major EEO laws cut across nearly every aspect of managing human
resources.
Equal Employment Opportunity (EEO)
The concept of equal employment opportunity has undergone much modification and fine-tuning since
the passage of the Civil Rights Act in 1964. Congress has passed numerous amendments to that act and
has passed other legislation, as oversights in the initial act surfaced. Major Supreme Court decisions
interpreting the provisions of the act have also been handed down. Executive orders were signed into
law that further strengthened equal employment opportunity. EEO is a combination of legislative and
judicial policy set forth by federal, state, and local governments that ensures fair and equal treatment of
all persons. Job applicants may not be rejected based on discriminatory practices
Affirmative action
A strategy intended to achieve fair employment by urging employers to hire certain groups of people
who were discriminated against in the past Steps that are taken for the purpose of eliminating the
present effects of past discrimination
Major Federal Laws (USA)
There have been many laws passed and court decisions rendered that affect the everyday actions of
human resource management. Human resource decisions that were made in the past may no longer be
feasible. Human resource managers have a responsibility to ensure that actions affecting human
resource management adhere to both the letter and intent of the law. Unfortunately, not everyone may
share this view, and that is when problems occur.
Equal Pay Act of 1963
This law requires the same pay for men and women who do the same job in the same organization.
Basically this law provides protection against discrimination based upon sex.
Civil Rights Act of 1964 (CRA) Title VII
Amended by Civil Rights Act of 1991(Title VII of Civil Rights Act)
This act prohibits discrimination based on race, color, sex, religion, or national origin. The Civil Rights
Act of 1991 amended the Civil Rights Act of 1964 and had the following purposes:
To provide appropriate remedies for intentional discrimination and unlawful harassment in the
workplace.
To codify the concepts of business necessity and job related pronounced by the Supreme Court.
To confirm statutory authority and provide statutory guidelines for the adjudication of disparate
impacts under Title VII of the Civil Rights Act of 1964.
To respond to recent decisions of the Supreme Court by expanding the scope of relevant civil rights

statutes in order to provide adequate protection to victims of discrimination.
Age Discrimination in Employment Act of 1967 (ADEA)
The Age Discrimination in Employment Act (ADEA) (amended 1978, 1986) prohibits employers from
discriminating against individuals who are over 40 years of age. The latest amendment not only gives
older employees the option to continue working past age 70, but the health care provision of the
amendment also provides them with an additional incentive to continue to do so. The ADA has three
major sections. Title I contains the employment provisions. Titles II and III concern the operation of
state and local governments and places of public accommodation such as hotels, restaurants, and
grocery stores.
1. Individuals with disabilities
2. Essential Functions
3. Reasonable accommodation
4. The Vocational Rehabilitation Act of 1973
THE AMERICANS WITH DISABILITIES ACT (ADA)
The Americans with Disabilities Act (ADA), passed in 1990, prohibits discrimination against qualified
individuals with disabilities. Persons discriminated against because they have a known association or
relationship with a disabled individual also is protected.
EXECUTIVE ORDER 11246, AS AMENDED BY EO 11375
An executive order (EO) is a directive issued by the president and has the force and effect of laws
enacted by Congress. A major provision of EO 11246 is that every executive department and agency
that administers a program involving federal financial assistance will require adherence to a policy of
nondiscrimination in employment as a condition for the approval of a grant, contract, loan, insurance,
or guarantee. Affirmative action, stipulated by EO 11246, requires employers to take positive steps to
ensure employment of applicants and treatment of employees during employment without regard to
race, creed, color, or national origin
Affirmative Action
An approach that an organization with government contracts develops to demonstrate that women or
minorities are employed in proportion to their representation in the firm’s relevant labor market
Executive Orders 11246 & 11375 require companies with federal contracts to develop affirmative
action plans (AAPs) it provides preferential treatment to minority group members in functions like
Recruiting and Hiring
The three steps involved in developing an affirmative action program are (1) conducting a utilization
analysis, (2) establishing goals and timetables, and (3) determining action options. In the first phase,
organizations need to consider different pieces of information, which constitute an availability analysis
after they have conducted a utilization analysis. Rather, the employer should take into consideration the
size of the underutilization, how fast the work force turns over, and whether the work force is growing
or contracting. In the third phase, the companies recruit protected-class members, redesign jobs,
provide specialized training, and remove unnecessary employment barriers.
Challenges to Legal Compliance
HRM practices may be challenged by anyone of stakeholders like society, community, customers,
employees and shareholders so management for every decision should have legal backing in order to
defend and explain its decisions. A firm's HR department has considerable responsibilities with respect
to human resource law. However, if managers make poor decisions, the HR department will not always
be able to resolve the situation. The manager's job is to prevent the damage from happening in the first
place. Thus, understanding and complying with HR law helps the manager to do the right thing, realize
the limitations of the HR and legal departments, and minimize potential liability.A dynamic legal
landscape, complex laws, conflicting strategies for fair employment, and unintended consequences are

among the challenges confronting managers attempting to comply with HR law.
A Dynamic Legal Landscape
In addition to the many HR related laws that have been passed, there have been a myriad of opinions
handed down in court cases that have affected the HR legal environment. The legal landscape is
changing quickly.
The Complexity of Laws
Each individual law is accompanied by a set of regulations that can be quite lengthy. Nonetheless, the
gist of most HR law is fairly straightforward. Managers should be able to understand the basic
intention of all such laws without too much difficulty.
Conflicting Strategies for Fair Employment
Society at large, political representatives, government employees, and judges all has different views
regarding the best ways to achieve equitable HR laws.
Unintended Consequences
It is very common for a law, government program, or an organizational policy to have numerous
unanticipated consequences, some of which turn out to be quite negative. The challenge to managers is
to anticipate and deal with both the intended and unintended consequences of law.
Key Terms
Affirmative Action: An approach that an organization with government contracts develops to
demonstrate that women or minorities are employed in proportion to their representation in the firm’s
relevant labor market
Employment discrimination: To make an employment decision, not on the basis of legitimate job-
related factors

Lecture 12
HUMAN RESOURCE PLANNING (HRP)
A. Human Resource Planning (HRP)
LECTURE OVERVIEW
We will examine the human resource planning process and some human resource forecasting techniques.
Next, we discuss forecasting human resource requirements and availability and describe what actions could
be taken should either a surplus or a shortage of workers exist.
A. Human Resources Planning (HRP)
To understand the Human Resource Planning First, we will see what is Planning? and why is it needed?
What is planning? Plans are methods for achieving a desired result. Goals or objectives are specific results
you want to achieve. Planning is thus “the process of establishing objectives and courses of action prior to
taking action.”
What is planning concerned with? Planning provides a sense of purpose and direction. It is a
comprehensive framework for making decisions in advance. It also facilitates the organizing, leading, and
controlling functions of management. Planning: allows you to make your decisions ahead of time, it helps
you to anticipate the consequences of various courses of action, it provides direction and a sense of
purpose, it provides a unifying framework against which to measure decisions, and thus helps you avoid
piecemeal decision making. Planning also helps identify potential opportunities and threats, and facilitates
control. It is concerned with the end (what is to be done) as well as with means (how it is to be done).
Is planning really needed? If… organizations… never faced changes in the environment, there would
have been no need for planning. Planning is one of the functional areas of HR.
B. Strategic Planning And The Human Resource Planning Process
Strategic planning: is the process by which top management determines overall organizational purposes
and objectives and how they are to be achieved.
Human resource planning (HRP): is the process of systematically reviewing human resource
requirements to ensure that the required number of employees, with the required skills, is available when
they are needed. After an organization’s strategic plans have been formulated, human resource planning can
be undertaken. Human resource planning has two components: requirements and availability. Forecasting
human resource requirements involves determining the number and type of employees needed by skill level
and location. In order to forecast availability, the human resource manager looks to both internal sources
(presently employed employees) and external sources (the labor market). When employee requirements and
availability have been analyzed, the firm can determine whether it will have a surplus or shortage of
employees. Ways must be found to reduce the number of employees if a surplus is projected. Some of these
methods include restricted hiring, reduced hours, early retirements, and layoffs. If a shortage is forecasted,
the firm must obtain the proper quantity and quality of workers from outside the organization. In this case,
external recruitment and selection is required.
The process of anticipating an organization’s future human resource needs and then developing action plans
for fulfilling identified needs. The systematic review of human resource requirements getting the right
people at the right place at the right time.
i. Objectives of Human Resource Planning
Enable organizations to anticipate their future HR needs to identify practices that will help them meet those
needs
ii. Benefits of HR Planning
• Helps in planning job assignments
• Helps cope with fluctuations in staffing

• Identifies recruiting needs
• Provides other useful information
iii. Planning Includes Forecasting
Forecasting is carried out in two basic areas which are demand forecast of workforce for organization and
supply forecast for the organization
Following approaches are used to perform this function or activity:
• Statistical approaches
a) Trend analysis
b) Ratio analysis
c) Regression analysis
• Judgmental methods
a) Managerial judgment
Forecasting Involves Two Activities
• Monitoring current HR programs and personnel staffing levels
• Investigating future HR needs and concerns
Forecasting Human Resource Requirements
A requirements forecast is an estimate of the numbers and kinds of employees the organization will need at
future dates in order to realize its goals. Several techniques of forecasting human resource requirements and
availability are currently being used by organizations.
a. Zero-Base Forecasting
This method uses the organization’s current level of employment as the starting point for determining
future staffing needs. The key to zero-base forecasting is a thorough analysis of human resource needs.
b. Bottom-Up Approach
A forecasting method in which each successive level of the organization, starting with the lowest, and
forecasts its employee requirements in order to, ultimately, provide an aggregate forecast of employment
needs.
c. Use Of Mathematical Models
Mathematical models can assist in forecasting HR requirements. The relationship between sales demand and
the number of employees needed is a positive one.
d. Simulation
It is a technique for experimenting with a real-world situation through a mathematical model representing
that situation. A model is an abstraction of the real world.
Forecasting Human Resource Availability
Determining whether the firm will be able to secure employees with the necessary skills and from what
sources these individuals may be obtained is called an availability forecast.
Surplus of Employees Forecasted
When a comparison of requirements and availability indicates a worker surplus will result, restricted hiring,
reduced hours, early retirements, or layoffs may be required to correct the situation.
a. Restricted Hiring
When a firm implements a restricted hiring policy, it reduces the workforce by not replacing employees who
leave.
b. Reduced Hours
Reaction to a declining demand can also be made by reducing the total number of hours worked. Instead of
continuing a 40-hour week, management may decide to cut each employee’s time to 30 hours.

c. Early Retirement
Early retirement of some present employees is another means of reducing the supply of workers.
d. Layoffs
At times, the firm has no choice but to actually lay off part of its workforce.
Shortage of Workers Forecasted
Faced with a shortage of workers, many organizations had to intensify their efforts to recruit the necessary
people to meet the needs of the firm. Some actions that were taken included:
a. Creative Recruiting
A shortage of personnel often means that new approaches to recruiting must be used. The organization may
have to recruit in different geographical areas than in the past, explore new methods, and seek different
kinds of candidates.
b. Compensation Incentives
Firms competing for workers in a high-demand situation may have to rely on compensation incentives.
Premium pay is one obvious method. However, this approach may trigger a bidding war that the
organization cannot sustain for an extended period. More subtle forms of rewards may be required to
attract employees to a firm, such as four-day workweeks, flexible working hours, telecommuting, part-time
employment, and child care centers.
I.
c. Training Programs
Special training programs may be needed to prepare previously unemployable individuals for positions with
a firm. Remedial education and skills training are two types of programs that may help attract individuals to
a particular company.
d. Different Selection Standards
Another approach for dealing with shortages of workers is the lowering of employment standards. Selection
criteria that screen out certain workers may have to be altered to ensure that enough people are available to
fill jobs. For instance, instead of desiring extensive work experience, a firm may be willing to hire an
inexperienced worker and train him or her to do the job.
Succession Planning and Development
a. Succession Planning
The process of ensuring that a qualified person is available to assume a managerial position once the
position is vacant.
b. Succession Development
The process of determining a comprehensive job profile of the key positions and then ensuring that key
prospects are properly developed to match these qualifications.
c. THE GOAL OF HR PLANNING
The goal of forecasting and planning is to keep a stable workforce that meets needs of the organization.
d. STEPS IN HRP PROCESS
• Determine the impact of organizational objectives on specific organizational unit
• Define the skills required to meet objectives (demand for Human Resource)
• Determine additional human resource requirements in light of current HR (net HR
requirements)
• Develop action plan to meet the anticipated HR needs

e. Importance Of Hrp
HRP has become more important in recent years for a number of reasons like:
• Globalisation of Business
• New Technologies
• The changing skill levels in the Workforce
• The changing demographics of the workforce
• Mergers and Acquisitions
• Legal developments
f. Requirements for effective HR planning
Successful HR planning requires:
• HR personnel understand the HR planning process
• Top management is supportive
• The communications between HR staff and line management are healthy
• The HR plan is integrated with the organization’s strategic business plan
Linking HR planning practices to competitive advantage
Effective HR planning provides best options for supply of workforce of the organization and s stated in
earlier chapters if organization is able to have efficient and effective workforce it will be have competitive
advantage.
KEY TERMS
Plans Plans are methods for achieving a desired result.
Simulation A technique for experimenting with a real-world situation through a
mathematical model representing that situation. A model is an abstraction of
the real world.
Strategic planning is the process by which top management determines overall organizational
purposes and objectives and how they are to be achieved.
Layoffs At times, the firm has no choice but to actually lay off part of its workforce.

Lesson 13
STRATEGIC PLANNING AND HRIS
Strategic Planning
Human Resource Information Systems (HRIS)
Relationship of HRIS with overall MIS
A. Strategic planning:
It is the process by which top management determines overall organizational purposes and
objectives and how they are to be achieved. The linking of HRM with strategic goals and objectives
in order to improve business performance and develop organizational cultures that foster
innovation and flexibility.” The role of HR in the strategic planning process depends on the
organization's view of HR. There are three views detailed in the text which involve HR as an
operational function, HR as a "fitting" function, and HR as an equal partner in the strategic
planning process. Obviously, it is our contention that the latter is the appropriate view. In this
view, HR's role would include environmental scanning, competitive intelligence, internal strengths
and weaknesses analysis, and the implementation of the strategies. HR process involves following
activities or steps.
I. HR Planning Process:
a. Determine the organizational mission:
It states Organization’s overall purpose and basic business scope and operations it provides
information like, why does our organization exist? What unique contributions can it make?
b. Scan the organizational environment.
This is also known as SWOT analysis through this process organizations identify different
opportunities available in the market and the threats that can be faced by the organization,
and the weaknesses and strengths possessed by organizations are also measured and
identified through this process.
c. Set strategic goals:
To achieve the overall mission or purpose of the organization it is required to set specific
long-term and short term objectives and goals. The goal can be defined as desired
outcomes to accomplish mission. Following are the characteristics of effective goals.
• Specific
• Challenging
• Measurable
d. Formulate a strategic plan:
Courses of action is designed to meet strategic goals, also specifies functional or
departmental goals are selected at this step.
II. Strategic Planning and Strategic Trends
a. The Basics of Strategic Planning – A strategy is the company’s plan for how it will balance
its internal strengths and weaknesses with its external opportunities and threats and
maintain a competitive advantage. Managers engage in three levels of strategic planning:
corporate-level strategy, business-level competitive strategy, and functional strategies.
b. The Strategic Planning Process entails conducting a SWOT analysis to identify its
strengths, weaknesses, opportunities, and threats.
c. Basic Strategic Trends
Globalization refers to the tendency of firms to extend their sales,
ownership, and/or manufacturing to new markets abroad. For

businesses everywhere, the rate of globalization in the past decade has
been enormous, and has several strategic implications for firms.
Technological Advances have been forcing, and enabling, firms to
become more competitive.
The Nature of Work is changing due to new technological demands.
The Workforce demographics are changing as well. It’s becoming
more diverse as women, minority-group members, and older workers
enter the workforce.
d. Managerial Consequences of the Basic Trends – Managers have to craft strategies that
balance opportunities and threats (like those previously discussed) with their firm’s
strengths and weaknesses, such as global expansion and improved competitiveness
strategies. These types of strategies are driving other organizational changes.
III. HR’s Strategic Role
a. HR’s Evolving Role – It’s the firm’s workforce that provides the
competitive advantage for the firm. HR’s role is shifting from
protector and screener to strategic partner and change agent.
b. Strategic Human Resource Management refers to improving business
performance and developing an organizational culture that fosters
innovation and flexibility by linking HRM with the strategic goals and
objectives of the firm.
c. HR’s Role As a Strategic Partner can be seen as either adapting
individual HR practices to fit specific corporate and competitive
strategies or as an equal partner in the strategic planning process.
1. HR’s Role in Executing Strategy – Execution has been HR’s traditional
strategic role.
2. HR and Value Chain Analysis – Strategy execution usually involves identifying
and reducing costs, and therefore value chain analysis.
3. HR’s Role in Formulating Strategy – HR management can play a role in
environmental scanning by assisting in identifying and analyzing external
opportunities and threats that may be crucial to the company’s success.
B. Human Resource Information System
HRISs are systems used to collect, record, and store, analyze, and retrieve data concerning an
organization's human
resources. The collection of
information on aspects of
work life as diverse as salary
and payroll, compensation,
leave, accidents,
superannuating and employee
benefits has always been part
of the human resource
manager's function. In the
early history of personnel
management, administrative
aspects, including data
collection, took up a great deal
of time. Reviews of employee
Manager
Analysis
Planning
Leading
Control
Assessing
information
needs
Distributing
information
Internal
records
Management decisions and communication
Environment
Micro-
Environment
forces
Macro-
environment
forces
Management Information System
Developing information
Management
intelligence
Research
Management
decision
support
analysis

salary and leave entitlements often dominated the activities of earlier personnel officers, reflecting
both management priorities and their own clerical backgrounds.
Such early information systems were manual, and were mainly used to notify employees of leave
entitlements, to ensure accurate salary and wage payments and to process workers' compensation
and superannuating claims. The data was seldom used to predict trends, identify problem areas and,
or aid in the longer-term staffing process.
I. The development of human resource information systems (HRIS)
In the early development of human resource management, information systems, although often
accurate and comprehensive, were mainly used for administrative and operational purposes. Forms
were used to collect leave requests, workers compensation and accident data, and salary variation
and superannuation entitlements. During the 1970s and 1980s, several factors radically changed
attitudes towards human resource information systems. The increasing complexity of payroll
systems in this period demanded more flexibility in, and access to information system. These needs
happily coincided' with the development of increasingly sophisticated computer hardware and
software systems. In large organizations, centralized payroll processing sections began to be
separated from other human resource functions. Some organizations contracted their payroll
responsibilities to external payroll bureaus with greater technological expertise, and for reduced
costs.
II. Nature and benefits of HRIS
Modern human resource information systems are comprehensive, accurate and accessible systems
for recording employee and work data relevant to HRM, HR and organizational planning.
An HRIS is:
The system used to acquire, store. Manipulate, analyze, retrieve and distribute pertinent information
regarding an organization’s human resources. Its purpose is to facilitate, or support, straight, tactical
and operational decision making, to avoid litigation, to evaluate programs, policies, or practice and
daily operations
Specific benefits of such systems include:
i. Improved planning and program development using decision support software. Faster
information processing and improved response times
ii. Decreased administrative and HR costs
iii. Accuracy of information
iv. Enhanced Communication at all levels.
Not all systems fulfill all these requirements, nor is such a complete system suitable for all
organizations. Essentially however all HRIS contain information on:
• Employees
• Jobs and work conditions
• Positions
• HR events (e.g. recruitment. training and development, performance appraisals, and
terminations).
III. Uses of HRIS
Comprehensive and integrated information systems can be used widely -in administrative, operational and
strategic fields by HR and other managers. On the operational level HRIS data can be used to identify
potential internal applicants for job vacancies, saying external recruitment costs and assuring employees of
career opportunities. Strategically, such information may be used to gauge the effectiveness of current
recruitment or promotional systems, their costs and/ or benefits, and enable subsequent changes of direction
in line with proposed organizational strategies.
IV. Strategic HR planning and HR information systems
Proactive HR managers ensure that their HRIS contributes to organizational performance. A recent
development in the uses of HRIS in many has been the linking of 'benchmarking' practices to the design,
choice and implementation of such systems as a directly strategic initiative. Integration with organizational

strategic objectives is achieved by the subsequent establishment of performance targets and quantitative
measures. As a strategic 'tool', HRIS can be used to contribute to the development and modification of HR
plans, on both quantitative and qualitative bases, and to feed into specific HRM functions. HR data, if
collected effectively and contained within computerized, accessible systems, can both compare
organizational HR 'bottom line' outcomes by HRM function, between functions and with national or
international performance benchmark
V. HRIS Applications
A computerized HRIS contains hardware and software applications that work together to help managers
make HR decisions. HRIS software applications currently available to business include those for employee
information, applicant tracking, skills inventory, payroll, and benefits administration.
VI. HRIS Security and Privacy
The HR department must develop policies and guidelines to protect the integrity and security of the HRIS
so that private employee information does not fall into the wrong hands. To maintain the security and
privacy of HRIS records, companies should control access, develop policies and guidelines that govern the
utilization of information, and allow employees to check their records.
VII. Purposes of HRIS
All organizations and their HR mangers need to consider whether their HRIS will be primarily used for
collecting, analyzing, interpreting or reporting employee information. The nature of the system chosen
should reflect this primary purpose, based upon a realistic analysis of needs prior to its introduction.
Small organizations with stable workforces and secure markets do not require complicated data analysis, but
can benefit from comprehensive and accurate databases for reporting purposes. On the other hand, large
organizations in competitive and dynamic industries demand strategic HRIS. Every organization needs to
assess its particular needs and identify the most appropriate information system for its chosen purposes.
VIII. Common HRIS Functions
Mainly following functions are performed by the HRIS in different organizations.
• Job analysis information can be placed in the HRIS.
• The program can write job descriptions and job specifications.
• Constant monitoring of compliance with EEO legislation.
• Maintain records of rejected applicants.
• Saves money and time in compiling reports.
• Ensure that women and minorities or not be adversely affected.
• Track minority hiring, recruitment, and advancement.
• Forecast supply and demand of labor from both the internal and external labor markets.
• Useful for internal recruiting.
• Can post job opening for employees to access.
• Can search for match between job specifications and applicant qualification.
• Applicant tracking system.
• Administering and scoring ability tests.
• Scanning resumes submitted online (web based or e-mail) or in person (or mail).
• Structured interviews.
• Matching qualifications with open positions (finding a good fit).
• Also, consider budgetary concerns.
• Help with registration, tracking training, monitor training costs, and schedule training.
• Used to deliver training.
• Career and managerial succession planning.
• Used to provide assessment tests to help employee’s plan their own career.
• Predict career paths.
• Provide PA instruments and results.

• Comparisons between employees, groups, or supervisors ratings.
• Monitor attendance.
• Monitor compliance with Labor Standards.
• Individual sale data can be accessed (tracking commissions).
• Benefits can be managed and administered by computers.
• Planned raises and wage histories.
• Provides reports for Occupational Safety and Health Administration (OSHA).
• Track hazardous materials.
• Track accidents and costs of accidents.
• Record employee safety training.
• Record employee exposure to various conditions and chemicals.
• Track disciplinary actions and grievances.
• Labor contract data.
• Worker seniority list. Etc..
C. Relationship of HRIS with overall MIS
Information is the backbone of healthy and efficient business management. An information system allows
the collection and processing of data to produce useful information for designated users at each level of
management. Information management must conform to well-defined principles, run on appropriate
software, and be completely adapted to your organization within an integrated system usually known as
Management Information System (MIS). Management Information System is the entire set of systems and
activities required to manage, process, and use information as a resource in the organization. Stated slightly
differently, MIS is the management and use of computer-based systems, computer-resident data, and
telecommunications for the support of business decision processes. HRIS is the part of MIS that provides
the information regarding workforce in the organization and facilitates the decision makers in decision
making process in this regard.
Key Terms
Strategic planning: It is the process by which top management determines overall organizational purposes
and objectives and how they are to be achieved.
Human Resource Information System: HRISs are systems used to collect, record, and store, analyze, and
retrieve data concerning an organization's human resources.

Lesson 14
JOB ANALYSIS
A. Job Analysis
LESSON OVERVIEW
We begin the chapter by describing why job analysis is a basic human resource management tool and
explaining the reasons for conducting job analysis. Next, we review the types of job analysis information
required and discuss job analysis methods. Then, we explain the components of a well-designed job
description and describe other methods for conducting job analysis and the ways job analysis helps to
satisfy various legal requirements. We then examine the human resource planning process and some human
resource forecasting techniques. Next, we discuss forecasting human resource requirements and availability
and describe what actions could be taken should either a surplus or a shortage of workers exist. The chapter
ends with a discussion of succession planning and development and job design.
A. Job Analysis:
Studying and under-standing jobs through the process known as job analysis is a vital part of any HRM
program
I. Purposes of the job Analysis
Job analysis is used to acquire the information in following areas
1. Major duties or activities required
2. Conditions under which the job is performed
So this process helps us to learn the following concepts:
• Job: A group of tasks that must be performed if an organization is to achieve its goals.
• Position: The tasks and responsibilities performed by one person; there is a position for every
individual in an organization.
• Task: A distinct, identifiable work activity composed of motions
• Duty: A larger work segment composed of several tasks that are performed by an individual.
• Responsibility: An obligation to perform certain tasks and duties.
II. Job Analysis Defined:
Job Analysis is the SYSTEMATIC process of collecting and making judgments about all the important
information related to a job. Job analysis is the procedure through which you determine the duties and
nature of the jobs and the kinds of people who should be hired for them. You can utilize the information it
provides to write job descriptions and job specifications that are utilized in recruitment and selection,
compensation, performance appraisal, and training.
III. Reasons For Conducting Job Analysis
A sound job analysis system is extremely critical for numerous reasons.
• Staffing—All areas of staffing would be haphazard if the recruiter did not know the
qualifications needed to perform the job.
• Training And Development—if the specification suggests that the job requires a
particular knowledge, skill, or ability—and the person filling the position does not possess
all the qualifications required—training and/or development is probably in order.
• Compensation and Benefits—The relative value of a particular job to the company must
be known before a dollar value can be placed on it. From an internal perspective the more
significant its duties and responsibilities, the more the job is worth.
• Safety and Health—Information derived from job analysis is also valuable in identifying
safety and health considerations.

• Employee and Labor Relations—Regardless of whether the firm is unionized,
information obtained through job analysis can often lead to more objective human
resource decisions.
• Legal Considerations—having properly accomplished a job analysis is particularly
important for supporting the legality of employment practices.
a. Job Analysis for Teams—Today whenever someone asks, “What is your job
description?” the reply might well is, “Whatever.” What this means is that if a project has
to be completed, individuals do what has to be done to complete the task.
IV. Types of Job Analysis Information
Considerable information is needed if job analysis is to be accomplished successfully. Knowledge of the
types of machines, tools, equipment, and work aids that are used in performing the job is important. Some
job analysis systems identify the standards that are established for the job.
Questions Job Analysis Should Answer
• What physical and mental tasks does the worker accomplish?
• When does the job have to be completed?
• Where is the job to be accomplished?
• How does the worker do the job?
• Why is the job done?
• What qualifications are needed to perform the job?
V. When Job analysis is performed?
Job analysis is conducted under following situations.
• When the organization is founded
When organizations are created complete information about jobs to be performed is collected through job
analysis.
• When new jobs are created
When jobs are changed significantly as a result of new technologies, methods, procedures, or systems for
analyzing them job analysis is conducted.
VI. Uses of Job Analysis Information
1. Recruitment and Selection – Job descriptions and job specifications are formed from the
information gathered from a job analysis, which help management decide what sort of people to
recruit and hire.
2. Compensation – The estimated value and the appropriate compensation for each job is determined
from the information gathered from a job analysis.
3. Performance Appraisal – Managers use job analysis to determine a job’s specific activities and
performance standards.
4. Training – Based on the job analysis, the job description should show the job’s required activities
and skills.
5. Discovering Unassigned Duties – Job analysis can help reveal unassigned duties.
6. EEO Compliance – The Uniform Guidelines on Employee Selection stipulate that job analysis is a
crucial step in validating all major personnel activities.
VII. Steps in Job Analysis
The job analysis process has the following steps:
1. Identify how the information will be used because that will determine what data will be collected
and how it should be collected. Interviewing and position analysis questionnaire are some examples of data
collection techniques.
2. Review relevant background information, such as organization charts, process charts, and job

descriptions.
3. Select representative positions to analyze because there may be too many similar jobs to analyze,
and it may not be necessary to analyze them all.
4. Analyze the job by collecting data on job activities, required employee behaviors, working
conditions, and human traits and abilities needed to perform the job.
5. Review and verify the job analysis information with job incumbents to confirm that it is factually
correct and complete.
6. Develop a job description and job specification from the job analysis information.
VIII. Job analysis outcomes
a.Job description
A job description is a written statement of what the jobholder actually does, how he or she does it, and
under what conditions the job is performed. There is no standard format for writing job descriptions, but
most descriptions include sections on:
• job identification
• job summary
• relationships, responsibilities, and duties
• authority of incumbent
• standards of performance
• working conditions
• job specifications
b.Job specification
A job specification is a document containing the minimum acceptable qualifications that a person should
possess in order to perform a particular job. Items typically included in the job specification are educational
requirements, experience, personality traits, and physical abilities.
c.Job evaluation
In Job Evaluation process the worth of job is identified based upon job comparability and according to
worth, importance of job and relative value Compensation is designed and selected.
Key Terms
Job Analysis: Studying and under-standing jobs through the process known as job analysis is a vital part of
any HRM program
Job Specification: A job specification is a document containing the minimum acceptable qualifications that
a person should possess in order to perform a particular job
Job Description: A job description is a written statement of what the jobholder actually does, how he or
she does it, and under what conditions the job is performed.
Job Evaluation: It suggests about the relevant importance of a particular job in organization.

Lesson 15
JOB ANALYSIS
A. Job Analysis
LESSON OVERVIEW
Today we will be continuing with job analysis, we will be discussing the steps in job analysis. Further we will
discuss methods that can be used to analyze the job in organization.
A. Job Analysis:
Job analysis is the procedure through which you determine the duties and nature of the jobs and the kinds
of people who should be hired for them. You can utilize the information it provides to write job
descriptions and job specifications, which are utilized in recruitment and selection, compensation,
performance appraisal, and training.
I. Job Analysis Methods
Job analysis traditionally has been conducted in a number of different ways. Also, firms differ in their needs
and in the resources they have for conducting job analysis.
Methods of Collecting Job Analysis Information
Introduction
1. An HR specialist (an HR specialist, job analyst, or consultant), a worker, and the worker’s
supervisor usually work together in conducting the job analysis.
2. Job analysis data is usually collected from several employees from different departments,
using interviews and questionnaires. The data is then averaged, taking into account the departmental
context of the employees, to determine how much time a typical employee spends on each of several
specific tasks.
a. The Interview
1. The three types of interviews managers use to collect job analysis data are: individual (to
get the employee’s perspective on the job’s duties and responsibilities, group (when large numbers of
employees perform the same job), and supervisor (to get his/her perspective on the job’s duties and
responsibilities).
2. The pros of using an interview are that it is: simple, quick, and more comprehensive
because the interviewer can unearth activities that may never appear in written form.
3. The following questions are some examples of typical questions. “What is the job being
performed?” “In what activities do you participate?” “What are the health and safety conditions?” Figure
3-3 gives an example of a job analysis questionnaire.
4. The following are interview guidelines: a) the job analyst and supervisor should identify
the workers who know the job best and would be objective; b) establish a rapport with the interviewee; c)
follow a structured guide or checklist; d) ask worker to list duties in order of importance and frequency of
occurrence; and e) review and verify the data.
b. Questionnaire
1. Structured or unstructured questionnaires may be used to obtain job analysis information
2. Questionnaires can be a quick, efficient way of gathering information from a large number
of employees. But, developing and testing a questionnaire can be expensive and time consuming.
c. Observation
1. Direct observations are useful when jobs consist of mainly observable physical activity as
opposed to mental activity.
2. Reactivity can be a problem with direct observations, which is where the worker changes
what he/she normally does because he/she is being watched.

3. Managers often use direct observation and interviewing together.
d. Participant Diary / Logs
1. The employee records every activity he/she engages in, in a diary or log along with the
amount of time to perform each activity to produce a complete picture of the job.
2. Employees may try to exaggerate some activities and underplay others.
e. Quantitative Job Analysis Techniques
1. Position Analysis Questionnaire (PAQ) is a questionnaire used to collect quantifiable data
concerning the duties and responsibilities of various jobs, see Figure 3-5, on five basic activities: a) having
decision-making/communication/social responsibilities, b) performing skilled activities, c) being physically
active, d) operating vehicles/equipment, and e) processing information.
2. Department of Labor Procedure (DOL) is a standardized method for rating, classifying,
and comparing virtually every kind of job based on data, people, and things. Table 3-1 shows a set of basic
activities, and Figure 3-6 gives a sample summary.
3. Functional job analysis: 1) rates a job on data; people; things; the extent to which specific
instructions are necessary to perform the task; the extent to which reasoning and judgment are required to
perform the task; and mathematical ability required to perform the task; and 2) identifies performance
standards and training requirements.
f. Using Multiple Sources of Information
Likely, no one job analysis method will be used exclusively. A combination is often more appropriate.
1. Where possible, collect job analysis data using several types of collection techniques and
respondents.
2. Potential inaccuracies in peoples’ judgments could lead to inaccurate conclusions
II. Source of Data
Main sources of collection of data for job analysis are as following:
• Employees
• Supervisor
• Manager
• Job Analyst
• Job Analyst (HR)
• Outside consultant
• Supervisor/Manager
III. Problems with Job Analysis
Too lengthy
• Time consuming and requires much patience
• Might be a reflection of stereotypes
Key Terms
Job Identification – contains the job title, the FLSA status, date, and possible space to indicate who
approved the description, the location of the job, the immediate supervisor’s title, salary and/or pay scale.
Job Summary – should describe the general nature of the job, and includes only its major functions or
activities.

Lesson 16
JOB ANALYSIS (CONTD.)
A. Human Resource Planning
B. Human Resource Forecasting Techniques
C. HR Hiring Process
D. Constraints of Recruitment Process
E. Philosophy of the Recruitment
F. Ethical Issues in Recruitment
LESSON OVERVIEW
Today we will examine the human resource planning process and some human resource forecasting
techniques. Next, we discuss forecasting human resource requirements and availability and describe what
actions could be taken should either a surplus or a shortage of workers exist.
A. Human resource planning (HRP):
It is the process of systematically reviewing human resource requirements to ensure that the required
number of employees, with the required skills, is available when they are needed.
B. HUMAN RESOURCE FORECASTING TECHNIQUES
Several techniques of forecasting human resource requirements and availability are currently used by those
in the profession.
• Zero Based Forecasting
This method uses the organization’s current level of employment as the starting point for determining
future staffing needs. The key to zero-base forecasting is a thorough analysis of human resource needs.
• Bottom-Up Approach
A forecasting method in which each successive level of the organization, starting with the lowest, forecasts
its employee requirements in order to, ultimately, provide an aggregate forecast of employment needs.
• Use Of Mathematical Models
Mathematical models can assist in forecasting HR requirements. The relationship between sales demand and
the number of employees needed is a positive one.
• Simulation
Simulation is a technique for experimenting with a real-world situation through a mathematical model
representing that situation. A model is an abstraction of the real world.
Forecasting Human Resource Requirements
A requirements forecast is an estimate of the numbers and kinds of employees the organization will need at
future dates in order to realize its goals.
Forecasting Human Resource Availability
Determining whether the firm will be able to secure employees with the necessary skills and from what
sources these individuals may be obtained is called an availability forecast.
SURPLUS OF EMPLOYEES FORECASTED
When a comparison of requirements and availability indicates a worker surplus will result, restricted hiring,
reduced hours, early retirements, or layoffs may be required to correct the situation.
• Restricted Hiring
When a firm implements a restricted hiring policy, it reduces the workforce by not replacing employees who
leave.

• Reduced Hours
Reaction to a declining demand can also be made by reducing the total number of hours worked. Instead of
continuing a 40-hour week, management may decide to cut each employee’s time to 30 hours.
• Early Retirement
Early retirement of some present employees is another means of reducing the supply of workers.
• Layoffs
At times, the firm has no choice but to actually lay off part of its workforce.
SHORTAGE OF WORKERS FORECASTED
Unemployment in the United States was at an all-time low in the summer of 2000. Faced with a shortage of
workers, many organizations had to intensify their efforts to recruit the necessary people to meet the needs
of the firm. Some actions that were taken included:
• Creative Recruiting
A shortage of personnel often means that new approaches to recruiting must be used. The organization may
have to recruit in different geographical areas than in the past, explore new methods, and seek different
kinds of candidates.
• Compensation Incentives
Firms competing for workers in a high-demand situation may have to rely on compensation incentives.
Premium pay is one obvious method. However, this approach may trigger a bidding war that the
organization cannot sustain for an extended period. More subtle forms of rewards may be required to
attract employees to a firm, such as four-day workweeks, flexible working hours, telecommuting, part-time
employment, and child care centers.
• Training Programs
Special training programs may be needed to prepare previously unemployable individuals for positions with
a firm. Remedial education and skills training are two types of programs that may help attract individuals to
a particular company.
• Different Selection Standards
Another approach for dealing with shortages of workers is the lowering of employment standards. Selection
criteria that screen out certain workers may have to be altered to ensure that enough people are available to
fill jobs. For instance, instead of desiring extensive work experience, a firm may be willing to hire an
inexperienced worker and train him or her to do the job.
SUCESSION PLANNING AND DEVELOPMENT
Succession Planning: The process of ensuring that a qualified person is available to assume a managerial
position once the position is vacant.
Succession Development: It is the process of determining a comprehensive job profile of the key
positions and then ensuring that key prospects are properly developed to match these qualifications.
C. HR Hiring Process:
HR hiring process involves the activities that are required to make the workforce or staff available to fill and
keep filled different positions in the organization.
This process includes the following steps
• Recruitment
It is the process of attracting individuals on a timely basis, in sufficient numbers and with appropriate
qualifications, and encouraging them to apply for jobs with an organization.

• Selection
The process of making a “hire” or “no hire” decision regarding each applicant for a job
• Socialization
The process of orienting new employees to the organization or the unit in which they will be working
Today we will start discussing this hiring process with the detail discussion on first step that is Recruitment.
Recruitment:
It is the process of attracting individuals on a timely basis, in sufficient numbers and with appropriate
qualifications, and encouraging them to apply for jobs with an organization.
a. Goals of Recruitment:
Mainly there are two recruitment goals
b. To attract qualified applicants
Recruiting process is used to create the pool of qualified applicants. By qualified applicants we mea those
applicants who are having abilities that are perfect match with the job requirements.
c. To discourage non qualified applicants.
Second goal of recruitment is to avoid nonqualified applicants. When recruiting is based upon careful
designing of the job disruption and job specification most of the applicants having irrelevant qualifications
are eliminated fro the list of potential applicants which makes recruiting process more effective and easier.
D. Constraints of Recruitment Process:
Different factors in internal or external environment can influence the effectiveness of recruiting process in
negative manner and can become hurdles in recruiting process. They mainly include:
I. Image of the Organization.
If employees believe that their employer deals with them fairly, the positive word-of-mouth support they
provide is of great value to the firm. It assists in establishing credibility with prospective employees.
Image of the organization is mainly assessed by its performance, salary, benefits provided by it potential
opportunities to excel and respect etc. If all these factors are good enough than the image of the
organization will be positive in the market that will help the organization to have reasonable number of
applicants ready to apply for then given job openings, But if the salary benefits provided by the
organizations are not compatible with the market there are no potential opportunities for the career
development and to excel in future than these factors will be contributing towards negative image of the
organization. This bad image is hurdle in acquiring good number of applicants through recruitment process
specially if any firm is having business in the declining industry and management is least bothered about the
welfare and wellbeing of the employees.
II. Attractiveness of the job
Attractiveness of the job mainly depends upon its contribution towards achievement of organizations
objectives, challenging assignments, its contribution in the career development of the job holder. Secondly
the benefits and salary associated to particular job also plays important role in defining the importance of
the job. There fore jobs having challenging assignments, career oriented in nature and having good
remuneration package can attract best applicants from the labor force available in the market or vice versa.
III. Government Influence
The recruitment process is influenced by the laws provided by the government. Organizations to be more
successful are required to work according to these laws.
IV. Labor Market Influence:
The recruitment process is influenced by labor market conditions. When the economy is growing rapidly
and unemployment levels are very low, recruiting is extremely difficult. However, when the economy is
stagnant and unemployment levels are high, organizations can obtain large applicant pool with very little
effort.

V. Recruiting Costs
Companies use to bear very high costs while performing the recruitment process especially when the
recruitment is external. Therefore organizations can perform this function only and only if they are having
sufficient resources to perform the recruitment process.
VI. Global Issues
When ever staffing function is performed at the international level or across the national boundaries beside
internal environment of organization polices of the host country regarding employment also influence the
recruitment process. They can include basic labor laws regarding quality of work life EEO, remuneration
packages, etc.
Diversity through Recruiting Efforts:
To offset the momentum of past discrimination in employment, firms must resort to additional recruitment
approaches. A recruitment program that is designed to specifically attract women and minorities is referred
to as affirmative recruitment. To ensure that an organization's recruitment program is nondiscriminatory,
the firm must analyze its recruitment procedures. Each individual who engages in recruitment should be
trained in the use of objective, job-related standards. With few exceptions, jobs must be open to all
individuals. When placing job orders with employment agencies, an organization should emphasize its
nondiscriminatory recruitment practices. Organizations engaged in affirmative recruitment should develop
contacts with minority, women's, and other community organizations.
E. Philosophy of the Recruitment:
Major decision in performing the recruitment process is selection of sources from the available sources
which are:
• Internal Recruitment
• External Recruitment.
Both of theses have pros and cons and to have the best pool of the applicant’s pool it is suggested that the
multiple approach should be used instead of depending upon any single sources
F. Ethical Issues in Recruitment:
• Performs recruiting and employment activities for the off-site location, providing qualified
candidates in a cost-effective and timely manner while ensuring adherence to the corporate job
posting procedure.
• Verifies that all job offers to internal and external candidates are within company policy and that
any unusual questions regarding employment are referred to the Manager in order to ensure fair
and equitable treatment of all job candidates.
Key Terms
Human resource planning (HRP): It is the process of systematically reviewing human resource
requirements to ensure that the required number of employees, with the required skills, is available when
they are needed.
Recruitment: It is the process of attracting individuals on a timely basis, in sufficient numbers and with
appropriate qualifications, and encouraging them to apply for jobs with an organization.
Job EvaluationIt is used to evaluate the importance of job by considering its contribution towards
achievements of the objectives of organization.

Lesson 17
SOURCES OF RECRUITMENT
A. Explain Recruitment
B. Describe Sources of Recruitment
C. Identify alternatives to recruitment
D. Understand Recruitment – an applicant’s perspective
E. Evaluate the Recruitment Process
LESSON OVERVIEW
Today we will discuss about the first step of staffing function which is Recruitment. We begin this lecture
by presenting the recruitment process. This section is followed by internal recruitment methods, external
recruitment sources, and external recruitment methods. Finally, recruitment evaluation will be discussed.
A. Recruitment:
Recruiting refers to the process of attracting potential job applicants from the available labor force. Every
organization must be able to attract a sufficient number of the job candidates who have the abilities and
aptitudes needed to help the organization to achieve its objectives. An effective employee selection
procedure is limited by the effectiveness of recruiting process. Outstanding job candidates cannot be
selected if they are not included in the applicant pool.
The recruitment process also interacts with other personnel functions, especially performance evaluation
compensation training and development and employee relations. Recruiting is typically a human resource
function.
In planning recruiting activities, an organization needs to know how many applicants must be recruited.
Since some applicants may not be satisfactory an others may not accept the job offers, an organization must
recruit more applicants than it expects to hire. Yield Ratios help organizations decide how many employees
to recruit for each job opening. These ratios express the relationship between the number of people at one
step of the recruitment process relative to the number of people who will move to the next step.
Now we will discuss the different sources of recruitment that are available to organization:
B. Source of Recruitment:
Basically organizations are available by the two man sources of recruitment which are:
I. External Recruitment.
II. Internal Recruitment.
Vacancies in upper level management can be filled either by hiring people from outside the organization or
by promoting lower level mangers. Both strategies have advantages and disadvantages.
We will consider both internal and external recruitment sources in detail:
I. Internal Recruiting Sources:
When job vacancies exist, the first place that an organization should look for placement is within itself. An
organization’s present employees generally feel that they deserve opportunities to be promoted to higher-
level positions because of their service and commitment to organization. More over organizations have
opportunities to examine the track records of its present employees and to estimate which of them would
be successful. Also recruiting among present employees is less expensive than recruiting from outside the
organization. The major forms of the internal recruiting include:
1. Promotion from with in.
2. Job posting.
3. Contacts and referrals
a. Promotion from within:
Promoting entry level employees to more responsible positions is one of the best ways to fill job vacancies
and important reason why company should have a human resource planning system. An organization that
has human resource planning system uses succession plans and replacement charts to identify and prepare
individuals for upper level positions. Skills inventories are useful in identifying individuals who have the

potential for advancement, and individual’s desire to be promoted can be assessed in the performance
appraisal review. A promotion from within policy is intrinsic to career development and human resource
planning. A promotion from within policy can stimulate great motivation among employee, and this
motivation is often accompanied by a general improvement in the employee morale.
b. Job posting
An organization can also use the policy of job posting as a internal recruitment source. In the job posting
system the organization notifies its present employees about job openings through the use of bulletin
boards, company publications, or personal letters. The purpose of the job posting is to communicate that
the job opening exists. An effective job posting system involves the following guidelines:
Job posting should be prominent.
Clear job specification should be communicated so that applicants assess themselves either they are eligible
to apply or not.
Once the decision is made, all applicants should be informed about the decision.
Job posting systems generally work quite well.
c. Contacts and Referrals:
Many firms have found that their employees can assist in the recruitment process. Employees may actively
solicit applications from their friends and associates.
Before going outside to recruit employees, many organizations ask present employees to encourage friends
or relatives to apply for the job openings. Contacts and referrals from the present employees are valuable
sources of recruits. Employee referrals are relatively inexpensive and usually produce quick responses.
However some organizations are concerned about problems that result from hiring friends of employees
for example, the practice of hiring friends and relatives favoritisms, cliques etc.
• Advantages of Internal Recruitment:
1. Provides greater motivation for good performance.
2. Provides greater opportunities for present employees
3. Provides better opportunity to assess abilities
4. Improves morale and organizational loyalty
5. Enables employees to perform the new job with little lost time
• Disadvantages of Internal Recruitment:
1. Creates a narrowing thinking and stale ideas
2. Creates pressures to compete
3. Creates homogeneous workforce
4. Chances to miss good outside talent Requires strong management development programs
specially to train for technology.
II. External Recruiting Sources:
A broad variety of methods are available for external recruiting. An organization should carefully assess the
kinds of positions it wants to fill and select the recruiting methods that are likely to produce the best results.
EXTERNAL SOURCES OF RECRUITMENT
There are some employee needs that a firm must fill through external recruitment. Among them are: filling
entry-level jobs, acquiring skills not possessed by current employees, and obtaining employees with different
backgrounds to provide new ideas.
a. High Schools and Vocational Schools
Organizations concerned with recruiting clerical and entry-level operative employees often depend on high
schools and vocational schools.
b. Community Colleges
A number of community colleges are sensitive to the specific employment needs in their local labor market
and graduate highly sought-after students with marketable skills.
c. Colleges and Universities

Colleges and universities represent a major source of recruitment for many organizations. Potential
professional, technical, and management employees are typically found in these institutions. Different
institutes use to publish booklets having information about the graduates that can be communicated to
organization who are in search of applicants.
d. Competitors and other Firms
Competitors and other firms in the industry or geographic area may be the most important source of
recruits for positions in which recent experience is highly desired.
e. Unemployed
Individuals who are unemployed, regardless of the reason, often provide a valuable source of recruitment.
f. Older Individuals
Older workers, including those retired, may also comprise a valuable source of employees.
g. Military Personnel
Using this source may make sense to many employers because these individuals typically have a proven
work history, and are flexible, motivated, and drug free.
h. Self-Employed Workers
These individuals may provide a source of applicants to fill any number of jobs requiring technical,
professional, administrative, or entrepreneurial expertise.
III. EXTERNAL RECRUITMENT METHODS
Recruitment methods are the specific means through which potential employees are attracted to the firm.
a. Advertising
A way of communicating the employment needs within the firm to the public through media such as radio,
newspaper, television, industry publications, and the Internet.
Some times organizations can perform the recruitment function through blind advertisements in blind
advertisements no identification about the company is provided to applicants. Companies can use blind
advertisements for many reasons e.g.
• Company wants to keep the recruitment in low profile so that lesser number of applicants should
apply in order to discourage the irrelevant people.
• Due to bad reputation or image of the organization
• Advertisement is made just for the purpose of test marketing fro example just to have knowledge
about the supply of applicants in labor market etc.
b. Employment Agencies
An organization that helps firms recruits employees and, at the same time, aids individuals in their attempt
to locate jobs. There are two types of the employment agencies i.e.
• Public Employment Agencies.
• Private Employment Agencies
Both of these sources provide coordination between the organizations and applicants who
are searching for jobs, for this service they use to charge a fee .Employment agencies are able to tailor their
services to the specific needs of the clients For example some agencies Specialize in a particular
employment areas, such as engineering, human resource or Computer programming, etc.
c. Recruiters
The most common use of recruiters is with technical and vocational schools, community colleges, colleges,
and universities.
d. Special Events
It is a recruiting method that involves an effort on the part of a single employer or group of employers to
attract a large number of applicants for interviews.

e. Internships
A special form of recruiting that involves placing a student in a temporary job. There is no obligation on the
part of the company to permanently hire the student and no obligation on the part of the student to accept
a permanent position with the firm. Hiring college students to work as student interns is typically viewed as
training activity rather than as a recruiting activity. However, organizations that sponsor internship
programs have found that such programs represent an excellent means of recruiting outstanding employees.
f. Executive Search Firms
Executive search firms sometimes called HEAD HUNTERS are specialized form of private employment
agencies that place top level executives and experienced professionals. These are the organizations that seek
the most-qualified executive available for a specific position and are generally retained by the company
needing a specific type of individual.
g. Professional Associations
Associations in many business professions such as finance, marketing, information technology, and human
resources provide recruitment and placement services for their members. Professional associations and
trade organizations provide a valuable service in bringing together professional and professional job
openings. Most professional organizations have newsletters, annual meetings and trade publications that
advertise job openings. The annual meetings of these organizations are good occasion for professionals to
learn about available job openings and for employers to interview potential applicants.
h. Unsolicited Walk-In Applicants
If an organization has the reputation of being a good place to work, it may be able to attract good
prospective employees without extensive recruitment efforts.
i. Open Houses
Firms pair potential hires and managers in a warm, causal environment that encourages on-the-spot job
offers.
j. Event Recruiting
Attend the events that the people you are seeking go to.
k. Virtual Job Fairs
Individuals meet recruiters face-to-face in interviews conducted over special computers that have lenses that
transmit head-and-shoulder images of both parties.
l. Cyber Recruiting
Organizations can also use web sites and internet sources to recruit people application submission test and
interview and other recruitment and selection activities can be performed online.
• Advantages of External Recruitment:
1. Provides new ideas and new insights
2. Provides greater diversity and helps achieve EEO goals by making affirmative action easy
3. Provides opportunities to handle rapid growth if the organization
4. Opportunities to get people with up-to-date knowledge education and training
• Disadvantages of External Recruitment:
1. It is more expensive and time consuming
2. Destroys incentives of present employees to strive for promotion
3. More chances to commit hiring mistakes due to difficult applicant assessment that will lead
to wastage of resources.
C. ALTERNATIVES TO RECRUITMENT
When an organization decides to add personnel to its staff, it makes a significant financial investment.
Recruitment and selection costs are high, especially for professionals, technical and managerial employees.
Therefore before an organization decides to recruit new employees, it ought to consider the feasibility of
other alternatives.

I. Outsourcing
Out sourcing is the process of transferring responsibility for an area of service and its objectives to an
external service provider instead of internal employee.
II. Contingent Workers
It is also known as part-timers, temporaries, and independent contractors, comprise the fastest-growing
segment of our economy.
III. Professional Employer Organization (Employee Leasing)
Using this approach, a firm terminates some or most of its employees. A leasing company then hires them,
usually at the same salary, and leases them back to the former employer, who becomes the client.
IV. Overtime
Perhaps the most commonly used method of meeting short-term fluctuations in work volume is through
the use of overtime.
D. Recruitment - An applicant perspective:
• Applicant should be provided with necessary information regarding organization job, remuneration
package etc.
• If rejection is to be communicated it should be done with tactics.
E. Evaluating the Recruitment Process:
Recruitment process can be evaluated by the following factors:
1. Quantity of the Applicants
2. Quality of the Applicants
Quantity of the Applicants
Recruitment process can be evaluated by the number of applicants who have applied for the job greater the
number of applications greater will be the chance to select best people from available pool.
Quality of the Applicants
Effectiveness of recruitment can be estimated by the quality of the applicants. Quality can be assessed by
the education, skills, capabilities and competencies of the applicants.
Yield Ratios:
The effectiveness of the recruitment process also depends upon the acceptability of the yield ratio.
Key Terms
Advertising: A way of communicating the employment needs within the firm to the public through media
such as radio, newspaper, television, industry publications, and the Internet.
Yield Ratios: Yield Ratios help organizations decide how many employees to recruit for each job opening.
Internal Recruiting Sources: When job vacancies exist, the first place that an organization should look for
placement is within itself
Outsourcing: Outsourcing is the process of transferring responsibility for an area of service and its
objectives to an external service provider instead of internal employee.
Contingent Workers: It is also known as part-timers, temporaries, and independent contractors, comprise
the fastest-growing segment of our economy.
Internships: A special form of recruiting that involves placing a student in a temporary job.
Recruitment: Recruiting refers to the process of attracting potential job applicants from the available labor
force.

Lesson 18
SELECTION
A. Explain Selection Process
B. Describe Environmental factors affecting the selection process
C. Identify Steps in the selection process
A. SELECTION PROCESS
We begin the chapter with a discussion of the significance of employee selection and the environmental
factors that affect it. Then, we describe the selection process, the preliminary interview, and review of the
application for employment.
Selection Process an Overview
Selection is the process of choosing from a group of applicants those individuals best suited for a particular
position. Most managers recognize that employee selection is one of their most difficult, and most
important, business decisions. This process involves making a judgment -not about the applicant, but about
the fit between the applicant and the job by considering knowledge, skills and abilities and other
characteristics required to perform the job Selection procedures are not carried out through standard
pattern and steps in this. Process can vary from organization to organization some steps performed and
considered important by one organization can be skipped by other organization
B. ENVIRONMENTAL FACTORS AFFECTING THE SELECTION PROCESS
A permanent, standardized screening process could greatly simplify the selection process. However,
development of such a process—even if it were possible and desirable—would not eliminate deviations to
meet the unique needs of particular situation.
• Legal Considerations
Legislation, executive orders, and court decisions have a major impact on human resource management. It
is important for hiring managers to see the relationship between useful and legally defensible selection tools.
• Speed Of Decision Making
The time available to make the selection decision can have a major effect on the selection process. Closely
following selection policies and procedures can provide greater protection against legal problems; however,
there are times when the pressure of business will dictate that exceptions be made.
• Organizational Hierarchy
Different approaches to selection are generally taken for filling positions at different levels in the
organization.
• Applicant Pool
The number of applicants for a particular job can also affect the selection process. The process can be truly
selective only if there are several qualified applicants for a particular position. The number of people hired
for a particular job compared to the individuals in the applicant pool is often expressed as a selection ratio.
• Type of Organization
The sector of the economy in which individuals are to be employed—private, governmental, or not-for-
profit—can also affect the selection process.
• Probationary Period
Many firms use a probationary period that permits evaluating an employee’s ability based on performance.
This may be either a substitute for certain phases of the selection process or a check on the validity of the
process.

• Selection Criteria:
Mostly the selection of applicant depends upon the following factors or criterions.
1. EDUCATION
2. COMPETENCIES
3. EXPERIENCE
4. SKILLS AND ABILITIES
5. PERSONNAL CHARECTRISTICS
Applicant who is best fit should be hired instead of hiring a person with extra ordinary skills it means right
person for right job should be hired person who is over or under qualified for the particular job will not be
able to adjust in the organization.
C. STEPS IN THE SELECTION PROCESS
The selection process typically begins with the preliminary interview; next, candidates complete the
application for employment. They progress through a series of selection tests, the employment interview,
and reference and background checks. The successful applicant receives a company physical examination
and is employed if the results are satisfactory. Several external and internal factors impact the selection
process, and the manager must take them into account in making selection decisions. Typically selection
process consists of the following steps but it is not necessary that all organization go through all these steps
as per requirement of the organization some steps can be skipped while performing the selection process.
1. Initial Screening
2. Application Blank
3. Pre-employment Testing
• General Intelligence Tests
• Aptitude Tests
• Personality and Interest Tests
• Achievement Tests
• Honesty Tests
4. Interview
• Structured Interview
• Unstructured Interview
• Mixed Interview
5. Background Checks
6. Conditional job offer
7. Medical Exam/Drug Tests
8. Final Selection Decision
1. Initial Screening
INITIAL SCREENING: The selection process often begins with an initial screening of applicants to
remove individuals who obviously do not meet the position requirements. At this stage, a few
straightforward questions are asked. An applicant may obviously be unqualified to fill the advertised
position, but be well qualified to work in other open positions. The Purpose of Screening is to decrease the
number of applicants being considered for selection.
Sources utilized in the screening effort:
Personal Resume presented with the job application is considered as source of information that can be used
for the initial screening process. It mainly includes information in the following areas:
• Employment & education history
• Evaluation of character
• Evaluation of job performance
Screening Interviews:
Screening interviews are used to:

• To verify information provided on resume or application blank.
• They are usually very short (approximately 30 minutes or so).
Advantages of Successful Screening:
If the screening effort is successful, those applicants that do not meet minimum required qualifications will
not move to the next stage in the selection process. Companies utilizing expensive selection procedures put
more effort in screening to reduce costs.
2. APPLICATION BLANK /REVIEW OF APPLICATIONS
APPLICATION BLANK: is a formal record of an individual’s application for employment The next step
in the selection process may involve having the prospective employee complete an application for
employment. The specific type of information may vary from firm to firm and even by job type within an
organization. However, the application form must reflect not only the firm’s informational needs but also
EEO requirements. Application forms are a good way to quickly collect verifiable and fairly accurate
historical data from the candidate.
Key Terms
Selection Process: Selection is the process of choosing from a group of applicants those individuals best
suited for a particular position.
Application Blank: Application blank is a formal record of an individual’s application for employment

Lesson 19
SELECTION TESTS
A. Explain Employee Tests
B. Describe Job Interviews
A. Employment Tests
I. Administration of selection tests:
A personnel testing is a valuable way to measure individual characteristics. Hundreds of tests have been
developed to measure various dimensions of behavior. The tests measure mantel abilities, knowledge,
physical abilities, personality, interest, temperament, and other attitudes and behaviors. Evidence suggests
that the use of tests is becoming more prevalent for assessing an applicant’s qualifications and potential for
success. Tests are used more in the public sector than in the private sector and in medium-sized and large
companies than in small companies. Large organizations are likely to have trained specialists to run their
testing programs.
• Advantages and disadvantages of using tests:
Selection testing can be a reliable and accurate means of selecting qualified candidates from a pool of
applicants. As with all selection procedures, it is important to identify the essential functions of each job and
determine the skills needed to perform them.
• Potential Problems Using Selection Tests
Selection tests may accurately predict an applicant’s ability to perform the job, but they are less successful in
indicating the extent to which the individual will want to perform it. Another potential problem, related
primarily to personality tests and interest inventories, has to do with applicants’ honesty. Also there is the
problem of test anxiety. Applicants often become quite anxious when confronting yet another hurdle that
might eliminate them from consideration.
II. Characteristics of Properly Designed Selection Tests
Properly designed selection tests are standardized, objective, based on sound norms, reliable and—of
utmost importance—valid.
1. Standardization: Refers to the uniformity of the procedures and conditions
related to administering tests. It is necessary for all to take the test under
conditions that are as close to identical as possible.
2. Objectivity: Achieved when all individuals scoring a given test obtain the same
results.
3. Norms: Provide a frame of reference for comparing applicants’ performance with
that of others. A norm reflects the distribution of scores obtained by many people
similar to the applicant being tested. The prospective employee’s test score is
compared to the norm, and the significance of the test score is determined.
4. Reliability: The extent to which a selection test provides consistent results. If a
test has low reliability, its validity as a predictor will also be low. To validate
reliability, a test must be verified.
5. Validity: The extent to which a test measures what it purports to measure. If a test
cannot indicate ability to perform the job, it has no value as a predictor.
• Types of Validation Studies
There three main approaches that may be followed to validate selection tests: criterion-related validity,

content validity, and construct validity.
a. Criterion-Related Validity
It is determined by comparing the scores on selection tests to some aspect of job performance. A close
relationship between the score on the test and job performance suggests the test is valid.
b. Content Validity
It is a test validation method whereby a person performs certain tasks that are actually required by the job
or completes a paper-and-pencil test that measures relevant job knowledge.
c. Construct Validity
It is a test validation method to determine whether a test measures certain traits or qualities that are
important in performing the job. However, traits or qualities such as teamwork, leadership, and planning or
organization ability must first be carefully identified through job analysis.
III. Types Of Employment Tests
Individuals differ in characteristics related to job performance. These differences, which are measurable,
relate to cognitive abilities, psychomotor abilities, job knowledge, work samples, vocational interests, and
personality. Various tests measure these differences.
a. Cognitive Aptitude Tests
It measures an individual’s ability to learn, as well as to perform a job. Job-related abilities may be classified
as verbal, numerical, perceptual speed, spatial, and reasoning.
b. Psychomotor Abilities Tests
This type of test is used to measure strength, coordination, and dexterity. It is feasible to measure many
abilities that are involved in many routine production jobs and some office jobs.
c. Job Knowledge Tests
This sort of test is designed to measure a candidate’s knowledge of the duties of the position for which he
or she is applying.
d. Work-Sample Tests (Simulations)
It identifies a task or set of tasks that are representative of the job. The evidence concerning these tests, to
date, is that they produce high predictive validity, reduce adverse impact, and are more acceptable to
applicants.
e. Vocational Interest Tests
It indicates the occupation in which a person is most interested and is most likely to receive satisfaction.
f. Personality Tests
It is a selection tools, personality tests have not been as useful as other types of tests. They are often
characterized by low reliability and low validity. Because some personality tests emphasize subjective
interpretation, the services of a qualified psychologist are required.
g. Drug and Alcohol Testing
Basic purpose of the drug-testing programs contends that it is necessary to ensure workplace safety,
security, and productivity.
h. Genetic Testing
As genetic research progresses, confirmed links between specific gene mutations and diseases are emerging.
Genetic testing can now determine whether a person carries the gene mutation for certain diseases,
including heart disease, colon cancer, breast cancer, and Huntington’s disease.

i. Honest Test/Polygraph Tests
For many years, another means used to verify background information has been the polygraph, or lie
detector, test. One purpose of the polygraph was to confirm or refute the information contained in the
application blank. Special tests have been constructed to measure the orientation of the individuals toward
the issue of the honesty and personal integrity. Honesty tests are the most frequently used psychological
tests in industry. These tests contain questions regarding such situations as whether a person who has taken
company merchandise should be trusted in another job that involves handling company money. An
individual’s response to the test statements indicates the individual’s attitudes towards theft, embezzlement,
and dishonest practices. Extensive research has shown that some of these instruments not only produce
reliable information that validly predicts dishonest behavior, but that they also are free from biases of age,
race, and sex. These honesty tests represent a valuable selection tool for choosing employees who will
occupy positions that involve handling company money.
j. Internet Testing
The Internet is increasingly being used to test various skills required by applicants.
B. Job Interviews
THE EMPLOYMENT INTERVIEW: Interview is a goal-oriented conversation in which the interviewer
and applicant exchange information. The employment interview is especially significant because the
applicants who reach this stage are considered to be the most promising candidates.
I. Interview Planning
Interview planning is essential to effective employment interviews. The physical location of the interview
should be both pleasant and private, providing for a minimum of interruptions. The interviewer should
possess a pleasant personality, empathy and the ability to listen and communicate effectively. He or she
should become familiar with the applicant’s qualifications by reviewing the data collected from other
selection tools. In preparing for the interview, a job profile should be developed based on the job
description.
II. Content of The Interview
The specific content of employment interviews varies greatly by organization and the level of the job
concerned.
1. Occupational experience: Exploring an individual’s occupational experience
requires determining the applicant’s skills, abilities, and willingness to handle
responsibility.
2. Academic achievement: In the absence of significant work experience, a
person’s academic background takes on greater importance.
3. Interpersonal skills: If an individual cannot work well with other employees,
chances for success are slim. This is especially true in today’s world with increasing
emphasis being placed on the use of teams.
4. Personal qualities: Personal qualities normally observed during the interview
include physical appearance, speaking ability, vocabulary, poise, adaptability, and
assertiveness.
5. Organizational fit: A hiring criterion that is not prominently mentioned in the
literature is organizational fit. Organizational fit is ill-defined but refers to
management’s perception of the degree to which the prospective employee will fit
in with, for example, the firm’s culture or value system.
III. Types of Interviews
Interviews may be classified in two types by the degree to which they are structured.
a. The Unstructured (Nondirective) Interview
Unstructured interview is an interview where probing, open-ended questions are asked. This type of
interview is comprehensive, and the interviewer encourages the applicant to do much of the talking.

b. The Structured (Directive Or Patterned) Interview
An interview consisting of a series of job-related questions that are asked consistently of each applicant for
a particular job is known as structured interview. A structured interview typically contains four types of
questions.
1. Situational questions: Pose a hypothetical job situation to determine what the
applicant would do in that situation.
2. Job knowledge questions: Probe the applicant’s job-related knowledge.
3. Job-sample simulation questions: Involve situations in which an applicant may
be actually required to perform a sample task from the job.
4. Worker requirements questions: Seek to determine the applicant’s willingness to
conform to the requirements of the job.
c. Behavior Description Interviewing
A structured interview that uses questions designed to probe the candidate’s past behavior in specific
situations. It avoids making judgments about applicants’ personalities and avoids hypothetical and self-
evaluative questions. Benchmark answers derived from behaviors of successful employees are prepared for
use in rating applicant responses. Questions asked in behavior description interviewing are legally safe
because they are job related.
IV. Methods of Interviewing
Interviews may be conducted in several ways.
a. One-On-One Interview
In a typical employment interview, the applicant meets one-on-one with an interviewer. As the interview
may be a highly emotional occasion for the applicant, meeting alone with the interviewer is often less
threatening.
b. Group Interview
Several applicants interact in the presence of one or more company representatives.
c. Board Interview
One candidate is interviewed by several representatives of the firm.
d. Stress Interview
Intentionally creates anxiety to determine how an applicant will react to stress on the job.
V. Realistic Job Previews
RJP Conveys job information to the applicant in an unbiased manner, including both positive and negative
factors
VI. Legal Implications of Interviewing
Because the interview is considered to be a test, it is subject to the same validity requirements as any other
step in the selection process, should adverse impact be shown. For the interview, this constraint presents
special difficulties.
VII. How To Avoid Common Interviewing Mistakes
Snap judgments
a. Snap Judgments:
This is where the interviewer jumps to a conclusion about the candidate during the first few minutes of
the interview. Using a structured interview is one way to help avoid this, as well as properly training the
interviewers.
b. Negative Emphasis:
When an interviewer has received negative information about the candidate, through references or other

sources, he or she will almost always view the candidate negatively. The best way to avoid this is to keep
references or other information from the interviewer. If possible, have different people do the reference
checks and the interviews and not share the information until afterwards.
c. Poor Knowledge of Job:
When interviewers do not have a good understanding of the job requirements, they do not make good
selections of candidates. All interviewers should clearly understand the jobs and know what is needed for
success in those jobs.
d. Pressure to Hire:
Anytime an interviewer is told that he or she must hire a certain number of people within a short time
frame, poor selection decisions may be made. This type of pressure should be avoided whenever possible.
e. Candidate Order
(Contrast) Error: When an adequate candidate is preceded by either an outstanding, or a poor candidate,
by contrast he or she looks either less satisfactory or much better. This can be countered through
interviewer training, allowing time between interviews, and structured interviews with structured rating
forms.
f. Influence of Nonverbal Behavior:
Candidates who exhibit stronger nonverbal behavior such as eye contact and energy level are perceived
as stronger by the interviewers. This can be minimized through interviewer training and structured
interviews.
VIII. Guidelines for Conducting an Interview
1. Plan the interview.
2. Establish rapport.
3. Ask questions.
HR in Practice gives do’s and don’ts of interview questions.
4. Close the interview.
5. Review the interview.
Key Terms
Standardization: Refers to the uniformity of the procedures and conditions related to administering tests.
It is necessary for all to take the test under conditions that are as close to identical as possible.
Objectivity: Achieved when all individuals scoring a given test obtain the same results.
Norms: Provide a frame of reference for comparing applicants’ performance with that of others. A norm
reflects the distribution of scores obtained by many people similar to the applicant being tested. The
prospective employee’s test score is compared to the norm, and the significance of the test score is
determined.
Reliability: The extent to which a selection test provides consistent results. If a test has low reliability, its
validity as a predictor will also be low. To validate reliability, a test must be verified.
Validity: The extent to which a test measures what it purports to measure. If a test cannot indicate ability to
perform the job, it has no value as a predictor.
Snap Judgments: This is where the interviewer jumps to a conclusion about the candidate during the first
few minutes of the interview.

Lesson 20
SELECTION PROCESS… CONTD.
A. Explain Background Investigations
B. Describe Conditional Job Offer
C. Identify Physical Exams
D. Understand Permanent Job Offer
E. Discuss the selection of managers
F. Explain Socialization
LESSON OVERVIEW
We will continue the selection process in this lecture by discussing the remaining steps of selection process.
A. Background Investigations
This step is used to check accuracy of application form through former employers and references.
Verification of education and legal status to work Credit history Criminal records is also made. Personal
reference checks may provide additional insight into the information furnished by the applicant and allow
verification of its accuracy. Past behavior is the best predictor of future behavior. It is important to gain as
much information as possible about past behavior to understand what kinds of behavior one can expect in
the future. Knowledge about attendance problems, insubordination issues, theft, or other behavioral
problems can certainly help one avoid hiring someone who is likely to repeat those behaviors. Background
investigations primarily seek data from references supplied by the applicant including his or her previous
employers. The intensity of background investigations depends on the level of responsibility inherent in the
position to be filled.
Negligent Hiring and Retention
Negligent hiring has become a critical concern in the selection process. An employer can be held
responsible for an employee’s unlawful acts if it does not reasonably investigate applicants’ backgrounds and
then assigns potentially dangerous persons to positions where they can inflict harm. This liability exists for
an employer even if the employee’s actions are not job related. Negligent retention, a related potential
liability, involves keeping persons on the payroll whose records indicate strong potential for wrongdoing.
Employers are beginning to be held responsible for actions outside the scope of the employee’s duties.
Employers are required by law to provide employees a safe place to work. This has been extended to
include providing safe employees because a dangerous worker is comparable to a defective machine.
B. Conditional Job Offer
After obtaining and evaluating information about the finalists in a job selection process, the manager must
take the most critical step of all: making the actual hiring decision. The person whose qualifications most
closely conform to the requirements of the open position should be selected. Initially the conditional job
letter is offered that is followed by the physical exam/test.
C. Physical Exam
After the decision has been made to extend a job offer, the next phase of the selection process involves the
completion of a physical examination for the successful applicant. Typically, a job offer is contingent on
successfully passing this examination.
Substance Abuse Screening – Because drug abuse is a serious problem for employers, it is common practice
for most employers to conduct drug screening just before employees are formally hired.
D. Permanent Job Offer
If physical test/exam proves eligibility of the candidate as per requirement of the job, final offer is made to
applicant by the concerned department or supervisor in the concerned department.
Notification to Candidates: The selection process results should be made known to candidates—
successful and unsuccessful—as soon as possible. Any delay may result in the firm losing a prime candidate,

as top prospects often have other employment options. As a matter of courtesy and good public relations,
the unsuccessful candidates should also be promptly notified.
E. Selecting Managers
While selecting mangers for the organization, organizations can hev three ptions which are:
I. Hiring Parent Country Nationals (PCN)
II. Hiring Host Country Nationals (HCN)
III. Hiring third Country Nationals (TCN)
All of these approaches are having some pros and cons let’s discuss them briefly:
I. Parent-Country Nationals
Parent country nationals are residents of home country.
Advantages
Better organizational Control and Coordination
Promising managers are given International experience.
PCNs are the best people for the job.
Disadvantages
Adaptation to the host country may take a long time
PCNs may impose an inappropriate headquarter style
Compensation for PCNs and HCNs may differ
II. Host-Country Nationals
Host country national are residents of the host country.
Advantages
Language and other barriers are eliminated
Hiring costs are reduced
No work permit is required
Continuity of management improved
Disadvantages
Control and Coordination of headquarters may be impeded.
Hiring HCN’s limits opportunities for PCN’s to gain overseas experience.
III. Third-Country Nationals
If required talent is not available in home or host country than national s of the third country can be hired
as mangers.
Advantages
Salary and benefits requirements may be lower than for PCNs
TCNs may be better informed than PCNs about the host country.
Disadvantages
The host Government may resent the hiring of TCNs
TCNs may not want to return to their own countries after assignment.
Once selection decision is made at any level of the organization, every applicant that is selected requires to
be create awareness about the organization regarding basic work policies , rules regulations , do’s and don’ts
of the organization this information is communicated through socialization process.
F. Socialization:
Teaching the corporate culture and philosophies about how to do business
Assumptions about Socialization
• Influences performance
• Increases organizational stability
• New members suffer anxiety
• Does not occur in a vacuum

Socialization
Employee orientation programs provide new employees with the basic background information required to
perform their jobs satisfactorily.
The HR specialist usually performs the first part of the orientation by explaining basic matters, then
introduces the new employee to his/her supervisor, who familiarizes the new employee with the workplace
to help reduce first day jitters.
• Welcome party
• Job rotation
• On job training etc.
Key Terms
Socialization: Teaching the corporate culture and philosophies about how to do business

Lesson 21
SOCIALIZATION
A. Explain Socialization
B. Describe Training
C. Identify Development
D. Understand Training and Development Trends
E. Evaluate the Recruitment Process
LESSON OVERVIEW
Today we will be discussing the orientation or the socialization process that acclimatizes the new hires to
the organization. We will discuss in detail that who is responsible for conducting this process and the stages
of the socialization process. Further we will also have overview of the training and development process.
A. Socialization
In order to reduce the anxiety that new employees may experience, attempts should be made to integrate
the person into the informal organization. The initial T&D effort designed for employees is Socialization,
the guided adjustment of new employees to the company, the job, and the work group.
I. Purposes of Socialization
Socialization formats are unique to each firm. However, some basic purposes include emphasizing these
areas: the employment situation (job, department, and company), company policies and rules, compensation
and benefits, corporate culture, team membership, employee development, dealing with change, and
socialization.
a. The Employment Situation
A basic purpose, from the firm’s viewpoint, is to have the new employee become productive as quickly as
possible. Therefore, specific information about performing the job may be provided at an early point in
time.
b. Company Policies and Rules
Every job within an organization must be performed considering the guidelines and constraints provided by
policies and rules. Employees must have an understanding of these to permit a smooth transition to the
workplace.
c. Compensation and Benefits
Employees will have a special interest in obtaining information about the reward system. Although this
information is usually provided during the recruitment and selection process, a review of the data is
appropriate during Socialization.
d. Corporate Culture
The firm’s culture reflects, in effect, how we do things around here. This relates to everything from the way
employees dress to the way they talk.
e. Team Membership
A new employee’s ability and willingness to work in teams is most likely determined before he or she is
hired. In Socialization, the importance of becoming a valued member of the company team may be
emphasized.
f. Employee Development
Employees should know exactly what is expected of them and what is required by the firm for advancement
in the job or via promotion.
g. Dealing With Change
Employees at all levels must learn to effectively deal with change in order to survive in their jobs. The best
way individuals can be prepared for change is to continually develop and expand their skills.
h. Socialization
In order to reduce the anxiety that new employees may experience, attempts should be made to integrate

the person into the informal organization.
II. Stages in socialization Process:
Socialization can be conceptualized as a process made up of three stages.
a. Pre-arrival Stage:
This stage explicitly recognizes that each individual arrives with a set of organizational values, attitudes, and
expectations. For instance, in many jobs, particularly high skilled and managerial jobs, new members will
have undergone a considerable degree of prior socialization in training and in school. Pre-arrival
socialization, however, goes beyond the specific job. The selection process is used in most organizations to
inform perspective employees about the organization as whole. In addition, of course, interviews in the
selection process also act to ensure the inclusion of the “right type” determining those who will fit in.
Indeed, the ability of the individuals to present the appropriate face during the selection process determines
their ability to move into the organization in the first place. Thus success depends upon the degree to which
aspiring members have correctly anticipated the expectations and desires of those in the organization in
charge of selection.
b. Encounter Stage:
Upon entry into the organization, new members enter the encounter stage. Here the individuals confront
the possible dichotomy between their expectations about their jobs, their coworkers, their supervisors, and
the organization in general and reality. If expectations prove to have been more or less accurate, the
encounter state merely provides a reaffirmation of the perceptions generated earlier. However, this is often
not the case. Where expectation and reality differ; new employees must undergo socialization that will
detach them from their previous assumption and replace these with the organization’s pivotal standards.
Socialization, however, cannot solve all the expectation differences. At the extreme, some new members
may become totally disillusioned with the actualities of their jobs and resign. It is hoped that proper
selection would significantly reduce this latter occurrence.
c. Metamorphosis Stage:
Finally the new member must workout any problems discovered during the encounter stage. This may mean
going through changes. Hence the last stage is termed as metamorphosis stage. Metamorphosis is complete
as is the socialization process – when new members have become comfortable with the organization and
their work teams. In this situation they will have internalized the norms of the organization and their
coworkers; and they understand and accept these norms. New members will feel accepted by their peers as
trusted and valued individuals. They will have gained an understanding of the organizational system- not
only their own tasks but the rules, procedures and informally accepted practices as well. Finally they will
know how they are going to be evaluated. They will know what is expected of them and what constitutes a
good job. Consequently, successful metamorphosis should have positive effect on a new employees
productivity and the employee’s commitment to the organization, and should reduce the likelihood that the
employee will leave the organization any time soon.
III. Many People Socialize new Hires
New employee socialization or orientation covers the activities involved in introducing a new employee to
the organization and to his or her work unit. How is responsible for the orientation of new employee? This
can be done by the supervisor, the people in HRM, Peers, CEO, or combination of any of these.
a. HRM Department: HRM department can conduct the orientation in order to socialize
the newly hired employees with the working environment of the organization. HRM plays
a major role in new employee orientation-the role of coordination, which ensures that the
appropriate components are in place. In addition HRM also serves as a participant in
program. As job offers are made and accepted, HRM should instruct the new employee
when to report to work. However, before the employee formally arrives, HRM must be
prepared to handle some of the more routine needs of these individuals.
b. Supervisor: Immediate supervisor of particular department can also be the source of
informing the employees about the culture, rules, procedures and policies of the

organization. Mostly in smaller organizations, orientation may mean the new member
reports to supervisor, who then assigns the new member to other employee who will
introduce the new member to other coworkers. This may be followed by a quick tour to
show the different parts and departments of the organization.
c. Peers: Peers and coworkers of the new hires can perform the orientation function in order
to tell the expectation of employers and requirements of the organization as can also
answer the queries raised from the employee side.
d. Organizational culture: Organizational culture itself can express the do’s and don’ts of
any organization. Every organization has its own unique culture. This culture includes
longstanding, and often unwritten, rules and regulation; a special language that facilitates
communication among members; shared standards of relevance as to the critical aspects of
the work that is to be done; standards for social etiquette, customs for how members
should relate to peers, employees, bosses and outsiders; what is appropriate and smart
behavior with in organization and what is not.
e. CEO: Prior to mid 1980s, new employee orientation operated, if at all, with out any
output from the company’s executive management. But that began to change, due in part
to management consultants advocating that senior management become more accessible to
employees. The CEO’s first responsibility is to welcome new employees aboard and talk to
them about what a good job choice they made. The CEO is in position to inspire these
new employees by talking about what it is like to work for the organization. When CEO is
present in the socialization process, the company is sending a message that it truly cares for
its employees.
IV. Topics covered in employee Orientation program:
Following topics are covered in orientation or socialization process.
a. Introduction: Regarding the organization, supervisor, trainers, and coworkers and to
system
b. Job Duties: It provides job related information like, Job location Job tasks Job safety
requirements Overview of job, Job objectives Relationship to other jobs
c. Organizational Issues: This provides the information about the overall organization it
may include; History of employer, organization of employer, name & titles of key
executive, employee’s titles and departments, layout of physical facilities, probationary
period, overview of production process, company policies and rules, disciplinary
regulations, employee handbook, safety procedures etc
d. Employee Benefits: This part provides the information about the benefits that are
offered by the organization like; Pay scales & paydays, vacations rest break, training &
education benefits, counseling, housing facilities, insurance benefits, retirement program,
employee-provided services for employees, rehabilitation program
The Hiring Process
Hiring process is completed here because orientation or the socialization process is the last step of hiring.
Next we will be discussing the training programs in the organization.
B. Training
Training is a process whereby people acquire capabilities to aid in the achievement of organizational goals.
It involves planned learning activities designed to improve an employee’s performance at her/his current
job. Training refers to the methods used to give new or present employees the skills they need to perform
their jobs.

C. Development
All efforts to provide employees with the abilities the organizations will need in the future
D. Training and Development Trends:
• Skill requirements will continue to increase
• Workforce will become significantly better educated & more diverse
• Corporate restructuring reshapes businesses
• Technology will revolutionize certain training delivery methods
• The role of training departments will change
• More flexible courses aimed specifically at performance improvement
• More firms will strive to become learning organizations
• Emphasis on human performance management will accelerate
Key Terms
Socialization: In order to reduce the anxiety that new employees may experience, attempts should be made
to integrate the person into the informal organization.
Training: Training is a process whereby people acquire capabilities to aid in the achievement of
organizational goals. It involves planned learning activities designed to improve an employee’s performance
at her/his current job.
Corporate Culture: The firm’s culture reflects, in effect, how we do things around here. This relates to
everything from the way employees dress to the way they talk.

Lesson 22
TRAINING AND DEVELOPMENT
A. Explain Learning
B. Define Training
LESSON OVERVIEW
We devote this lecture to explaining the learning and its importance in improving status of organization; we
will also explore scope of Training and its relationship to organizational change. Next, the Training process
is described along with how Training needs are determined and objectives established. Then, we look at the
numerous Training methods. Effectiveness of training program depends upon the learning of trainees so
first of all we should see what is meant by learning.
A. Learning
Learning is a relatively permanent change in behavior that results from direct or indirect experience.
• Learning organization
Learning organizations are firms that recognize the critical importance of continuous performance-related.
Training take appropriate action. They are one whose employees continuously attempt to learn new things
& to use what they learn to improve product or service quality. The most important thing in learning is that
all managers should understand the basic purposes and processes of both Training also recognize the role
of learning theory in Training.
B. Training Defined:
The heart of a continuous effort designed to improve employee competency and organizational
performance. Training typically focuses on providing employees with specific skills or helping them correct
deficiencies in their performance.
I. Challenges in Training
Upgrading employees' performance and improving their skills through training is a necessity in today's
competitive environment. The training process brings with it many questions that managers must answer.
Included in these questions are: Is training the solution to the problems? Are the goals of training clear and
realistic? Is training a good investment? Will the
training work?
• Is Training the Solution?
• Are the Goals Clear and Realistic?
• Is Training a Good Investment?
• Will Training Work?
II. The Training Process
Adjustments in external and internal
environments necessitate change. Once the
need for change is recognized and the factors
that influence intervention are considered, the
process of determining Training needs begins.
Essentially, two questions must be asked: “What
are our Training needs?” and “What do we want
to accomplish through our TRAINING
efforts?” After stating the TRAINING
objectives, management can determine the appropriate methods for accomplishing them. Various methods
and media are available; the selection depends on the nature of TRAINING goals. Naturally, TRAINING
must be continuously evaluated in order to facilitate change and accomplish organizational objectives. Now
we will discuss different phases of training process.
The Training Process
Needs Assessment Phase
•Organization Needs
•Task Needs
•Person Needs
Development and Conduct
of Training
•Location
•Presentation
•Type
Evaluation

Phases of Training
a. Phase 1: Needs Assessment & Establishing Objectives
In order to compete effectively, firms must keep their employees well trained. The first step in the Training
process is to determine Training needs. The overall purpose of the assessment phase is to determine if
training is needed and, if so, to provide the information required to design the training program.
Assessment consists of three levels of analysis: organizational, task, and person.
Organizational Analysis: It is an examination of the kinds of problems that an organization is
experiencing and where they are located within organization.
Task/Operational Analysis: An operational analysis identifies the kinds of the skills and behaviors
required of the incumbents of a given job and the standards of performance that must be met.
Personal Analysis: The objective of the personnel analysis is to examine how well individual employees are
performing their jobs. Training should be given to those who need it. Assigning all employees to a training
program, regardless of their skill levels, is a waste of organizational resources and create a unpleasant
situation for employees who do not need training.
The objectives of training must be clarified, related to the areas identified in the task analysis, and should be
challenging, precise, achievable, and understood by all.
Mostly when there is a performance gap i.e. the performance is not up to the specified standards training is
required to improve the performance there are certain factors that should be kept in mind before
conducting training ,lets consider these factors:
• Number of employees experiencing skill deficiency: Number of employees supposed to be
trained.
• Severity of skill deficiency: What are the cons or advantages that are being faced by the
organization due to absence of that skill?
• Importance of skill: How important is skill to be possessed by workforce.
• Extent to which skill can be improved with Training: Would there be real difference in skill
level in case the training program is conducted.
Determining Training Needs:
Following sources can help organization to assess either there is a need for Training or not.
Self-assessments
Company records
Customer complaints
New Technology
Employee grievances
Interviews with managers
Customer satisfaction surveys
Observation
Establishing Training Objectives
Objectives are desired end results. In human resource, clear and concise objectives must be formulated
b. Phase 2: Delivering the Training
The training program that results from assessment should be a direct response to an organizational problem
or need. Approaches vary by location, presentation, and type. These are summarized below:
1. Location Options
a. On the job: Training is at the actual work site using the actual work equipment
b. Off the job: Training away from the actual work site. Training is at a Training facility designed
specifically for Training
c. Phase 3: Training Methods
• Lecture
The Lecture is an efficient means of transmitting large amounts of factual information to a relatively large
number of people at the same time. It is traditional method of teaching and is used in many training

programs. A skilled lecture can organize material and present it in a clear and understandable way. How ever
a lecture doesn’t allow active participation by learners.
• Case method
A Training method in which trainees are expected to study the information provided in the case and make
decisions based on it.
• Simulations
Simulators are training devices of varying degrees of complexity that duplicate the real world. Simulation
refers to creating an artificial learning environment that approximates the actual job conditions as much as
possible.
• Apprenticeship
This type of training refers to the process of having new worker, called an apprentice, work alongside and
under the direction of skilled technician.
• Internships
Internships and assistantships provide training similar to apprenticeship training; however’ assistantships
and internships typically refer to occupations that require a higher level of the formal education than that
required by the skilled trades. Many colleges and universities used to develop agreements with organizations
to provide internships opportunities for students.
• Coaching And Mentoring
Some organizations assign an experienced to serve as a mentor for new employees. Effective mentors teach
their protégés job skills, provide emotional support and encouragement. Coaching and mentoring are
primarily on-the-job development approaches emphasizing learning on a one-to-one basis. Coaching is
often considered a responsibility of the immediate boss who has greater experience or expertise and is in the
position to offer sage advice. The same is true with a mentor, but this person may be located elsewhere in
the organization or even in another firm. The relationship may be established formally or it may develop on
an informal basis.
• Discussions
Conferences and group discussions, used extensively for making decisions, can also be used as a form of
training because they provide forums where individuals are able to learn from one another. A major use of
the group discussion is to change attitudes and behaviors.
• Games
Simulations that represent actual business situations are referred to as business games. These simulations
attempt to duplicate selected parts of a particular situation, which are then manipulated by the participants
• Role playing
A Training method in which participants are required to respond to specific problems they may actually
encounter in their jobs.
• Computer-based
Computer based training is a teaching method that takes advantage of the speed, memory, and data
manipulation capabilities of the computer for greater flexibility of instruction.
• Multimedia
Multimedia is an application that enhances computer-based learning with audio, animation, graphics, and
interactive video.
• Virtual reality
It is a unique computer-based approach that permits trainees to view objects from a perspective otherwise
impractical or impossible.
• Video Training
The use of videotapes continues to be a popular Training method. An illustration of the use of videotapes is

provided by behavior modeling. Behavior modeling has long been a successful Training approach that utilizes
videotapes to illustrate effective interpersonal skills and how managers function in various situations.
• Vestibule training
Training that takes place away from the production area on equipment that closely resembles the actual
equipment used on the job. Effective training programs are effective only if the trainers re able to effectively
transfer to required knowledge to trainees but there are certain reasons due to which training programs
transferring becomes ineffective. The reasons re as under:
Why Transfer of Training Fails
• Don’t learn material
• Don’t understand “real life” applications
• Lack of confidence
• Forgetting the material
d. Phase 4:Evaluating Training
The credibility of training is greatly enhanced when it can be shown that the organization has benefited
tangibly from such programs. Organizations have taken several approaches in attempting to determine the
worth of specific programs. In this phase, the effectiveness of the training is assessed. Effectiveness can be
measured in monetary or non-monetary terms. It is important that the training be assessed on how well it
addresses the needs it was designed to address.
• Participants’ Opinions: Evaluating a training program by asking the participants’ opinions of it is
an inexpensive approach that provides an immediate response and suggestions for improvements.
The basic problem with this type of evaluation is that it is based on opinion rather than fact. In
reality, the trainee may have learned nothing, but perceived that a learning experience occurred.
• Extent of Learning: Some organizations administer tests to determine what the participants in
training program have learned. The pretest, posttest, control group design is one evaluation
procedure that may be used.
• Behavioral Change: Tests may indicate fairly accurately what has been learned, but they give little
insight into desired behavioral changes.
• Accomplishment of Training Objectives: Still another approach to evaluating training programs
involves determining the extent to which stated objectives have been achieved.
• Benchmarking
Benchmarking utilizes exemplary practices of other organizations to evaluate and improve training
programs. It is estimated that up to 70 percent of American firms engage in some sort of benchmarking.
• A Case for Simplicity: Value is the measure of impact and positive change elicited by the training.
The most common approaches used to determine the effectiveness of training programs are as under:
Post Training Performance Method:
In this method the participants’ performance is measured after attending a training program to determine if
behavioral changes have been made.
Pre-Post Test approach:
Most commonly used approach towards measurement of effectiveness of training is Pretest Post test
approach this approach performances the employees is measured prior to training and if required training is
provided. After completion if the training again the performance is measured this is compared with
performance before training if evaluation is positive e.g. increase in productivity that means that training is
effective.
Pre- Post Training Performance with control group Method:
Under this evaluation method, two groups are established and evaluated on actual job performance.
Members of the control group work on the job but do not undergo instructions. On the other hand, the
experimental group is given the instructions. At the conclusion of the training, the two groups are
reevaluated. If the training is really effective, the experimental group’s performance will have improved, and
its performance will be substantially better than that of the control group.

Key Terms
Training: The process of teaching new employees the basic skills they need to perform their jobs.
Task analysis: A detailed study of a job to identify the skills required so that an appropriate training
program may be instituted.
Performance analysis: Careful study of performance to identify a deficiency and then correct it with new
equipment, a new employee, a training program, or some other adjustment.
On-the-job training (OJT): Training a person to learn a job while working at it.
Vestibule or simulated: Training employees on special off-the-job equipment, as in
training airplane pilot training, whereby training costs and hazards can be reduced.
Coaching/Mentoring: A method of on-the-job training where an experienced worker, or
Method the trainee’s supervisor trains the employee.
Action Learning: A training technique by which management trainees are allowed to work full-time
analyzing and solving problems in other departments.
Case study method: A development method in which the manager is presented with a written description
of an organizational problem to diagnose and solve.
Business games: A development technique in which teams of managers compete with one another by
making computerized decisions regarding realistic but simulated companies.
Behavior modeling: A training technique in which trainees are first shown good management techniques
in a film, are then asked to play roles in a simulated situation, and are then given feedback and praise by
their supervisor.
Learning organization: An organization skilled at creating, acquiring, and transferring knowledge and at
modifying its behavior to reflect new knowledge and insights.

Lesson 23
MAXIMIZING LEARNING
C. Maximizing Learning
D. Selecting the Stage for Learning
E. Maintaining performance after Training
F. Following up on Training
G. Learning Principles
H. Training versus Development
I. Human Resource Development (HRD)
J. Role of Line Managers and Training and Development
K. Role of HR Department in Training and Development
LESSON OVERVIEW
In this lecture we will discuss how a learning process can be maximized in terms of learning. As we know
that training is a learning process we should know the basic learning principles that can be helpful in making
training process more effective. We will also discuss the HRD that is, Human Resource Development in
detail as well.
C. Maximizing Learning:
Learning can be maximized by considering the basic principles of learning. That will be discussed later.
D. Selecting the Stage for Learning
Effective learning requires two things (1) Clear Task Instructions that what is going to be learnt how and
what is its importance and the (2) is Model Appropriate Behavior. When ever the training need is assessed,
it should be translated to behavioral objective and trainer should try to present the results in behavioral
terms. This will be contributing towards quality training and effective learning.
E. Maintaining Performance after Training
Effective training can raise performance, improve morale, and increase an organization's potential. Poor,
inappropriate, or inadequate training can be a source of frustration for everyone involved. To maximize the
benefits of training, managers must closely monitor the training process. Developing learning points, to
assist knowledge retention, Setting specific goals, identifying appropriate reinforces and teaching trainees,
self-management skills can help organizations to maintain performance after training.
F. Following up on Training:
Any training or development implemented in an organization must be cost effective. That is the benefits
gained by such programs must outweigh the cost associated with providing the learning experience.
Training to be more effective, is supposed to be followed with careful evaluation. Evaluation methods are
discussed in the previous lecture. Different techniques and approaches can be used to evaluate the training
program and, if required at any level, revisions and redesigning should not be avoided. It is not enough to
merely assume that any training effort of an organization is effective; we must develop substantive data to
determine whether our training effort is achieving its goals- that is, if it’s correcting the deficiencies in skills,
knowledge or attitudes that were assessed in needing attention. Training programs are expensive. The cost
incurred alone justify evaluating the effectiveness.
G. Learning Principles
These are the basic principles or conditions that facilitate learning.

I. Participation
Learning should permit and encourage active participation of the learner. The learning activities should be
experiential rather than just informational. Therefore, the trainers should arrange the physical surroundings
to facilitate small group interaction and promote the sharing of ideas.
II. Repetition
An important principal of the learning is to provide the learner with the opportunity for practice and
repetition. To gain the full benefit of training learned behaviors must be over learned to ensure smooth
performance and minimum of forgetting at a latter date. Proficiency in learning and retaining new skills is
improved when individuals visualize themselves performing the new behavior.
III. Relevance
The learning should be problem centered rather than content centered. People are motivated to learn when
training is immediately relevant to help them solve a current problem. Learning something just because
someone says “it is important” is not as motivating.
IV. Transference
Because the training occurs in a special environment, an important question to ask is whether learning will
transfer to the actual job situation. Transfer of training occurs when trainees can apply the knowledge and
skills learned in training course to their jobs. If the learning in one setting does not transfer to the actual job
situation, the training has failed .Three transfers training situations are possible (1) Positive transfer of
training, when the training activities enhance performance in the new situation; (2) negative transfer of
training, when the training activities inhibit performance in new situation; and (3) no observable effect of
training.
V. Feedback
Performance feed back is necessary prerequisite for learning. Feedback improves performance not only by
helping learners correct their mistakes, but also by providing reinforcement for learning. Knowledge of
results is a positive reinforcement itself. Learning activities have more intrinsic interest if feedback is
available. Nevertheless, performance feedback should do more than inform learners whether they were right
or wrong. Merely informing the trainees that they were wrong is not as effective as telling them why they
were wrong and how they can avoid making mistakes in future. In general, knowledge of results is an
essential feature of learning, and this knowledge comes after the learner’s response.
H. Training vs. Development
Although training is often used with development, the terms are not synonymous. Training typically
focuses on providing employees with specific skills or helping them to correct deficiencies in their
performance. In contrast, development is an effort to provide employees with the abilities that the
organization will need in the future
I. Purposes of T & D
The most prominent changes affecting T&D that have been prophesied and that are actually occurring
today in business include:
• Orient new employees and Preparing them for promotion
• Satisfy personal growth needs
• Improve performance
• Avoid Managerial Obsolescence
• Solve organizational problems
• Changes in organization structure caused by mergers, acquisitions, rapid growth, downsizing, and
outsourcing
• Changes in technology and the need for more highly skilled workers
• Changes in the educational level of employees
• Changes in human resources; a diverse workforce consisting of many groups
• Competitive pressures necessitating flexible courses and just-in-time and just-what’s-needed

training
• Increased emphasis on learning organizations and human performance management
II. Selecting T & D Program
While selecting the training ad development programs and selecting training and development methods to
be used, following factors should be kept in mind in order to have more effective utilization of resources
that are supposed to be spent on proposed training and development programs.
a. Cost Effectiveness: Any training or development implemented in an organization must be
cost effective. That is the benefits gained by such programs must outweigh the cost
associated with providing the learning experience. If measured the effectiveness of the
training process, there should be air justification of assigning training programs in the
organization because if organizations are not able to have advantages or development and
enhancement of the performance after training it is only wastages of the resources.
b. Desired Program Content: Contents of the training program and the methods used to
deliver the training should be in relevance to training objectives and need assessed for
training.
c. Learning Principles: Learning principals should be implemented to have more effective
training.
d. Appropriateness of the Facilities: Factors that are supposed to facilitate the training
program should be appropriate and available.
e. Trainee Performance and Capabilities: There is chance and enough probability that
training will lead to the enhancement of the trainees.
f. Trainer Performance and Capabilities: Trainers or people who are assigned responsibility
to train the trainees are having enough experience, skills, capabilities and past trends that
show that they can be effective trainers. Trainers themselves are required to be well trained in
order to provide the training.
I. Human Resource Development (HRD)
HRD has been defined as an organized learning experience, conducted in a definite time period, to increase
the possibility of improving job performance and growth. Training is the part of HRD that deals with the
designing programs that permit learners to acquire knowledge and skills needed for their present jobs.
HRD Involves Following Activities;
Training & Development: Training typically
focuses on providing employees with specific skills or
helping them to correct deficiencies in their
performance. In contrast, development is an effort to
provide employees with the abilities that the
organization will need in the future.
Organizational Development: It is an organization
wide application of behavioral science knowledge – to
the planned development and reinforcement of a
firm’s strategies, structures, and processes for
improving its effectiveness.
Career Development: A formal approach taken by an organization to help people acquire the skills and
experiences needed to perform current and future jobs is termed as career development. Company’s policies
especially policies regarding promotion, counseling the employees, opportunities to excel in future help
employees to develop their career. It consists of skills, education and experiences as well as behavioral
modification and refinement techniques that allow individuals to work better and add value.
Training &
Development
Organization
Development
Career
Development
H
R
D

HRD programs are divided into three categories
(1) Training: Training is the acquisition of
technology which permits employees to perform
their present job to standards.
(2) Education: Education is training people to do a
different job. It is often given to people who have
been identifies as being promotable, being
considered for a new job either lateral or upwards
(3) Development: Development is training people to
acquire new horizons, technology, or viewpoints.
It enables leaders to guide their organizations onto
new expectations by being proactive rather than
reactive.
Human Resource Development Methods:
Some development of the individuals’ ability can take place on the job (Job Rotation, assistant-to-position
and committee assignment) and some times off the job methods (Lectures, Courses, Seminars, Simulation,
Outdoor Training) are to be used to provide the development opportunity to the workforce. We will have
brief discussion on these methods.
Job Rotation: It involves moving employees to various positions in organization in an effort to expand
their skills, knowledge and abilities. Job rotation can be either horizontal or vertical. Vertical rotation is
nothing more than promoting a worker in to a new position.
Assistant to Position: Employees with demonstrated potential are sometimes given the opportunity to
work under a successful manger, often in different areas of organization. In doing so, these employees get
exposure to wide variety of management activities and are groomed for assuming the duties of next higher
level.
Committee Assignments: Committee Assignments can provide an opportunity for the employee to share
in decision making, to learn by watching others, and to investigate specific organizational problems.
Lectures & Seminars: Traditional forms of instruction revolved around formal lecture course and
seminars. These offered opportunity for individuals to acquire knowledge and develop their conceptual and
analytical abilities.
Simulations: Simulators are training devices of varying degrees of complexity that duplicate the real world.
Simulation refers to creating an artificial learning environment that approximates the actual job conditions
as much as possible.
Outdoor Training: A trend in employee development has been the use of outdoor training. The primary
focus of such training is to teach trainees the importance of working together, of gelling as teams. The
purpose of these trainings is to see how employees react to the difficulties that nature presents to them.
Developing a succession planning program:
Succession planning programs are considerations of the job openings that presently exist in an organization,
the openings that are likely to occur in the future, and how these positions might be filled. If positions are
to be filled from within, training and development will be needed to prepare employees for promotion. If
positions are to be filled by hiring from without, the organization will need to make a careful analysis of the
labor market and the likelihood of finding qualified replacements.
J. Role of line Managers and Training and Development
• Provide employee orientation training.
• Assess training needs and plan developmental strategies.
• Provide on-the-job training.
• Ensure transfer of training.
K. Role of the HR Department in Training and Development
HRM department helps in Training and development program by performing the following functions.
• Provide employee orientation training.
• Contribute to management development programs.
Training for the
present,
Educatingfor the
future,
Developing to
lead.

• Provide training and development.
• Evaluate training.
Key Terms
Training: The heart of a continuous effort designed to improve employee competency and organizational
performance.
Human Resource Development: A major HRM function that consists not only of T&D but also
individual career planning and development activities and performance appraisal.
Learning Organizations: Firms that recognize the critical importance of continuous performance-related
training and development and take appropriate action.
Job Rotation: It involves moving employees from one job to another for the purpose of providing them
with broader experience.
Assistant to Position: Employees with demonstrated potential are sometimes given the opportunity to
work under a successful manger.
Job Rotation: It involves moving employees to various positions in organization in an effort to expand
their skills, knowledge and abilities.

Lesson 24
CAREER MANAGEMENT
L. Career
LESSON OVERVIEW
In this lecture, we first discuss the concept of career, career planning and development. Next, we distinguish
between job security and career security. Then, we identify several factors that affect career planning and
discuss both individual and organizational career planning. We next address career paths and discuss career
development, then, career planning and development methods are described. We devote the last part of the
chapter to a discussion of developing unique segments of the workforce.
L. Career:
Career can be defined as a general course of action a person chooses to pursue throughout his or her
working life
I. Career planning:
Career planning is an ongoing process through which an individual sets career goals and identifies the
means to achieve them. The process by which individuals plan their life’s work is referred to as career
planning. Through career planning, a person evaluates his or her own abilities and interests, considers
alternative career opportunities, establishes career goals, and plans practical developmental activities.
Usually, career planning programs are expected to achieve one or more of the following objectives:
1. More effective development of available talent.
2. Self-appraisal opportunities for employees considering new or nontraditional career paths.
3. More efficient development of human resources within and among divisions and/or geographic
locations.
4. A demonstration of a tangible commitment to EEO and affirmative action.
5. Satisfaction of employees’ personal development needs.
6. Improvement of performance through on-the-job training experiences provided by horizontal and
vertical career moves.
7. Increased employee loyalty and motivation, leading to decreased turnover.
8. A method of determining training and development needs.
a. Individual career planning — Career planning begins with self-understanding. Then, the
person is in a position to establish realistic goals and determine what to do to achieve these
goals. Learning about oneself is referred to as self-assessment. Some useful tools include a
strength/weakness balance sheet and a likes and dislikes survey.
1. Strength/weakness balance sheet: A self-evaluation procedure assists people in
becoming aware of their strengths and weaknesses.
2. Likes and dislikes survey: A procedure that assists individuals in recognizing
restrictions they place on themselves.
b. Career Assessment on the Web — The Web has numerous tests and assessments sites
available to assist job seekers.
c. Organizational Career Planning — The process of establishing career paths within a
firm.
II. Career Paths
Career paths have historically focused on upward mobility within a particular occupation. One of four types
of career paths may be used: traditional, network, lateral, and dual.
a. Traditional Career Path—An employee progresses vertically upward in the organization
from one specific job to the next.
b. Network Career Path—A method of career pathing that contains both a vertical
sequence of jobs and a series of horizontal opportunities.
c. Lateral Skill Path—Traditionally, a career path was viewed as moving upward to higher

levels of management in the organization. The availability of the previous two options has
diminished considerably in recent years. But this does not mean that an individual has to
remain in the same job for life. There are often lateral moves within the firm that can be
taken to allow an employee to become revitalized and find new challenges.
d. Dual-Career Path— A career-path method, that recognizes that technical specialists can
and should be allowed to continue to contribute their expertise to a company without
having to become managers.
e. Adding Value To Retain Present Job—Regardless of the career path pursued, today’s
workers need to develop a plan whereby they are viewed as continually adding value to the
organization. If employees cannot add value, the company does not need them, and much
of the evolving work environments cannot use them either. Workers must anticipate what
tools will be needed for success in the future and obtain these skills. These workers must
look across company lines to other organizations to determine what skills are transferable,
and then go and get them. Essentially, today’s workers must manage their own careers as
never before.
f. Demotion—Demotions have long been associated with failure, but limited promotional
opportunities in the future and the fast pace of technological change may make them more
legitimate career options.
III. Career Development
A formal approach taken by an organization to help its people acquire the skills and experiences needed to
perform current and future jobs is termed as career development. Company’s policies especially policies
regarding promotion, counseling the employees, opportunities to excel in future help employees to develop
their career. Career development consists of skills, education and experiences as well as behavioral
modification and refinement techniques that allow individuals to work better and add value.
Career development is an ongoing organized and formalized effort that recognizes people as a vital
organizational resource. It differs from training in that it has a wider focus, longer time frame, and broader
scope. The goal of training is improvement in performance; the goal of development is enrichment and
more capable workers.
Recently, career development has come to be seen as a means for meeting both organizational and
employee needs, as opposed to solely meeting the needs of the organization as it had done in the past.
Now, organizations see career development as a way of preventing job burnout, providing career
information to employees, improving the quality of work lives and meeting affirmative action goals. That is,
career development must be seen as a key business strategy if an organization wants to survive in an
increasingly competitive and global business environment.
IV. Career Planning and Development Methods
There are numerous methods for career planning and development. Some currently utilized methods, most
of which are used in various combinations, are discussed next.
a. Discussions with Knowledgeable Individuals—In a formal discussion, the superior
and subordinate may jointly agree on what type of career planning and development
activities are best. In other instances, psychologists and guidance counselors provide this
service. In an academic setting, colleges and universities often provide career planning and
development information to students. Students often go to their professors for career
advice.
b. Company Material—Some firms provide material specifically developed to assist their
workers in career planning and development. Such material is tailored to the firm’s special
needs. In addition, job descriptions provide valuable insight for individuals to personally
determine if a match exists with their strengths and weaknesses and specific positions
considered.
c. Performance Appraisal System—The firm’s performance appraisal system can also be a
valuable tool in career planning and development. Noting and discussing an employee’s

strengths and weaknesses with his or her supervisor can uncover developmental needs. If
overcoming a particular weakness seems difficult or even impossible, an alternate career
path may be the solution.
d. Workshops—Some organizations conduct workshops lasting two or three days for the
purpose of helping workers develop careers within the company. Employees define and
match their specific career objectives with the needs of the company. At other times,
workshops are available in the community that the company may send the worker to or
workers may initiate the visit themselves.
e. Personal Development Plans (PDP)—Many employers encourage employees to write
their own personal development plans. This is a summary of a person’s personal
development needs and an action plan to achieve them. Workers are encouraged to analyze
their strengths and weaknesses.
f. Software Packages—Some software packages assist employees in navigating their careers.
g. Career Planning Web Sites—There are numerous Web sites available that provide career
planning and career counseling as well as career testing and assessment.
V. Challenges in Career Development
While most business people today agree that their organizations should invest in career development, it is
not always clear exactly what form this investment should take. Before putting a career development
program in place, management needs to consider three major challenges.
a. Who will be Responsible?
Many modern organizations have concluded that employees must take an active role in planning and
implementing their own personal development plans. Situations have led companies to encourage their
employees to take responsibility for their own development; these may include mergers, acquisitions,
downsizing, and employee empowerment. However, employees need at least general guidance regarding the
steps they can take to develop their careers, both within and outside the company.
b. How Much Emphasis is Appropriate?
Too much emphasis on career enhancement can harm an organization's effectiveness. Employees with
extreme career orientation can become more concerned about their image than their performance. Some
warning signs a manager should be on the lookout for include a heavy focus on advancement opportunities,
managing impressions, and socializing versus job performance.
Serious side effects of career development programs include employee dissatisfaction, poor performance,
and turnover in the event that it fosters unrealistic expectations for advancement.
c. How Will the Needs of a Diverse Work Force be Met?
Companies need to break down the barriers some employees face in achieving advancement in order to
meet the career development needs of today's diverse work force. In 1991, a government study revealed
that women and minorities are frequently excluded from the informal career development activities like
networking, mentoring, and participation in policy-making committees.
Perhaps the best way a company can ensure that women and minorities have a fair chance at managerial and
executive positions is to design a broad-based approach to employee development that is anchored in
education and training.
Another employee group that may need special consideration consists of dual-career couples. Common
organizational approaches that are becoming increasingly popular in dealing with the needs of dual career
couples are flexible work schedules, telecommuting, and the offering of child-care services. Some

companies have also been counseling couples in career management.
III. Meeting the Challenges of Effective Career Development
Creative decision making is a must in designing and implementing an effective development program. The
three phases of development often blend together in a real_life program. These three phases include the
assessment phase, the direction phase, and the development phase.
a. The Assessment Phase
The assessment phase involves activities ranging from self-assessment to organizationally provided
assessment. The goal of both of these types of assessment is to identify employees' strengths and
weaknesses.
b. The Direction Phase
This involves determining the type of career that employees want and the steps they must take to make their
career goals a reality. It involves:
1. Individual career counseling
2. Information services
c. The Development Phase
The development phase is taking actions to create and increase skills to prepare for future job opportunities
and is meant to foster this growth and self-improvement. The methods are
1. Mentoring & Coaching : It has become increasingly clear over the years that employees who aspire
to higher management levels in the organization often need the assistance and advocacy of someone higher
up in the organization. When senior employee takes an active role in guiding another individual, we refer to
this activity as mentoring and coaching. This can occur at any level and can be most effective when the two
individuals do not have any type of reporting relationship.
2. Job Rotation: Involves moving employees from one job to another for the purpose of providing
them with broader experience.
3. Tuition Assistance Programs: To help individuals plan their careers, organizations try to provide
additional information in order to have better choice of the career.
Self-Development
When an employer does not routinely offer development programs, it is essential that employees work out
their own development plan. Planning for your career should include a consideration of how you can
demonstrate that you make a difference to the organization.
• Development Suggestions
Development suggestions focus on personal growth and direction. These suggestions include statements
such as "Create your own personal mission statement."
• Advancement Suggestion
Advancement suggestions focus on the steps that employees can take to improve their chances of being
considered for advancement. These suggestions include statements such as "Remember that performance
in your function is important, but interpersonal performance is critical."
IV. Career-Impacted Life Stages
Each person’s career goes through stages that influence an individual’s knowledge of, and preference for,
various occupations. People change constantly and, thus, view their careers differently at various stages of
their lives. Some of these changes result from the aging process and others from opportunities for growth
and status. The main stages of the career cycle include the growth, exploration, establishment, maintenance,
and decline.
a. Growth Stage: The growth stage is roughly from birth to age 14 and is a period during
which an individual develops a self-concept by identifying and interacting with other
people. Basically, during this stage an individual establishes his or her identity.
b. Exploration Stage: The exploration stage is the period roughly from ages 15 to 24, during
which an individual seriously explores various occupational alternatives. The person
attempts to match these occupational alternatives with his or her own interests and abilities

resulting from education, leisure activities, and work.
c. Establishment Stage: The establishment stage is roughly from ages 25 to 44 and is the
primary part of most people’s work lives. Hopefully, during this period, a suitable
occupation is found and the person engages in those activities that help earn a permanent
career. During this period, the individual is continually testing personal capabilities and
ambitions against those of the initial occupational choice.
d. Maintenance Stage: Between the ages of 45 to 65, many people move from the
stabilization sub stage into the maintenance stage. During maintenance, the individual has
usually created a place in the work world, and most efforts are directed at maintaining the
career gains earned.
e. Decline Stage: As retirement becomes an inevitable reality, in the decline stage, there is
frequently a period of adjustment, where many begin to accept reduced levels of power
and responsibility.
Key Terms
Career: Career can be defined as a general course of action a person chooses to pursue throughout his or
her working life
Career planning: Career planning is an ongoing process through which an individual sets career goals and
identifies the means to achieve them.
Career Paths: Career paths have historically focused on upward mobility within a particular occupation.
Career Development: A formal approach taken by an organization to help people acquire the skills and
experiences needed to perform current and future jobs is termed as career development.
Mentoring & Coaching: When senior employee takes an active role in guiding another individual, we refer
to this activity as mentoring and coaching
Dual-Career Path: A career-path method, that recognizes that technical specialists can and should be
allowed to continue to contribute their expertise to a company without having to become managers.

Why Do We Care?
OpportunityMotivation
Performance =
f (Ability, Motivation, Opportunity)
Ability
PERFORMANCE
Lesson 25
PERFORMANCE
M. Internal Barriers to Career Advancement
N. Successful Career-Management Practices
O. Individual and Organizational Perspectives on Career Planning
P. Performance
LESSON OVERVIEW
In this lecture, we will discuss the barriers to effective career development. Next, we will learn about some
basic concepts of performance. We will also discuss an important function of effective management is
accurate measurement of employee performance. This chapter discusses the foundation, design, and
implementation of performance measurement systems. In addition, it describes the principles of effective
performance management.
M. Internal Barriers to Career Advancement
There can be following types of barrier that can influence the effectiveness of the career advancement.
• Lack of time, budgets, and resources for employees to plan their careers and to undertake
training and development.
• Rigid job specifications, lack of leadership support for career management, and a short-term
focus.
• Lack of career opportunities and pathways within the organization for employees
N. Successful Career-Management Practices
Following steps can be helpful towards successful career management practices in the organizations.
• Placing clear expectations on employees.
• Giving employees the opportunity for transfer.
• Providing a clear succession plan
• Encouraging performance through rewards and recognition.
• Encouraging employees to continually assess their skills and career direction.
• Giving employees the time and resources they need to consider short- and long-term career goals.
O. Individual and Organizational Perspectives on Career Planning:
Effective career planning, that is ensured with monitoring to record the failures and successes, provides
continuous chances and opportunities to employees towards career development that will definitely produce
more committed and effective workforce.
P. Performance:
Performance can be defined as efforts along with the ability to put
efforts supported with the organizational policies in order to
achieve certain objectives.
Performance is the function of:
a) Ability: The basic skills possessed by the individual that
are required to give certain performance enhances the level
of performance.

b) Motivation: Activities in HRM concerned with helping employees exert high energy levels and to
get performance in desirable direction.
c) Opportunity: Circumstances under which performance is made they can be ideal or vice versa.
I. Determinants of Job Performance
There are three basic determinants of the job they are as following:
1) Willingness to perform: If employee is performing tasks and responsibilities in the organization
with willingness level of the performance will be high and
will be up to the standards.
2) Capacity to Perform: If the basic qualifications abilities
and skills required performing specific tasks are
possessed by the employees the level of performance will
be in accordance with the set standards and vice versa.
3) Opportunity to Perform: Favorable circumstances and
opportunities to perform the challenging tasks which are
more contributory towards achievement of the
organization’s mission and objective can be reasons to
have more effective performance from employees.
II. Sample Core Performance Indicators
These indicators are used to measure Organizational Effectiveness. Researchers see primary management
tasks as control, innovation, and efficiency. Control means dominating the external environment, attracting
resources, and using political processes. Innovation entails developing skills to discover new products and
processes and designing adaptable structures and cultures. Efficiency involves developing modern plants for
rapid, low-cost production, fast distribution, and high productivity.
a. The External Resource Approach: Control
Using the external resource approach, managers evaluate a firm’s ability to manage and control the external
environment. Indicators include stock price, profitability, return on investment, and the quality of a
company’s products. An important factor is management’s ability to perceive and respond to environmental
change. Stakeholders value aggressiveness and an entrepreneurial spirit.
b. The Internal Systems Approach: Innovation
Using the internal systems approach, managers evaluate organizational effectiveness. Structure and culture
should foster flexibility and rapid response to market changes. Flexibility fosters innovation. Innovation is
measured by the time needed for decision making, production, and coordinating activities.
c. The Technical Approach: Efficiency
The technical approach is used to evaluate efficiency. Effectiveness is measured by productivity and
efficiency (ratio of outputs to inputs). Productivity gains include increased production or cost reduction.
Productivity is measured at all stages of production. Service companies could measure sales per employee or
the ratio of goods sold to goods returned. Employee motivation is an important factor in productivity and
efficiency.
d. Measuring Effectiveness: Organizational Goals
Organizational effectiveness is evaluated by both official and operative goals. Official goals are the formal
mission of an organization. Operative goals are specific long-term and short-term goals that direct tasks.
Managers use operative goals to measure effectiveness. To measure control, managers examine market share
and costs; to measure innovation, they review decision-making time. To measure efficiency, they use
benchmarking to compare the company to competitors. A company may be effective in one area and
ineffective in another. Operative goals must be consistent with official goals.
III. Why is performance measured?
• Enhances motivation & productivity
• Assists in validation studies
• Detects problems
Determinants of Job
Performance
Capacity to
perform
Capacity to
perform
Opportunity
to perform
Opportunity
to perform
Willingness
to perform
Willingness
to perform
Job performanceJob performance

• Helps evaluate change efforts
• Provides basis for making decisions
• Differentiates employees in job-related areas
• Helps ensure legal compliance
IV. Performance Management
A process that significantly affects organizational success by having managers and employees work together
to set expectations, review results, and reward performance. Performance management is a means of getting
better results… by understanding and managing performance within an agreed framework of planned goals,
standards and competence requirements. It is a process to establish a shared understanding about what is to
be achieved, and an approach to managing and developing people so that it will be achieved. The Goal of
measuring performance is to improve the effectiveness & efficiency of the organization by aligning the
employee’s work behaviors & results with the organization’s goals improving the employee’s work
behaviors & results. It is on-going, integrative process.
Key Terms
Performance: Performance can be defined as efforts along with the ability to put efforts supported with
the organizational policies in order to achieve certain objectives.
Motivation: Activities in HRM concerned with helping employees exert high energy levels and to get
performance in desirable direction.
Performance Management: A process that significantly affects organizational success by having managers
and employees work together to set expectations, review results, and reward performance.

Lesson 26
PERFORMANCE APPRAISAL
A. PERFORMANCE APPRAISAL
LESSON OVERVIEW
We begin this chapter by defining performance appraisal and identifying the uses of performance appraisal. We
then explain environmental factors affecting performance appraisal and the performance appraisal process.
Then, we identify the aspect of a person’s performance that should be evaluated, who will be responsible
for appraisal, and the appraisal period. Next, we discuss the various performance appraisal methods,
problems associated with performance appraisal, and characteristics of an effective appraisal system.
A. Performance Appraisal
Performance appraisal is a system of review and evaluation of an individual or team’s job performance. An
effective system assesses accomplishments and evolves plans for development. Performance management is
a process that significantly affects organizational success by having managers and employees work together
to set expectations, review results, and reward performance. Its goal is to provide an accurate picture of past
and / or future employee performance. To achieve this, performance standards are established.
I. The Performance Appraisal Process
Many of the external and internal environmental factors previously discussed can influence the appraisal
process. Legislation requires that the appraisal systems be nondiscriminatory. The labor union might affect
the appraisal process by stressing seniority as the basis for promotions and pay increases. Factors within the
internal environment can also affect the performance appraisal process. The type of corporate culture can
serve to help or hinder the process. Identification of specific goals is the starting point for the PA process.
After specific appraisal goals have been established, workers and teams must understand what is expected
from them in their tasks. Informing employees of what is expected of them is a most important employee
relations task. At the end of the appraisal period, the appraiser observes work performance and evaluates it
against established performance standards. The evaluation results are then communicated to the workers.
The performance evaluation discussion with the supervisor serves to reestablish job requirements.
Steps in the performance appraisal process
Identify the specific performance appraisal goals.
Establish job expectations (job analysis).
Examine work performed.
Appraise performance.
Discuss appraisal with employee.
II. Uses Of Performance Appraisal
Performance appraisal serves two types of the objectives one is to make the evaluation decisions and other
is to provide the need assessment source for the training and development if there is a gap between actual
and expected performance. For many organizations, the primary goal of an appraisal system is to improve
performance. A system that is properly designed and communicated can help achieve organizational
objectives and enhance employee performance. In fact, PA data are potentially valuable for use in numerous
human resource functional areas.
a. Human Resource Planning—In assessing a firm’s human resources, data must be
available that describe the promotability and potential of all employees, especially key
executives.
b. Recruitment And Selection—Performance evaluation ratings may be helpful in
predicting the future performance of job applicants.
c. Training And Development—A performance appraisal should point out an employee’s
specific needs for training and development. By identifying deficiencies that adversely

affect performance, human resource and line managers are able to develop T&D programs
that permit individuals to build on their strengths and minimize their deficiencies.
d. Career Planning And Development—Career planning and development may be viewed
from either an individual or organizational viewpoint.
e. Compensation Programs—Performance appraisal results provide the basis for decisions
regarding pay increases.
f. Internal Employee Relations—Performance appraisal data are also frequently used for
decisions in areas of internal employee relations including motivation, promotion,
demotion, termination, layoff, and transfer.
g. Assessment Of Employee Potential—Some organizations attempt to assess employee
potential as they appraise job performance.
III. What to Evaluate
What aspect of a person’s performance should an organization evaluate? In practice, the most common sets
of appraisal criteria are traits, behaviors, and task outcomes.
a. Traits—Many employees in organizations are evaluated on the basis of certain traits such
as attitude, appearance, initiative, etc.
b. Behaviors—When an individual’s task outcome is difficult to determine, it is common to
evaluate the person’s task-related behavior.
c. Task Outcomes—If ends are considered more important than means, task outcomes
become the most appropriate factor to evaluate.
d. Improvement Potential—Some attention must be given to the future and the behaviors
and outcomes that are needed to not only develop the employee, but also to achieve the
firm’s goals. This involves an assessment of the employee’s potential.
IV. Performance Appraisal Methods
The type of performance appraisal system utilized depends on its purpose. If the major emphasis is on
selecting people for promotion, training, and merit pay increases, a traditional method such as rating scales
may be most appropriate. Collaborative methods are designed to assist employees in developing and
becoming more effective.
a. 360-Degree Feedback—Involves input from multiple levels within the firm and external
sources as well.
b. Rating Scales—Rates employees according to defined factors. The factors chosen for
evaluation are typically of two types: job related and personal characteristics.
c. Critical Incidents—Requires written records be kept of highly favorable and highly
unfavorable work actions.
d. Essay—The rater simply writes a brief narrative describing the employee’s performance.
This method tends to focus on extreme behavior in the employee’s work rather than
routine day-to-day performance.
e. Work Standards—Compares each employee’s performance to a predetermined standard,
or expected level of output.
f. Ranking—The rater simply places all employees in a given group in rank order on the
basis of their overall performance. Paired comparison is a variation of the ranking method
that involves comparing the performance of each employee with every other employee in
the group.
g. Forced Distribution—An appraisal approach where the rater is required to assign
individuals in the work group to a limited number of categories similar to a normal
frequency distribution.
h. Forced-Choice And Weighted Checklist Performance Reports—The forced-choice
performance report is a technique in which the appraiser is given a series of statements
about an individual and the rater indicates which items are most or least descriptive of the
employee. The weighted checklist performance report is a technique whereby the rater
completes a form similar to the forced-choice performance report, but the various
responses have been assigned different weights.
i. Behaviorally Anchored Rating Scales—A performance appraisal method that combines

elements of the traditional rating scales and critical incidents methods.
j. Results-Based Systems—In a result-based system the superior and the subordinate
jointly agree on objectives for the next appraisal period.
k. Assessment Centers—Recognizing the differences in purposes, and the difficulty that a
PA system will have in achieving both aims, some firms opt to use an assessment center as
an adjunct to their appraisal system
l. Management by objectives (MBO)—It is a goal-oriented performance appraisal
method, requires that supervisors and employees determine objectives for employees to
meet during the rating period, and the employees appraise how well they have achieved
their objectives
m. The Appraisal Interview
The appraisal interview is the Achilles’ heel of the entire evaluation process.
• Scheduling the Interview—Supervisors usually conduct a formal appraisal interview
at the end of an employee’s appraisal period.
• Interview Structure—A successful appraisal interview should be structured in a way
that allows both the supervisor and the subordinate to view it as a problem solving
rather than a faultfinding session.
• Use of Praise and Criticism—Praise should be provided when warranted, but it can
have only limited value if not clearly deserved. Criticism, even if warranted, is
especially difficult to give.
• Employees’ Role—Two weeks or so before the review, they should go through their
diary or files and make a note of every project worked on, regardless of whether they
were successful or not.
• Use of Software—Computer software is available for recording the appraisal data.
• Concluding the Interview—Ideally, employees will leave the interview with positive
feelings about management, the company, the job, and themselves.
V. Responsibility For Appraisal
In most organizations, the human resource department is responsible for coordinating the design and
implementation of performance appraisal programs. However, it is essential that line managers play a key
role from beginning to end.
a. Immediate Supervisor—An employee’s immediate supervisor traditionally has been the
most common choice for evaluating performance.
b. Subordinates—Some managers have concluded that evaluation of managers by
subordinates is feasible.
c. Peers—Peer appraisal has long had proponents who believed that such an approach is
reliable if the work group is stable over a reasonably long period of time and performs
tasks that require considerable interaction.
d. Self-Appraisal—If individuals understand the objectives they are expected to achieve and
the standards by which they are to be evaluated, they are—to a great extent—in the best
position to appraise their own performance.
e. Customer Appraisal—The behavior of customers determines the degree of success a
firm achieves. Therefore, some organizations believe it is important to obtain performance
input from this critical source.
VI. PROBLEMS IN PERFORMANCE APPRAISAL
Many performance appraisal methods have been severely criticized. Many of the problems commonly
mentioned are not inherent in the method but, rather, reflect improper usage.
a. Lack of Objectivity— A potential weakness of traditional methods of performance
appraisal is that they lack objectivity. Some subjectivity will always exist in appraisal
methods. However, the use of job-related factors does increase objectivity.
b. Halo Error—Occurs when the evaluator perceives one factor as being of paramount
importance and gives a good or bad overall rating to an employee based on this factor.

c. Leniency/Strictness—The giving of undeserved high or low ratings.
d. Central Tendency—Occurs when employees are incorrectly rated near the average or
middle of the scale.
e. Recent Behavior Bias—It is only natural to remember recent behavior more clearly than
actions from the more distant past. However, performance appraisals generally cover a
specified period of time, and an individual’s performance should be considered for the
entire period.
f. Personal Bias—Supervisors doing performance appraisals may have biases related to their
employees’ personal characteristics such as race, religion, gender, disability, or age group.
g. Manipulating the Evaluation—In some instances, supervisors control virtually every
aspect of the appraisal process and are therefore in a position to manipulate the system.
Key Terms
Performance: Performance appraisal is a system of review and evaluation of an individual or team’s job
performance.
Halo Error: Occurs when the evaluator perceives one factor as being of paramount importance and gives a
good or bad overall rating to an employee based on this factor.
MBO: It is a goal-oriented performance appraisal method, requires that supervisors and employees
determine objectives for employees to meet during the rating period, and the employees appraise how well
they have achieved their objectives
360-Degree Feedback: Involves input from multiple levels within the firm and external sources as well.
Central Tendency: Occurs when employees are incorrectly rated near the average or middle of the scale.

Lesson 27
JOB EVALUATION AND PRICING
A. The Appraisal Period
B. Job Evaluation
LESSON OVERVIEW
This lecture discusses the career management concepts and their application in detail.
A. THE APPRAISAL PERIOD
Performance evaluations are typically prepared at specific intervals. In most organizations these evaluations
are made either annually or semiannually. The appraisal period may begin with each employee’s date of hire,
or all employees may be evaluated at the same time.
I. The Line Manager and Performance Appraisal:
Line managers have the following responsibilities in appraising the performance.
• Complete the ratings: Line managers facilitate the overall rating process, initially by providing
goals to be achieved than comparing those goals with actual performance and finally providing
the feedback to make the corrective actions if required.
• Provide performance feedback: Performance always requires feedback, if it is positive than
feedback will act as a positive reinforcement factor that will lead to more improvement and if
the performance is poor, it again requires feedback so that the poor performance can be
improved by taking corrective steps. This task of providing feedback is carried out and
facilitated by line managers.
• Set performance goals: Performance to b evaluated requires set standards, goals or
benchmarks against which it can be compared for evaluation purpose these goals are provided
by the line mangers.
II. Role of HRM Department in Performance Appraisal:
HRM department performs the following functions during performance appraisal process.
• Develop the appraisal system: HRM department plays important role in formulating the
performance appraisal systems, it facilitated different departments in setting performance
standards and acquiring appropriate appraisal performance method according to the
requirements of particular department it also provides monitoring in appraising the
performance of employees and hence are necessary for developing effective performance
appraisal systems.
• Provide rater training: Evidence indicates that the training of appraisers can make them more
accurate raters. The raters are bothered to be trained because, a poor appraisal is worse than no
appraisal at all. Training can help raters to avoid and eliminate the basic appraisal errors. Raters
are provided with the training opportunity through HRM department.
• Monitor and evaluate the appraisal system: Any system to be run and implemented
effectively requires continuous monitoring. Performance appraisal is very important in any kind
of organization both for employee as well as employer because many decisions are supposed to
be made on data and result provided by the performance appraisal like, promotions, demotions
and some times termination etc . To achieve more authentic and fair results through
performance appraisal systems it requires monitoring and supervision which is performed by
the HRM department.
III. Performance Appraisal Failures:
Some times performance appraisal process do not satisfy the purpose for which it is conducted, that means
it is faced with some failures and there are certain reasons, these reasons are as under:
1. Manager lacks information
2. Lack of appraisal skills
3. Manager not taking appraisal seriously

4. Manager not prepared
5. Employee not receiving ongoing feedback
6. Manager not being honest or sincere
7. Ineffective discussion of employee development
8. Unclear language
9. Insufficient reward for performance
IV. Strategies for Improving Performance:
If performance appraisal process indicates the poor performance of the employees than the following
strategies can be used to improve the performance of the employees and even for good performance these
strategies can be used to keep on the trend. These strategies are as under:
a. Positive Reinforcement:
Applying a valued consequence that increases the likelihood that the person will repeat the behavior that led
to it is termed as positive reinforcement. Examples of positive reinforcement include compliments, letters
of recommendations, favorable performance appraisal, and pay raises. Equally important, Jobs can be
positively reinforcing.
b. Punishment:
Punishment means administering an aversive consequence. Examples include criticizing or shouting at an
employee, assigning an unappealing task, and sending a worker home without pay. Punishment strategy can
be used to improve the performance of employees.
c. Self Management:
Many companies empower their employees to take responsibility for the day to day functions in their areas.
Accordingly, these employees may now work without direct supervision and take on the administrative
responsibilities that were once performed by their supervisor.
d. Employee Assistance Programs (EAPs):
Specific programs designed to help employees with personal problems. No matter what kind of
organization one works in, one thing is certain. Whether that problem is job stress, legal, marital, financial,
or health related, one commonality exists: if an employee experiences a personal problem, sooner or later it
will manifest itself at the work place in terms of lowered productivity, increased absenteeism, or turnover.
To help employees deal with these personal problems, more and more companies are implementing
employee assistance programs.
V. Characteristics Of An Effective Appraisal System (Designing An Appraisal System)
Validation studies of an appraisal system may be the most direct and certain approach to determining
whether the system is satisfactory. It is unlikely that any appraisal system will be totally immune to legal
challenge. However, systems that possess certain characteristics may be more legally defensible.
a. Job-Related Criteria—The criteria used for appraising employee performance must be
job related. The Uniform Guidelines and court decisions are quite clear on this point.
b. Performance Expectations—Managers must clearly explain their performance
expectations to their subordinates in advance of the appraisal period.
c. Standardization—Employees in the same job categories under a given supervisor should
be appraised using the same evaluation instrument.
d. Trained Appraisers—Responsibility for evaluating employee performance should be
assigned to the individual(s) who have an opportunity to directly observe a representative
sample of job performance. In order to ensure consistency, appraisers must be well trained.
e. Open Communication—A good appraisal system provides highly desired feedback on a
continuing basis.
f. Employee Access To Results—Employees will not trust a system they do not
understand.
g. Due Process—A formal procedure should be developed—if one does not exist—to
permit employees the means for appealing appraisal
Effectiveness of the appraisal can be created by considering following steps.
• Gain support for the system

• Choose the appropriate rating instrument
• Choose the raters
• Determine the appropriate timing of appraisals
• Ensure appraisal fairness
B. Job Evaluation
Job evaluation means systematically determining relative worth of jobs to create job structure. An attempt
to identify inputs that are most valuable to the organization & to develop job hierarchy based on which jobs
have more or less of those dimensions
Job Evaluation Methods:
The essence of compensation administration is job evaluation and the establishment of the pay structure.
Let’s now turn our attention to the topic of job evaluation. By job evaluation we mean using the
information in job analysis to systematically determine the value of each job in relation to all jobs with in the
organization. In short, job evaluation seeks to rank all the jobs in the organization and place them in a
hierarchy that will reflect the relative worth of each. There are four general job evaluation methods.
a. Ranking method:
Raters examine the description of each job being evaluated and arrange the jobs in order according to their
value to the company. This method requires a committee – typically composed of both management and
employee representative – to arrange job in a simple rank order from highest to lowest. No attempts are
made to break down the jobs by specific weighted criteria. The committee members merely compare two
jobs and judge which one is more important, or more difficult to perform. Then they compare the other job
with the first two, and so on until all the jobs have been evaluated and ranked.
The most obvious limitation to the ranking method is its sheer inability to be managed when there
are a large number of jobs. Other drawbacks to be considered are the subjectivity of the method- there
are no definite or consistent standards by which to justify the rankings- and the fact that because jobs are
only ranked in terms of order, we have no knowledge of the distance between the ranks.
b. Classification method:
A job evaluation method by which a number of classes or grades are defined to describe a group of jobs is
known as Classification method. The classifications are created by identifying some common denominator-
skills, knowledge, responsibilities –with the desired goal being the criterion of a number of distinct classes
or grades of jobs.
Once the classifications are established, they are ranked in an overall order of importance according to the
criteria chosen, and each job is placed in its appropriate classification. This later action is generally done by
comparing each position’s job description against the classification description and benchmarked jobs.
The classification method shares most of the disadvantages of the ranking approach, plus the difficulty of
writing classification descriptions, judging which jobs go where, and dealing with jobs that appear to fall
into more than one classification.
c. Factor comparison method:
Raters need not keep the entire job in mind as they evaluate; instead, they make decisions on separate
aspects, or factors, of the job. A basic underlying assumption is that there are five universal job factors: (1)
Mental Requirements, (2) Skills, (3) Physical Requirements, (4) Responsibilities, and (5) Working
Conditions. The committee first rank each of the selected benchmark jobs on the relative degree of
difficulty for each of the five factors. Then, the committee allocates the total pay rates for each job to each
factor based on the importance of the respective factor to the job. A job comparison scale, reflecting
rankings and money allocations, is developed next. The raters compare each job, factor by factor, with those
appearing on the job comparison scale. Then, they place the jobs on the chart in an appropriate position.
d. Point method:
Raters assign numerical values to specific job components, and the sum of these values provides a
quantitative assessment of a job’s relative worth. The point method requires selection of job factors
according to the nature of the specific group of jobs being evaluated. After determining the group of jobs to

be studied, analysts conduct job analysis and write job descriptions. Next, the analysts select and define the
factors to be used in measuring job value and which become the standards used for the evaluation of jobs.
Education, experience, job knowledge, mental effort, physical effort, responsibility, and working conditions
are examples of factors typically used. The committee establishes factor weights according to their relative
importance in the jobs being evaluated, and then determines the total number of points to be used in the
plan. A distribution of the point values to job factor degrees is made, with the next step being the
preparation of a job evaluation manual.
Hay guide chart-profile method: A highly refined version of the point method that uses the
factors of know-how, problem solving, accountability, and, where appropriate, working
conditions.
Key Terms
Job Evaluation: Job evaluation means systematically determining relative worth of jobs to create job
structure.
Point Method: Raters assign numerical values to specific job components, and the sum of these values
provides a quantitative assessment of a job’s relative worth.
Classification Method: A job evaluation method by which a number of classes or grades are defined to
describe a group of jobs is known as Classification method.
Ranking Method: Raters examine the description of each job being evaluated and arrange the jobs in order
according to their value to the company.
EAPs: Specific programs designed to help employees with personal problems.
Positive Reinforcement: Applying a valued consequence that increases the likelihood that the person will
repeat the behavior that led to it is termed as positive reinforcement.
Punishment: Punishment means administering an aversive consequence.

Lesson 28
COMPENSATION SYSTEM
A. Job Pricing & Developing a Base Pay System
B. Compensation system
LESSON OVERVIEW
We begin this chapter with an overview of compensation and an explanation of compensation equity. Next,
we discuss determinants of individual financial compensation and the organization as a determinant of
financial compensation. This is followed by a discussion of the labor market, the job, and the employee, as
determinants of financial compensation. Finally, job pricing and executive compensation are presented.
To understand the basic concepts of compensation first of all we will define the pay
Pay:
Pay is a statement of an employee’s worth by an employer.
Or
Pay is a perception of worth by an employee
HR Management Strategy Model:
Human resource department uses different
strategies to mange the workforce so that the
desired results can be attained. These desired
result as stated in earlier chapters as well, can be
attained if organization is able to attract, select,
develop and retain workforce in successful
manner in short, the effective hiring and
retaining workforce can be helpful in achieving
organizational goals. This purpose can be
attained through fair and effective rewards
systems in the organization. Rewards are used as
basic motivational tools in the organization so
that performance of the employees can be
influenced in desirable way. So to be more
successful organizations need attractive and fair
compensation and reward systems to be paid to
the workforce.
A. Job Pricing
Job pricing means placing a dollar value on the worth of a job.
I. Pay Grades—The grouping of similar jobs together to simplify the job pricing process. Plotting
jobs on a scatter diagram is often useful in determining the appropriate number of pay grades.
II. Wage Curve—The fitting of plotted points in order to create a smooth progression between pay
grades.
III. Pay Ranges—Includes a minimum and maximum pay rate with enough variance between the
two to allow some significant pay difference.
IV. Broad Banding—A technique that collapses many pay grades (salary grades) into a few wide
bands in order to improve organizational effectiveness.
HR Management Strategy Model
Attract
Retain Engage
Select
Develop
Rewards
HR
Strategy
Desired
Results

V. Single-Rate System—Pay ranges are not appropriate for some workplace conditions. When
single rates are used, everyone in the same job receives the same base pay, regardless of seniority
or productivity. This rate may correspond to the midpoint of a range determined by a
compensation survey.
VI. Adjusting Pay Rates—when pay ranges have been determined and jobs assigned to pay grades,
it may become obvious that some jobs are overpaid and others underpaid. Underpaid jobs
normally are brought to the minimum of the pay range as soon as possible.
B. Compensation: An Overview
i. Compensation—The total of all rewards provided employees in return for their services.
ii. Direct Financial Compensation—Consists of the pay that a person receives in the form of
wages, salaries, bonuses, and commissions.
iii. Indirect Financial Compensation—All financial rewards that are not included in direct
compensation.
iv. Non-financial Compensation—Consists of the satisfaction that a person receives from the job
itself or from the psychological and/or physical environment in which the person works. All such
rewards comprise a total compensation program.
I. Equity in financial compensation :
Organizations must attract, motivate, and retain competent employees. Because achievement of these goals
is largely accomplished through a firm’s compensation system, organizations must strive for compensation
equity.
a. Equity—Workers’ perceptions that they are being treated fairly. Compensation must be
fair to all parties concerned and be perceived as fair.
b. External Equity—Exists when a firm’s employees are paid comparably to workers who
perform similar jobs in other firms.
c. Internal Equity—Exists when employees are paid according to the relative value of their
jobs within an organization.
d. Employee Equity—Exists when individuals performing similar jobs for the same firm are
paid according to factors unique to the employee, such as performance level or seniority.
e. Team Equity—Achieved when more productive teams are rewarded more than less-
productive teams.
II. Determinants of individual financial compensation:
Compensation theory has never been able to provide a completely satisfactory answer to what an individual
is worth for performing jobs.
• The Organization,
• The Labor Market,
• The Job, and
• The Employee
These all have an impact on job pricing and the ultimate determination of an individual’s financial
compensation.
a. The Organization as a Determinant of Financial Compensation:
• Compensation Policies—An organization often establishes—formally or informally—
compensation policies that determine whether it will be a pay leader, a pay follower, or
strive for an average position in the labor market.

1. Pay Leaders: Those organizations that pay higher wages and salaries than competing firms.
2. Market Rate or Going Rate: The average pay that most employers provide for the same job in a
particular area or industry.
3. Pay Followers: Companies that choose to pay below the market rate because of poor financial
condition or a belief that they simply do not require highly capable employees.
• Organizational Politics—Political considerations may also enter into the equation. A
sound, objective compensation system can be destroyed by organizational politics.
Managers should become aware of this possibility and take appropriate action.
• Ability to Pay—An organization’s assessment of its ability to pay is also an important
factor in determining pay levels. Financially successful firms tend to provide higher-than-
average compensation. However, an organization’s financial strength establishes only the
upper limit of what it will pay.
b. The labor market as a determinant of financial compensation:
Potential employees located within the geographical area from which employees are recruited comprise the
labor market.
• Compensation Surveys—Large organizations routinely conduct compensation surveys to
determine prevailing pay rates within labor markets.
1. Compensation surveys: Provide information for establishing both direct and indirect compensation.
2. Benchmark job: A job that is well known in the company and industry, one that represents the
entire job structure, and one in which a large percentage of the workforce is employed.
• Cost of Living—A pay increase must be roughly the equivalent to the cost of living
increase if a person is to maintain a previous level of real wages.
• Labor Unions—When a union uses comparable pay as a standard for making
compensation demands, the employer must obtain accurate labor market data. When a
union emphasizes cost of living, management may be pressured to include a cost-of-living
allowance (COLA). This is an escalator clause in the labor agreement that automatically
increases wages as the U.S Bureau of Labor Statistics’ cost-of-living index rises.
• Society—Compensation paid to employees often affects a firm’s pricing of its goods
and/or services. Consumers may also be interested in compensation decisions.
• Economy—In most cases, the cost of living will rise in an expanding economy. Thus, the
economy’s health exerts a major impact on pay decisions.
• Legislation—The amount of compensation a person receives can also be affected by
certain federal and state legislation.
c. The job as a determinant of financial compensation:
Organizations pay for the value they attach to certain duties, responsibilities, and other job-related factors.
Techniques used to determine a job’s relative worth include job analysis, job descriptions, and job
evaluation.
• Job Analysis and Job Descriptions—Before an organization can determine the relative difficulty or
value of its jobs, it must first define their content, which it normally does by analyzing jobs. Job analysis
is the systematic process of determining the skills and knowledge required for performing jobs. The job

description is the primary by-product of job analysis, consisting of a written document that describes
job duties and responsibilities. Job descriptions are used for many different purposes, including job
evaluation.
• Job Evaluation—That part of a compensation system in which a firm determines the relative value of
one job compared with that of another.
d. The employee as a determinant of financial compensation:
In addition to the organization, the labor market, and the job, factors related to the employee are also
essential in determining pay and employee equity.
I. Performance Based Pay—PA data provide the input for such approaches as merit pay, variable
pay, skill-based pay, and competency-based pay.
1. Merit Pay: A pay increase given to employees based on their level of performance as indicated in
the appraisal.
2. Bonus: The most common type of variable pay for performance and is a one-time award that is
not added to employees’ base pay.
3. Skill-based Pay: A system that compensates employees on the basis of job-related skills and
knowledge they possess, not for their job titles.
4. Competency-Based Pay: A compensation plan that rewards employees for their demonstrated
expertise.
II. Seniority—The length of time an employee has been associated with the company, division,
department, or job is referred to as seniority.
III. Experience—Regardless of the nature of the task, very few factors has a more significant impact
on performance than experience.
IV. Membership in the Organization—Some components of individual financial compensation
are given to employees without regard to the particular job they perform or their level of
productivity.
V. Potential—Organizations do pay some individuals based on their potential.
e. Political Influence—Political influence is a factor that obviously should not be used as a determinant
of financial compensation. However, to deny that it exists would be unrealistic.
f. Luck—The expression has often been stated, “It certainly helps to be in the right place at the right
time.” There is more than a little truth in this statement as it relates to the determination of a person’s
compensation.
g. Special Employee Classes—These include pay for executives, which are discussed in a later section,
and pay for professionals and sales employees.
III. Executive Compensation:
Executive skill largely determines whether a firm will prosper, survive, or fail. Therefore, providing adequate
compensation for these managers is vital. A critical factor in attracting and retaining the best managers is a
company’s program for compensating executives.
a) Determining Executive Compensation—In determining executive compensation, firms
typically prefer to relate salary growth for the highest-level managers to overall corporate

performance. In general, the higher the managerial position, the greater the flexibility
managers have in designing their jobs.
b) Types of Executive Compensation—Executive compensation often has five basic
elements: (1) Base Salary, (2) Short-Term Incentives or Bonuses, (3) Long-Term Incentives
and Capital Appreciation Plans, (4) Executive Benefits, and (5) Perquisites. The way an
executive compensation package is designed is partially dependent on the ever-changing
tax legislation.
• Base Salary: Salary is obviously important. It is a factor in determining standard
of living. Salary also provides the basis for other forms of compensation.
• Short-Term Incentives or bonuses: Payment of bonuses reflects a managerial
belief in their incentive value. Today, virtually all top executives receive bonuses
that are tied to base salary.
• Long-Term Incentives and Capital Appreciation: The stock option is a
long-term incentive designed to integrate further the interests of management
with those of the organization. The typical stock option plan gives the manager the
option to buy a specified amount of stock in the future at or below the current
market price.
• Executive Benefits: Executive benefits are generally more generous than those
received by other employees because the benefits are tied to their higher salaries.
However, current legislation (ERISA) does restrict the value of executive
benefits to a certain level above those of other workers.
• Perquisites (Perks): Any special benefits provided by a firm to a small group
of key executives that are designed to give the executives something extra. A
“golden parachute” contract is a perquisite that protects executives in the event that
their firm is acquired by another.
IV. Compensation for professionals:
People in professional jobs are initially compensated primarily for the knowledge they bring to the
organization. Because of this, the administration of compensation programs for professionals is somewhat
different than for managers. Many professional employees eventually become managers. For those who do
not desire this form of career progression, some organizations have created a dual track of compensation.
The dual track provides a separate pay structure for professionals, which may overlap a portion of the
managerial pay structure.
V. Sales Compensation:
Designing compensation programs for sales employees involves unique considerations. For example, job
content, relative job worth, and job market value should be determined. The straight salary approach is at
one extreme in sales compensation. In this method, salespersons receive a fixed salary regardless of their
sales levels. At the other extreme, the person whose pay is totally determined as a percentage of sales is on
straight commission. Between these extremes, there are endless part salary–part commission combinations.
The possibilities increase when various types of bonuses are added to the basic compensation package. In
addition to salary, commissions, and bonuses, salespersons often receive other forms of compensation that
are intended to serve as added incentives.
Role of Line managers and HRM Department in Compensation:
Line managers perform the function of job evaluation that is base for the compensation systems, according
to the worth of the job negotiation regarding the salaries and other benefits is negotiated with potential
employees through line mangers. Basic compensation packages are mostly recommended by the line
managers in the organizations. All these information is communicated to the employees by HRM

department beside communicating this information HRM department also facilitates the departments in
establishing rates of pay, monitoring in job evaluation process, and Conducting salary surveys in order to
establish procedures for administering pay plans, and to ensure compliance with antidiscrimination laws.
Key Terms
Merit Pay: A pay increase given to employees based on their level of performance as indicated in the
appraisal.
Equity: Workers’ perceptions that they are being treated fairly. Compensation must be fair to all parties
concerned and be perceived as fair
External Equity: Exists when a firm’s employees are paid comparably to workers who perform similar
jobs in other firms.
Internal Equity: Exists when employees are paid according to the relative value of their jobs within an
organization.
Compensation: The total of all rewards provided employees in return for their services.
Job Pricing: Job pricing means placing a dollar value on the worth of a job.

Lesson 29
BENEFITS
A. Total Compensation
B. Employee Benefits
LESSON OVERVIEW
We begin the chapter with a discussion of benefits, both mandated and voluntary. Then, legislation related
to benefits and the proper communication of information about benefit packages is discussed. Next, we
present various types of incentive compensation and describe non-financial compensation and the job as a
total compensation factor.
A. Total Compensation
Total compensation constitutes of
two types of the rewards which are
direct rewards and indirect rewards.
Direct rewards include the salaries
wages, commis-sion, bonuses and
gain sharing all of these rewards are
directly paid to employees in
monetary or financial terms, second
type of the rewards are benefits
provided by organization. Benefits are
not direct payments in financial terms.
B. Employee Benefits
Benefits are all financial rewards that generally are not paid directly to an employee. Benefits absorb social
costs for health care and retirement and can influence employee decisions about employers.
I. Benefits (Indirect Financial Compensation)
Most organizations recognize that they have a responsibility to provide their employees with insurance and
other programs for their health, safety, security, and general welfare. These benefits include all financial
rewards that generally are not paid directly to the employee.
Ii. Mandated Benefits (Legally Required)
Although most employee benefits are provided at the employer’s discretion, others are required by law.
Legally required benefits include Social Security, unemployment compensation, and workers’ compensation.
a) Social Security—It is a system of retirement benefits that provides benefits like disability
insurance, survivor’s benefits, and, most recently, Medicare.
b) Unemployment Compensation—An individual laid off by an organization covered by the Social
Security Act may receive unemployment compensation for up to 26 weeks. Although the federal
government provides certain guidelines, unemployment compensation programs are administered
by the states, and the benefits vary state by state.
c) Workers’ Compensation—Workers’ compensation benefits provide a degree of financial
protection for employees who incur expenses resulting from job-related accidents or illnesses.
Total CompensationTotal Compensation
DirectDirect IndirectIndirect
BonusesBonuses
GainsharingGainsharing Security Plans
• Pensions
Security Plans
• Pensions
Employee Services
• Educational assistance
• Recreational programs
Employee Services
• Educational assistance
• Recreational programs
CommissionsCommissions
Wages / SalariesWages / Salaries
Insurance Plans
• Medical
• Dental
• Life
Insurance Plans
• Medical
• Dental
• Life
Time Not Worked
• Vacations
• Breaks
• Holidays
Time Not Worked
• Vacations
• Breaks
• Holidays

d) Family And Medical Leave Act Of 1993 (FMLA)—The Family and Medical Leave Act applies
to private employers with 50 or more employees and to all governmental employers regardless of
the number of employees. The act provides for up to 12 workweeks of unpaid leave per year for
absences due to the employee’s own serious health condition or the need to care for a newborn or
newly adopted child or a seriously ill child, parent, or spouse.
III. Discretionary Benefits (Voluntary)
Organizations voluntarily provide numerous benefits. These benefits may be classified as (1) payment for
time not worked, (2) health and security benefits, (3) employee services, and (4) premium pay. Generally
speaking, such benefits are not legally required.
a) Payment For Time Not Worked—In providing payment for time not worked, employers
recognize that employees need time away from the job for many purposes, such as paid vacations,
payment for holidays not worked, paid sick leave, jury duty, national guard or other military reserve
duty, voting time, and bereavement time. Some payments are provided for time off taken during
work hours, such as rest periods, coffee breaks, lunch periods, cleanup time, and travel time.
• Paid Vacations: Payment for time not worked serves important compensation goals. Paid
vacations provide workers with an opportunity to rest, become rejuvenated, and hopefully,
become more productive.
• Sick Leave: Each year many firms allocate, to each employee, a certain number of days of
sick leave, which they can use when ill.
b) Health Benefits—Health benefits are often included as part of an employee’s indirect financial
compensation. Specific areas include health, dental, and vision care.
• Health care: Benefits for health care represent the most expensive and fastest-growing cost in the
area of indirect financial compensation. Many factors have combined to create this situation: an
aging population, a growing demand for medical care, increasingly expensive medical technology, a
lack of price controls, and inefficient administrative processes. In addition to self-insurance and
traditional commercial insurers, employers may utilize one of several options. Health maintenance
organizations (HMOs) are one option in which all services are covered for a fixed fee; however,
employers control which doctors and health facilities may be used. Point-of-service (POS) permits a
member to select a provider within the network, or, for a lower level of benefits, go outside the
network. Preferred provider organizations (PPOs) are a more flexible managed care system. Although
incentives are provided to members to use services within such a system, out-of-network providers
may be utilized at greater cost. Exclusive provider organizations (EPO) offer a smaller PPO provider
network and usually provide little, if any, benefits when an out-of-network provider is used.
• Capitation: Typically, the reimbursement method used by primary care physicians is an approach
to health care where providers negotiate a rate for health care for a covered life over a period of
time. It presumes that doctors have an incentive to keep patients healthy and to avoid costly
procedures when they are paid per patient rather than per service.
• Defined-Contribution health care system: Companies give each employee a set amount of money
annually with which to purchase health care coverage.
• Utilization Review: A process that scrutinizes medical diagnoses, hospitalization, surgery, and
other medical treatment and care prescribed by doctors.
• The Health Insurance Portability and Accountability Act of 1996: Provides new protections
for approximately 25 million Americans who move from one job to another, who are self-
employed, or who have preexisting medical conditions.

• Dental and Vision Care: Relative newcomers to the list of potential health benefits. Both types of
plans are typically paid for entirely by the employers.
c) Security Benefits—Security benefits include retirement plans, disability insurance, life insurance,
and supplemental unemployment benefits.
• Retirement Plans: Private retirement plans provide income for employees who retire after
reaching a certain age or having served the firm for a specific period of time. In a defined benefit plan,
the employer agrees to provide a specific level of retirement income that is either a fixed dollar
amount or a percentage of earnings. A defined contribution plan is a retirement plan that requires
specific contributions by an employer to a retirement or savings fund established for the employee.
A 401(k) plan is a defined contribution plan in which employees may defer income up to a
maximum amount allowed. An employee stock ownership plan (ESOP) is a defined contribution plan in
which a firm makes a tax-deductible contribution of stock shares or cash to a trust.
• Disability Protection: Workers’ compensation protects employees from job-related accidents and
illnesses. Some firms, however, provide additional protection that is more comprehensive.
• Supplemental Unemployment Benefits (SUB): Supplemental unemployment benefits are
designed to provide additional income for employees receiving unemployment benefits.
• Life Insurance: Group life insurance is a benefit commonly provided to protect the employee’s
family in the event of his or her death. Although the cost of group life insurance is relatively low,
some plans call for the employee to pay part of the premium.
d) Employee Services—Organizations offer a variety of benefits that can be termed employee
services. These benefits encompass a number of areas including relocation benefits, child care,
educational assistance, food services/ subsidized cafeterias, and financial services.
• Relocation Benefits: Include shipment of household goods and temporary living expenses,
covering all or a portion of the real estate costs associated with buying a new home and selling the
previously occupied home.
• Child Care: Another benefit offered by some firms is subsidized child care. Here, the firm may
provide an on-site child care center, support an off-site center, or subsidize the costs of child care.
• Educational Assistance: According to a recent benefits survey, 81 percent have educational
benefits that reimburse employees for college tuition and books.
• Food Services/ Subsidized Cafeterias: Most firms that offer free or subsidized lunches feel that
they get a high payback in terms of employee relations.
• Financial Services: One financial benefit that is growing in popularity permits employees to
purchase different types of insurance policies through payroll deduction.
• Unique Benefits: A tight labor market gives birth to creativity in providing benefits.
e) Premium Pay—Compensation paid to employees for working long periods of time or working
under dangerous or undesirable conditions.
• Hazard pay: Additional pay provided to employees who work under extremely dangerous
conditions.
• Shift differentials: Paid to employees for the inconvenience of working undesirable hours.
f) Benefits for Part-Time Employees—Recent studies indicate that employers are offering this
group more benefits than ever. Growth in the number of part-timers is due to the aging of the
workforce and also to an increased desire by more employees to balance their lives between work
and home.
IV. Other Benefit-Related Legislation

a) Employee Retirement Income Security Act Of 1974 (ERISA)—The Employee Retirement
Income Security Act of 1974 (ERISA) was passed to strengthen existing and future retirement
programs. Mismanagement of retirement funds was the primary factor in the need for this
legislation.
b) Older Workers Benefit Protection Act (OWBPA)—The Older Workers Benefit Protection Act
(OWBPA) is a 1990 amendment to the ADEA and extends its coverage to all employee benefits.
The act has an equal benefit or equal cost principle.
V. Communicating Information about the Benefits Package
Employee benefits can help a firm recruit and retain a quality workforce. Management depends on an
upward flow of information from employees in order to know when benefit changes are needed, and,
because employee awareness of benefits is often severely limited, the program information must be
communicated downward.
vi. Incentive Compensation
Compensation programs that relate pay to productivity.
a) Individual Incentive Plans—A specific form of performance-based pay is an individual incentive
plan called piecework. In such a plan, employees are paid for each unit produced.
b) Team-Based Compensation Plans—Team performance consists of individual efforts. Therefore,
individual employees should be recognized and rewarded for their contributions. However, if the
team is to function effectively, a reward based on the overall team performance should be provided
as well.
c) Companywide Plans—Companywide plans offer a feasible alternative to the incentive plans
previously discussed. They may be based on the organization’s productivity, cost savings, or
profitability.
• Profit Sharing: A compensation plan that results in the distribution of a predetermined
percentage of the firm’s profits to employees. There are several variations, but the three
basic forms are current, deferred, and combination. Current plans provide payment to
employees in cash or stock as soon as profits have been determined. Deferred plans involve
placing company contributions in an irrevocable trust to be credited to the account of
individual employees. The funds are normally invested in securities and become available
to the employee (or his/her survivors) at retirement, termination, or death. Combination
plans permit employees to receive payment of part of their share of profits on a current
basis, whereas payment of part of their share is deferred. Profit sharing tends to tie
employees to the economic success of the firm.
• Employee Stock Option Plan (ESOP): A defined contribution plan in which a firm
contributes stock shares to a trust.
• Gain Sharing: Plans that are designed to bind employees to the firm’s performance by
providing an incentive payment based on improved company performance. The first gain
sharing plan was developed by Joseph Scanlon during the Great Depression, and it
continues to be a successful approach to group incentive, especially in smaller firms.
• Scanlon Plan: Provides a financial reward to employees for savings in labor costs that
result from their suggestions.
Vii. Non-financial Compensation
Compensation departments in organizations do not normally deal with non-financial factors. However,
non-financial compensation can be a very powerful factor in the compensation equation.
Viii. The job
Some jobs can be so exciting that the incumbent can hardly wait to get to work each day.

IX. The Job as a Total Compensation Factor
The job itself is a central issue in many theories of motivation, and it is also a vital component of a total
compensation program.
a) Skill Variety—The extent to which work requires a number of different activities for successful
completion.
b) Task Identity—The extent to which the job includes an identifiable unit of work that is carried
out from start to finish.
c) Task Significance—The impact that the job has on other people.
d) Autonomy—The extents of individual freedom and discretion employees have in performing their
jobs.
e) Feedback—The amount of information employees receive about how well they have performed
the job.
f) Cyber-work—A possibility of a never-ending workday created through the use of technology.
X. The Job Environment as a Total Compensation Factor
Employees can draw satisfaction from their work through several non-financial factors.
a) Sound Policies—Human resource policies and practices reflecting management’s concern for its
employees can serve as positive rewards.
b) Competent Employees—Successful organizations emphasize continuous development and assure
that competent managers and non-managers are employed.
c) Congenial Coworkers—Although the American culture has historically embraced individualism,
most people possess, in varying degrees, a desire to be accepted by their work group.
d) Appropriate Status Symbols—Organizational rewards that take many forms such as office size
and location, desk size and quality, private secretaries, floor covering, and title.
e) Working Conditions—The definition of working conditions has been broadened considerably during
the past decade.
XI. Workplace Flexibility
Flexible work arrangements do more than just assist new mothers’ return to full-time work. They comprise
an aspect of non-financial compensation that allows many families to manage a stressful work/home
juggling act.
a) Flextime—The practice of permitting employees to choose, with certain limitations, their own
working hours.
b) Compressed Workweek—Any arrangement of work hours that permits employees to fulfill their
work obligation in fewer days than the typical five-day workweek.
c) Job Sharing—An approach to work that is attractive to people who want to work fewer than 40
hours per week.
d) Flexible Compensation (Cafeteria Compensation)—Plans that permit employees to choose
from among many alternatives in deciding how their financial compensation will be allocated.
e) Telecommuting—Telecommuting is a work arrangement whereby employees are able to remain
at home, or otherwise away from the office, and perform their work over telephone lines tied to a
computer.
f) Part-Time Work—Use of part-time workers on a regular basis has begun to gain momentum in
the United States. This approach adds many highly qualified individuals to the labor market by
permitting both employment and family needs to be addressed.
g) Modified Retirement—An option that permits older employees to work fewer than regular hours

for a certain period of time proceeding retirement. This option allows an employee to avoid an
abrupt change in lifestyle and more gracefully move into retirement.
XII. Other Compensation Issues
Several issues that relate to compensation deserve mention. These issues include comparable worth, pay
secrecy, and pay compression.
a) Severance Pay—Although some firms are trimming the amount of severance pay offered,
typically, one to two weeks of severance pay is given for every year of service, up to some
predetermined maximum. Severance pay is generally shaped according to the organizational level of
the employee.
b) Comparable Worth—Requires the value for dissimilar jobs, such as company nurse and welder, to
be compared under some form of job evaluation and pay rates for both jobs to be assigned
according to their evaluated worth.
c) Pay Secrecy—Organizations tend to keep their pay rates secret for various reasons. If a firm’s
compensation plan is illogical, secrecy may indeed be appropriate because only a well-designed
system can stand careful scrutiny. An open system would almost certainly require managers to
explain the rationale for pay decisions to subordinates.
d) Pay Compression—Occurs when workers perceive that the pay differential between their pay and
that of employees in jobs above or below them is too small.
Key Terms
Flextime: The practice of permitting employees to choose, with certain limitations, their own working
hours.
Capitation: Typically, the reimbursement method used by primary care physicians is an approach to health
care where providers negotiate a rate for health care for a covered life over a period of time.
Disability protection: Workers’ compensation protects employees from job-related accidents and illnesses.
Some firms, however, provide additional protection that is more comprehensive.
(ESOP):A defined contribution plan in which a firm contributes stock shares to a trust.
Gain sharing: Plans that are designed to bind employees to the firm’s performance by providing an
incentive payment based on improved company performance
Scanlon plan: Provides a financial reward to employees for savings in labor costs that result from their
suggestions
Telecommuting: Telecommuting is a work arrangement whereby employees are able to remain at home,
or otherwise away from the office, and perform their work over telephone lines tied to a computer
Autonomy: The extent of individual freedom and discretion employees has in performing their jobs.

Lesson 30
ROLE OF MONEY IN PERFORMANCE OF EMPLOYEES
A. Explain Pay-for-Performance
B. Describe the Role of Money
LESSON OVERVIEW
This chapter focuses on the effective design and implementation of pay-for-performance systems. First, it
addresses the major challenges and pitfalls facing managers in their attempts to link pay and performance.
Second, the chapter offers a set of general recommendations to deal with pay-for-performance challenges.
Third, it describes and analyzes specific types of pay-for-performance programs. Finally, it discusses unique
pay-for-performance plans.
A. Pay-for-Performance
Pay for performance refers to any compensation method that ties pay to the quantity or quality of work the
person produces. Variable pay plans are pay for performance plans that put a portion of the employee’s pay
at risk, in return for the opportunity to earn additional pay. Gainsharing plans are group incentive plans
that engage many or all employees in a common effort to achieve productivity goals. Stock options are
rights to purchase company stock at a discount some time in the future.
A compensation philosophy of higher pays for higher contributions Performance will be calculated on -
corporate performance and personal performance.
I. Challenges of Pay-for-Performance System
a) Pay for Performance: The Challenges
This section covers the attitudes that employees have about pay, the difficulties in measuring performance,
the psychological contract, lack of flexibility, the importance of credibility, job satisfaction, stress, and the
potential reduction of intrinsic drives.
i. The “Do Only What You Get Paid For” Syndrome: The closer pay is tied to particular
performance indicators, the more employees tend to focus on those indicators and neglect
other important job components
ii. Negative Effects on the Spirit of Cooperation: Employees may withhold information
from a colleague if they believe that it will help the other person get ahead
iii. Lack of Control: Employees often cannot control all of the factors affecting their
performance
iv. Difficulties in Measuring Performance: Assessing employee performance is one of the
thorniest tasks a manager faces, particularly when the assessments are used to dispense
rewards
v. Psychological Contracts: Once implemented, a pay-for-performance system creates a
psychological contract between the employee and firm, and it is very resistant to change
vi. The Credibility Gap: Employees often do not believe that pay-for-performance programs
are fair or that they truly reward performance
vii. Job Dissatisfaction and Stress: Pay-for-performance systems may lead to greater
productivity but lower job satisfaction
viii. Potential Reduction of Intrinsic Drives: Pay-for-performance systems may push
employees to the point of doing whatever it takes to get the promised monetary reward
and in the process stifle their talents and creativity

II. Meeting the Challenges of Pay for Performance Systems:
Appropriately designed pay-for-performance systems offer managers an excellent opportunity to align
employees' interests with the organizations. Pay for performance programs are not likely to achieve the
desired results unless complementary HRM programs are implemented at the same time.
b) Link Pay and Performance Appropriately: There are few cases in which managers can justify
paying workers according to a pre-established formula or measure.
c) Use Pay for Performance as Part of a Broader HRM System: Pay-for-performance programs
are not likely to achieve the desired results unless complementary HRM programs accompany
them.
d) Build Employee Trust: Even the best conceived pay-for-performance program can fail if
managers have a poor history of labor relations or if the organization has a cutthroat culture
e) Promote the Belief that Performance Makes a Difference: Unless an organization creates an
atmosphere in which performance makes a difference, it may end up with a low-achievement
organizational culture
f) Use Multiple Layers of Rewards: Because all pay-for-performance systems have positive and
negative features, providing different types of pay incentives for different work situations is likely to
produce better results than relying on a single type of pay incentive
g) Increase Employee Involvement: When employees do not view a compensation program as
legitimate, they will usually do whatever they can to subvert the system
h) Use Motivation and Non-financial Incentives: Some people are more interested in the non-
financial aspects of their work
III. Types of Pay-for-Performance Plans
When a pay-for-performance system has multiple layers, it can increase the motivation of individual
employees and simultaneously improve cooperation. For example, bonuses given to teams or work units
promote cooperation. Bonuses given to individual employees, however, are more motivating because they
allow employees to see how their personal contributions lead to direct rewards. Since all
pay-for-performance systems have positive and negative features, providing different types of pay incentives
for different work situations is likely to produce better results than relying on a single type of pay incentive.
With a multiple-layers-of-rewards system, the organization can realize the benefits of each incentive plan
while minimizing its negative side effects.
Types of pay-for-performance plans vary in design. Some are designed to reward individuals, teams,
business units, the entire organization, or any combination of these.
a. Individual-Based Plans
Individual-based plans are the most widely used pay-for-performance plans in industry. There are several
plans that can be used: merit pay, bonus programs, and awards. Advantages of individual-based pay-
for-performance plans include rewarded performance is likely to be repeated, financial incentives can shape
an individual's goals, they help the firm achieve individual equity, and they fit in with an individualistic
culture. Disadvantages include they may promote single-mindedness; employees do not believe pay and
performance are linked, they may work against achieving quality goals, and they may promote inflexibility.
b. Team-Based Plans
Team-based plans attempt to support other efforts to increase the flexibility of the work force within a firm.
These plans normally reward all team members equally based on group outcomes. The advantages of team-
based pay-for-performance plans include they foster group cohesiveness and they facilitate performance

measurement. Disadvantages include possible lack of fit with individualistic cultural values, the free-riding
effect, social pressures to limit performance, difficulties in identifying meaningful groups, and intergroup
competition leading to a decline in overall performance.
c. Plant wide Plans
These plans reward all workers in a plant or business unit based on the performance of the entire plant or
unit. Plant wide plans are generally referred to as gain sharing programs because they return a portion of
the company's cost savings to the workers, usually in the form of a lump-sum bonus. There are three major
types of gain sharing programs: Scanlon Plan, Rucker Plan, and the Improshare. Advantages include
eliciting active employee input, increasing the level of cooperation, fewer measurement difficulties, and
improving quality. Disadvantages include protection of low performers, problems with the criteria used to
trigger rewards, and management-labor conflict.
d. Corporate wide Plans
This is the most macro type of incentive program and is based on the entire corporation's performance.
The most widely used program of this kind is profit sharing which differs from gain sharing in several
important ways: no attempt is made to reward workers for productivity improvements, they are very
mechanistic, and typically they are used to fund retirement programs. Employee stock ownership plans
are another type of corporate wide plan. Advantages of corporate wide plans are financial flexibility for the
firm, increased employee commitment, and tax advantages. Disadvantages include risk for employees,
limited effect on productivity, and long-run financial difficulties.
IV. Designing Pay-For-Performance Plans for Executives and Salespeople
Executives and sales personnel are usually treated very differently than other types of workers in
pay-for-performance plans. A number of plans are used to link executives' pay to a firm's performance, but
there is little agreement on which is best. Sales professionals may be paid in the form of straight salary,
straight commission, or a combination plan. The relative proportion of salary versus incentives varies
widely across firms.
V. Reasons for Pay-For-Performance Failures
Following factors are commonly blamed for the failure of individual-based pay-for-performance systems.
Performance appraisal is inherently subjective, with supervisor’s evaluating subordinates according
to their own preconceived biases.
Regardless of the appraisal form used, rating errors are rampant.
Merit systems emphasize individuals rather than group goals and this may lead to dysfunctional
conflict in the organization.
The use of a specified time period (normally one year) for the performance evaluation encourages a
short-term orientation at the expense of long-term goals.
Supervisors and employees seldom agree on the evaluation, leading to interpersonal confrontations.
Increments in financial rewards are spaced in such a way that their reinforcement value for work
behavior is questionable for example becoming twice as productive now has little perceived effect
on pay when the employee must rat a whole year for a performance review.
Individual merit pay systems are not appropriate for the service sector.
Supervisors typically control a rather limited amount of compensation, so merit pay differentials are
normally quite small and therefore of questionable value.

A number of bureaucratic factors hat influence the size and frequency of merit pay have little to do
with employee performance.
Performance appraisals are designed for multiple purposes (training and development, selection,
work planning, compensation, and so forth.) When a system is used to accomplish so many
objectives, it is questionable whether it can accomplish any of them well. It is difficult for the
supervisor to play the role of counselor or advisor and evaluator at the same time.
B. The Role of Money
Money can be used as a motivational tool in the organization because it is used as a source to fulfil different
needs. It affects several needs, not just existence needs. Money is used to prove and enhance the identity id
people it influences the self-perceptions.
Improving Reward Effectiveness
Effectiveness of the rewards can be improved by considering the following factors.
• Link rewards to performance
• Ensure rewards are relevant
• Use team rewards for interdependent jobs
• Ensure rewards are valued
• Beware of unintended consequences
I. Money as a Motivator
According to Maslow and Alderfer, pay should prove especially motivational to people who have strong
lower-level needs. If pay has this capacity to fulfill a variety of needs, then it should have good potential as a
motivator.
II. Why People Leave Organizations:
Mostly people leave the organizations or organizations have to face high turnover rate due to different
reasons like employees are not satisfied with benefits provided or the recognition is not provided for
extraordinary perfumers these causes should be overcome so that employee loyalty can be increased.
Following ways can be used to avoid the high turnover of employees.
• Use Recognition
Some employees highly value day-to-day recognition from their supervisors, peers and team members
because it is important for their work to be appreciated by others. Recognition helps satisfy the need people
have to achieve and be recognized for their achievement.
• Use Positive Reinforcement
Positive reinforcement programs rely on operant conditioning principles to supply positive reinforcement
and change behavior. Experts claim it is better to focus on improving desirable behaviors rather than on
decreasing undesirable ones. There are a variety of consequences including social consequences (e.g., peer
approval or praise from the boss), intrinsic consequences (e.g., the enjoyment the person gets from
accomplishing challenging tasks), or tangible consequences (e.g., bonuses or merit raises).
• Empower Employees
Empowerment means giving employees the authority, tools, and information they need to do their jobs
with greater autonomy, as well as the self-confidence to perform new jobs effectively. Empowerment
boosts employees’ feelings of self-efficacy and enables them to use their potential more fully.

I. Rewards and other Employee Behaviors
Rewards can be used to modify the
behaviors of the employees if people in the
organization are not satisfied with the
reward system or if they think that the
reward system of the organization is not
fair, than the organizations will be facing
problems of low productivity, high
absenteeism and high turnover and vice
versa. When ever some one performs up to
specific standards and some times beyond
that , there us always exists demand and
expectations of rewards and recognitions
that will lead to continuous improvement
but in the absence of recognition
performance instead of improvement will
be facing down fall trends which are
definitely harmful for the organizations. Positive consequences (rewards) of actions (performance) are
always tending actions to be repeated but in case any action (performance) is followed with the negative
consequences (no rewards) than the behavior will jot be repeated as shown in fig.
Key Terms
Pay for Performance Pay for performance refers to any compensation method that ties pay to the
quantity or quality of work the person produces
Empowerment Empowerment means giving employees the authority, tools, and information they
need to do their jobs with greater autonomy
Positive consequence
(reinforced by reward)
Negative consequence
(no reward)
Not repeatedNot repeated
BehaviorBehavior
RepeatedRepeated

1. E m ployee
Identifies
N eeds
1. Em ployee
Identifies
N eeds
2. E m plo yee
S earch es for
W ays to S atisfy
Th ese N eeds
2. E m p lo yee
S earches fo r
W ays to S atisfy
Th ese N eeds
3. E m plo yee
S elects G oal-
D irected
B ehavior
3. E m plo yee
S elects G oal-
D irected
B eh avio r
6. E m plo yee
R eassesses N eed
D eficiencies
6. E m p lo yee
R eassesses N eed
D eficiencies
5. E m plo yee
R eceives E ither
R ew ard s o r
P u nish m en ts
5. Em p lo yee
R eceives E ith er
R ew ard s or
P un ishm ents
4. Em ployee
P erform s
4. E m ployee
P erform s
Lesson 31
MOTIVATION
A. Explain Motivation
LESSON OVERVIEW
The focus is on managing motivation and outcomes to boost performance, one of the most important roles
of any manager. This chapter explores the elements of motivation and introduces the expectancy model,
discussing individual, job-related, and organizational influences on motivation. In addition, the chapter
investigates how managers can use opportunities and outcomes to manage employee performance on the
job.
A. Motivation
Motivation is the inner drive that directs a person’s behavior toward goals. Motivation can be defined as a
process which energizes, directs and sustains human
behavior. In HRM the term refers to person’s desire
to do the best possible job or to exert the maximum
effort to perform assigned tasks. An important feature
of motivation is that it is behavior directed towards
goal.
Why is motivation important?
Motivation is important in getting and retaining
people. Motivation tools act as the glue that links
individuals to organizational goals, In addition, make
individuals go beyond the job and be creative.
I. The Motivation Process
In its simplest form, the motivation process begins
with a need, an individual’s perception of
a deficiency .For instance, an employee
might feel the need for more challenging
work, for higher pay, for time off, or for
the respect and admiration of colleagues.
These needs lead to thought processes
that guide an employee’s decision to
satisfy them and to follow a particular
course of action. If an employee’s chosen
course of action results in the anticipated
out come and reward, that person is likely
to be motivated by the prospect of a
similar reward to act the same way in the
future. However, if the employee’s action
does not result in the expected reward, he or she is unlikely to repeat the behavior. Thus, the reward acts as
feedback mechanism to help the individual evaluate the consequences of the behavior when considering
futures action.
II. Core Phases of the Motivational Process:
1. Need Identification: First phase of motivation process is need identification where the employee feels
his/her some unsatisfied need. The motivation process begins with an unsatisfied need, which creates
tension and drives an individual to search for goals that, if attained, will satisfy the need and reduce the
tension.
More money for
unexpected medical expenses
Need
Ask for a raise
Work harder to gain a promotion
Look for a higher-paying job
Steal
More money
Goal-directed behavior
Need Satisfaction

2. Searching Ways to satisfy needs: Second phase is finding the different alternatives that can be used
to satisfy the needs, which were felt in first stage. These needs lead to thought processes that guide an
employee’s decision to satisfy them and to follow a particular course of action
3. Selecting Goals: Once if the need is assessed and employee is able to find out the way to satisfy the
need than next phase is selection of goals to be performed.
4. Employee Performance: These needs lead to thought processes that guide an employee’s decision to
satisfy them and to follow a particular course of action in form of performance.
5. Consequences of performance Reward/punishments: If an employee’s chosen course of action
results in the anticipated out come and reward, that person is likely to be motivated by the prospect of a
similar reward to act the same way in the future. However, if the employee’s action does not result in
the expected reward, he or she is unlikely to repeat the behavior
6. Reassessment of Need deficiencies: Once felt need is satisfied through certain rewards in response
to performance than employee reassesses any deficiencies and entire process is repeated again.
III. Motivational Theories
Motivation theories seek to explain why employees are motivated by and satisfied with one type of work
than another. It is essential that mangers have a basic understanding of work motivation because highly
motivated employees are more likely to produce a superior quality product or service than employee who
lack motivation
a. Maslow’s Need Hierarchy
Abraham Maslow organized five
major types of human needs into
a hierarchy, as shown in Figure.
The need hierarchy illustrates
Maslow’s conception of people
satisfying their needs in a
specified order, from bottom to
top. The needs, in ascending
order, are:
1. Physiological (food, water,
and shelter.)
2. Safety or security
(protection against threat
and deprivation)
3. Social (friendship,
affection, belonging, and
love)
4. Ego (independence,
achievement, freedom, status, recognition, and self-esteem)
5. Self-actualization (realizing one’s full potential; becoming everything one is capable of being.)
According to Maslow, people are motivated to satisfy the lower needs before they try to satisfy the higher
need. Also, once a need is satisfied it is no longer a powerful motivator. Maslow’s hierarchy, however, is a
simplistic and not altogether accurate theory of human motivation. For example, not everyone progresses
through the five needs in hierarchical order. But Maslow makes three important contributions. First, he
identifies important need categories, which can help managers create effective positive rein forcers. Second,
it is helpful to think of two general levels of needs, in which lower-level needs must be satisfied before
higher-level needs become important. Third, Maslow sensitized managers to the importance of personal
growth and self-actualization.
Self-actualization is the best-known concept arising from this theory. According to Maslow, the average
Maslow’s Hierarchy of Needs
Physiological
Security
Social
Self-Esteem
Self-
Actualization
The desire for
food, shelter,
and clothing
The desire
for job security
The desire for
affiliation and
acceptance
The desire for
status and
position
The desire for
a fulfilling life
and to fulfill
one’s potential

person is only 10 percent self-actualized. In other words, most of us are living our lives and working at our
lives and working at our jobs with a large untapped reservoir of potential. The implication is clear: Create a
work environment that provides training, resources, gives people a chance to use their skills and abilities in
creative ways and allows them to use their skills and abilities kin creative ways and allows them to achieve
more of their full potential.
b. Existence Relatedness Growth (ERG) Theory
Alderfer focuses on three needs: existence, relatedness, and growth. Existence needs are similar to
Maslow’s physiological needs, and to the physical components of Maslow’s security needs. Relatedness
needs are those that require interpersonal interaction to satisfy the needs for things like prestige and esteem
from others. Growth needs are similar to Maslow’s needs for self-esteem and self-actualization.
c. McGregor’s Theory-X and Theory-Y
McGregor’s Theory-X represented the traditional management view that employees are lazy, was
uninterested in work, and needed to be prodded to perform. In contrast his theory Y viewed employees as
creative, complex, and mature individuals interested in meaningful work. McGregor believed that under the
right circumstances, employees would willingly contribute their ingenuity and their talents for the benefits
of the organization. He suggested that the mangers motivate em-0loyees by giving them the opportunity to
develop their talents more fully and by giving them the freedom to choose the methods they would use to
achieve organizational goals. In McGregor’s view the mangers role was not to manipulate employees but to
align their needs with needs of the organization so that employees would regulate their own actions and
performance. These insights lead researches to investigate the origins and processes of motivation more
closely.
d. Expectancy Theory
Expectancy theory states that a person’s motivation to exert a certain level of effort is a function of three
things: expectancy (E), instrumentality (I), and valance (V). Motivation = E x I x V. “E” is the person’s
expectancy that his or her effort will lead to performance, “I” represents the perceived relationship between
successful performance and obtaining the reward, and “V” refers to the perceived value the person attaches
to the reward.
e. Reinforcement Theory
In 1911, psychologist Edward Thorndike formulated the law effect: Behavior that is followed by positive
consequences probably will be repeated. This powerful law of behavior laid the foundation for country
investigations into the effects of the positive consequences, called rein forcers that motivate behavior.
Organizational behavior modification attempts to people’s actions.
Four key consequences of behavior either encourage or discourage people’s behavior
1. Positive Reinforcement- applying a valued consequence that increases the likelihood that the
person will repeat the behavior that led to it. Examples of positive reinforcers include
compliments, letters of commendation, favorable performance evaluations, and pay raises. Equally
important, jobs can be positively reinforcing. Performing well on interesting, challenging, or
enriched jobs (discussed later in this chapter) is much more reinforcing, and therefore motivating,
then performing well on jobs that are routine and monotonous.
2. Negative Reinforcement- removing or withholding an undesirable consequence. For example, a
manager takes an employee (or a school takes a student) off probation because of improved
performance. Frequent threatening memos admonished people to achieve every one of their many
performance goals
3. Punishment- administering an aversive consequence. Examples include criticizing or shouting at
an employee, assigning an unappealing task, and sending a worker home without pay. Negative
reinforcement can involve the threat of punishment, but not delivering it when employees
perform satisfactorily. Punishment is the actual delivery of the aversive consequence.

4. Extinction –withdrawing or failing or failing to provide a reinforcing consequence. When this
occurs motivation is reduced and the behavior is extinguished, or eliminated. Examples include
not giving a compliment for a job well done, forgetting to say thanks for a favor, or setting
impossible performance goals so that the person never experiences success. The first two
consequences, positive and negative reinforcement, are positive for the person receiving them:
The person either gains something or avoids something negative. Therefore, the person who
experiences these consequences will be motivated to behave in the ways that led to the
reinforcement. The last two consequences, punishment and extinction, are negative outcomes for
the person receiving them: Motivation to repeat the behavior that led to the undesirable results
will be reduced.
Thus, effective managers give positive reinforcement to their high-performing people and negative
reinforcement to low performance. They also punish or extinguish poor performance and other unwanted
behavior.
f. Herzberg’s Two-Factor Approach
Herzberg Two-Factor theory divides Maslow’s Hierarchy into a lower-level and a higher-level set of needs,
and suggests that the best way to provide motivation for an employee is to offer to satisfy the person’s
higher-order needs, ego and self-actualization. Herzberg said that lower-order needs, or hygiene factors, are
different from higher-order needs, or motivators. He maintains that adding more hygiene factors to the job
is a very bad way to motivate because lower-order needs are quickly satisfied.
g. McClelland (Needs for Affiliation, Power, and Achievement) Theory
McClelland agrees with Herzberg that higher-level needs are most important at work. He believes the needs
for affiliation, power, and achievement are most important. He and his associates use the Thematic
Apperception Test to identify a person’s needs for achievement, power, and affiliation. People with a high
need for achievement strive for success, are highly motivated to accomplish a challenging task or goal,
prefer tasks that have a reasonable chance for success, and avoid tasks that are either too easy or too
difficult. People with a high need for power enjoy roles requiring persuasion. People with a strong need for
affiliations are highly motivated to maintain strong, warm relationships.
h. Adam’s Equity Theory
Adams’s equity theory assumes that people have a need for fairness at work, and therefore, value and seek
it. People are motivated to maintain a balance between what they perceive as their inputs or contributions
and their rewards as compared to others. This theory seems to work when people feel they are underpaid,
but inequity due to overpayment does not seem to have the positive effects on either quantity or quality that
Adams’s equity theory would predict.
IV. Methods for Motivating Employees for Employee Satisfaction
a. Rewards: People behave in ways that they believe are in their best interest, they constantly look
for payoffs for their efforts. They expect good job performance to lead to organizational goal
attainment, which in turn leads to
satisfying their individual goals or needs.
Organization, then, use rewards to
motivate people.
b. Challenging Jobs: Job design refers to
the number and nature of activities in a
job. The key issue is whether jobs should
be more specialized or more enriched and
non-routine. Job design has been
implemented in several ways. Job
enlargement assigns workers to additional
same-level tasks to increase the number of
Challenging
Jobs
ChallengingChallenging
JobsJobs
Equitable
Rewards
EquitableEquitable
RewardsRewards
Good Work
Environment
Good WorkGood Work
EnvironmentEnvironment
Supportive
Colleagues
SupportiveSupportive
ColleaguesColleagues

tasks they have to perform. Job rotation systematically moves workers from job to job. Job
enrichment means building motivators like opportunities for achievement into the job by making it
more interesting and challenging. Forming natural work groups, combining tasks, establishing
client relationships, vertically loading the job, and having open feedback channels may implement
Job enrichment.
c. Using Merit Pay: A merit raise is a salary increase, usually permanent, that is based on the
employee’s individual performance. It is a continuing increment rather than a single payment like a
bonus. Relying heavily on merit rewards can be a problem because the reinforcement benefits of
merit pay is usually only determined once per year.
d. Using Spot Awards: A spot award is one given to an employee as soon as the laudable
performance is observed. These awards are consistent with principles of motivation because they
are contingent on good performance and are awarded immediately.
e. Using Skill-Based Pay: With skill-based pay, employees are paid for the range, depth, and types
of skills and knowledge they are capable of using rather than for the job they currently hold. Skill-
based pay is consistent with motivation theory because people have a self-concept in which they
seek to fulfill their potential. The system also appeals to the employee’s sense of self-efficacy
because the reward is a formal and concrete recognition that the person can do the more
challenging job well.
f. Using Recognition: Some employees highly value day-to-day recognition from their supervisors,
peers and team members because it is important for their work to be appreciated by others.
Recognition helps satisfy the need people have to achieve and be recognized for their achievement.
g. Using Job Redesign: Job design refers to the number and nature of activities in a job. The key
issue is whether jobs should be more specialized or more enriched and nonroutine. Job design has
been implemented in several ways. Job enlargement assigns workers to additional same-level tasks
to increase the number of tasks they have to perform. Job rotation systematically moves workers
from job to job. Job enrichment means building motivators like opportunities for achievement into
the job by making it more interesting and challenging. Job enrichment may be implemented by
forming natural work groups, combining tasks, establishing client relationships, vertically loading
the job, and having open feedback channels.
h. Using Empowerment: Empowerment means giving employees the authority, tools, and
information they need to do their jobs with greater autonomy, as well as the self-confidence to
perform new jobs effectively. Empowerment boosts employees’ feelings of self-efficacy and
enables them to use their potential more fully.
i. Using Goal-Setting Methods: People are strongly motivated to achieve goals they consciously
set. Setting goals with employees can be a very effective way of motivating them. Goals should be
clear and specific, measurable and verifiable, challenging but realistic, and set with participation.
j. Using Positive Reinforcement: Positive reinforcement programs rely on operant conditioning
principles to supply positive reinforcement and change behavior. Experts claim it is better to focus
on improving desirable behaviors rather than on decreasing undesirable ones. There are a variety
of consequences including social consequences (e.g., peer approval or praise from the boss),
intrinsic consequences (e.g., the enjoyment the person gets from accomplishing challenging tasks),
or tangible consequences (e.g., bonuses or merit raises).
k. Using Lifelong Learning: Lifelong learning can be used to deal with problems of downsizing
and employee commitment, and to counterbalance their negative effects. It provides extensive
continuing training and education, from basic remedial skills to advanced decision-making
techniques, throughout the employees’ careers, which provide employees the opportunity to boost

their self-efficacy and self- actualization.
V. Challenges of motivating employees:
Motivation is not a simple subject; no two people respond to precisely the same set of motivators. Mangers
face several pressing issues that complicate the challenges of motivating their employees.
a. Workforce Diversity: the composition of the workforce becoming less homogeneous.
This diversity complicates the task of motivating employees because mangers must
consider so many more motivational variables
b. Organizational Restructuring: The wave of mergers and acquisitions is followed by
massive layoffs that represent another challenge. Employees who have been let go for
reason unrelated to their performance may question whether initiative and creativity are
now less important than political survival skills. Moreover, employees who have seen
colleagues’ loss their jobs may concentrate on keeping their own jobs and may stop taking
risks –risk that might lead to new products, new markets, or other advances.
c. Fewer Entry-level Employees: The labor force is growing at half the rate of the previous
decade; the number of qualified candidates for most entry-level positions is decreasing. In
such a tight labor market, mangers face new challenges in attracting; retaining and
motivating qualified entry-level employees. Managers must also determine how to motivate
under qualified candidates to upgrade their skills and education so that they can handle the
entry-level tasks.
d. An oversupply of managers: In the middle and top ranks of management, quite different
phenomenon is causing organizational headaches. The number of senior management
positions is far fewer than the number of deserving candidates, and the trend toward flatter
organizations only makes matters worse for people who want to climb the hierarchal
ladder.
As managers in organizations come to grips with these increasingly urgent challenges, they must understate
the forces that derive employees' actions, how employees channel their actions towards goals, and how high
performance behavior can be sustained.
Key Terms
Extinction withdrawing or failing or failing to provide a reinforcing consequence.
Punishment administering an aversive consequence.
Positive Reinforcement applying a valued consequence that increases the likelihood that the
person will repeat the behavior that led to it.
Motivation Motivation is the inner drive that directs a person’s behavior toward goals.

Lesson 32
OCCUPATION, HEALTH & SAFETY
A. Explain Elements of Workplace Safety and Health
LESSON OVERVIEW
We begin this chapter by describing the nature and role of safety and health and provide an overview of the
Occupational Safety and Health Act. Organizations realize the importance of social responsibility and that
safe organizations are more effective organizations. Moreover, the law requires that the workplace be safe
and free of health hazards. Thus, many firms seek to provide a workplace environment that is safe and
healthy. This chapter presents workplace safety and health in detail. First, it deals with the legal issues of
workplace safety and health. Second, it presents a variety of contemporary safety and health issues. Finally,
the chapter evaluates programs designed to maintain employee safety and health.
A. Elements of Workplace Safety and Health
Safety: Involves protecting employees from injuries due to work-related accidents.
Health: Refers to the employees’ freedom from physical or emotional illness.
Safety programs may be designed to accomplish their purposes in two primary ways. The first approach is
to create a psychological environment and attitudes that promote safety. A strong company policy
emphasizing safety and health is crucial. The second approach to safety program design is to develop and
maintain a safe physical working environment.
• Physical Conditions: Conditions resulting from the workplace environment that include
occupational diseases and accidents, such as:
• Repetitive motion injuries
• Back pain
• Cancer Etc.
• Psychological Conditions: Conditions resulting from the workplace environment that result from
organizational stress and low quality of working life. These include:
• Dissatisfaction, withdrawal
• Mistrust in others, irritability
I. Safety Programs
Today, it has become clear that optimal health can generally be achieved through environmental safety,
organizational changes, and different lifestyles.
a. Developing Safety Programs—Organizational safety programs require planning for
prevention of workplace accidents. Plans may be relatively simple or more complex and
highly sophisticated in order to fit the organization’s size. Top management’s support is
essential if safety programs are to be effective. Tremendous economic losses can result
from accidents.
1. Job hazard analysis: The main goal of safety and health professionals is to
prevent job-related injuries and illnesses.
2. The Superfund Amendments Reauthorization Act, Title III (SARA): SARA
requires businesses to communicate more openly about the hazards associated with the materials they use
and produce and the wastes they generate.
3. Employee involvement: One way to strengthen a safety program is to include
employee input, which provides workers with a sense of accomplishment.

b. Accident Investigation—Accidents can happen even in the most safety-conscious firms.
Each accident, whether or not it results in an injury, should be carefully evaluated to
determine its cause and to ensure that it doesn’t recur. The safety engineer and the line
manager jointly investigate accidents—why, how, and where they occur and who is
involved. Main causes that can create accidents at workplace are:
• Chance occurrences
• Unsafe working conditions
• Unsafe acts by employees
• Unsafe conditions
Physical conditions
• Defective Equipment
• Inadequate Machine Guards
• Lack of Protective Equipment
Environmental conditions
• Noise
• Dust, Fumes
• Stress
• Unsafe behaviors
c. Evaluation of Safety Programs—Perhaps the best indicator that a safety program is
succeeding is a reduction in the frequency and severity of injuries and illnesses.
d. Rationale for Safety and Health Trends—Firms are spending an increasing amount of
money on safety. Reasons include; (1) profitability—employees can produce only while
they are on the job, (2) employee relations—firms with good safety records can attract and
retain good employees, (3) reduced liability—an effective safety program can reduce
corporate and executive liability, (4) marketing—a good safety record may well provide
companies with a competitive edge, and productivity—(5) an effective safety program may
boost morale and productivity while simultaneously reducing rising costs.
II. Ways to manage Safe and Healthy environment in organization
To cope with physical hazards and other hazards such as stress, unsafe behavior, and poor health habits,
employers often design comprehensive safety and health programs. Among these are safety programs,
employee assistance programs, and wellness programs.
a. Safety Programs
A safe working environment does not just happen; it has to be created. The organizations with the best
reputations for safety have developed well-planned and thorough safety programs.
b. Employee Assistance Programs (EAPs)
EAPs are programs designed to help employees whose job performance is suffering because of physical,
mental, or emotional problems.
c. Wellness Programs
As health care costs have skyrocketed over the last two decades, organizations have become more interested
in preventative programs. A complete wellness program has three components:
• It helps employees identify potential health risks through screening and testing.
• It educates employees about health risks such as high blood pressure, smoking,
poor diet, and stress.
• It encourages employees to change their lifestyles through exercise, good
nutrition, and health monitoring.

d. Smoking in The work place
Numerous studies have concluded that workplace smoking not only is hazardous to employees’ health, but
also is detrimental to the firm’s financial health. Increased costs of insurance premiums, higher absenteeism,
and lost productivity cost huge amount a year. These factors, along with rising opposition from nonsmokers
and widespread local and state laws, have spurred many firms into action, and the trend continues.
The rewards of good health habits
Effective safety programs share the following features:
• They include the formation of safety committee and participation by all departments
within the company. Employees participate in safety decision and management carefully
considers employee suggestions for improving safety.
• They communicate safety with a multimedia approach that includes safety lectures, films,
poster, pamphlets, and computer presentations.
• They use incentives, rewards, and positive reinforcement to encourage safe behavior.
• They communicate safety rules and enforce them.
• They use safety directors and/or the safety committee to engage in regular self-inspection
and accident research to identify potentially dangerous situations, and to understand why
accidents occur and how to correct them.
III. Policies to prevent workplace violence
Every organization should have a two-pronged policy in place to (a) prevent workplace violence and (b) to
deal with violent incidents when they occur. An HR manager's major responsibility is to be certain that
selection policies include careful screening and reference checking. Furthermore, the HR manager should
take the lead to enforce policies pertaining to the fair treatment of employees. This may require training
managers to recognize performance problems, refer troubled employees for counseling, and apply
disciplinary procedures consistently.
IV. Cumulative Trauma Disorders
CTDs are also called repetitive stress (or motion or strain) injuries (or illnesses or syndromes). CTDs do
not refer to only one disorder but to a wide array of maladies ranging from carpal tunnel syndrome to tennis
elbow. The number of workers with CTDs has risen dramatically in recent years.
V. Benefits of a Safe and Healthy Workforce
• More productivity
• Increased efficiency and quality
• Reduced medical and insurance costs
• Lower workers’ compensation rates and payments
• Greater workforce flexibility
VI. The HRM Department and Employee Safety and Health
HRM department can help organizations and employers by performing tasks like:
• Develop safety and health programs.
• Select safety and health programs.
• Evaluate safety and health programs.
• Ensure legal compliance.
• Incorporate safety and health concerns in HRM practices.
Key Terms
Safety Involves protecting employees from injuries due to work-related accidents.
Health Refers to the employees’ freedom from physical or emotional illness.

Lecture 33
STRESS MANAGEMENT
A. Explain Stress
LESSON OVERVIEW
We will discuss the concept of stress in this chapter we will see either stress is positive or negative in nature.
Further we will see different sources that can create stress at workplace and programs that can be used to
manage the stress.
A. Stress
Stress is the body’s nonspecific reaction to any demand made on it. For various reasons, programs dealing
with stress and its related problems are becoming increasingly popular. Long-term productivity depends
largely on the dedication and commitment of the company’s employees. Employees are increasingly holding
their employers liable for emotional problems they claim are work related. And, stress-related mental
disorders have become the fastest-growing occupational disease. There is increasing evidence indicating that
severe, prolonged stress is related to the diseases that are leading causes of death—coronary heart disease,
stroke, hypertension, cancer, emphysema, diabetes, and cirrhosis; stress may even lead to suicide. Some
signs that may indicate problems include impaired judgment and effectiveness, rigid behavior, medical
problems, increased irritability, excessive absences, emerging addictive behaviors, lowered self-esteem, and
apathetic behavior.
I. Sources Of Stress
Regardless of its origin, stress possesses the same devastating potential. Some factors are controllable to
varying degrees, whereas others are not.
Stressor
The person or event that triggers the stress response, it can be organizational, personal or environmental
factor that can become the source of stress.
a. Organizational Factors—Many factors associated with a person’s employment can be
potentially stressful. These include the firm’s culture, the individual’s job, and general
working conditions.
b. Personal Factors—Stress factors outside the job and job environment also may affect job
performance. Factors in this category include the family, financial problems, and living
conditions.
c. The General Environment—Stress is a part of everyone’s everyday life and its potential
lurks not only in the workplace and the home but also in our general environment. The
three-hour commute in rush traffic, the unrelenting rain, the oppressive heat, or chilling
cold can all create stress. Excessive noise, wherever it is encountered, can drive some
people up the wall.
II. Symptoms of Stress:
Stress can express following four types of the symptoms:
a. Short-term physical symptoms: Short-term physical symptoms include; faster
heart beat, increased sweating, cool skin Cold hands and feet Feelings of nausea,
or 'Butterflies in stomach' Rapid Breathing, Tense Muscles, dry Mouth, desire to
urinate, diarrhea
b. Long-term physical symptoms: Change in appetite frequent colds illnesses
(such as asthma Back pain digestive problems headaches aches and pains)

feelings of intense and long-term tiredness, Risk factors (Heart attacks and
strokes Hypertension and headaches Ulcers Allergies)
c. Internal symptoms: Internal symptoms include Worry or anxiety, Confusion,
and an inability to concentrate or make decisions, Feeling ill, Feeling out of
control or overwhelmed by events, Mood changes, Depression, Frustration,
d. Helplessness, Restlessness, Being more lethargic, Difficulty sleeping, drinking
more alcohol and smoking more, Changing eating habits, relying more on
medication.
e. Behavioral symptoms: Behavioral Symptoms include, talking too fast or, too
loud Bad moods being irritable Defensiveness Being critical Aggression,
Irrationality, Overreaction and reacting emotionally Reduced personal
effectiveness Being unreasonably negative Making less realistic judgments Being
unable to concentrate and having difficulty making decisions being more
forgetful Making more mistakes being more accident-prone Changing work
habits Increased absenteeism Neglect of personal appearance
g. Outcomes of Organization due to stress:Continuous stress in working
environment results in some problem in organizational operations like poorer
decision-making, decreased creativity, lost work time, Increased turnover and
more sabotage.
III. Stress & Job Performance
Stress can affect the performance in positive as well as negative ways. Stress is a dynamic condition in which
an individual is confronted with an opportunity, constraints or demand related to what he or she desires,
and for which the outcome is perceived to be both uncertain and important. Stress is a complex issue, so
let’s look at it more closely. Stress can manifest itself both in positive and negative way. Stress is said to be
positive when the situation offers an opportunity for one to gain something; for example, the “psyching-
up” that an athlete goes through can be stressful, but this can lead to maximum performance. It is when
constraints or demands are placed on us that stress can become negative. Constraints are barriers that keep
us from doing what we desire. Demands, on the other hand, may cause you to give up something. Demands
are desires that are backed by the purchasing power or affordability.
Managing Stress
Experts emphasize that some stress is healthy and moderate stress is the key to survival.
a. INDIVIDUAL COPING APPROACHES—There are a number of ways, that
individuals may take to control excessive stress. There are several specific techniques that
individuals can utilize to deal with stress. These methods include hypnosis, biofeedback,
and transcendental meditation.
• Hypnosis: An altered state of consciousness that is artificially induced and characterized by increased
receptiveness to suggestions.
• Biofeedback: A method that can be used to control involuntary bodily processes, such as blood
pressure or heart beat rate.
• Transcendental meditation (TM): A stress-reduction technique whereby a secret word or phrase
(mantra) provided by a trained instructor is mentally repeated while an individual is comfortably seated.
b. Organizational Coping Approaches—A number of programs and techniques may
effectively prevent or relieve excessive stress. General organizational programs, although
not specifically designed to cope with stress, may nevertheless play a major role.

Key Terms
Stress: Stress is the body’s nonspecific reaction to any demand made on it.
Burnout The total depletion of physical and mental resources caused by excessive striving to reach an
unrealistic work-related goal.
Hypnosis An altered state of consciousness that is artificially induced and characterized by increased
receptiveness to suggestions.
Constraints: Constraints are barriers that keep us from doing what we desire.
Demands desires that are backed by the purchasing power or affordability.
Biofeedback A method of learning to control involuntary bodily processes, such as blood pressure or heart
rate.
Transcendental Meditation A stress-reduction technique in which an individual, comfortably seated,
mentally repeats a secret word or phrase provided by a trained instructor.

Lesson 34
COMMUNICATION IN ORGANIZATION
A. Explain Burnout
B. Describe Communication in Organization
LESSON OVERVIEW
This chapter also presents a model of how communication works. Moreover, it explores specific policies
that give employees access to important company information as well as those which provide feedback to
top managers.
A. Burnout
Burnout is a pattern of emotional, physical, and mental exhaustion in response to chronic job stressors. It is
an incapacitating condition in which individuals lose a sense of the basic purpose and fulfillment of their
work
Burnout has been described as a state of fatigue or frustration that stems from devotion to a cause, way of
life, or relationship that did not provide the expected reward. It is often found in a midlife or mid-career
crisis, but it can happen at different times to different people. Individuals in the helping professions such as
teachers and counselors seem to be susceptible to burnout, whereas others may be vulnerable because of
their upbringing, expectations, or their personalities. Burnout is frequently associated with people whose
jobs require close relationships with others under stressful and tension-filled conditions. The dangerous part
of burnout is that it is contagious. A highly cynical and pessimistic burnout victim can quickly transform an
entire group into burnouts. It is important to deal with it quickly; once it has begun, it is difficult to stop.
I. Symptoms of Burn-Out
Following symptoms indicate that a person is suffering through burnout
• A feeling of lack-of-control over commitments
• A belief (incorrect) that you are accomplishing less
• A growing tendency to think negatively
• Loss of a sense of purpose and energy
• Increased detachment from relationships
II. Avoiding Burn-Out
Burnout can be avoided by taking the following steps
• Re-evaluate goals
• Reduce unnecessary commitments
• Learn stress management skills
• Find out where the stress is coming
from (family, job, etc.)
• Follow a healthy lifestyle
• Get adequate rest
• Eat a balanced diet
• Get regular exercise
• Limit caffeine and alcohol
• Develop other interests (hobbies)
• Acknowledge your humanity--you have a right to pleasure and relaxation
Social Support at Work & Home:
Social support at home by friends family members and at workplace by supervisor, colleagues subordinates
etc can be used to avoid the burnout in the organizations.
Individual
Organizational
Supervisor
Colleagues
Subordinates
Clients
Family
Spouse, Children
Parents, In-laws
Religion
Alams, Teachers
Friends
Support groups
Clubs
Business associations
Social clubs
Athletic groups
Professional
Physicians
Psychologists
Counselors
Lawyers

B. Communication in organization
The transmission of information and understanding through the use of common symbols is termed as
communication. Communication is the exchange of information between people; it occurs when one
person understands the meaning of a message sent by another person, and responds to it. Two forms of
information are sent and received in communications: facts and feelings. Facts are pieces of information
that can be objectively measured or described. Examples are the cost of a computer, the daily defect rate in
a manufacturing plant, and the size of the deductible payment of the company-sponsored health insurance
policy. Feelings are employees' emotional responses to the decisions made or actions taken by managers or
other employees. Organizations need to design communication channels that allow employees to
communicate facts and feelings about specific aspects of their jobs.
I. The Communication Process
Communication, a continuous process, is the exchange of information and meaning between people. It
occurs when one person understands and responds to the meaning of a message sent by someone else. The
communication process includes five
main components: the information
source, the signal, the transmission, the
destination or receiver, and the noise.
Communication starts with a sender
who has a message to send to the
receiver. The sender must encode the
message and select a communication
channel that will deliver it to the
receiver. In communicating facts, the
message may be encoded with words,
numbers, or digital symbols; in
communicating feelings, it may be
encoded as body language or tone of
voice.
Communications that provide for
feedback are called two-way
communications because they allow the
sender and receiver to interact with each other. Communications that provide no opportunity for feedback
are one-way. Noise means barriers to effective Communication. Potential barriers include: ambiguous,
muddled messages; semantics; physical barriers; loss of transmission; failing to communicate; competition
barriers; cultural, linguistic, and diversity barriers; and not listening.
II. Nonverbal Communication
Nonverbal communication is the non-spoken aspects of communication, such as a person’s manner of
speaking, facial expressions, or body posture, that express meaning to others. The nonverbal aspects of
communication can especially complicate the task of communicating internationally. Nonverbal
communication is communication that is sent without the use of the written or spoken word. This type of
communication is quite powerful because people can communicate without speaking through the use of
facial expression, body posture, tone of voice, use of space, and touching. Occulesics are facial expressions
and eye contact that people use to communicate. Kinesics is the study of bodies through posture, gesture,
head movements, and similar actions. Use of and reaction to facial expressions and body movement vary
from culture to culture.
III. Barriers to Effective Communication and ways to remove these barriers
The complex factors in the communication pose barriers to effective communication. Individual barriers
include perceptual biases, which function as noise by affecting how the receiver gathers, organizes, and
interprets information. Organizational barriers to effective communication include organizational culture
and structure, status differences, and time.
Active listening is a good way to minimize both individual and organizational barriers to effective
The Communication Process
within an Organization
Communication
Channel
Sender
(Encodes Message)
Receiver
(Decodes Message)
Noise
Noise
Feedback

communication. In active listening, the receiver assumes a conscious and dynamic role in the
communication process through a variety of behaviors and actions. Both the sender and the message are
targets for the active listener. Cultural differences can influence active listening.
Feedback is information about some behavior and its effect. Managers need to provide feedback to
employees about their job performance; they also give feedback to suppliers and customers about various
matters. Managers often have difficulty giving negative feedback—just as employees tend to stop actively
listening to negative feedback. Therefore, effective feedback should be fact-based, timely, and focused on
behaviors. Feedback is another part of communication that is affected by cultural differences. Supportive
communication is honest, accurate interpersonal communication that focuses on building and enhancing
relationships. There are number of attributes of supportive communication, which aims to create an
environment in which people can openly exchange information about issues.
A number of interpersonal and intrapersonal barriers effect the decoding of a message.
Filtering refers to manipulating information so that it will be received more favorably.
Filtering is most likely to occur where there is emphasis on status differences and among
employees with strong career mobility aspirations.
Expect more filtering taking place in large corporations than in small business firms.
With selective perception, receivers see and hear based on their needs, motivations, experience, background,
and other personal characteristics.
Information overload happens when individuals have more information than they can sort out and use; they
tend to select out, ignore, pass over, or forget information, etc.
Emotions. When people feel that they're being threatened, they tend to react in ways that reduce their ability
to achieve mutual understanding.
Language. The meanings of words are not in the words; they are in us.
Employees come from diverse backgrounds and have different patterns of speech.
Grouping of employees into departments creates specialists who develop their own jargon
or technical language.
While we speak a common language--English-our usage of that language is far from uniform.
The problem is that members in an organization usually don't know how others with
whom they interact have modified the language.
An estimated 5 to 20 percent of the population suffer from debilitating communication apprehension or
anxiety.
People who suffer from it experience undue tension and anxiety in oral communication,
written communication, or both.
Studies demonstrate that oral-communication apprehensives avoid situations that require them to engage in
oral communication.
Of greater concern is the evidence that high-oral-communication apprehensives distort the communication
demands of their jobs in order to minimize the need for communication.
IV. Improving Communication in Organizations
Working with supervisors and managers, employee relations representatives can facilitate effective
communications by developing and maintaining three types of programs: information dissemination,
employee feedback, and employee assistance.
a. Information Dissemination Programs
Information dissemination involves making information available to decision makers, wherever they are
located. The employee handbook is probably the most important source of information the HR
department can provide and sets the tone for the company's overall employee relations philosophy. There
are many other forms of written communication besides the employee handbook that can be used to alert
employees to important information. These include memos and newsletters.
1. The employee handbook
2. Written communications: memos, financial statements, newsletters, and bulletin boards
3. Audiovisual communications

b. Electronic Communications
New technologies have made it possible to disseminate information that goes beyond the printed word.
Visual images and audio information are powerful communication tools. A recent technological advance,
teleconferencing, allows people with busy schedules to participate in meetings even when they are a great
distance away from the conference location (or each other). Advances in electronic communications (voice
mail and e-mail) have made interactive communications between sender and receiver possible even when
they are separated by physical distance and busy schedules.
c. Meetings
Formal meetings are opportunities for face-to-face communication between two or more employees and are
guided by a specific agenda. Formal meetings facilitate dialogue and promote the nurturing of personal
relationships, particularly among employees who may not interact frequently because they are separated by
organizational or geographic barriers.
Retreats
Informal communications
d. Employee Feedback Programs
To provide upward communications channels between employees and management, many organizations
offer employee feedback programs. These programs are designed to improve management-employee
relations by giving employees a voice in decision making and policy formulation and by making sure that
they receive due process on any complaints they lodge against managers. The most common employee
feedback programs are employee attitude surveys, appeals procedures, and employee assistance programs.
Employee attitude surveys
Appeals procedures
e. Employee Assistance Programs
EAPs help employees cope with personal problems that are interfering with their job performance. These
problems may include alcohol or drug abuse, domestic violence, elder care, AIDS and other diseases, eating
disorders, and compulsive gambling. Confidentiality is an important component of these programs.
V. The Formal and Informal Communication
a. Formal communication networks - Networks that are designated by the organizational
structure, charts, or other official documents.
b. Informal Communications
Informal communication flows outside of the firm’s chain of command.
How Excellent Companies Foster Informal Communications
The following techniques have been found to encourage informal communication: 1) emphasizing
informality; 2) maintaining an extraordinary level of communication intensity; and 3) giving communication
the physical support. Management by Wandering around: The communication skill here is not in the
wandering around the office, but in the interpersonal communication skills you can bring to bear when
you’re speaking with the employees. These skills include paying attention, making yourself clear, listening
actively, and listening sympathetically.
VI. Levels of Communication
a. Upward Communication
Upward communication from subordinates to superiors provides management with valuable insight into
how the organization is functioning, and provides superiors with feedback about whether subordinates
understand orders and instructions. It gives employees an opportunity to vent their feelings. Upward
communication can be encouraged by social gatherings, union publications, regular meetings, performance
appraisal meetings, grievances, attitude surveys, a suggestion system, and open door policy, indirect
measures, and email. Formal, comprehensive programs and upward appraisals also encourage upward
communication.
When communicating with a supervisor, avoid phrases that may inadvertently signal a lack of responsibility
on your part. Avoid counterproductive body language and nonverbal mannerisms.

b. Downward Communication
Downward communication is transmitted from superior to subordinate on subjects like corporate vision
and mission, what the job consists of, performance evaluations, job instruction, and organizational policies
and practices. This format can help build commitment by keeping employees informed about what the
organization plans to do. Some firms install open-book management programs that manage without
concealment, and motivate all employees to focus on helping the business grow profitable and increasing
the return on it human capital. Open-book management fosters trust and commitment among employees
by treating them more like partners.
When communicating with subordinates, remember that fairness and the appearance of fairness are key.
Make sure your body language comes across as open and receptive.
c. Horizontal Communication
Horizontal or lateral communications are messages between departments or people in the same department.
Managers use individuals or committees to bridge departments and improve the flow of communication
between them by using liaison personnel, committees and task forces, and independent integrators.
VII. Communications and HRM
HRM depends upon the effective communications systems in the organization for its success because all its
functions like staffing , compensating , performance appraisal, training and development , etc require
communication system for their executions basic purposes that are served through communication systems
are keeping employees informed using it a s a tool to bring about positive change and to Influence culture.
Bulletin board, newsletter and gossip are different sources that are used to disseminate information in the
organizations.
Employees are provided with the Employee Handbook which serves many purposes like (1) it helps
employees learn about company at their own pace. (2) Provides references regarding policies, rules, and
benefits. (3) Ensures HRM policies will be consistently applied. (4) Creates sense of security and
commitment for employees. (5) Provides information to recruits. (6) May be interpreted as implied contract.
(7)Should be updated continually but the important thing is that these purposes can be achieved only if the
employee handbook is Well Organized, Clearly Written and legally limited. Employee handbook mainly
includes the information both about the employee and employer for employee it provides information
regarding the job description and for employer it provides information about the rules regulations of the
organization and different compensation benefits etc related information to the employees.
VIII. Communication Methods
Inside the organization Employee handbook, Bulletin board, Company newsletter, Company-wide
meetings, Digital Media etc are used as source or method to communicate while for the offsite employees
facsimile machine, E-mails, and Internet Phone are used as tools for communication of information,
Key Terms
Burnout: An incapacitating condition in which individuals lose a sense of the basic purpose and fulfillment
of their work
Communication Exchange of information between people; it occurs when one person understands the
meaning of a message sent by another person, and responds to it.
Noise: All factors that interfere with and distort communication.
Encoding: Process by which sender puts a message in a certain format to send to the receiver.
Feedback:: Information about some behavior and its effect.
Decoding: Process by which the receiver translates the sender's message into an understandable form.

Lesson 35
TRADE UNIONS
A. Unions
B. Collective Bargaining
C. The HRM Department in a Nonunion Setting
D. Phases of Labor Relations
This chapter talks about why workers organize, outlines the basics of labor law, and reviews the procedures
of labor elections, collective bargaining, and contract administration. We will also go through the grievance
procedures.
A. Unions
Organization of workers, acting collectively, seeking to protect and promote their mutual interests through
collective bargaining is termed as union. The most significant impact of a union on the management of
human resources is its influence in shaping HRM policies. In the absence of a union, the company may
develop all HRM policies based on efficiency. But, when a union enters the picture, management must
develop HRM policies that reflect consideration for the preferences of workers who are represented by a
union. A union's strong preferences for high wages, job security, the ability to express dissatisfaction with
administrative actions, and having a voice in the development of work rules that affect their jobs get
injected into the equation along with the employer's preferences.
I. Union Objectives
Several broad objectives characterize the labor movement as a whole. These include:
(1) To secure and, if possible, improve the living standards and economic status of its members.
(2) To enhance and, if possible, guarantee individual security against threats and contingencies that might
result from market fluctuations, technological change, or management decisions. (3) To influence power
relations in the social system in ways that favor and do not threaten union gains and goals. (4) To advance
the welfare of all who work for a living, whether union members or not. (5) To create mechanisms to guard
against the use of arbitrary and capricious policies and practices in the workplace. In order to accomplish
these objectives, most unions recognize that they must strive for continued growth and power.
Growth—To maximize effectiveness, a union must strive for continual growth, but the percentage
of union members in the workforce is declining. Union leaders are concerned because much of a
union’s ability to accomplish objectives comes from strength in numbers. Unions must continue to
explore new sources of potential members.
Power—We define power here as the amount of external control that an organization is able to
exert. A union’s power is influenced to a large extent by the size of its membership and the
possibility of future growth. By achieving power, a union is capable of exerting its force in the
political arena.
II. Factors Leading to Employee Unionization
Three types of factors play role in origin of employee unions they are:
a. Working Environment: Inadequate staffing, Mandatory overtime, Poor working conditions
b. Compensation: Non-competitive Pay, Inadequate benefits inequitable pay raises
c. Management Style: Arbitrary Management Decision Making, Use of fear, Lack of recognition
d. Organization Treatment: Job insecurity, unfair discipline and policies, Harassment and abusive
treatments, Not responsive to complaints
III. Why Employees Join Unions
Individuals join unions for many different reasons, and these reasons tend to change over time. They may

involve dissatisfaction with management, need for a social outlet, opportunity for leadership, forced
unionization, and peer pressure.
A union is an organization that represents employees' interests to management on issues such as wages,
hours, and working conditions. Generally, employees seek to join a union when they (1) are dissatisfied
with aspects of their job,
(2) feel a lack of power or influence with management in terms of making changes, and
(3) see unionization as a solution to their problems.
a. Dissatisfaction With Management—Unions look for problems in organizations and then
emphasize the advantages of union membership as a means of solving them. Management must
exercise restraint and use its power to foster management and labor cooperation for the benefit of all
concerned. Some reasons for employee dissatisfaction are described:
1. Compensation: If employees are dissatisfied with their wages, they may look to a union
for assistance in improving their standard of living.
2. Job Security: If the firm doesn’t provide its employees with a sense of job security,
workers may turn to a union. Employees are more concerned than ever about job security
due to a decline in employment in such key industries as automobiles, rubber, and steel.
3. Management Attitude: Employees do not like to be subjected to arbitrary and capricious
actions by management. In some firms, management is insensitive to the needs of its
employees. When this situation occurs, employees may perceive that they have little or no
influence in job-related matters, thus becoming prime targets for unionization.
b. A Social Outlet—Many people have strong social needs. Union-sponsored recreational and social
activities, day care centers, and other services can increase the sense of solidarity.
c. Opportunity For Leadership—Employers often promote union leaders into managerial ranks as
supervisors.
d. Forced Unionization—It is generally illegal for management to require that an individual join a
union prior to employment. However, in the 29 states without right-to-work laws, it is legal for an
employer to agree with the union that a new employee must join the union after a certain period of
time (generally 30 days) or be terminated.
e. Peer Pressure—Many individuals will join a union simply because they are urged to do so by other
members of the work group.
f.
IV. The Impact of Unions on Human Resource Management
Managers are more likely to develop HRM policies based on efficiency. But, when a union is in the picture,
policies must reflect employees' preferences as well. Employees have preferences related to staffing,
employee development, compensation, and employee relations.
a. Staffing: The contract can dictate how jobs are filled and on what basis they are filled.
b. Employee Development: Performance evaluations are rarely used in unionized
organizations. However, there is often a greater amount of worker training.
c. Compensation: On average, union employees earn 10% to 20% higher wages than
comparable non-union employees. Unionized firms avoid using merit pay plans and are
likely to give across-the-board pay raises to employees based on market considerations.
d. Employee Relations: The labor contract gives employees specific rights. The employees,
through the collective bargaining process, have a voice in the development of work rules
that affect their jobs.

B. Collective Bargaining
Under a collective bargaining system, union and management negotiate with each other to develop the work
rules.
The performance of the mutual obligation of the employer and the representative of the employees to meet
at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions
of employment, or the negotiation of an agreement, or any question arising there under, and the execution
of a written contract incorporating any agreement reached if requested by either party; such obligation does
not compel either party to agree to a proposal or require the making of a concession.
I. Labor Management Relations and Collective Bargaining
Forms of Bargaining Structures AND Union/ Management Relationships—The bargaining
structure can affect the conduct of collective bargaining. The four major structures are one
company dealing with a single union, several companies dealing with a single union, several unions
dealing with a single company, and several companies dealing with several unions. Types of
union/management relations that may exist in an organization are conflict, armed truce, power
bargaining, accommodation, cooperation, and collusion.
The Collective Bargaining Process—Both external and internal environmental factors can
influence the process. The first step in the collective bargaining process is preparing for
negotiations. This step is often extensive and ongoing for both union and management. After the
issues to be negotiated have been determined, the two sides confer to reach a mutually acceptable
contract. Although breakdowns in negotiations can occur, both labor and management have at
their disposal tools and arguments that can be used to convince the other side to accept their views.
Eventually, however, management and the union usually reach an agreement that defines the rules
of the game for the duration of the contract. The next step is for the union membership to ratify
the agreement. There is a feedback loop from “Administration of the Agreement” to “Preparing
for Negotiation.” Collective bargaining is a continuous and dynamic process, and preparing for the
next round of negotiations often begins the moment a contract is ratified.
The Psychological Aspects Of Collective Bargaining
Prior to collective bargaining, both the management team and the union team have to prepare positions and
accomplish certain tasks. Vitally important for those involved are the psychological aspects of collective
bargaining. Psychologically, the collective bargaining process is often difficult because it is an adversarial
situation and must be approached as such. It is a situation that is fundamental to law, politics, business, and
government, because out of the clash of ideas, points of view, and interests come agreement, consensus,
and justice.
a. Preparing For Negotiations
Bargaining issues can be divided into three categories: mandatory, permissive, and prohibited.
Mandatory Bargaining Issues—Fall within the definition of wages, hours, and
other terms and conditions of employment.
Permissive Bargaining Issues—May be raised, but neither side may insist that
they be bargained over.
Prohibited Bargaining Issues—Are statutorily outlawed.
b. Bargaining Issues
The document that results from the collective bargaining process is known as a labor agreement or contract.
Certain topics are included in virtually all labor agreements.
Recognition—Its purpose is to identify the union that is recognized as the bargaining
representative and to describe the bargaining unit.

Management Rights—A section that is often, but not always, written into the labor agreement
and that spells out the rights of management. If no such section is included, management may
reason that it retains control of all topics not described as bargainable in the contract.
Union Security— The objective of union security provisions is to ensure that the union continues
to exist and to perform its function.
1. Closed Shop: An arrangement whereby union membership is a prerequisite to
employment.
2. Union Shop: An arrangement that requires that all employees become members of the
union after a specified period of employment (the legal minimum is 30 days) or after a
union shop provision has been negotiated.
3. Maintenance of Membership: Employees who are members of the union at the time the
labor agreement is signed or who later voluntarily joins must continue their memberships
until the termination of the agreement, as a condition of employment. This form of
recognition is also prohibited in most states that have right-to-work laws.
4. Agency Shop: Does not require employees to join the union; however, the labor
agreement requires, as a condition of employment, that each nonunion member of the
bargaining unit “pay the union the equivalent of membership dues as a kind of tax, or
service charge, in return for the union acting as the bargaining agent.” The agency shop is
outlawed in most states that have right-to-work laws.
5. Exclusive Bargaining Shop: The company is bound legally to deal with the union that
has achieved recognition, but employees are not obligated to join or maintain membership
in the union or to financially contribute to it.
6. Open Shop: Employment that has equal terms for union members and nonmembers alike.
7. Dues Checkoff: The Company agrees to withhold union dues from members’ checks and
to forward the money directly to the union.
Compensation and Benefits—This section typically constitutes a large portion of most labor
agreements. Virtually any item that can affect compensation and benefits may be included.
1. Wage Rate Schedule: The base rates to be paid each year of the contract for each job are
included in this section. At times, unions are able to obtain a cost-of-living allowance (COLA) or
escalator clause in the contract in order to protect the purchasing power of employees’ earnings.
2. Overtime and Premium Pay: Provisions covering hours of work, overtime pay, and
premium pay, such as shift differentials, are included in this section.
3. Jury Pay: Some firms pay an employee’s entire salary when he or she is serving jury duty.
Others pay the difference between jury pay and the compensation that would have been
earned. The procedure covering jury pay is typically stated in the contract.
4. Layoff or Severance Pay: The amount that employees in various jobs and/or seniority
levels will be paid if they are laid off or terminated is presented in this section.
5. Holidays: The holidays to be recognized and the amount of pay that a worker will receive
if he or she has to work on a holiday are specified. In addition, the pay procedure for times
when a holiday falls on a worker’s nominal day off is provided.

6. Vacation: This section spells out the amount of vacation that a person may take, based on
seniority. Any restrictions as to when the vacation may be taken are also stated.
7. Family Care: This is a benefit that has been included in recent collective bargaining
agreements, with child care expected to be a hot bargaining issue in the near future.
Grievance Procedure—It contains the means by which employees can voice dissatisfaction with
specific management actions. Also included in this section are the procedures for disciplinary action
by management and the termination procedure that must be followed.
Employee Security—This section of the labor agreement establishes the procedures that cover
job security for individual employees. Seniority and grievance handling procedures are the key
topics related to employee security.
a. Negotiating The Agreement
The negotiating phase of collective bargaining begins with each side presenting its initial demands. The term
negotiating suggests a certain amount of give and take, the purpose of which is to lower the other side’s
expectations. Each side does not expect to obtain all the demands presented in its first proposal. Demands
that the union does not expect to receive when they are first made are known as beachhead demands.
b. Breakdowns In Negotiations
At times negotiations break down, even though both labor and management may sincerely want to arrive at
an equitable contract settlement. Several means of removing roadblocks may be used in order to get
negotiations moving again.
Third-Party Intervention—Often a person from outside both the union and the organization can
intervene to provide assistance when an agreement cannot be reached and a breakdown occurs. At
this point there is an impasse.
1. Mediation: A process whereby a neutral third party enters a labor dispute when a
bargaining impasse has occurred.
2. Arbitration: A process in which a dispute is submitted to an impartial third party to make
a binding decision.
3. Sources of Mediators and Arbitrators: The principle organization involved in mediation
efforts, other than the available state and local agencies, is the Federal Mediation and
Conciliation Service (FMCS). Either or both parties involved in negotiations can seek the
assistance of the FMCS, or the agency can offer help if it feels that the situation warrants
this.
Union Strategies for Overcoming Negotiations Breakdowns—There are times when a union
believes that it must exert extreme pressure on management to agree to its bargaining demands.
Strikes and boycotts are the primary means that the union may use to overcome breakdowns in
negotiations.
1. Strikes: When union members refuse to work in order to exert pressure on management
in negotiations.
2. Boycotts: An agreement by union members to refuse to use or buy the firm’s products.
The practice of a union attempting to encourage third parties (suppliers and customers) to
stop doing business with the firm is a secondary boycott.
Management’s Strategies For Overcoming Negotiation Breakdowns—One form of action
that is somewhat analogous to a strike is called a lockout. Management keeps employees out of the

workplace and may run the operation with management personnel and/or temporary replacements.
The employees are unable to work and do not get paid.
a. Ratifying The Agreement
In the vast majority of collective bargaining encounters, the parties reach agreement without experiencing
severe breakdowns in negotiations or resorting to disruptive actions. Typically, this is accomplished before
the current agreement expires. After the negotiators have reached a tentative agreement on all topics
negotiated, they will prepare a written agreement complete with the effective and termination dates.
However, the approval process can be more difficult for the union. Until it has received approval by a
majority of members voting in a ratification election, the proposed agreement is not final. Union members
may reject the proposed agreement, and new negotiations must begin.
b. Administration Of The Agreement
The larger and perhaps more important part of collective bargaining is the administration of the agreement,
which is seldom viewed by the public. The agreement establishes the union-management relationship for
the duration of the contract.
.
II. Grievance Handling Under a Collective Bargaining Agreement
If employees in an organization are represented by a union, workers who believe that they have been
disciplined or dealt with unjustly can appeal through the grievance and arbitration procedures of the
collective bargaining agreement.
a. Grievance Procedure—A grievance can be broadly defined as an employee’s
dissatisfaction or feeling of personal injustice relating to his or her
employment relationship.
b. Arbitration—The process that allows the parties to submit their dispute to an
impartial third party for resolution.
c. Proof that Disciplinary Action was Needed—Any disciplinary action
administered may ultimately be taken to arbitration, when such a remedy is
specified in the labor agreement.
d. Weaknesses Of Arbitration—The reason for the initial filing of the
grievance may actually be forgotten before it is finally settled. Another
problem is the cost of arbitration, which has been rising at an alarming rate.
III. Grievance Handling In Union-Free Organizations
Although the step-by-step procedure for handling union grievances is common practice, the means of
resolving complaints in union-free firms varies. A well-designed union-free grievance procedure ensures
that the worker has ample opportunity to make complaints without fear of reprisal.
C. The HRM Department in a Nonunion Setting
Employers who adhere to certain union-free strategies and tactics can remain or become union free.
Effective first-line supervision: Extremely important to an organization’s ability to remain union
free is the overall effectiveness of its management, particularly its first-line supervisors. These
supervisors represent the first line of defense against unionization.
Union-free policy: The fact that the organization’s goal is to remain union free should be clearly
and forcefully communicated to all its members.
Effective communication: One of the most important actions an organization that wants to
remain union free can take is to establish credible and effective communication. One approach
taken to encourage open communication is the open-door policy. The open-door policy gives
employees the right to take any grievance to the person next in the chain of command if the
immediate supervisor cannot resolve the problem.

Trust and openness: Openness and trust on the part of managers and employees alike are
important in order to remain union free. The old expression actions speak louder than words is certainly
valid for an organization that desires to remain union free.
Effective compensation programs: The financial compensation that employees receive is the
most tangible measure they have of their worth to the organization. If an individual’s pay is
substantially below that provided for similar work in the area, the employee will soon become
dissatisfied.
Healthy and safe work environment: An organization that gains a reputation for failing to
maintain a safe and healthy work environment leaves itself wide open for unionization.
Effective employee and labor relations: No organization is free from employee disagreements
and dissatisfaction. Therefore, a means of resolving employee complaints, whether actual or
perceived, should be available. The grievance procedure is a formal process that permits employees to
complain about matters affecting them. Most labor-management agreements contain formal
grievance procedures, and union members regard handling grievances as one of the most important
functions of a labor union.
D. Phases of Labor Relations
Labor relations consist of the human resource management activities associated with the movement of
employees within the firm after they have become organizational members and include the actions of
promotion, transfer, demotion, resignation, discharge, layoff, and retirement. Labor relations can be divided
into following three phases:
a. Union organizing: Organization of workers, acting collectively, seeking to protect and promote
their mutual interests through collective bargaining is termed as union. The most significant impact
of a union on the management of human resources is its influence in shaping HRM policies. In the
absence of a union, the company may develop all HRM policies based on efficiency. But, when a
union enters the picture, management must develop HRM policies that reflect consideration for the
preferences of workers who are represented by a union. A union's strong preferences for high
wages, job security, the ability to express dissatisfaction with administrative actions, and having a
voice in the development of work rules that affect their jobs get injected into the equation along
with the employer's preferences.
b. Collective bargaining: The performance of the mutual obligation of the employer and the
representative of the employees to meet at reasonable times and confer in good faith with respect
to wages, hours, and other terms and conditions of employment, or the negotiation of an
agreement, or any question arising there under, and the execution of a written contract
incorporating any agreement reached if requested by either party; such obligation does not compel
either party to agree to a proposal or require the making of a concession.
c. Contract administration: The larger and perhaps more important part of collective bargaining is
the administration of the agreement, which is seldom viewed by the public. The agreement
establishes the union-management relationship for the duration of the contract. The agreement
established the union-management relationship for its effective length. Usually no changes in
contract language can be made until the expiration date except by mutual consent. Administering
the contract is a day-to-day activity. Ideally, the aim of both management and the union is to make
the agreement work to the mutual benefit of all concerned. This is not easy. In the daily stress of
the work environment, terms of the contract are not always uniformly interpreted and applied.

KEY TERMS
Grievance procedure A formal, systematic process that permits employees to complain about
matters affecting them and their work.
Collective bargaining The process through which representatives of management and the union
meet to negotiate a labor agreement
Mediation A process whereby a neutral third party enters a labor dispute when a
Boycotts An agreement by union members to refuse to use or buy the firm’s
products.
Arbitration The process that allows the parties to submit their dispute to an impartial
third party for resolution.

Lesson 36
CONFLICT AND NEGOTIATION
A. Conflict
B. Conflict and Negotiation
CHAPTER OVERVIEW
This lecture takes an in-depth look at conflict management and negotiation, key aspects of contemporary
organizational behavior. After examining the two views of conflict, the consequences of conflict, and the
types and levels of conflict, the chapter discusses culture and conflict, conflict management styles,
organizational sources of conflict, and conflict management strategies. The chapter goes on to explore
negotiation.
A. Conflict
Conflict is the process in which one party perceives that its interests are being opposed or negatively
affected by another party. Conflict is a process in which people disagree over significant issues, thereby
creating friction between parties. Conflict can exist when people have opposing interests, perceptions, and
feelings; when those involved recognize the existence of differing points of view; when the disagreement is
ongoing; and when opponents try to prevent each other from accomplishing their goals. Although conflict
can be destructive, it can also be beneficial when used as a source of renewal and creativity. Competition,
rivalry between individuals or groups over an outcome that both seek, is not the same as conflict. In
competition, there must be a winner and a loser; with conflict, people can cooperate so that no one wins or
loses.
Organizational conflict occurs when a stakeholder group pursues its interests at the expense of other
stakeholders. Given the different goals of stakeholders, organizational conflict is inevitable. Conflict is
associated with negative images, such as unions getting angry and violent, but some conflict can improve
effectiveness. When conflict passes a certain point, it hurts an organization.
I. Transitions in Conflict Thought
Under traditional view conflict is a process in which
people disagree over significant issues, creating friction
between parties. One view of conflict is that it is
dysfunctional and harmful to organizations, because the
struggle over incompatible goals is a waste of time that
prevents people and organizations from being
productive and reaching their potential. On the other
hand, interactionist view states that when conflict is
based on issues rather than personalities, it can enhance
problem solving and creativity. Open discussions of
differing viewpoints allows for a thorough consideration
of alternatives and their consequences in the course of
decision making. Conflict can also increase motivation
and energize people to focus on a task. Human relation
view states that Conflict is a natural occurrence and we should accept conflict
.
Traditional
View
Human
Relations
View
Interactionist
View

II. Conflict Good or Bad
Conflict can have both positive and negative consequences. On the positive side, conflict can bring energy
to a competition and focus participants on the task at hand. It can also increase group cohesion and
stimulate open discussion of issues. On the negative side, conflict can cause participants to lose sight of
common goals and focus on winning at all costs. In addition, it can lead to distorted judgments and a lack
of cooperation. Finally, the losers in a conflict feel demoralized and lose motivation; this loser effect harms
long-term relationships and overall organizational performance.
III. How can conflict improve effectiveness?
Conflict can overcome inertia and introduce change, because conflict requires an organization to reassess its
views. Different views are considered, and the quality of decision-making is improved.
IV. Types and levels of Conflict
There are four types of conflict. Inter-group conflict
occurs when groups within and outside the
organization disagree on various issues.
Interpersonal conflict is due to differences in goals,
values, and styles between two or more people who are
required to interact. Intra group conflict occurs
within a work group over goals and work
procedures. Intrapersonal conflict is a person's
internal conflict over divergent goals, values, or
roles. Inter group conflict can occur at two levels
which are horizontal and vertical. Horizontal
conflict takes place between departments or groups at
the same level of the organization. In contrast,
vertical conflict occurs between groups at different levels of the organization.
Types of Conflict
Task conflict: Conflicts over content and goals of the work
Relationship conflict: Conflict based on interpersonal relationships
Process conflict: Conflict over how work get done
V. Individual Conflict Management Styles
a. The obliging style of conflict management is based on low concern for self, high
concern for others, and
focusing on the needs of
others while satisfying or
ignoring personal needs.
This works best when
issues are unimportant,
knowledge is limited,
there is long-term give
and take, and the person
managing the conflict
has no power.
b. The avoiding style is
based on low concern
for self and others and a
focus on suppressing,
setting aside, and ignoring the issues. This is appropriate when the conflict is too strong
and parties need to cool off.
Individual
Group
Organization
Type of conflictLevel of conflict
Within and between
organizations
Within and
between groups
Within and between
individuals
Conflict Management StylesConflict Management Styles
IntegratingIntegrating ObligingObliging
AvoidingAvoidingDominatingDominating
LowConcern for Self
ConcernforOthers
Low
High
High
CompromisingCompromising

c. The integrative style shows high concern for self and for others and focuses on
collaboration, openness, and exchange of information. This is used when issues are
complex, when commitment is needed, when dealing with strategic issues, and when long-
term solutions are required.
d. The dominating style shows high concern for self, low concern for others, and focuses
on advancing own goals at any cost. This is used when time is short, issues are trivial, all
solutions are unpopular, and an issue is important to the party resolving the conflict.
e. The compromising style shows moderate concern for self and others and focuses on
achieving a reasonable middle ground where all parties win. This is used when goals are
clearly incompatible, parties have equal power, and a quick solution is needed.
VI. Manager’s ways to manage conflict.
Managers can manage conflict by either preventing or reducing high levels of conflict or stimulating low
levels of conflict. To do this, managers can apply a behavioral approach or an attitudinal approach. The
behavioral approach targets the behavior causing the conflict, while the attitudinal approach targets the
roots of the conflict, including people's emotions, beliefs, and behaviors. Behavioral methods include
enforcing rules, separating the parties, clarifying tasks, having a common enemy or outside competition, and
increasing resources and rewarding cooperation. Attitudinal methods include having a common enemy,
rotating members, increasing resources, and team-building and organizational development (OD). To
stimulate conflict, managers can introduce change, increase task ambiguity, or create interdependency.
B. Conflict and Negotiation
Stakeholders compete for the resources that an organization produces. Shareholders want dividends,
employees want raises. An organization must manage both cooperation and competition among
stakeholders to grow and survive. All stakeholders have a common goal of organizational survival, but not
all goals are identical.
o Negotiation
It is the process used by two or more parties to reach a mutually agreeable arrangement to exchange goods
and services. Managers need negotiating skills to be effective in today's global, diverse, dynamic, team-
oriented business environment. Culture significantly affects the negotiation process. Negotiators from
masculine cultures emphasize assertiveness and independence, which can cause them to see negotiation as a
competition and spur them to win at all costs. Negotiators from cultures comfortable with uncertainty will
take a creative, problem-solving approach, while those from high uncertainty-avoidance cultures will
emphasize bureaucratic rules and procedures. Power-distance, individuality-collectivism, high or low
context, emotion, and time-orientation dimensions also affect negotiation.
Beyond a certain point, conflict hurts the organization and causes decline. Managers spend time bargaining,
rather than making decisions. An organization in decline cannot afford to spend time on decision-making,
because it needs a quick response to recover its position. Group’s battle for their interests, no agreement is
reached, and the organization floats along, falling prey to inertia.
Bargaining issues in negotiation process can be divided into three categories: mandatory, permissive, and
prohibited.
o Mandatory Bargaining Issues—Fall within the definition of wages, hours, and other
terms and conditions of employment.
o Permissive Bargaining Issues—May be raised, but neither side may insist that they be
bargained over.
o Prohibited Bargaining Issues—Are statutorily outlawed.

o Negotiation Strategies
Figure shows four negotiating strategies based on the importance of the substantive outcome and the
importance of the relationship outcome. These four strategies are trusting collaboration, firm competition,
open subordination, and active
avoidance. Trusting
collaboration is a win-win
strategy most appropriate when
both the substantive task
outcome and the relationship
outcome are important. Firm
competition is used when the
substantive task outcome is
important but the relationship
outcome is not. Open
subordination is applied when
the task outcome is not
important but the relationship
outcome is. Active avoidance is
useful when neither the task
outcome nor the relationship
outcome is important.
When two parties are unable to
come to agreement during
negotiations, they may bring in a
third party to help resolve the differences. Conciliation and consultation focus on improving interpersonal
relations to foster constructive discussion of issues. Mediation considers both interpersonal and substantive
issues and relies on formal evaluation of positions plus persuasion to bring about a non-binding solution.
Arbitration, a legally binding process in which the arbitrator imposes a solution, can be used when all other
methods have failed and the conflict must be urgently resolved.
Common mistakes made when negotiating include:
Irrational escalation of commitment; thinking the pie is fixed; winner's curse; and overconfidence. Avoiding
these common mistakes requires managers to be aware of the issues, be thoroughly prepared, and be willing
to rely on expert opinion to reduce the possibility of making mistakes.
KEY TERMS
Conflict Conflict is the process in which one party perceives that its interests are
being opposed or negatively affected by another party.
Task conflict Conflicts over content and goals of the work
Relationship conflict Conflict based on interpersonal relationships
Process conflict Conflict over how work get done
Vertical conflict It occurs between groups at different levels of the organization.
Horizontal conflict It takes place between departments or groups at the same level of the
organization.
Negotiation It is the process used by two or more parties to reach a mutually agreeable
arrangement to exchange goods and services.
Four Negotiating StrategiesFour Negotiating Strategies
Trusting
Collaboration
Trusting
Collaboration
Open
Subordination
Open
Subordination
Firm
Competition
Firm
Competition
NoIs Substantive Outcome Important?
IsRelationship
OutcomeImportant?
No
Yes
Yes
Active
Avoidance
Active
Avoidance

Lesson 37
POWER AND POLITICS
A. Power
B. Politics In Organizations
C. Power and Politics in Context
CHAPTER OVERVIEW
This chapter explores how managers use power and organizational politics. Organizations today use power
and politics differently than in the past, given the uncertain environment and the shift to flatter hierarchies,
team structures, and employee empowerment. This chapter opens with a look at power, including the
individual and organizational sources, the effect of culture and gender, corruption of power, and potential
benefits of empowerment. Next, the chapter examines politics.
A. Power
Power, the ability of one person to influence another, is not limited to managers. Employees at all levels and
outsiders such as customers have the ability to influence the actions and attitudes of other people. Someone
need not have power to influence another person—and those with influence may not have power. Also,
power is not the same as authority. Authority is the power vested in a particular position, such as the power
of the security director.
I. Power, influence, and authority
Power is the ability of one person to influence another. It is not the same as authority, which refers to the
power vested in a particular position. It is not synonymous with influence, either, since someone who has
power may not be able to influence others while someone without power may have the ability to influence
others. Power, authority, and influence are all integral parts of any organization, although the way
II. Sources of Power
Three types of power derive from the person's formal position in the organization:
Legitimate power: It is based on a person holding a formal
position;
Reward Power: reward power, based on a person's access to
rewards.
Coercive Power: coercive power, based on a person's ability
to punish.
Two types of power derive from the individual:
Expert power,: Expert power is based on personal expertise
and knowledge
Referent Power: referent power, based on a person's
attractiveness to others.
Organizational sources of power, which derive from the structure, depend on strategic contingencies—
elements that are essential to the performance and effectiveness of the organization, department, or team.
The three strategic contingencies that are sources of organizational power are: coping with uncertainty;
centrality in the resource network; and dependency and substitutability.
III. Advantages and Disadvantages of Power
Power is necessary in an organization because it helps managers fulfill their leadership responsibilities; it
also helps all employees influence others in pursuit of organizational and personal goals. Two key benefits
are the ability to inspire commitment (as a reaction to expert or referent power) and the ability to reduce
uncertainty for others in the organization. Empowerment leads to other benefits, such as support for
creativity and reduction of bureaucratic obstacles. The main disadvantage is the potential for misuse and
Sources ofSources of
IndividualIndividual
PowerPower
LegitimateLegitimate
RewardReward
CoerciveCoercive
ExpertExpert
ReferentReferent

abuse, which can harm individuals and the organization.
IV. Power Corruption
Power corruption occurs when someone has a great deal of power but is not held accountable for its use.
The result is abuse of power for personal gain. The power corruption cycle starts when managers are
physically removed from their employees, they may develop an inflated view of themselves. The disparity in
power can cause employees to feel helpless, so they respond by becoming more submissive and dependent
and by flattering the manager. The consequences of the power corruption cycle are poor decision making,
use of coercion, low opinion of employees, more distance from employees, and possibly ethical or illegal
actions taken by the manager.
Organizations can prevent corruption of power by pushing for more contact between managers and
employees; reducing employees' dependence on managers; and creating an open, performance-centered
organizational culture and structure.
One of the most visible ways managers and organizations can encourage the ethical use of power is by
modeling and rewarding ethical behavior. In addition, they can establish appropriate policies and procedures
to identify and stop unethical use of power and create an organizational culture that values high ethical
standards for the use of power.
B. Politics In Organizations
Organizational politics are activities that allow people in organizations to achieve goals without going
through formal channels. Whether political activities help or hurt the organization depends on whether the
person's goals are consistent with the organization's goals. In the rational model of organizations, people are
assumed to manage logically, based on clear information and well-defined goals.
I. Elements initiating Political activities
Three elements create the conditions under which political activities thrive.
a. Changes in any of the five strategic contextual forces (environment, technology, strategy,
culture, and structure) can generate uncertainty over resource allocation, leading to an
increase in political behavior.
b. Changes in the coordination and integration of organizational activities used to achieve
common goals can also lead to an increase in political behavior.
c. Finally, changes in leadership, which change traditional relationships and processes, can
create an opportunity for increased political behavior.
II. Rational and political models of organizations
Organizational politics are activities that allow people in organizations to achieve goals without going
through formal channels. In the rational model of organizations, people are assumed to manage logically,
based on clear information and well-defined goals. In contrast, the political model assumes that information
is scarce, individuals and groups have diverse goals,
negotiation and alliances drive decision making, and
individual goals take the place of rational, systematic
processes for problem solving and decision making.
Political Tactics
Political tactics are activities that fall outside the
standardized, formal processes of the organization.
Four types of political tactics are building
relationships, controlling resources, image
management, and blame and ingratiation.
• Building Relationship
People develop relationships through coalitions,
Employing ImageEmploying Image
Management, Blame,Management, Blame,
and Ingratiationand Ingratiation
Controlling ResourcesControlling Resources
and Decisionand Decision--MakingMaking
ProcessesProcesses
Building Coalitions,Building Coalitions,
Alliances, and NetworksAlliances, and Networks
PoliticalPolitical
TacticsTactics

alliances, networks, and supportive managerial linkages. Coalitions are relationships formed over specific
issues; alliances are general agreements of support among different individuals and groups; and networks are
broad, loose support systems. Relationship building can either help or harm the organization.
a. Controlling Resources
Controlling resources and decisions, another type of political tactic, involves developing expertise,
becoming indispensable, and influencing decision criteria. Like relationship building, controlling resources
and decisions can either help or harm the organization.
b. Image Management
Image management means remaining visible and presenting oneself in the best light within the
organization. It also means knowing when to avoid association with people who are considered deviants.
c. Blame and Integration
Blaming and attacking others to deflect attention from one's mistakes—and using ingratiating behavior to
gain favor—are unethical and negative types of political actions.
Managers need to manage political behavior from two directions. First, they should seek to maintain and
encourage constructive relationships, which are essential for coordination and effectiveness within the
organization. Second, they also need to reduce negative, self-interested behaviors that can hurt the
organizations. This can be accomplished through an open, supportive organizational culture; information
sharing to reduce uncertainty; use of consistent, open, and fair processes, procedures, and rewards;
increased cooperation with decreased internal competition; and rewarding and modeling constructive
behaviors.
C. Power and Politics in Context
Power and politics are linked to strategy, structure, and culture. The development and implementation of
the organization's mission, strategy, and goals entails much uncertainty, which makes the strategic planning
process ripe for political activity. To be effective, managers must apply both power and politics as they
negotiate, build relationships, and seek cooperation from others. The structure determines how power will
be distributed in the organization, and managers need power to make structural changes in response to the
environment. National and ethnic cultural values influence how managers perceive and use power. But
power and politics also affect the organization's culture; in particular, how a top leader uses power and
politics helps shape the culture.
KEY TERMS
Power Ability of a person to influence another.
Authority Power vested in a particular position.
Expert Power Based on personal expertise and knowledge in a certain area. Others
comply because they believe in the power holder's knowledge.
Legitimate Power Based on a person holding a formal position. Others comply because they
believe in the legitimacy of the power holder.
Reward Power Based on a person's access to rewards. Others comply because of the
desire to receive rewards.
Organizational Politics Activities that allow people in organizations to achieve goals without
going through formal channels.

Lesson 38
EMPLOYEE RIGHTS AND DISCIPLINE
A. Employee Rights
B. Disciplining Employees
LESSON OVERVIEW
Today’s lecture examines employee rights and employee discipline. The concepts of employee rights,
management rights, and the employment-at-will doctrine are discussed. Some challenges managers
encounter in balancing employee rights with their own rights and responsibilities (duties) are explored.
Employee discipline is discussed, and some suggestions for managing difficult employees are offered.
A. Employee Rights
Employee rights allow them to engage in conduct
protected by laws and social sanctions. Federal and
state governments have enacted laws giving
employees specific protection in their relationship
with their employer. The courts have also been
willing to protect workers from wrongful discharge.
These rights include statutory, contractual, and other
rights.
B. Employee Rights
There are many laws and regulations governing
human resource management that have been created
to help define, maintain, and preserve employee
rights. Discrimination laws essentially give people the right to work without being evaluated on the basis of
non-job-relevant factors such as religion, origins, sex or race. Minimum wage legislation gives people the
right to expect a certain base level of compensation for their work. Labor laws give employees the right to
organize and join a labor union under certain prescribed circumstances. Employee rights allow them to
engage in conduct protected by laws and social sanctions. Federal and state governments have enacted laws
giving employees specific protection in their relationship with their employer. The courts have also been
willing to protect workers from wrongful discharge. These rights include statutory, contractual, and other
rights.
a) Statutory Rights
The key statutory rights can be found in laws such
in Civil Rights Acts, the Occupational Safety and
Health Act (OSHA), and the National Labor
Relations Act (NLRA). These rights Protect
employees from discrimination, Safe working
conditions, Right to form unions
b) Contractual Rights
A written employment contract details the terms
of the employment relationship. These contracts
usually address such issues as seniority, due
process, and wrongful discharge. Besides written
contracts, there are implied contracts. Employee
handbooks, employment policies, and statements
made by an interviewer or manager may be
interpreted by the courts as implied contracts.
Discrimination lawDiscrimination law
Minimum wageMinimum wage
Labor lawLabor law
Rights to privacyRights to privacy
Employment
at
Will
Categories of Employee Rights
• Protection from
discrimination
• Safe working
conditions
• Right to form
unions
Contractual Rights Other RightsStatutory Rights
• Employment contract
• Union contract
• Implied contracts/
employment policies
• Ethical treatment
• Privacy (limited)
• Free speech
(limited)

c) Other Rights
Beyond statutory and contract rights, employees may have rights to ethical treatment, limited free speech,
and limited privacy.
d) Ways Managers and Supervisors Can Influence Their Companies’ Climate of
Fairness and Behavior
Take actions that develop trust, such as sharing useful information and making good on
commitments.
Act consistently so that employees are not surprised by unexpected management actions or
decision.
Be truthful and avoid white lies and actions designed to manipulate others by giving a certain (false)
impression.
Demonstrate integrity by keeping confidences and showing concern for others.
Meet with employees to discuss and define what is expected of them.
Ensure that employees are treated equitably, giving equivalent rewards for similar performance and
avoiding actual or apparent special treatment of favorites.
Adhere to clear standards that are seen as just and reasonable.
Demonstrate respect toward employees, showing openly that they care about employees and
recognize their strengths and contributions.
e) Management Rights
Management rights are the rights to run the business and to retain any profits generated. In particular, this
includes the right to direct the work force (i.e., to hire employees and set pay levels). Often, these rights are
residual. Residual rights are those remaining that are not affected by contracts or other (i.e., EEO) laws.
f) Employment at Will
It is a common law doctrine stating that employers have the right to hire, fire, demote, or promote
whomever they choose, unless there is a law or contract to the contrary and Employees have the right to
quit and got another job under the same constraints. The employment-at-will rule was adopted in the
nineteenth century. Workers were free to terminate their relationship (employment) for any reason, so the
courts deemed it fair for employers to be able to do the same. Such a rule has stacked the deck in favor of
the employer, giving wrongfully discharged employees little legal recourse. Nevertheless, employment-at-
will is limited in certain situations. These include cases of public policy exceptions, implied contracts, and
lack of good faith and fair dealing.
g) Employee Rights Challenges:
There is a thin line between the rights of employees and the rights of management. Workplace issues such
as random drug testing, electronic monitoring and whistle-blowing highlight this conflict.
a. Random Drug Testing
Companies that use drug tests must address several challenges such as establishing a policy, what to do with
false positives, how to ensure security over urine specimens, and whether alternative tests should be used
(e.g., performance tests).
b.Electronic Testing
Companies attempt to fight various forms of employee theft by electronic monitoring. To use this type of
monitoring successfully, employees should know what devices are being used, employers should create ways
in which monitoring is beneficial to the employees as well, the employer should develop appropriate policies
which are publicized throughout the company.
c. Whistle blowing
Whistle blowing means employees can notify the wrongdoings of the management. While federal employees
who blow the whistle have certain legal protections; private-sector employees are far less protected.
Because employees may decide to blow the whistle on an employer, many companies realize that it is in

their best interest to establish a policy on whistle blowing.
C. Disciplining Employees
Employee discipline is a tool that managers use to communicate a need to change behavior. Traditionally,
such discipline is performed by supervisors. But, when teams are used, it may be the team's responsibility.
Two different approaches to discipline are widely used. They include progressive and positive discipline
a. Progressive Discipline
The most commonly used form of discipline, progressive discipline, consists of a series of management
interventions that gives employees opportunities to correct their behavior before being discharged.
b. Positive Discipline
Encouraging employees to monitor their own behaviors and assume responsibility for their own actions is
called positive discipline. Management still intervenes, but with counseling sessions as opposed to
punishment.
KEY TERMS
Employee Rights Employee rights allow them to engage in conduct protected by laws and
social sanctions.
Whistle Blowing A situation in which an employee notifies authorities of wrongdoings in
organization
Discipline A procedure that corrects or punishes a subordinate because a rule of
procedure has been violated.
Progressive Discipline An approach to disciplinary action designed to ensure that the minimum
penalty appropriate to the offense imposed.
Positive Discipline Encouraging employees to monitor their own behaviors and assume
responsibility for their own actions is called positive discipline

Lesson 39
DISCIPLINE (CONT...)
A. Employee Separations
A. Discipline
As discussed in previous lectures, the term discipline refers to a condition in the organization where
employees conduct themselves in accordance with the organization’s rules and standards of acceptable. For
the most part employees discipline themselves by conforming to what is considered proper behavior
because they believe it is the reasonable thing to do. One they are made aware of what is expected of them,
and assuming they find these standards or rules to be reasonable, they seek to meet those expectations. But
not all employees will accept the responsibility of self-discipline. There are some employees that will
accept the norms of responsible employees’ behavior. These employees, then, require some degree of
extrinsic disciplinary action. It is this need to impose extrinsic disciplinary action that we will address in the
following sections.
I. Discipline System Recommended by Labor Department
A fair discipline process is based on three prerequisites: rules and regulations, a system of progressive
penalties, and an appeals process. Inform employees ahead of time as to what is and is not acceptable
behavior. Progressive penalties range from oral warnings to written warnings to suspension from the job to
discharge; the severity is a function of the severity of the offense and, in some cases, the number of times
the offense has occurred. Discipline guidelines include the need to determine whether there was “just
cause” for disciplinary action by (1) using discipline in line with the way management usually responds to
similar incidents; (2) warning the employee of the consequences of the alleged misconduct; (3) punishing for
violation of rules that are “reasonably related” to the efficient and safe operation of the work environment;
(4) investigating adequately; (5) applying rules and employee’s past history. Fairness is built into the system
of discipline without punishment in that the punitive nature of discipline is reduced while there is an
attempt to gain the employee’s acceptance of the rules.
II. Factors to Consider when Disciplining
Before we review disciplinary guidelines, we should take at the major factors that need to be considered if
we are to have fair and equitable disciplinary practices. The following seven contingency factors can help us
analyze a discipline problem:
1. Seriousness of the problem. How sever is the problem? As noted previously, dishonesty is usually
considered a more serious infraction than reporting to work 20 minutes late.
2. Duration of problem. Have there been other discipline problems in the past, and over how long a
time span? The violation dies not take place in a vacuum. A first occurrence is usually viewed
differently than a third or fourth offense.
3. Frequency and mature of the problem. Is the current problems part of an emerging or
continuing pattern of disciplinary infractions? We are continual with not only the duration but also
the pattern of the problem. Continual infractions may require but also the pattern of the problem.
Continual infractions may require a different type of discipline from that applied to isolated
instances of misconduct. They may also point out a situation that demands far more sever
discipline in order to prevent a minor problem demands far more severe discipline in order to
prevent a minor problem from becoming a major one.
4. Extenuating Factors. Are there extenuating circumstances related to the problem? The student
who fails to turn in her term paper by the deadline because of the death of her grandfather is likely
to have her violation assessed more leniently than will her peer who missed the deadline because he
overslept.

5. Degree of socialization. To what extent has management made an earlier effort to educate the
person causing the problem about the existing rules and procedures and the consequences of
knowledge that the violator holds of the organization’s standards of acceptable behavior. In
contrast to the previous item, the new employee is less likely to have been socialized to these
standards than the 20-year veteran. Additionally, the organization that has formalized, written rules
governing employee conduct is more justified in aggressively enforcing
6. Violations of these rules than is the organization whose rules are informal or vague. History
of the Organization’s Discipline practices. How have similar infractions been dealt with in the past
within the department? Within the entire organizations? Has there been consistency in the
application of discipline procedures? Equitable treatment of employees must take into
consideration precedents within the unit where the infraction occurs, as well as previous
disciplinary actions taken in other units within the organization. ? Equity demands consistency
against some relevant benchmark.
7. Management Backing. If employees decide to take their case to a higher level in management,
will you have reasonable evidence to justify your decision? Should the employee challenge your
disciplinary action, it is important that you have the data to back up the necessity and equity of the
action taken and that you feel confident that management will support your decision. No
disciplinary action is likely to carry much weight if violators believe that they can challenge and
successfully override their manager’s decision.
How can these seven items help? Consider that there are many reasons for why we might discipline an
employee. With little difficulty, we could list several dozen or more infraction that management might
believe require disciplinary action. For simplicity’s sake, we have classified the most frequent violations into
four categories: attendance, on-the- job behaviors, dishonesty, and on the job behavior.
Attendance like: Unexcused absence, chronic absenteeism, leaving without permission
Work Performance problems can include action like not completing work assignments,
producing substandard products or services not meeting established production
requirements
Dishonesty and Related Problems like, Theft, Falsifying employment application,
Willfully damaging organizational property, Punching another employee’s time card,
Falsifying work records
On-the-job Behaviors like: Insubordination ,Smoking in unauthorized places, Fighting,
Gambling, Failure to use safety devices, Failure to report injuries, Carelessness, Sleeping on
the job, Using abusive or threatening language with supervisors, Possession of narcotics or
alcohol, Possession of firearms or other weapons, Sexual harassment,
Infractions may be minor or serious given the situation or the industry in which one works. For example,
while concealing defective work in a hand –power tool assembly line may be viewed as minor, the same
action in an aerospace manufacturing plant is more serious. Furthermore, recurrence and severity of the
infraction will play a role. For instance, employees who experience their first minor offense might generally
expect a minor reprimand. A second offense might result in a more stringent reprimand, and so forth. In
contrast, the first occurrence of a serious offense might mean not being allowed to return to work, the
length of time being dependent on the circumstances surrounding the violation.
III. Disciplinary Guidelines:
All human resource managers should be aware of disciplinary guidelines. In the section, we will briefly
describe them.
a. Make Disciplinary Action Corrective Rather than punitive. The objective is to correct an
employee’s undesirable behavior. While punishment may be a necessary means to that end,
one should never lose sight of the eventual objective.
b. Make disciplinary Action progressive. Although the type of disciplinary action that is
appropriate may vary depending on the situation, it is generally desirable for discipline to

be progressive. Only for the most serious violations will an employee be dismissed after a
first offense. Typically, progressive disciplinary action begins with a verbal warning and
proceeds through a written warning, suspension, and, only in the most serious cases,
dismissal. More on this in a moment.
c. Follow the “Hot-stove” Rule. Administering discipline can be viewed as analogous to
touching a hot stove (hence, the hot-stove rule).84 While both are painful to the recipient,
the analogy goes further. When you touch a hot stove, you get an immediate response; the
burn you receive is instantaneous, leaving no question of cause and effect. You have ample
warning; you know what happens if you touch a red-hot stove, you furthermore, the result
is consistent: every time you touch a hot stove, you get the same response you get burned.
In all, the result is impersonal; regardless of who you are, if you touch a hot stove, you will
get burned. The comparison between touching a hot stove and administering discipline
should be apparent, but let us briefly expand on each of the four points in the analogy.
The impact of a disciplinary action will be reduced as the time between the infraction and the penalty’s
implementation lengthens. The more quickly the discipline follows the offense, the offense, the more likely
it is that the employee will associate the discipline with the offense rather than with the manager imposing
the discipline. As a result, kit is best that the disciplinary process begin as soon as possible after the violation
is noticed. Of course, this desire for immediacy should not result in undue haste. If all the facts are not in,
managers may invoke a temporary suspension, pending a final decision in the case. The manager has an
obligation to give advance warning prior to initiating formal disciplinary action. This means the employee
must be aware of the organization’s rule and accept its standards of behavior. Disciplinary action is more
likely to be interpreted as fair by employees when there is clear warning that a given violation will lead to
discipline and when it is known that discipline will be. Fair treatment of employees also demands that
disciplinary action be consistent. When rule violations are enforced in an inconsistent manner, the rules lose
their impact. Morale will decline and employees will question the competence of management. Productivity
will suffer as a result of employee insecurity and anxiety. All employees want to know the limits of
permissible behavior, and they look to the actions of their managers for such feedback. The last
guideline that flows from the hot-stove rule is: keep the discipline impersonal. Penalties should be
connected with a given violation, not with the personality of the violator. That is, discipline should be
directed at what employees have done, not the employees themselves. As a, manager, you should make it
clear that violation personal judgments about the employee’s character. You are penalizing the rule
violation, not the individual, and all employees committing the violation can expect to be penalized.
Furthermore, once the penalty has been imposed, you as manager must make every effort to forget the
incident; you should attempt to treat the employee in the same manner as you did prior to the infraction.
IV. Disciplinary Actions (Progressive discipline)
As mentioned earlier, discipline generally follows a typical sequence of four steps: written verbal warning,
written warning, suspension, and dismissal. Let’s
briefly review these four steps.
a. Written Verbal Warning
The mildest form of discipline is the written
verbal warning. Yes, the term is correct. A
written, verbal warning is a temporary record of
a reprimand that is then placed in the manager’s
file on the employee. This written verbal
warning should state the purpose, date, and
outcome of the interview with the employee.
This in fact, what differentiates the written
verbal warning from the verbal warning. Because
of the need to document this step in the process,
the verbal warning must be put into writing. The
difference, however, is that this warning remains
in the hands of the manager; that is, it is not
Progressive
Discipline
Procedure

forwarded to HRM for inclusion in the employee’s personnel file.
The written verbal reprimand is best achieved when completed in a private and informal environment. The
manager should begin by clearly informing the employee of the rule that has been violated and the problem
that this infraction has caused. For instance, if the employee has been late several times, the manager would
reiterate the organization’s rule that employees are to be at their desks by 8:00 A.M, and then proceed to
give specific evidence of how violation of this rule has resulted in an increase in workload for others and
has lowered departmental morale. After the problem has been made clear, the manager should then allow
the employee to respond. Is he aware of the problem? Are there extenuating circumstances that justify his
behavior? What does he plan to do correct his behavior?
After the employee has been given the opportunity to make his case, the manager must determine if the
employee has proposed an adequate solution to the problem. If this has not been done, the manager should
direct the discussion toward helping the employee figure out ways to prevent the trouble from recurring.
Once a solution has been agreed upon, the manager should ensure that the employee understands what, if
any, follow-up action will be taken if the problem recurs.
b. Written Warning
The second step in the progressive discipline process is the written warning. In effect, it is the first formal
stage of the disciplinary procedure. This is because the written warning becomes part of the employee’s
official personnel file. This is achieved by not only giving the warning to the employee but sending a copy
to HRM to be inserted in the employee’s permanent record. In all other ways, however, the procedure
concerning the writing of the warning is the same as the written verbal warning; that is, the employee is
advised in private of the violation, its effects, and potential consequences of future violations. The only
difference is that the discussion concludes with the employee being told that a formal written warning will
be issued. Then the manager writes up the warning-stating the problem, the rule that has been violated, any
acknowledgment by the employee to correct her behavior, and the consequences form a recurrence of the
deviant behavior-and sends it to HRM.
c. Suspension
A suspension or layoff would be the next disciplinary step, usually taken only the prior steps have been
implemented without the desired outcome. Exceptions-where suspension is given without any prior verbal
or written warning –occasionally occur if the infraction is of a serious nature.
A suspension may be for one day or several weeks; disciplinary layoffs in excess of a month are rare. Some
organizations skip this step completely because it can have negative consequences for both the company
and the employee. From the organization’s perspective, a suspension means the loss of the employee for the
layoff period. If the person has unique skills or is a vital part of a complex process, her loss during the
suspension period can severely impact her department or the organization performance if a suitable
replacement cannot be located. From the employee’s standpoint, a suspension can result in the employee
returning in a more unpleasant and negative frame of mind than before the layoff.
Then why should management consider suspending employees as a disciplinary measure? The answer is that
a short layoff is potentially a rude awakening to problem employees. It may convince them that
management is serious and may move them to accept responsibility for following the organization’s rules.
d. Dismissal
Management’s ultimate disciplinary punishment is dismissing the problem employee. Dismissal should be
used only for the most serious offenses. Yet it may be the only feasible alternative when an employee’s
behavior seriously interferes with a department or the organization’s operation.
A dismissal decision should be given long and hard consideration. For almost all individuals, being fired
from a fob is an emotional trauma. For employees who have been with the organization for many years’
dismissal can make it difficult to obtain new employment or may require the individual to undergo extensive
retraining. In addition, management should consider the possibility that a dismissed employee will take legal
action to fight the decision. Recent count cases indicate that juries are cautiously building a list of conditions
under which employees may not be lawfully discharged.

B. Employee Separations
I. Employee Separations
An employee separation occurs when an employee ceases to be a member of an organization. The rate of
employee separations in an organization (the turnover rate) is a measure of the rate at which employees
leave the firm.
a. The Costs of Employee Separations
There are always costs associated with employee separations. The cost may be more or less, depending on
whether managers intend to eliminate the position or to replace the departing employee. Costs included in
separations include: recruitment costs, selection costs, training costs, and separation costs.
1. Recruitment costs.
2. Selection costs.
3. Training costs.
4. Separation costs.
b. The Benefits of Employee Separations
While many people understand the costs of employee separations, there are benefits as well. Some of the
benefits of separations include: reduced labor costs, replacement of poor performers, increased innovation,
and the opportunity for greater diversity.
1. Reduced labor costs.
2. Replacement of poor performers.
3. Increased innovation.
4. Opportunity for greater diversity.
II. Types of Employee Separations
Employee separations can be divided into two categories based on who initiates the termination of the
employment relationship. Voluntary separations (quits and retirements) are initiated by the employee.
Involuntary separations (discharges and layoffs) are initiated by the employer.
a. Voluntary Separations
1. Quits.
2. Retirements.
b. Involuntary Separations
Involuntary separations occur when management decides to terminate its relationship with an employee due
to economic necessity or a poor fit between the employee and the organization.
1. Discharges.
2. Layoffs.
3. Downsizing and rightsizing. A reduction in the number of people employed by a firm
(also known as restructuring and rightsizing); essentially the reverse of a company growing and
suggests a one-time change in the organization and the number of people employed
III. Managing Early Retirements
When a company realizes that it needs to downsize its scale of operations, its first task is to examine
alternatives to layoffs. One of the most popular of these methods is early retirement.

The Features of Early Retirement Policies: Early retirement policies consist of
two features: (a) a package of financial incentives that make it attractive for senior employees to
retire earlier than they planned and (b) an open window that restricts eligibility to a fairly short
period. After the window is closed, the incentives are no longer available to senior employees.
Avoiding Problems with Early Retirements: Managing early retirement policies
requires careful design, implementation, and administration. When not properly managed, early
retirement policies can cause a host of problems. All managers with senior employees should make
certain that they do not treat senior employees any differently than other employees.
IV. Managing Layoffs
Generally, an organization will institute a layoff when it cannot reduce its labor costs by any other means.
Managers should first try to reduce labor costs with layoff alternatives.
Alternatives to Layoffs: There are many alternative methods of reducing labor costs that
management should explore before deciding to conduct a layoff. These alternatives include things
such as early retirements, employment policies (attrition and hiring freeze), job redesign (job
sharing), pay and benefits policies (pay freezes and cuts), training, and other voluntary workforce
reductions.
1. Employment policies.
2. Changes in job design.
3. Pay and benefits policies.
4. Training.
5. Nontraditional alternatives to layoffs.
Implementing a Layoff: A layoff can be a traumatic event that affects the lives of thousands of
people, so managers must implement the layoff carefully. Issues that need to be considered include
how to notify employees, developing layoff criteria, communicating to laid-off employees,
coordinating media relations, maintaining security, and reassuring survivors of the layoff.
1. Notifying employees.
2. Developing layoff criteria.
3. Communicating to laid-off employees.
4. Coordinating media relations.
5. Maintaining security.
6. Reassuring survivors of the layoff.
V. Outplacement
Outplacement is a human resource program created to help separated employees deal with the emotional
stress of job loss and to provide assistance in finding a new job
The Goals of Outplacement:
The goals of outplacement reflect the organization's need to maintain employee productivity. The most
important of these goals are (1) reducing the moral problems of employees who will be laid off so that they
will remain productive; (2) minimizing the amount of litigation initiated by separated employees; and (3)
assisting separated employees in quickly finding comparable jobs.
Outplacement Services: The most common outplacement services provided to separate
employees are emotional support and job-search assistance. These services can help achieve the
goals of outplacement.
1. Emotional support.
2. Job-search assistance.

VI. The role of HR Department in employee separations and outplacement
Cooperation and teamwork characterize the relationship between managers and HR staff in the employee
separation process. HR staff can act as valuable advisers to managers, particularly in the dismissal process,
by helping them avoid mistakes that can lead to claims of wrongful discharge. They can also help protect
the employee whose rights may be violated by managers. Furthermore, they may assist in the development
of and/or selection of the contents of voluntary severance plans or buyouts, early retirement plans, and
outplacement services
KEY TERMS
Employee Separations An employee separation occurs when an employee ceases to be a member
of an organization.
Downsizing A reduction in the number of people employed by a firm (also known as
restructuring and rightsizing)
Outplacement A company procedure that assists a laid-off employee in finding
employment elsewhere

Lesson 40
LEADERSHIP
Introduction
Today we will discuss the role of leadership in the organizations. The face of leadership is changing in
business today. In addition to influencing subordinates to achieve desired objectives, today’s managers
must make quicker, more accurate decisions in a consensus building and teamwork environment. Leaders
fill many roles simultaneously. Leaders not only influence others to achieve desired goals, they interact with
and motivate subordinates, and deal with conflict and any other issues that may arise.
A. Leadership
Leadership is a process where Leader/Person, who influences individuals and groups in an organization,
helps them establish goals, guides them toward achievement of those goals, and allows them to be effective
as a result.
Leaders fill many roles simultaneously. Leaders not only influence others to achieve desired goals, they
interact with and motivate subordinates, and deal with conflict and any other issues that may arise.
How Leaders Provide a Vision: To be effective, leaders must provide a vision that is a general statement
of the organization’s intended direction that evokes positive emotional feelings in organization members.
I. The Foundations and Traits of Leadership
a. The Leader’s Traits: Researchers have studied the traits of successful leaders for many years in
an effort to identify a set of core traits that would predict success as a leader. Recent research
indicates that there are certain core traits that significantly contribute to success for a business
leader. These include drive, the desire to lead, honesty/integrity, self-confidence, cognitive ability
and knowledge of the business.
b. The Leader’s Behavior
How Leaders Act Like Leaders: Leadership studies that focus on how the leader’s style is related to
his/her effectiveness as a leader all focus on what the leader does and how he/she behaves in trying to
influence followers. These studies also focus on the two major functions of leaders—accomplishing the task
and satisfying the needs of group members.
Initiating Structure and Consideration: Initiating structure and consideration have been two of the most
frequently used descriptions of leader behavior. These concepts evolved from the Ohio State University
leadership studies. Initiating structure is leader behavior whereby the person organizes work to be done and
defines relationships or roles, the channels of communication, and ways of getting jobs done. Consideration
is leader behavior indicative of mutual trust, friendship, support, respect, and warmth. In most situations,
considerate leaders will have more satisfied subordinates, but the effects of such considerate leadership on
employee performance are inconsistent. The effects of initiating structure are also inconsistent with respect
to performance and satisfaction.
Participative and Autocratic Styles: Leaders can act in either a participative or autocratic style. Autocratic
leaders solve problems and make decisions by themselves based upon information available at the time.
Participative leaders share the problem with subordinates as a group, and together, they generate and
evaluate alternatives and attempt to reach consensus on a solution.
Transformational Leadership Behavior: Transformational leaders encourage and obtain performance
beyond expectations by formulating visions, inspiring their subordinates to pursue them, cultivating
employee acceptance and commitment to their visions, and providing their employees with the big picture.
Transformational leaders are perceived as charismatic, inspirational, considerate, and stimulating. On the
other hand, leaders who exhibit transactional behaviors are more focused on accomplishing the task at hand
and maintaining good working relations with subordinates by rewarding for performance.

Are There Gender Differences in Leadership Styles? Research suggests that there are few differences in
the way men and women lead. The slower career progression for women can be better accounted for by
institutional biases and inaccurate stereotypes of women managers. It has been found that men and women
perform at about the same level. Women managers have been found to be more achievement oriented,
understanding, patient, relationship oriented, socially sensitive, and communicative than men.
c. Situational Theories of Leadership
Fiedler’s Contingency Theory of Leadership: Fiedler used a least preferred coworker (LPC) scale to
measure whether a leader who was lenient in evaluating associates he/she least liked working with was
more likely or less likely to have a high-producing group than the leader who was demanding and
discriminating. Three factors combine to determine which leadership style is more appropriate: position
power, task structure, and leader-member relations. Fiedler concluded that if the situation is favorable or
unfavorable to the leader, a more task-oriented, low-LPC leader is appropriate. In the middle range
where the factors are more mixed, a more people-oriented, high-LPC leader is more appropriate. Recent
research findings cast doubt on the validity of these conclusions.
Path-Goal Leadership Theory: Path-goal theory of leadership, developed by House, is based upon
expectancy theory, which states whether a person will be motivated depends on whether the person
believes he/she has the ability to accomplish a task and his/her desire to do so. The theory concludes that
leaders should increase the personal rewards subordinates receive for attaining goals and make the path to
these goals easier to follow. The leadership style required depends upon the situation, so the leader must
be flexible and adopt the style that is required.
Leader-Member Exchange Theory: Leader-member exchange theory (LMX) says that leaders may use
different styles with different members of the same work group. Followers tend to fall in either the in-
group or the out-group in relating to the leader. The quality of leader-member exchanges was positively
related to a leader’s perception of the follower’s similar attitudes and extroversion. The findings suggest
that leaders should try to make the in-group more inclusive, and followers should try to be in the leader’s
in-group by emphasizing similarity in attitudes.
The Situational Leadership Model: The situational leadership model of leadership suggests that a leader
should adapt his/her leadership style (delegating, participating, selling, or telling) to the task.
The Vroom-Jago-Yetton Model: Vroom, Jago, and Yetton have developed a leadership
model that enables a leader to analyze a situation and decide whether it is right for
participation. The technique includes a set of management decision styles, a set of
diagnostic questions, and a decision tree for identifying how much participation is called
for in a situation.
II. Power and Leadership
Leaders without power are really not leaders because they have no chance of influencing anyone to do
anything. Leaders in organizations normally derive much of their power from their formal position and the
ability to allocate rewards. In some cases, leaders may have expert or referent power depending upon their
individual characteristics.
III. Becoming a Leader
Start to think Like a Leader: Thinking like a leader requires applying the three-step model: identify what
is happening; account for it; and decide on the necessary leadership actions. And remember that leading
requires knowledge of matters other than leadership theories (e.g., culture, motivation, groups, conflict, and
change) to influence followers to move toward goals.
Develop Your Judgment: Leaders can improve their judgment or decision-making ability by increasing
their knowledge, debasing their judgment, being creative, using intuition, not overstressing the finality of

decisions, and making sure the timing of a decision is right.
Develop Your Other Leadership Traits: Leaders can use good judgment, exhibit self-confidence, and
improve their knowledge of the business to improve their effectiveness.
Start to Build Your Power Base: Leaders can strengthen the foundation of their leadership by making
sure followers share their vision, adapting their leadership style and actions to the situation, substituting
other management skills to help them lead by choosing the right followers, and organizing the task properly
to reduce the need for leadership.
Help Others Share Your Vision: Ensuring that your subordinates know and understand your vision,
mission, and objectives can help the leader influence the subordinates to work enthusiastically toward
achieving an objective.
Adapt Your Style and Actions to the Situation: No one leadership style is appropriate for every
situation.
Use Your Other Management Skills to Lead: Leaderships should choose the right followers and
organize the task properly.
B. Building Trust: The Essence of Leadership
I. Understanding Trust
Trust is a positive expectation that another will not act opportunistically. The two most important elements
of our definition are that it implies familiarity and risk. Trust is a history-dependent process based on
relevant but limited samples of experience. It takes time to form, building incrementally and accumulating, it
involves making oneself vulnerable. By its very nature, trust provides the opportunity for disappointment.
But trust is not taking risk per se; rather it is a willingness to take risk. Recent evidence has identified five:
integrity, competence, consistency, loyalty, and openness. Integrity refers to honesty, conscientiousness, and
truthfulness. This one seems to be most critical when someone assesses another's trustworthiness.
Competence encompasses an individual's technical and interpersonal knowledge and skills. Consistency
relates to an individual's reliability, predictability, and good judgment in handling situations. Loyalty is the
willingness to protect and save face for another person. The final dimension of trust is openness.
II. Trust as One Foundation of Leadership
1. Trust appears to be a primary attribute associated with leadership.
2. Part of the leader's task has been working
with people to find and solve problems,
but whether leaders gain access to the
knowledge and creative thinking they
need to solve problems depends on how
much people trust them.
3. When followers trust a leader, they are
willing to be vulnerable to the leader's
actions.
4. Honesty consistently ranks at the top of
most people's list of characteristics they
admire in their leaders.
5. Now, more than ever, managerial and
leadership effectiveness depends on the
ability to gain the trust of followers.
6. In times of change and instability, people
turn to personal relationships for
guidance; and the quality of these relationships are largely determined by level of trust.
7. Moreover, contemporary management practices such as empowerment and the use of work
Trust: The Foundation
of Leadership

teams require trust to be effective.
III. Types of Trust
Deterrence-based Trust: The most fragile relationships are contained in deterrence-based trust,
based on fear of reprisal if the trust is violated. It works only to the degree that punishment is
possible, consequences are clear, and the punishment is actually imposed if the trust is violated. To
be sustained, the potential loss of future interaction with the other party must outweigh the profit
potential that comes from violating expectations. Most new relationships begin on a base of
deterrence. In a new manager-employee relationship the bond that creates this trust lies in the
authority held by the boss and the punishment he/she can impose.
Knowledge-based Trust: Most organizational relationships are rooted in knowledge-based trust.
Trust is based on the behavioral predictability that comes from a history of interaction. Knowledge
of the other party and predictability of his or her behavior replaces the contracts, penalties, and
legal arrangements more typical of deterrence-based trust. This knowledge develops over time,
largely as a function of experience. The more communication and regular interaction you have with
someone else, the more this form of trust can be developed and depended upon. Interestingly, at
the knowledge-based level, trust is not necessarily broken by inconsistent behavior. If you can
adequately explain or understand another's apparent violation, you can accept it, forgive the person,
and move on in the relationship. Most manager-employee relationships are knowledge-based.
Identification-based Trust: The highest level of trust is achieved when there is an emotional
connection between the parties. It allows one party to act as an agent for the other and substitute
for that person. This mutual understanding is developed to the point that each can effectively act
for the other. Controls are minimal at this level. The best example of identification-based trust is a
long-term, happily married couple. You see identification-based trust occasionally in organizations
among people who have worked together for long periods of time and have a depth of experience
that allows them to know each other inside and out. This is also the type of trust that managers
ideally seek in teams.
KEY TERMS
Leadership Leadership is a process where Leader/Person who influences individuals and groups in an
organization.
Trust Trust is a positive expectation that another will not act opportunistically.
Vision Vision that is a general statement of the organization’s intended direction that evokes
positive emotional feelings in organization members.

Lesson 41
REVISION (LESSON 12-21)
KEY TERMS
Plans Plans are methods for achieving a desired result.
Simulation A technique for experimenting with a real-world situation through a
mathematical model representing that situation. A model is an abstraction of the
real world.
Strategic planning is the process by which top management determines overall organizational
Layoffs At times, the firm has no choice but to actually lay off part of its workforce.
Strategic planning: It is the process by which top management determines overall organizational
Human Resource Information System
HRISs are systems used to collect, record, and store, analyze, and retrieve data
concerning an organization's human resources.
Job Analysis: Studying and under-standing jobs through the process known as job analysis is a
vital part of any HRM program
Job Specification A job specification is a document containing the minimum acceptable
qualifications that a person should possess in order to perform a particular job
Job Description A job description is a written statement of what the jobholder actually does, how
he or she does it, and under what conditions the job is performed.
Job Evaluation It suggests about the relevant importance of a particular job in organization.
Job Identification Contains the job title, the FLSA status, date, and possible space to indicate who
approved the description, the location of the job, the immediate supervisor’s
title, salary and/or pay scale.
Job Summary should describe the general nature of the job, and includes only its major
functions or activities.
Human resource planning (HRP):
It is the process of systematically reviewing human resource requirements to
ensure that the required number of employees, with the required skills, is
available when they are needed.
Recruitment: It is the process of attracting individuals on a timely basis, in sufficient numbers
and with appropriate qualifications, and encouraging them to apply for jobs with
an organization.
Job Evaluation It is used to evaluate the importance of job by considering its contribution
towards achievements of the objectives of organization.
Advertising A way of communicating the employment needs within the firm to the public
through media such as radio, newspaper, television, industry publications, and
the Internet.
Yield Ratios: Yield Ratios help organizations decide how many employees to recruit for each
job opening.
Internal Recruiting Sources:
When job vacancies exist, the first place that an organization should look for
placement is within itself
Outsourcing Out sourcing is the process of transferring responsibility for an area of service
and its objectives to an external service provider instead of internal employee.
Contingent Workers It is also known as part-timers, temporaries, and independent contractors,
comprise the fastest-growing segment of our economy.
Internships A special form of recruiting that involves placing a student in a temporary job.
Recruitment: Recruiting refers to the process of attracting potential job applicants from the
available labor force.
Selection Process Selection is the process of choosing from a group of applicants those individuals
best suited for a particular position.

Application Blank Application blank is a formal record of an individual’s application for
employment.
Standardization: Refers to the uniformity of the procedures and conditions related to
administering tests. It is necessary for all to take the test under
conditions that are as close to identical as possible.
Objectivity: Achieved when all individuals scoring a given test obtain the same
results.
Norms: Provide a frame of reference for comparing applicants’ performance
with that of others. A norm reflects the distribution of scores obtained
by many people similar to the applicant being tested. The prospective
employee’s test score is compared to the norm, and the significance of
the test score is determined.
Reliability: The extent to which a selection test provides consistent results. If a test
has low reliability, its validity as a predictor will also be low. To validate
reliability, a test must be verified.
Validity: The extent to which a test measures what it purports to measure. If a
test cannot indicate ability to perform the job, it has no value as a
predictor.
Snap Judgments: This is where the interviewer jumps to a conclusion about the candidate
during the first few minutes of the interview.
Socialization: Teaching the corporate culture and philosophies about how to do
business
Socialization: In order to reduce the anxiety that new employees may experience,
attempts should be made to integrate the person into the informal
organization.
Training: Training is a process whereby people acquire capabilities to aid in the
achievement of organizational goals. It involves planned learning
activities designed to improve an employee’s performance at her/his
current job.
Corporate Culture: The firm’s culture reflects, in effect, how we do things around here.
This relates to everything from the way employees dress to the way they
talk.

Lesson 42
KEY TERMS
Training The process of teaching new employees the basic skills they need to perform
their jobs.
Task Analysis A detailed study of a job to identify the skills required so that an appropriate
training program may be instituted.
Performance Analysis Careful study of performance to identify a deficiency and then correct it with
new Equipment, a new employee, a training program, or some other
adjustment.
On-the-job Training (OJT)Training a person to learn a job while working at it.
Vestibule or Simulated Training employees on special off-the-job equipment, as in training airplane
pilot training, whereby training costs and hazards can be reduced.
Coaching/Mentoring A method of on-the-job training where an experienced worker or Method the
trainee’s supervisor trains the employee.
Action Learning A training technique by which management trainees are allowed to work full-
time analyzing and solving problems in other departments.
Case Study Method A development method in which the manager is presented with a written
description of an organizational problem to diagnose and solve.
Business Games A development technique in which teams of managers compete with one
another by making computerized decisions regarding realistic but simulated
companies.
Behavior Modeling A training technique in which trainees are first shown good management
techniques in a film, are then asked to play roles in a simulated situation, and
are then given feedback and praise by their supervisor.
Learning Organization An organization skilled at creating, acquiring, and transferring knowledge and
at modifying its behavior to reflect new knowledge and insights.
Training The heart of a continuous effort designed to improve employee competency
and organizational performance.
Human Resource Development:
A major HRM function that consists not only of T&D but also individual
career planning and development activities and performance appraisal.
Learning Organizations Firms that recognize the critical importance of continuous performance-
related training and development and take appropriate action.
Job Rotation It involves moving employees from one job to another for the purpose of
providing them with broader experience.
Assistant to Position: Employees with demonstrated potential are sometimes given the opportunity
to work under a successful manger.
Job Rotation: It involves moving employees to various positions in organization in an effort
to expand their skills, knowledge and abilities.
Career: Career can be defined as a general course of action a person chooses to pursue
throughout his or her working life
Career planning: Career planning is an ongoing process through which an individual sets career
goals and identifies the means to achieve them.
Career Paths: Career paths have historically focused on upward mobility within a particular
occupation.
Career Development: A formal approach taken by an organization to help people acquire the skills
and experiences needed to perform current and future jobs is termed as career
development.
Mentoring & Coaching: When senior employee takes an active role in guiding another individual, we
refer to this activity as mentoring and coaching
Dual-Career Path: A career-path method, that recognizes that technical specialists can and should
be allowed to continue to contribute their expertise to a company without

having to become managers.
Performance: Performance can be defined as efforts along with the ability to put efforts
supported with the organizational policies in order to achieve certain
objectives.
Motivation: Activities in HRM concerned with helping employees exert high energy levels
and to get performance in desirable direction.
Performance Management: A process that significantly affects organizational success by having managers
and employees work together to set expectations, review results, and reward
performance.
Performance: Performance appraisal is a system of review and evaluation of an individual or
team’s job performance.
Halo Error Occurs when the evaluator perceives one factor as being of paramount
importance and gives a good or bad overall rating to an employee based on
this factor.
MBO: It is a goal-oriented performance appraisal method, requires that supervisors
and employees determine objectives for employees to meet during the rating
period, and the employees appraise how well they have achieved their
objectives
360-Degree Feedback: Involves input from multiple levels within the firm and external sources as
well.
Central Tendency Occurs when employees are incorrectly rated near the average or middle of
the scale.

Lesson 43
KEY TERMS
Job Evaluation: Job evaluation means systematically determining relative worth of jobs to
create job structure.
Point Method: Raters assign numerical values to specific job components, and the sum of
these values provides a quantitative assessment of a job’s relative worth.
Classification Method: A job evaluation method by which a number of classes or grades are defined
to describe a group of jobs is known as Classification method.
Ranking Method: Raters examine the description of each job being evaluated and arrange the
jobs in order according to their value to the company.
EAPs: Specific programs designed to help employees with personal problems.
Positive Reinforcement: Applying a valued consequence that increases the likelihood that the person
will repeat the behavior that led to it is termed as positive reinforcement.
Punishment: Punishment means administering an aversive consequence.
Merit Pay: A pay increase given to employees based on their level of performance as
indicated in the appraisal.
Equity: Workers’ perceptions that they are being treated fairly. Compensation must be
fair to all parties concerned and be perceived as fair
External Equity: Exists when a firm’s employees are paid comparably to workers who perform
similar jobs in other firms.
Internal Equity: Exists when employees are paid according to the relative value of their jobs
within an organization.
Compensation: The total of all rewards provided employees in return for their services.
Job Pricing: Job pricing means placing a dollar value on the worth of a job.
Flextime: The practice of permitting employees to choose, with certain limitations, their
own working hours.
Capitation: Typically, the reimbursement method used by primary care physicians is an
approach to health care where providers negotiate a rate for health care for a
covered life over a period of time.
Disability protection: Workers’ compensation protects employees from job-related accidents and
illnesses. Some firms, however, provide additional protection that is more
comprehensive.
(ESOP): A defined contribution plan in which a firm contributes stock shares to a
trust.
Gain sharing: Plans that are designed to bind employees to the firm’s performance by
providing an incentive payment based on improved company performance
Scanlon plan: Provides a financial reward to employees for savings in labor costs that result
from their suggestions.
Telecommuting: Telecommuting is a work arrangement whereby employees are able to remain
at home, or otherwise away from the office, and perform their work over
telephone lines tied to a computer
Autonomy: The extent of individual freedom and discretion employees have in
performing their jobs.
Pay for Performance Pay for performance refers to any compensation method that ties pay to the
quantity or quality of work the person produces
Empowerment Empowerment means giving employees the authority, tools, and information
they need to do their jobs with greater autonomy
Extinction withdrawing or failing or failing to provide a reinforcing consequence.
Punishment Administering an aversive consequence.
Positive Reinforcement applying a valued consequence that increases the likelihood that the person
will repeat the behavior that led to it.
Motivation Motivation is the inner drive that directs a person’s behavior toward goals.

Stress Stress is the body’s nonspecific reaction to any demand made on it.
Burnout The total depletion of physical and mental resources caused by excessive
striving to reach an unrealistic work-related goal.
Hypnosis An altered state of consciousness that is artificially induced and characterized
by increased receptiveness to suggestions.
Constraints Constraints are barriers that keep us from doing what we desire.
Demands desires that are backed by the purchasing power or affordability.
Biofeedback A method of learning to control involuntary bodily processes, such as blood
pressure or heart rate.
Transcendental Meditation A stress-reduction technique in which an individual, comfortably seated,
mentally repeats a secret word or phrase provided by a trained instructor.
Burnout: An incapacitating condition in which individuals lose a sense of the basic
purpose and fulfillment of their work
Communication Exchange of information between people; it occurs when one person
understands the meaning of a message sent by another person, and responds
to it.
Noise All factors that interfere with and distort communication.
Encoding Process by which sender puts a message in a certain format to send to the
receiver.
Feedback Information about some behavior and its effect.
Decoding Process by which the receiver translates the sender's message into an
understandable form.
Grievance procedure A formal, systematic process that permits employees to complain about
matters affecting them and their work.
Collective bargaining The process through which representatives of management and the union
meet to negotiate a labor agreement
Mediation A process whereby a neutral third party enters a labor dispute when a
Boycotts An agreement by union members to refuse to use or buy the firm’s products.
Arbitration The process that allows the parties to submit their dispute to an impartial third
party for resolution.

Lesson 44
INTERNATIONAL DIMENSIONS OF HRM
This lecture demonstrates how managers can effectively utilize HRM practices to enhance their firms'
competitive response in an era when the opportunities and challenges facing business are international in
nature. It covers the stages of international involvement, the challenges of expatriate job assignments, and
the ways to make those assignments more effective. It also discusses the development of HRM policies in a
global context and the specific HR concerns of exporting firms.
A. Managing Human Resources in an International Business
Globally, HR executives are strategic partners with line managers and actively participate in top-level
business decisions that bring human resource perspectives to the global management of a company.
Basically, the role of the global human resource executive is focused on being a strategic business partner
and decision maker. Any human resource initiative must be based on maximizing productivity to best
benefit the bottom line, and, therefore, a solid understanding of the total global system is essential. Just as
global business enterprises evolve, so do the human resources that support them. The global human
resources role is, and should be, a natural extension of the positive orientation toward global human
resource management and the recognition of the strategic role that must play.
I. The Stages of International Involvement
Firms progress through five stages (e.g., domestic operations, export operations, subsidiaries or joint
ventures, multinational operations, and transnational operations) as they internationalize their operations.
See Figure for a graphical
display of these stages. The
higher the stage, the more HR
practices need to be adapted to
diverse cultural, economic,
political, and legal
environments. For example,
HRM practices at Stage 5
companies (transnational
corporations) are designed to
blend individuals from diverse
backgrounds to create a shared
corporate (rather than national)
identity and a common vision.
The evolution of global
business stages are:
Exporting—Selling
abroad, either directly
or indirectly, by retaining foreign agents and distributors.
Licensing—An arrangement whereby an organization grants a foreign firm the right to use
intellectual properties such as patents, copyrights, manufacturing processes, or trade names for a
specific period of time.
Franchising—The parent company grants another firm the right to do business in a prescribed
manner. Franchisees must follow stricter operational guidelines than do licensees. Licensing is
usually limited to manufacturers, whereas franchising is popular with service firms such as
restaurants and hotels.
Multinational Corporation (MNC)—A firm that is based in one country (the parent or home
The Stages of Internationalization
Stage 1: Domestic
Operations The
firm’s market is
exclusively
domestic.
Stage 2: Export Operations The firm
expands its market to include other
countries, but retains production
facilities within domestic borders.
Stage 3: Subsidiaries or Joint Ventures
The firm physically moves some of its
operations out of the home country.
Stage 4: Multinational
Operations The firm becomes a
full-fledged multinational corp.
(MNC) with assembly and
production facilities in several
countries and regions of the
world. Some decentralization of
decision making is common, but
many personnel decisions are
still made at corp. headquarters.
Stage 5: Transnational
Operations Firms that reach this
stage are often called transna-
tional because they owe little
allegiance to their country of
origin. Operations are highly
decentralized, with each busi-
ness unit free to make personnel
decisions with very loose control
from corp. headquarters.

country) and produces goods or provides services in one or more foreign countries (host
countries).
Global Corporation—Has corporate units that are integrated to operate as one organization
worldwide in a number of countries.
II. Global Human Resource Management
The utilization of global human resources to achieve organizational objectives without regard to geographic
boundaries. Those engaged in the management of global human resources develop and work through an
integrated global human resource management system similar to that experienced domestically.
III. Global Staffing
A global organization must have qualified individuals in specific jobs at specific places and times in order to
accomplish its goals. This process involves obtaining such people globally through human resource
planning, recruitment, and selection.
A. Type of staff members
1. Expatriate: An employee working in a firm who is not a citizen of the country in which the firm is
located but is a citizen of the country in which the organization is headquartered.
2. Host-country national (HCN): An employee working in a firm who is a citizen of the country in
which the firm is located, but where the firm is operated by an organization headquartered in another
country. Normally the bulk of employees in international offices will be host-country nationals.
3. Third-country national (TCN): A citizen of one country, working in a second country, and
employed by an organization headquartered in a third country.
B. Approaches to Global Staffing
1. Ethnocentric staffing: Companies primarily hire expatriates to staff higher-level foreign positions.
2. Polycentric Staffing: When more host-country nationals are used throughout the organization,
from top to bottom.
3. Regiocentric Staffing: Similar to the polycentric approach, but regional groups of subsidiaries
reflecting the organizations strategy and structure work as a unit.
4. Geocentric staffing: A staffing approach that uses a worldwide integrated business strategy.
Global training and development is needed because people, jobs, and organizations are often quite
different globally.
IV. Global Human Resource Development
a. Expatriate Development—The development process should start as soon as the workforce is
selected, even before beginning global operations if possible.
b. Repatriation Orientation and Training—Orientation and training is necessary prior to
repatriation, which is the process of bringing expatriates home. Repatriation orientation and
training is needed to prepare the employee, and the family, for a return to the home-country culture
and to prepare the expatriate’s new subordinates and supervisor for the return.

V. Global Compensation and Benefits
Probably the main reason that organizations relocate to other areas of the world is because of high-wage
pressures that threaten their ability to compete on a global basis. Basically, the compensation levels are
usually much lower globally. Variations in laws, living costs, tax policies, and other factors all must be
considered when establishing global compensation packages.
VI. Global Safety and Health
Safety and health aspects of the job are important because employees who work in a safe environment and
enjoy good health are more likely to be productive and yield long-term benefits to the organization. For this
reason, progressive global managers have long advocated and implemented adequate safety and health
programs. Basically, U.S.-based global operations are often safer and healthier than those of the host-
country operations, but frequently not as safe as similar operations in the United States.
VII. Possible Barriers To Effective Global Human Resource Management
Unfortunately, a global organization must cope with various unknowns. The management of HR functions
globally is enormously complicated by the need to adapt HR policies and practices to different host
countries. HR management must consider the potential impact of global differences on human resources.
Differences in politics, law, culture, economics, labor/management relations systems, and other factors
complicate the task of global human resource management.
a. Political and Legal Factors—the nature and stability of political and legal systems vary throughout
the globe. firms enjoy a relatively stable political and legal system. The same is true in many of the
other developed countries, particularly in Europe. However, in other nations, the political and legal
systems are much more unstable. Some governments are subject to coups, dictatorial rule, and
corruption, which can substantially alter the business environment as well as the legal environment.
Legal systems can also become unstable, with contracts suddenly becoming unenforceable because of
internal politics.
b. Cultural Factors—Cultural differences vary from country to country with corresponding differences
in HR practices. HR practices must be adapted to local cultural norms, and, therefore, most HR staff
members in a foreign subsidiary should be drawn from host-country nationals. However, just because
certain cultural norms are restrictive does not mean that an attempt at change should not be made.
Companies must bring in a critical mass of expatriates who carry the culture with them and always
leave one or two behind to oversee locals and ensure that they are following corporate policies. The
key is to accommodate local cultures but maintain the critical nature of the corporate culture.
c. Economic Factors—Differences in economic systems must also be thoroughly investigated. In a
capitalist system, the overwhelming need for efficiency favors HR policies and practices that value
productivity and efficiency. In a socialist system, HR practices favor the prevention of
unemployment, often at the expense of productivity and efficiency, which is often unacceptable. The
impact of economic factors on pending global operations must be fully understood and accounted
for prior to developing HR policies and practices. Probably one of the greatest economic factors is
the difference in labor costs.
d. Labor/Management Relations Factors—The relationship between workers, unions, and
employers varies dramatically from country to country and obviously has an enormous impact on HR
management practices.
VIII. The Challenges of Expatriate Assignments
One of the most challenging tasks for any firm operating internationally is to manage its expatriate work
force effectively.
a. Why International Assignments End in Failure
The failure. expatriates is estimated to be in the 20 to 40 percent range. Six factors account for most
failures.

1. Career blockage
2. Culture shock
3. Lack of pre-departure cross-cultural training
4. Overemphasis on technical qualifications
5. Getting rid of a troublesome employee
6. Family problems
Difficulties on Return
When the expatriates return home, they may experience additional problems, which include:
7. Lack of respect for acquired skills
8. Loss of status
9. Poor planning for return position
10. Reverse culture shock
Effectively Managing Expatriate Assignments with HRM Policies and Practices
Companies can minimize the chances of failure by putting in place a sensible set of HRM policies and
practices that get to the root of the problems. Such policies and practices would pertain to selection,
training, career development, and compensation. Adequate practices in these areas can be used to avoid
problems.
Selection
The choice of an employee for an international assignment is a critical decision. To choose the best
employee for the job, management should:
1. Emphasize cultural sensitivity as a selection criteria
2. Establish a selection board of expatriates
3. Require previous international experience
4. Explore the possibility of hiring foreign-born employees
5. Screen candidates’ spouses and families
Training
The assumption that people everywhere respond in similar fashion to the same images, symbols, and
slogans has hurt U.S. companies. Cross-cultural training sensitizes candidates for international assignment
to the local culture, customs, language, tax laws, and government.
Career Development
The expatriate’s motivation to perform well on an international assignment will depend to a large amount
on the career development opportunities offered by the employer.
Compensation
Firms can use compensation packages to enhance the effectiveness of expatriate assignments. However,
compensation policies can create conflict if locals compare their pay packages to the expatriate’s and
conclude that they are being treated unfairly.
Global Equal Employment Opportunity
Equal employment opportunity worldwide ranges from virtually none to a highly sophisticated system.
Some countries have extensive EEO laws, and they are enforced vigorously. Other countries have similar
laws that are not enforced, whereas others have no laws relating to EEO.
Eight Keys to Global Human Resource Management of Expatriates
Global HR management of expatriates can be made simpler and more manageable by following eight steps,
which are general guidelines for developing an expatriate workforce.

The global business plan must be completely understood to make it easier to determine how
existing human resource policies can be adapted to accomplish global objectives.
The company’s Foreign Service policy should be a set of guidelines, not rigid rules, for relocating
employees and their families around the world while maintaining the domestic corporate culture.
Develop a global budget process so the overall cost of each expatriate global assignment can be
estimated. Such costs represent enormous investments and should be carefully considered to
determine if expatriates or host-country or third-country nationals should be used.
Profile the candidate and his or her family to determine who might be an effective candidate for a
global assignment. Often an entire family, not just an employee, must be considered in making the
determination.
The terms and conditions of the global assignment should be clearly stated up front. Expatriates
should be given both a verbal and written presentation of the assignment’s terms and conditions to
ensure a complete understanding of both the benefits and responsibilities of the global assignment.
Prepare expatriates and their families for relocation with departure orientation and training.
Employees and their families should be given language training and cultural training, as well as a
general orientation of everyday living and local customs.
Develop and implement a continual development process to take advantage of the employee’s
global experiences, including career planning, as well as home-country development during the
global assignment period.
Prepare returning expatriates and their families with repatriation orientation training.
Maintaining Corporate Identity through Corporate Culture
Maintaining an effective corporate culture that reflects that of the home country is essential for continuity
worldwide and often requires innovative insight. When a U.S. company hires too many local people in its
foreign offices, it risks losing the unique set of values and operating procedures that defines its corporate
culture.
Often a corporation forms an alliance with a company in the host country. In such situations, it is essential
that the corporate cultures and management styles of the partners blend together as quickly as possible.
Long-term success means having a corporate culture that supports the goals of the global organization and
effectively deals with the international business environment. As a firm becomes more and more global in
nature, it becomes more difficult to have a supportive corporate culture. Alliances are useful for all partners
because collaboration makes it possible to share the costs and risks of doing business, and it enables
companies to share financial resources, technology, production facilities, marketing expertise, and of course,
human resources. However, problems may occur in international alliances when people from different
organizations and national cultures work together. Regardless of whether an alliance exists, it is essential
that the corporate culture focus on making a profit. Combining an effective corporate culture that keys on
innovatively coping with the global environment and, at the same time, being profitable is what all global
companies must strive for. Ideally, the corporate culture of global corporations will closely parallel that of
the home country.

KEY TERMS
Ethnocentric Staffing Companies primarily hire expatriates to staff higher-level foreign
positions.
Polycentric Staffing When more host-country nationals are used throughout the organization,
from top to bottom.
Regiocentric Staffing Similar to the polycentric approach, but regional groups of subsidiaries
reflecting the organizations strategy and structure work as a unit.
Geocentric Staffing A staffing approach that uses a worldwide integrated business strategy
Expatriate An employee working in a firm who is not a citizen of the country in
which the firm is located but is a citizen of the country in which the
organization is headquartered.
Licensing An arrangement whereby an organization grants a foreign firm the right to
use intellectual properties such as patents, copyrights, manufacturing
processes, or trade names for a specific period of time.
Multinational Corporation A firm that is based in one country (the parent or home country) and
produces goods or provides services in one or more foreign countries
(host countries).
Global Corporation Has corporate units that are integrated to operate as one organization
worldwide in a number of countries.

Lesson 45
CONCLUSION & REVIEW
In today’s lecture, we will be having overview of the entire course we have covered in previous modules and
will consider the reasons of importance of HRM.
A. Human Resource Management
A managerial function tries to match an organization’s needs to the skills and abilities of its employees.
Attracting developing, motivating and retaining required talent and people in organization carries out this
function. Workforce of the organization is also being utilized as a source of competitive advantage by
acquiring financial or economic capabilities, product capabilities, technological or process capability,
organizational capability.
B. Strategies for Gaining Competitive Advantage
Competitive advantage refers to a company’s ability to maintain market share and profitability. Any
competitive advantage enjoyed by an organization tends to be short-lived because other companies are
likely to imitate it. This is as true for HR advantages as for technological and marketing advantages. For
example, many high-tech firms have "borrowed" reward programs for key scientists and engineers from
other successful high-tech firms. The challenge from an HR perspective is to develop strategies that offer
the firm a sustained competitive advantage. For instance, a company may develop programs that maximize
present employees' potential through carefully developed career ladders while at the same time rewarding
them generously with company stock with strings attached (for example, a provision that they will forfeit
the stock if they quit before a certain date).
a. Cost leadership A cost leadership strategy is a competitive strategy in which a company
aims to become the low-cost leader in the industry by emphasizing the attainment of
absolute cost advantages from any and all sources. Requires a balance between low costs
and acceptable quality.
b. Differentiation A differentiation strategy is a competitive strategy in which a company
seeks to be unique in its industry in a way that is valued by the customers. HR strategies
that fit a differentiation strategy emphasize innovation, flexibility, and renewal of the work
force by attracting new talent from other firms, opportunities for mavericks, and
reinforcement (rather than discouragement) of creative flair. The specific HR strategies
that are likely to benefit differentiators include the use of broad job classes, loose work
planning, external recruitment at all levels, team-based learning, emphasis on what the
individual can do (rather than on the job title held) as a basis for pay, and reliance on
performance appraisal as a developmental (rather than a control) device.
c. Focus Strategy: A focus
strategy is a competitive
strategy in which a
company selects a market
segment and serves the
customers in that
particular market niche
better or cheaper than its
competitors. The focus
strategy relies on both a
low-cost position and
differentiation, with the
objective of serving a
narrow target market
better than other firms.
The firm seeks to achieve

differentiation either from better meeting the needs of the particular target, or from
lowering costs in serving this target, or both. The HR strategies likely to fit the focus
strategy best would be somewhere in the middle of those described for low-cost producers
and differentiators.
C. The Strategic Management Process
Strategic planning is the process of identifying the business of the firm today and the business of the firm
for the future, and then identifying the course of action it should pursue. Strategic planning includes the
first five strategic management tasks: evaluating the situation, defining the business, developing the mission,
translating the mission into goals, and then crafting a course of action. Strategic management includes the
implementation phase. The strategic management process is the continuous process of identifying and
pursuing the organization’s mission by aligning internal capabilities with the external demands of the
environment.
Step 1: Define the Business and Its Mission: The strategic management process begins with answering
the question, in what business should we be? Defining a company’s business involves identifying several
things: product scope, vertical integration, geographic scope, how they compete. A vision is a general
statement of the organizations desired direction that evokes emotional feelings in its members. A mission
statement outlines the organization’s future path and it communicates its purpose. Managers base their
strategic plans on methodical analyses of their internal and external situations.
IV. Step 2: Translate the mission into strategic goals: Top management’s vision and mission are
translated into operational strategic goals.
V. Step 3: Formulate a strategy to achieve the strategic goals: A strategy is a course of action that
explains how the organization will move to achieve its strategic goals given its internal strengths
and weaknesses and its external opportunities and threats. Implementation of the strategy means
translating the plan strategy into actions and results, which requires drawing on the planning,
organizing, leading, and controlling functions of management. Top companies craft strategies
whose basic principles are easy to communicate.
VI. Step 4: Structure: Some HR strategies fit very well with highly formalized organizations that are
divided into functional areas (for example, marketing, finance, production, and so on) and that
concentrate decision making at the top. The HR strategies appropriate for this type of firm include
a control emphasis, centralized pay decisions, explicit job descriptions, and job-based pay.
VII. Step 5: People: People in organization mean to have workforce in organization to perform
different functions. Different set of HR strategies, include informal hiring and socializing of new
employees, decentralized pay decisions, broad job classes, and individual-based pay.
Managers must be alert to opportunities and threats that might require modifying or totally redoing their
strategies. Strategic control is the assessing of progress towards strategic goals and taking corrective action
as needed and keeping the strategy up-to-date.
D. Strategic Management Role:
Strategic management role is used to link the firm’s HR policies and practices to the broader,
longer-term needs of the firm and its stakeholders. Main responsibilities include Setting the direction
Crafting corporate- and business-level plans developing and implementing functional plans measuring,
evaluating, revising and refocusing, the fit between HR & business strategy
a. Enabler and Consultant Role: This role is used to enabling line managers to make things happen
main responsibilities include, Training, assisting with problem diagnosis developing solutions with
managers being accessible and attuned to employee needs and concerns

Developing
High-Performance
Work Systems
Linkages
to
Strategy
Linkages
to
Strategy
Principles of
High
Involvement
Principlesof
High
Involvement
OUTCOMES
•Organizational
• Employee
OUTCOMES
•Organizational
• Employee
SystemDesign
• Work flow
• HRMpractices
• Support
technology
SystemDesign
• Work flow
• HRMpractices
• Support
technology
The Implementation
Process
The Implementation
Process
c. Monitoring and Maintaining Role: Continuous monitoring is required to have compliance with
legal regulations and effectiveness of HR activities and this is ensured by the monitoring role by HR
department. Main activities performed in this role include monitoring morale, providing support
during change and uncertain times
d. Innovator Role: Improving productivity and quality of work life it includes: Adapting to an
environment of uncertainty, energy conservation, and international competition, justifying the
benefits and costs of programs
Change and Knowledge Facilitator Role: This role is played in order to facilitate organizational change
and to maintain the organizational flexibility. It includes focusing on the future, guiding the flow of
knowledge, information and learning throughout the organization.
E. High-performance Work System (HPWS)
A specific combination of HR practices, work structures, and processes that maximizes employee
knowledge, skill, commitment, and flexibility is called high performance work systems. This system is
composed of many interrelated parts that complement one another to reach the goals of an organization,
large or small. This system is based upon the principles of
shared information, knowledge development, performance
reward linkage and social equality. High performance
work system can bring many advantages to
organization they mainly include:
Employee Benefits: High performance
work systems are beneficent for employee in
absence that they are provided with
opportunity of more involvement in
organization, experience growth and
satisfaction specifically through organizational
training and developmental policies and can
become more contributors towards
achievement of goals and mission of the
organization.
Organizational Benefits: Organization can improve and increase the productivity; it can
ensure quality, flexibility in system in order to have more satisfied customers.
F. Selecting HR Strategies to Increase Firm Performance
No HR Strategy is “good” or “bad” in and of itself. The success of HR strategies depends on the situation
or context in which they are used. In other words, an HR strategy’s effect on firm performance is always
dependent on how well it fits with some of the factors. Fit refers to the consistency or compatibility
between HR strategies and other important aspects of the organization
a. Fit with Organizational Strategies
Organizational strategies may be examined at two levels: corporate and business.
Corporate strategy refers to the mix of businesses a corporation decides to hold and the flow of resources
among those businesses. This involves decisions pertaining to acquisition, divestment, diversification, and
growth. At one end of the spectrum is the evolutionary business strategy; at the other end is the steady-
state strategy. Business unit strategies refer to those established by firms or autonomous units of the
corporation. Well-known business strategies were formulated by Porter (overall cost leadership strategy,
differentiation business strategy, and focus strategy) and Miles and Snow (defender strategy and prospector
strategy).
b. Fit with the Environment
HR strategies should help the organization better exploit environmental opportunities or cope with the

unique environmental forces that affect it. The environment can be examined on four dimensions,
including (1) degree of uncertainty, (2) volatility, (3) magnitude, and (4) complexity.
c. Fit with Organizational Characteristics
To be effective, HR strategies must be tailored to the organization’s personality. The features of an
organization’s personality are its (1) production process for converting inputs into output, (2) market
posture, (3) overall managerial philosophy, (4) organizational structure, and (5) organizational culture.
d. Fit with Organizational Capabilities
An organization’s capabilities are its distinct competencies. HR strategies make a greater contribution to a
firm’s performance (1) when they help to exploit the firm’s specific advantages or strengths while avoiding
its weaknesses, and (2) when they assist in better using its own unique blend of human resource skills and
assets.
e. Choosing Consistent and Appropriate HR Tactics to Implement HR Strategies
Even the best-laid strategic HR plans may fail when specific HR programs are poorly chosen or
implemented. A firm’s HR strategies must be mutually consistent. That is, HR strategies are more likely to
be effective if they reinforce one another rather than work at cross-purposes.
G. Expectations for HR Professionals
Today’s dynamic environment places some expectations upon the HR professional to meet the changing
environment and contingencies these expectations are enlisted as following:
• Understand problems assigned
• Stay competent and professional through study and research
• Maintain high standards of personal honesty and integrity
• Consider the personal interests, welfare, and dignity of all employees affected by recommendations
and actions
• Ensure organizations maintain high regard for public interest and personal interests and dignity of
employees
H. Current HRM Challenges
a. Managing Teams
Team building—activities aimed at improving the internal work and relationship processes of teams—
requires attention to both task and interpersonal relationships. In team building, organizations apply the
principles of group dynamics to select complementary members, support more cohesion, manage stages of
group development, and establish constructive norms that foster high performance. Membership in teams is
based on expertise in areas that are necessary for task accomplishment. Trust is the key to team members'
commitment to a common goal, mutual accountability, and collaboration. Trust is built on six
interdependent factors: the integrity of the members; open communication; mutual respect and support;
fairness and equity; competence and hard work; and reward for cooperation. In addition, clear goals are a
requirement for effective teamwork. Members of effective teams play eight different roles, all of which are
necessary for a complete team and for synergy
b. Managing Diversity
A diverse workforce refers to two or more groups, each of whose members are identifiable and
distinguishable based on demographic or other characteristics like gender age group, education etc. Several
barriers in dealing with diversity include stereotyping, prejudice, ethnocentrism, discrimination, tokenism,
and gender-role. Managing diversity means planning and implementing organizational systems and practices
to manage people so that the potential advantages of diversity are maximized while its potential
disadvantages are minimized. Managers are striving for racial, ethnic, and sexual workplace balance as a
matter of economic self-interest. A study found that cultural diversity contributes to improved productivity,

return on equity, and market performance.
c. Managing Globalization
One of the most dramatic challenges facing as they enter the twenty-first century is how to compete against
foreign firms, both domestically and abroad. Many companies are already being compelled to think globally,
something that doesn't come easily to firms long accustomed to doing business in a large and expanding
domestic market with minimal foreign competition.
Weak response to international competition may be resulting in upwards layoffs in every year. Human
resources can play a critical role in a business's ability to compete head-to-head with foreign producers. The
implications of a global economy on human resource management are many. Some firms try to develop a
global company identity to smooth over cultural differences between domestic employees and those in
international operations. Minimizing these differences increases cooperation and can have a strong impact
on the bottom line. Some firms actively engage in international alliances with foreign firms or acquire
companies overseas to take advantage of global markets. Making such alliances work requires a highly
trained and devoted staff. These illustrations show how firms can use HR strategies to gain a worldwide
competitive advantage.
d. Managing Change
Many organizations face a volatile environment in which change is nearly constant. If they are to survive
and prosper, they need to adapt to change quickly and effectively. Human resources are almost always at the
heart of an effective response system. Here are a few examples of how HR policies can help or hinder a
firm grappling with external change:
I. Code of Ethics for HR Professionals:
Ethics related problems are faced by the organizations whenever there is a practice of using favoritism
rather than ability or job performance for managerial decisions regarding employment, promotion, pay and
discipline. These problems can be reduced and eliminated by maintaining the highest standards of
professional and personal conduct, encouraging employers to make fair and equitable treatment of all
employees a primary concern, maintaining loyalty to employers and pursue company objectives in ways
consistent with the public interest, upholding all laws and regulations relating to employer activities, and
maintaining the confidentiality of privileged information. People’s expectations that their employers will
behave ethically are increasing, so much that many firms and professional organizations have created codes
of ethics outlining principles and standards of personal conduct for their members. These negative
perceptions have worsened over the years. The widespread perceptions of unethical behavior may be
attributed to the fact that managerial decisions are rarely clear-cut. Except in a few blatant cases (such as
willful misrepresentation), what is ethical or unethical is open to debate. Even the most detailed codes of
ethics are still general enough to allow much room for managerial discretion. In other words, many specific
decisions related to the management of human resources are subject to judgment calls. Workplace
Flexibility: collaborative work in a virtual office
J. How Can You Gain Support for “Best HR Practices?”
Managers can gain support for best HR practices by linking the use of HR practices to the solution of real
business problems, and to achieving tangible business goals. This achievement of goals requires selection of
well defined and specific, measurable and realistic goals and communicating the expected standard of
performance to workers. Managers should demonstrate how the benefits outweigh the costs of using “best
HR practices.” Speak the language of business people, i.e., money, not correlation coefficients! Etc.
K. Future HR Trends:
Workplace Flexibility: collaborative work in a virtual office as well as flexible work hours is
one of future HR trends.

Global Business: borderless business requires a global workforce to perform the function at
international business level.
Work & Society: working to live, not living to work
Workforce Development: constant learning in a just-in-time format, learning organization &
high skill utilization
Definition of Jobs: jobs get bigger & broader
Strategic Role of HR: becoming leaders, not just partners
The Value of Predicting: having a vision & a way to achieve it.
Key issues of the organization are to achieve efficiency, effectiveness and competitiveness and this can be
done by using not ignoring the Knowledge and experience are available. Because most of the time Best HR
Practices are not used because of Resistance to change, Ignorance on the part of decision makers and
Political considerations. By overcoming these three factors we can have more effectively managed
organizations by using HR practices.
THE END

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