Human Resource Management Notes




Definition of HRM                                                                            (Nov. 01, May 04)

“HRM is a process of bringing people and organisations together so that the goals of each are met. It is a part of management process which is concerned with the management of human resource in an organisation”.

Definition of Personnel Management

According to George R. Terry “Personnel management is concerned with the obtaining and maintaining of a satisfactory workforce”.

Functions of HRM / PM (Nov. 02, May 05)

A] Managerial Functions includes: Planning, organizing, directing and controlling personnel.

B] Operational Functions

  1. 1. Procurement of Manpower: The basic principle of procurement is right man to the right job. The procurement function includes – manpower planning, recruitment, selection, appointment, placement, induction, promotion and transfer of employees.
  2. 2. Development of Manpower (HRD): HRD is concerned with the training and qualitative development of employees. Manpower development is required for meeting the growing and changing needs of manpower along with the expansion and diversification of business activities.
  3. 3. Performance and Compensation of Manpower: Performance management involves performance planning, performance appraisal, performance counseling and payment of compensation to employees.
  4. 4. Motivation and Maintenance of Manpower: Motivation and maintaining satisfied manpower requires health and safety measures, proper working conditions provision of welfare facilities and other non-monitory benefits.
  5. 5. Integration of Interests of Manpower and the Organisation: Manpower is interested in wage payment while organisation is interested in higher profits and market reputation etc. Personnel management has to reconcile the interests of both parties.
  6. 6. Maintaining Cordial Industrial Relations: This function involves the designing of industrial relation system, managing discipline, settlement of employee grievances and managing disputes between management and employees.
  7. 7. Miscellaneous Functions: Maintenance of service records of employees, promotions and transfers of employees, career planning of employees etc.

Objectives of HRM / PM (Nov. 02, May 05, Nov. 07)

  1. To attain self-development of the members of an organisation and also to utilize available human resources.
  2. To establish working relationships between employer and employees and between groups of employees.
  3. To ensure the availability of a competent and willing workforce to the organisation.
  4. To ensure satisfaction to the workers so that they are freely ready to work.
  5. To maintain high morale of the workers
  6. To secure the integration of individuals with the organisation by reconciling individual goals with those of an organisation.
  7. To improve the services rendered by the enterprise to the society through better workforce.

Features of HRM / PM

  1. 1. HRM relates to Managing People at work. It covers all level of personnel and their needs, expectations etc.
  2. 2. HRM is a people oriented process of bringing people and organisations together so that the goals of each ate met properly.
  3. 3. HRM is concerned with the development of employee’s potentialities.
  4. 4. HRM is an integral part of organisation
  5. 5. HRM is a continuous activity as personnel problems continue to exist as long as employees are working in an organisation.
  6. 6. HRM aims at securing willing cooperation of employees for achieving organizational objectives.
  7. 7. HRM is future oriented as it helps the organisation to achieve its objectives in future.
  8. 8. HRM is a challenging function as it deals with the employees who are always unpredictable.

Scope of HRM / PM (Nov. 06)

Scope of HRM is vast. All major activities of a worker from the time of his entry into an organisation until he leaves come under the purview of HRM. Important activities under HRM are:

  1. Determining the human resources needs of the organisation
  2. Recruitment, selection, appointment and placement of employees.
  3. Training and manpower development.
  4. Administration of wages and salaries.
  5. Employee services like health and safety, amenities and welfare facilities.
  6. Promotion and transfer of employees
  7. Industrial relations and settlement of grievances of employees.
  8. Human resources planning and career planning.
  9. Personnel research and personnel audit.

10.  Labour legislation and their administration in the organisation.

HRM V/S PM (May 03, 07)

HRM is the latest development in the evaluation of management of man Personnel management precedes HRM
It gives more importance to the abilities of employees rather than evaluating them as per rules. Performance is evaluated within the framework of rules.
It works on the basis of integrated initiative It works on the basis of piecemeal initiative
Process of decision making is fast Process of decision making is slow
It supports performance related remuneration It supports fixed remuneration
It uses latest techniques of training and development It uses outdated techniques of training and development
It practices division of work along with team work It practices only division of work
It favoures all round development of employees It favoures contractual employment based on written agreement


HRD is part of HRM and constitute one wing of HRM department. HRD is concerned with the training and qualitative development of employees.

Features of HRD

  1. HRD is a system of several interdependent sub-systems such as procurement, appraisal, development etc.
  2. HRD is a planned process of developing people on a continuous basis.
  3. HRD is an interdisciplinary concept as it uses principles of different areas such as psychology, economics, sociology etc.
  4. HRD basically develops competencies at individual, groups and organizational level.

Role & Responsibilities of HRD (May 04)

  1. HRD makes effective use of manpower by employing right man to the right job at right time.
  2. HRD facilitates human resource planning and control by maintaining data about the manpower of organisation.
  3. HRD influence the employees to accept the change willingly.
  4. HRD creates mutual trust and confidence leading to overall better performance.
  5. HRD maintains transparency in administration.
  6. HRD encourages employees to show innovation while solving problems.

HRD Policy (May 04)

HRD policy is a statement of an organisation, which provides a broad framework within which a decision on human resource can be made. HRD policy is formulated by the HRD department under the supervision of top management. HRD policy includes procedures, programmes and practices affecting human resources. This policy makes clear code of conduct thereby providing pleasant work atmosphere. HRD policy is a long life policy; they can be used repeatedly to solve recurring problems.

HRIS (Nov. 02, 08)

The concept of Human Resource Information System (HRIS) has been derived from the concept of Management Information System (MIS). HRIS may be defied as “a systematic procedure for collecting, storing, maintaining and retrieving data needed by an organisation about its human resource and various activities”.

Like any other information system, HRIS has three basic components – input, storage and output. The output may be in the form of hard copy or soft copy. The information supplied by HRIS is used by all departments of organisation.

The basic objective of HRIS is to provide accurate, relevant and timely information about human resources and their functioning in the most cost effective way. At present, every organisation generally uses computerised HRIS, which is fast, accurate and compact in storing the information.


Important characteristics of today’s workforce are:

  1. Composition of Workforce: In 1999 the total employment in India was 397 million. Of this 369 million in unorganized sector and 28 million were in organized sector. Of this 28 million, 19.4 million were in public sector and 8.7 million in private sector. This suggests that the share of organized private sector in total employment was 2.2 % indicating large-scale employment opportunities in this sector in near future.
  2. Employment in Factories: In 1999 the employment in factories was 7.44 million, which is just 2.3 % of total workforce estimate of 402 million. This suggests the factory workforce is very small portion of total workforce in the country.
  3. Industrial Labour Growth: The growth of industrial labour is rather slow in India due to slow growth of factories and also due to extensive use of automated technology. However due to industrial growth through globalisation, SEZ and export houses industrial workforce soon will dominate total labour force in India.
  4. Limited Education: Industrial workforce in India was uneducated over years; as a result they were exploited. However the situation has changed, they are now educated, get higher salaries, quick promotions and responsible positions.
  5. Absence of Unity: Industrial workforce in India lacks unity. It is divided on the basis of religion, language, cast and region. However this division is absent among highly educated and qualified industrial workers.
  6. Labour Turnover: This problem was in the olden days due to rural socio-economic background, easy availability of jobs, wage differences etc. However turnover is now reducing among industrial workforce.

In brief rapid changes taking place in industrial workforce in India in every aspect

Current Status of HRM / PM in India (Nov. 05)







JOB ANALYSIS                                                                                           (Nov. 01, 03, 04)

According to Adwin Flippo, “Job analysis is the process of collecting and studying information relating to the operations and responsibility of a specific job”.

Components of Job Analysis

1] Job Description (May 05, Nov. 06)

Job description is a statement describing the job and gives all necessary details of the job for which the recruitment is to be made. It is a written record of the duties, responsibilities and requirements of a particular job. The details given in a job description are as follows:

i)                    Nature and title of the job

ii)                  Operations and tasks involved in the job

iii)                Duties requited to be performed

iv)                Location, physical setting and discomfort connected with the job

v)                  Working condition for the job

vi)                Hazards connected with the job

vii)              Machines, tools and materials required to be used

viii)            Types of supervision received and given

ix)                Relation with the other jobs in the organisation

x)                  Opportunities for promotion

2] Job Specification

Job specification is based on job description. It states the minimum acceptable human qualifications and qualities necessary for the proper performance of the job. The details of the job specification are as follows:

i)                    Educational and professional qualifications

ii)                  Practical experience

iii)                Personality and mental qualities

iv)                Physical fitness

v)                  Interpersonal relations skills

Process of Job Analysis

Job analysis is a sequential process and involves the following five steps:

  1. Selection of a specific job for analysis
  2. Collection of information relating to the job
  3. Processing of information for conclusion
  4. Preparation of job description i.e. a statement showing various details of the job
  5. Preparation of job specification i.e. a statement showing qualities required for performing the job.

Uses of Job Analysis

  1. Facilitate proper publicity of jobs as exact details of job obtained from job analysis.
  2. Facilitate selection of psychological tests exactly as per need
  3. Facilitate purposeful personal interview of the candidate
  4. Facilitate scientific selection, placement and orientation
  5. Facilitate scientific promotions and transfers
  6. Facilitate performance appraisal
  7. Facilitate manpower training and development programmes
  8. Facilitate introduction of rational wage structure.

JOB DESIGN                                                                                                           (Nov. 01)

Job design is a systematic attempt to organize tasks, duties and responsibilities into a unit of work to achieve certain objectives. It is the division of the total task to be performed into manageable units. Jon design involves the following three steps:

a)      Specification of individual tasks

b)      Specification of the method of performing each task

c)      Combination of tasks into specific jobs to be assigned to the employees


1. Organisation Factors

i) Characteristics of Task: An individual employee may carry out one main task, which consists of a number of interrelated functions. In case of complex jobs, individual employee may carry out a variety of connected tasks, each having a number of functions.

ii) Work Flow: The workflow in an organisation is strongly influenced by the nature of the product and services.

iii) Ergonomics: Ergonomics is concerned with the designing as per the physical abilities and characteristics of individual employees so that they can perform the job efficiently.

iv) Work Practices: Work practices are the set methods of performing work. Such practices are based on the tradition or as per the collective wishes of employees.

2. Environmental Factors

i) Employee Abilities and Availabilities: Job should be adjusted as per the availability and ability of the employees.

ii) Social and Cultural Expectations: Job should be designed as per the social and cultural expectations of employees such as holidays, hours of work, rest breaks, etc.

3. Behavioural Factors

i) Feedback: Individual employee should receive meaningful feedback about his hob performance. This enables him to improve his performance.

ii) Autonomy: Employee should have autonomy because the job that gives authority of decision making to employees increases the employee’s sense of recognition.

iii) Use of Abilities: The job should be designed in such a manner that the employee will be able to use his abilities fully.

iv) Variety: Adequate variety should be given while designing the job, as the absence of variety in the job leads to boredom and fatigue and fatigues causes mistakes while performing the job.


  1. Job Simplification: A given job is divided into small sub-parts and each part is one individual employee. Purpose of job simplification is that the job become highly specialised and the less trained employees can perform these jobs easily. Disadvantage of job simplification is that over specialization results into boredom, which in turn leads to errors.
  2. Job Rotation: Job rotation means systematic movement of employees from one job to the other. Job remains unchanged but employees performing them shift from one job to other.
  3. Job Enlargement: Jon enlargement means aggregating tow or more jobs into a single one. It is opposite to the job simplification. Purpose of job enlargement is to bring about some sense of wholeness in the job. Advantage of job enlargement is that it reduces monotony and boredom.
  4. Self-Directed Teams: A self-directed team is a group of employees who are responsible for a whole work process that delivers a product or service. Such teams have clear sense of purpose and are effective in taking decisions and ensure the quality of work assigned to them.
  5. Job enrichment: Job enrichment means making the job rich in its contents so that an employee will get more satisfaction while performing job.


Characteristics of Job Enrichment
  1. Variety: Job should be enlarged by adding new varieties to it.
  2. Task Identity: Instead of asking the worker to manufacture only one component of the total product, he should be asked to complete the manufacturing of the whole product. This will enable him to identify himself with the result of his efforts.
  3. 3. Task Significance: When a worker is asked to complete the manufacturing the whole product, he will feel the significance of the task completed.
  4. 4. Autonomy: Worker should be given freedom to set his own work schedule, establish his work methods, introduce his quality checks, make crisis decision etc. The worker feels that the work is his own and he is responsible for its success and failure.
  5. 5. Feedback: Worker should be given periodical information as to how he is progressing in the enriched job. This will enable him to improve and adjust his work properly.

Process of Job Enrichment
  1. Selecting the jobs which are suitable to job enrichment.
  2. Identify the changes that may enrich the selected jobs.
  3. Changing the contents of a job so as to provide self-control, sense of achievement & responsibility.
  4. Training, guiding, developing and motivating employees wherever necessary.
  5. Integrating the newly enriched jobs into the daily work routine of the organisation.

Advantages of Job Enrichment

  1. Job enrichment benefits employees and management in terms of better performance, job involvement, job satisfaction and reduce employees absenteeism.
  2. It meets psychological needs of workers in terms of achievement and acceptance of new challenges.

Limitations of Job Enrichment

  1. Success of job enrichment depends on the desire of the employees to accept more responsibility. If the employee refuses to accept the enriched job, the accepted result will not be available.
  2. There may be opposition to job enrichment by trade unions.

JOB EVALUATION                                                             (Nov. 02, 04, 08, May 04, 05, 07)

Job evaluation means determining the relative worth of a job in an organisation by comparing it with other jobs within the organisation and with job market outside.


  1. To establish logical & accurate relationship of each job to other jobs within organisation.
  2. To determine the wage rate for each job in relation to other job in the organisation.
  3. To select employees accurately and train, promote or transfer them impartially.
  4. To promote employee goodwill, strengthen morale and provide an incentive.
  5. To provide management with a basis for proper control.


1. Ranking / Grading Method

Under ranking method, jobs are arranged in descending order of importance with the help of job description and job specification etc. The ranking of job is carried out by a committee of experts called raters.  The ranking is done a departmental level, for every department the job is ranked in order of importance.


  1. It is simple, easily understood by all concerned and easy to operate.
  2. It is inexpensive.
  3. It can be used conveniently in small establishments.


  1. It dose not indicate the degree of differences in the jobs
  2. Sometimes it is based on the rater’s general knowledge of the jobs.
  3. It is unsuitable for a large company with a complex organisational structure.

2. Factor Comparison / Weight-in-Money Method

Under factor comparison method the jobs are ranked in the following way:

  1. Common key elements of different jobs are selected.
  2. These selected key elements are weighted and ranked.
  3. A monetary value is assigned to each element of all jobs.
  4. Then these monetary values of individual jobs are weighted.
  5. Then total value of each job is available.


  1. It is more accurate and systematic then Simple Ranking Method.
  2. Dissimilar jobs also can be rated on the basis of common factors.


  1. It is complicated, not easily explainable and expensive.
  2. Application of weightage and monetary values may involve bias of rankers.
  3. It is difficult to install hence not used extensively.

3. Point Rating Method

In this method, each job is evaluated separately, considering each of the job factors such as skill, effort, responsibility and working conditions and combining them into a single point score for each job.


  1. It is analytical in its approach,
  2. It gives a quantitative value for each job.
  3. Basis and guidelines of valuation are standardized are codified in a user manual.


  1. Manual used for rating the jobs needs periodical revision and update.
  2. It is difficult for application and unintelligible for workers.


The process of job evaluation involves following steps:

  1. Securing acceptance from employees after explaining the purpose and use of job evaluation programme.
  2. Creating job evaluation committee consisting of experienced employees, union representatives and HR experts.
  3. Deciding the job to be evaluated, which may represent the type of work performed in the organisation.
  4. Analysing and preparing job description
  5. Selecting method of evaluation, according to the job factors and organisational demand.
  6. Classifying the jobs on the basis of weightage and monetary values
  7. Installing the programme in the whole organisation after explaining it to employees.
  8. Conducting periodical review in the light of changes in environment from time to time.



PERSONNEL PLANNING (Nov. 02, 07, May 05)

Manpower Planning and Human Resource Planning is rather synonyms. HR planning is a strategy for the procurement, development, allocation and utilization of an orgainisation’s human resources.


  1. To ensure that necessary human resources are made available as and when required by the organisation.
  2. To make suitable and scientific arrangement for the recruitment of right type persons.
  3. To ensure optimum utlisation of human resources currently developed in organisation.
  4. To design the management development programmes so as to develop the required talents among the employed.
  5. To determine future manpower requirements of the organisation.


  1. Facilitates scientific recruitment and selection of manpower as per future needs
  2. Makes HRD programmes effective, this ensure full utilisation of available manpower.
  3. Ensures orderly working and growth of an organisation
  4. Regulates labour costs and production costs and ensure adjustments between manpower requirement and manpower available.
  5. Motivate existing employees and keep their morale high through training and manpower development programmes.
  6. Prevents sudden disruption in the working of organisation, as it indicates shortages of particular types personnel in advance and facilitates suitable provisions.


  1. HR planning may be ineffective as future manpower needs of organisation are uncertain.
  2. HRP is time consuming and costly due to services of experts required for HRP.
  3. Inadequate attention to environmental changes and corresponding future manpower requirements (by traditional management) makes HRP redundant.
  4. Shortage of skilled labour and high labour turnover makes recruitment of required manpower difficult.
  5. Surplus manpower in a country like India makes HRP redundant.


HR planning involves the following six steps:

  1. Deciding the objectives of human resource planning in the context of organisational objectives and policies.
  2. Estimating the overall human resource requirements in the context of organisational objectives and plans. This may be described as “HR Needs forecast”. Such forecast should be in relation to quantity and quality of manpower required by the organisation.
  3. Taking inventory of human resource currently available in the organisation. This may be described as “HR Supply Forecast”.
  4. Determining actual human resource requirement on the basis of job requirements and job description. This may be described as “HR Programme”. In addition, proper comparison between manpower available and manpower required is necessary.
  5. Preparing a human resource recruitment and selection plan for filling additional human resource required. This may be described as  “HRP Implementation”
  6. Developing appropriate manpower development plan in order to meet the future manpower requirements from within the organisation.

(See page 62 for diagram)


Human resource planning plays an important role at different level, i.e. national level, industry level and industry level. (Further- summerise objectives and advantages of HR planning)


Downsizing of an organisation means reducing the excess employees by suitable measures and adjusting them as per need of the organisation. Such downsizing is necessary when market demand reduces or when new technology is introduced or when certain activities are closed down. In India downsizing was introduced in nationalized banks and in organisations such as SAIL, Fiat India, Motorola, and Hyundai etc.

For reduction, suitable “trimming downsizing plan” must be prepared which indicates:

  1. Who is to be made redundant and where and when
  2. Plans for retraining of employees.
  3. Steps to be taken to help redundant employees find new jobs.
  4. Policy for declaring redundancy and making redundancy payments.
  5. Programme for consulting with unions and informing those affected.

For downsizing, following other methods can also be used:

  1. Retain all existing employees but reduce the work hour for reduction in the total wage payment.
  2. Transfer employees in other parts of organisation where additional employees are needed.
  3. Offer incentives for early retirement in the form of VRS
  4. Declare lay-off for dealing with surplus staff.

VRS (Nov. 02, 08)

Voluntary Retirement Scheme is a type of voluntary separation of old and unproductive employees from the organisation. It is also called Golden Hand Shake Plan. VRS is followed in private as well as public sector organisations. Here the employees are relived from the job as per the terms and conditions mentioned in the scheme. Under VRS the surplus employees are offered following types of monetary incentives:

  1. Pension and lump sum gratuity.
  2. Loyalty bonus
  3. Employee Stock Ownership Plans (ESOP)
  4. Prizes and rewards for long service in the organisation
Purpose of VRS

VRS is advocated on the following grounds:

  1. To reduce financial burden on the organisation
  2. To reduce surplus labour
  3. To ensure optimum utilisation of operating manpower in the organisation.
  4. To introduce extensive use of computers and new technology.
Advantages of VRS
  1. It is an economical and time saving method for reducing surplus staff
  2. Generally it is favoured by employees and unions.
Limitations of VRS
  1. In many organisations competent employees opted for VRS and not incompetent employees
  2. This scheme failed in India due to inadequate employment opportunities.
  3. Sometimes, VRS become compulsory retirement scheme for some employees and thus opposed by employees and union.

Employee Stock Ownership Plans (ESOP) (Nov. 05)

Under ESOP employees are offered the company’s share at a concessional price. When the market price of the shares increases, the employees earn substantial capital gain.

Merits of ESOP
  1. It enables the company to retain efficient employee with company.
  2. It encourages the employees to show better performance.
  3. It develops a sense of ownership and responsibility among the employees.
  4. It links compensation package closely to employee performance.
Demerits of ESOP
  1. It can be used only by profit making companies.
  2. Employees will suffer loss if share prices are falling.
  3. Unsound market fluctuations cause inconvenience to employees.
  4. Lack of transparency may lead to criticism on the ground of favoritism.


Recruitment Selection (Nov. 06)

According to Edwin Flippo, “Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organisation”.

Selection is a process of choosing most suitable candidates out of many interested candidates.

To attract maximum number or interested candidates through applications.

To select the best candidates out of those qualified and interested in appointment.

Recruitment is prior to selection. It creates actual base for proper selection.

Selection is next to recruitment.
Nature of Function: 

It is a positive function in which interested candidates are encouraged to submit applications.

It is a negative function in which the unsuitable candidates are eliminated and the best one is selected.

It is a short process, only publicity is given to vacancies and applications are collected.

It is a lengthy process, involves scrutiny of applications, giving tests, interview and medical examinations.
Expert’s Service: 

Services of experts are not required

Services of experts are required
Cost Involved:  

It is not costly, only expenditure is advertisement given for publicity.

It is a costly process, expenditure is needed for testing candidates and conducting interviews.
Steps Involved: 

i) Vacancies available are finalised

ii) Publicity is given to them

iii) Applications are collected

i) Applications are scrutinised 

ii) Tests, interviews and medical examinations are conducted.


Internal Sources of Manpower (May 04)

  1. Promotions: Promotions means an improvement in pay, position, authority, status and responsibilities of an employee within the organisation. In non-unionized companies promotions are made on merit bases while in government departments it is on seniority basis.
  2. Transfers: Transfer means filling a new vacancy in the organisation by shifting of existing employee within the organisation.
  3. Internal Notification: Since employees know requirements of the job and what sort of person the company is looking for. Often they have friends and acquaintances who meet these requirements. Thus sometimes company issues an internal advertisement for the benefit of existing employees.
  4. Retirements: Sometimes management may not find the suitable candidate in place of the retired employee. Under the circumstances management may call retired manager with new extension.
  5. Recalls: When management faces a problem that can be solved only by a manager who has proceeded on long leave, management may call that person. After the problem is solved, his leave may be extended.
  6. Former Employee: Individuals, who left for some other job, might be willing to come back for higher wages and incentives.

Merits of Internal Sources

  1. It is economical, quick and most reliable method
  2. The present employees already know the company well.
  3. It provides security and continuity of employment.
  4. People recruited internally do not need induction training.
  5. It reduced labour turnover as capable employees get internal promotions.
Demerits of Internal Sources
  1. It prevents the entry of young blood in the organisation.
  2. It unable the organisation to attract capable persons from outside.
  3. It may encourage favouritism and nepotism within the organisation.
  4. Promotions create a feeling of discontent among those who are not promoted.
  5. Promotions may not be possible due to non-availability of competent person.

External Source of Manpower (Nov. 04, 05, May 05)

1. Campus Selection (May 05)

The growth of management institutes, IITs and engineering colleges has provided a popular source of recruitment known as Campus Selection.


i)                    Selection committee of company personally visits the institute campus.

ii)                  Information are collected from interested students and interviewed within the campus.

iii)                Suitable candidates are selected and asked to join the organisation after final exam result


i)                    It is easy, quick and economical

ii)                  It is convenient to the company as well as candidates.

iii)                It is an excellent source of selecting management trainees.

iv)                Promising students get job security immediately after securing degree.

2. Press Advertisement (May 04)

Press advertisement is also called Recruitment Advertisement, as its purpose is to give publicity to vacancies available in the organisation and to appeal deserving candidates to submit their applications. Recruitment Advertisement has following contents:

– Details of the job i.e. job description and job specification.

– Information to be supplied

– Copies of documents to be attached

– To whom the application is to be submitted

–  Performa of application blank, so that the candidates submit exact information required by the company.

3. Recruitment Through Consultants and Private Employment Exchanges: Management consultants select suitable staff required by the business unit. For this they publish advertisement, conduct tests and arrange interviews. Similarly private employment exchanges keep details of candidates interested in jobs and provide services to employers. This source is mainly useful for the selection of top-level executives. E.g. Tata Consultancy Services, Kirloskar Consultants.

4. Deputation of Personnel: For executive position for short period, the services of an executive from another company can be used on loan basis. This is known as deputation. This is quite common in the case of sister concerns.

5. Management Training Scheme: Here, the young talented candidates of the age group of 20 to 25 are selected as trainee executives in different areas such as accounts, technical, marketing etc. After selection, candidates are sent to their institutes for executive training. After completion of training they are appointed as a regular manager.

6. Walk-ins, Write-ins, and Talk-ins: In these methods the candidates submit their resumes directly to the employer. Walk-ins are those where on advertisement mentioned date and time applicant walk-in for an interview. Write-ins are those who send written application. In talk-ins the applicants are required to meet the employer for detailed talks.

7. Miscellaneous Sources:

i) Appointment of retired officers from civil services or from public sectors

ii) Professional meetings for the selection of executives

iii) Assistance from professional associations

iv) Use of executive placement agencies

v) Government employment Exchanges

Merits of External Sources
  1. Entry of young blood in the organisation is possible
  2. Wide scope is available for selection
  3. Selection can be made in an impartial manner
  4. Reservation can be provided to the backward section of the society.
Demerits of External Sources
  1. It leads to labour turnover particularly of skilled and experienced employees.
  2. Existing employees may lose their sense of security.
  3. Relations between employer and employee deteriorate leading to industrial disputes.

STEPS IN SELECTION PROCEDURE (Nov. 01, May 03, 06, 07)

  1. Job Analysis: Job analysis is the process of collecting and studying information relating to the operations and responsibility of a specific job.
  2. Advertisement: Though advertisement is costly, it is used widely as it provides a wide choice of by attracting large number of candidates all over the country.
  3. Collection of Application: In this step, applications with necessary details are collected from interested candidates. Some companies provide a prescribed form of application in the advertisement known as application blank.
  4. Scrutiny of Applications Received: In this process, incomplete applications and the candidates who do not possess required qualifications, experience etc. are rejected. Along with this, certificates, testimonials and references are also checked.
  5. Written Tests: After the scrutiny of applications, a final list of candidates for written tests is prepared. The purpose of such tests is to judge the knowledge of candidate and also to find out his (a) intelligence, (b) aptitude (c) capacity (d) interest (e) suitability for a specific job.
  6. Psychological Tests: This includes various tests such as intelligence test, aptitude test, interest test, achievement test, analytical test, performance test, synthetic test, and personality test. Each test is useful for judging specific quality of a candidate.
  7. Personal Interview: The candidates who have shown good performance in the written test and psychological tests are called for personal interview. This is conducted by one interviewer or group of interviewers. They notes strong and weak points of every candidate and select the best candidates for appointment.
  8. Reference Check: Candidate is required to give at least two references, which may be educational, social, and employment.
  9. Medical Examination: The purpose of medical exam is to judge the general health and physical fitness of candidates. Candidates who are not physically fit for the specific job are rejected even when they show good performance in the tests and interview.
  10. Final Selection for Appointment: The selection procedure comes to an end when the final appointment letter is sent to the candidate. The letter states the post, title of the job, salary, and terms and conditions of employment. Initially the appointment is in probation and after a year or two, it is confirmed.


  1. Intelligence Test: Intelligence is the capacity of a person for comprehension and logical reasoning. It is useful for judging the intelligence of a candidate. Simon and Binet had developed intelligence test in 1916 known as IQ test.
  2. Vocational Aptitude Test: Vocational aptitude is the capacity of an individual to learn the job, given the necessary training.
  3. Analytical Test: For the purpose of analytical test, a job is first analyses in term of qualities like speed, dexterity, observation etc. and then measured the degree to which the candidates possesses these qualities. Dr. Munsterberg, an industrial psychologist in the U.S, first devised such test for the selection of telephone operators.
  4. Synthetic Test: synthetic test are used fir the job which are complex for which analytical test can not be used. In this test the candidate is presented a complex situation, more or less similar to the one which he will have to face in this job.
  5. Trade Test: Trade test is necessary in the jobs which involve technique work, e.g. stenographer, welders, machine operator.


Some companies provide a prescribed form of application in the advertisement known as application blank.

Performa of Application Blank                                                                                   (May 03)


INDUCTION AND ORIENTATION (Nov. 03, 06, 07, May 07)

OBJECTIVES OF INDCUTION                                                      (Nov. 06)

INDUCTION PROCEDURE            / STEPS IN INDUCTION                 (Nov. 02)

METHOD OF INDUCTION                                                             (Nov. 02, 08)

INDUCTION TRAINING                                                                (May 04, 05)

PROCEDURE OF ORIENTATION                                                             (Nov. 01)

Head Hunting                                                                                     (May 05)




Performance Appraisal is a systematic and orderly evaluation of performance of employees at work by their superiors or others who are familiar with the techniques of performance appraisal. Such appraisal is common in the case of blue collared employees (workers, supervisors etc.) and white collared employees (bank employees, government servants etc.). Performance appraisal is different from personal appraisal. This system was introduced by Scottish Millionaire Robert Owen in early 19th century.


  1. It helps in Suitable Placements of subordinates as per their potential
  2. It provides Assistance in Self Improvement by giving details of strengths and weakness of employees through performance feedback.
  3. It acts as Incentive to Improve the Performance and to develop mew qualities to achieve higher position in the organisation.
  4. It suggests appropriate Training Programme as per the weaknesses of the employees.
  5. It helps in framing Sound Personnel Policies for promotion and transfers.
  6. It promotes Cordial Employee-Employer Relations as it minimise the employee’s grievances about transfer, promotions and increments.
  7. It facilitates HR Planning and Development of existing manpower as per the future needs of enterprise.
  8. It facilitates Direct Employee Communication through appraisal interview and post-appraisal interview.
  9. It wins the High Employee Morale as they feel that the management is interested in their career development and well being


  1. Establishing performance standards
  2. Communicating standards to employees
  3. Measuring accrual performance
  4. Comparing actual performance with the standard set
  5. Appraisal interview – discussing actual performance with the employee
  6. Flow up – training to improve the performance


A] Traditional Methods

  1. Confidential Reports: In this method, superiors are asked to prepare confidential report on his subordinates. Various aspects such as achievements, weaknesses, major mistakes etc. are recorded in such report. It is used even today in government departments and educational institutions.
  2. Grading: In this method, Rater evaluates the performance of an employee and places him into a grade. Grades may be like A (outstanding), B (very good), C (good), D (fair), and E (poor).
  3. Checklist: In this method, a list of the qualities of employees is prepared. While rating an employee, the rater is asked to put a plus sign, minus sign or a question mark against each quality statement.
  4. Forced Choice Rating: In this method, Rater is asked to select out of five qualities only one, which he feels is more characteristics and the one which is least applicable to him.
  5. Critical Incident: This method was developed during WWII and suggests that there is certain key acts of behaviour, which results in the success or failure in the job. These acts arise incidentally while performing the jab. The supervisor is required to note all such critical incidents and rate the performance of the subordinate.
  6. Essay Method: In this method, a superior is asked to write a small paragraph as regard his subordinate’s strengths, weaknesses, potentials, etc.
  7. Group Appraisal: In this method, a group of evaluators consists of supervisors; head of departments, personnel experts access the employees.
  8. Field Review: In this method, a training officer from HR department interviews line supervisor to appraise their subordinates. The supervisor is expected to answer the questions of interviewer prepared in advance.
  9. Ranking: In this method, each employee is compared with all others performing the same job and then is given a particular rank in descending order. It states that A is superior to B and B is superior to C and so on.


    1. It is simple to understand and easy to use
    2. It is less expensive and less time consuming.
    3. It does not require trained raters.


    1. It does not specify how much on employee is superior to other.
    2. It is not possible to give objective proof for ranking
    3. Performance is not compared to standard performance
    4. There may be bias of raters in ranking
    5. It is highly subjective.
  1. Graphic Rating Scale: In this method, a list of various factors like quantity of output, quality of output, initiative etc. is prepared and given a degree (outstanding, very good, good, fair, poor). While rating an employee, the rater is asked to mark in front of each respective degree of quality.

Merits: (same merits of Ranking as above)


    1. It puts heavy pressure on rater, as he has to consider 4 to 12 factors with five degree for each.
    2. Rate has to do lot of paper work
    3. There may be gap between two degrees e.g. very good and good.
    4. There may be bias of raters in rating.

B] Modern Methods


When the appraisal of a manager is made by the superiors, peers, subordinates and clients, it is called as 360-degree system of performance appraisal. This system was developed fits at General Electric, US in 1992. It is now used by Indian organisations like Reliance, Crompton Greaves, Godrej, Wipro, Infosys, and Thomas Cook etc.

Merits of 360 Degree Appraisal
1.      Uses Multiple Rates such as findings from superiors, peers, subordinates and clients and hence it is more reliable and free from bias.
  1. There is Systematic Performance Data Collection from superiors, peers, subordinates and clients.
  2. It provides greater Potentiality of Self Development as it provides broader perspective about an employee’s performance.
  3. Only Formal Communication is entertained in 360-degree appraisal. Hence employee feels more accountable.
  4. It Identify Special Traits like team building skills and interpersonal skills.
Demerits of 360 Degree Appraisal
  1. Creates Sense of Insecurity when employees heard that the appraisal would be obtained from multiple of sources.
  2. It is Time Consuming, as it requires time to select right and multiple raters.
  3. All raters may not be equally close to the employee.

2] ASSESMENT CENTER (May 03 04, 05, Nov. 04, 05)

Assessment center may be defined as “a central location where managers may come together to participate in job related exercises evaluated by trained observers”.
Features                                                                                                                     (May 05)
  1. Here, the managers have to participate in job related exercises and their performance is judged by trained observers.
  2. In this, qualities like interpersonal skills, communication skills, self-confidence, decision-making ability etc. is assessed.
  3. It was first developed in UK and US by 1943 but now used by Indian companies like Crompton Greaves, HLL, and Modi Xerox etc.
  4. It is now used for performance appraisal of executives and supervisors.

Process (May 05)

1.      Employees are asked to participate in role-playing, business games, computer simulation and work groups without leaders.
  1. Evaluators observe and rate employees as they perform jobs.
  2. After this, raters meet to discuss their observations.
  3. Then they make a summery report.
  4. Assessment is done mainly with a view to determine employee promotion.
Merits                                                                                                                         (May 04)
1.      It defines the criteria for selection and promotion.
  1. It provides better forecasts for of future performance of executrices and managers.
  2. It helps to determined training and development needs of an employee.
  3. It provides fair and equal opportunity to prove merits of all candidates.
Demerits                                                                                                                     (May 04)
  1. It is costly and time consuming method
  2. Raters are often influenced by subjective elements such as personality of candidates.
  3. Performers in day-to-day operations feel suffocated in stimulated environment and this adversely affect their performance.
  4. If the report of assessment center is negative, employee may feel demoralised and frustrated.
Objectives                                                                                                                   (Nov. 04)

3] MBO (May 05)

Peter Drucker coined the term MBO in 1954. MBO is a way of managing which focuses on the accomplishment of well-defined objectives rather than on tasks and activities.

Process of MBO

  1. Establishing Goal: In this first step, subordinate decide the goal, which he is to attain. In some organisation subordinate and superior work together to establish goal.
  2. Setting Performance Standard for the subordinate.
  3. Comparison of Goal attained with the goal agreed upon. This facilitated to find out the goals that were not met.
  4. Establishing New Goals and new strategies for the goals not achieved previously.

4] BARS (Behaviorally Anchored Rating Scale)

The scale point of BARS is determined by statements of effective and ineffective behaviors. While appraisal, a rater indicates which behaviour on each scale best describes the performance of an employee.

Features of BARS
  1. Raters who will use the scale define the areas of performance to be appraised.
  2. Scales are anchored by description of actual job behaviour.
  3. Scales carries behaviours, which are observable and related to the job.
  4. BARS help to remove rating errors.


In this method, the performance of employees is assessed in terms of cost and contribution of employees. Cost of human resource consists of expenditure on recruitment, selection, training etc. and contribution of human resource is the monetary value of productivity.


The concept of performance counseling and potential appraisal is closely connected. Its basic objective is to help the employee to overcome his weaknesses and to reinforce his strong points. Potential appraisal is different from performance appraisal. Performance appraisal only evaluates what the subordinate has performed whereas potential appraisal seeks to examine what the subordinate can do.



EMPLOYEE TRAINING (Nov. 01, 03, 05, 06)

Training comes next to recruitment, selection, and placement. It normally relates to the job assigned and is in the form of guidance for performing the job safely and efficiently. According to Edwin Flippo “Training is the act of increasing the knowledge and skill of an employee for doing a particular job”.


A] Benefits To Employer

  1. Improve efficiency of workers, which leads to more production and more profit.
  2. Improve quality of production
  3. Reduce industrial accidents as trained workers avoid mistakes in their job.
  4. Reduce expenditure on supervision as trained workers do their work with interest.
  5. Provide stable labour force by reducing labour turnover.
  6. Reduce labour absenteeism as trained workers do their work with interest.
  7. Facilitates the introduction of new management techniques
  8. Creates a pool of capable employees from which any vacancy of key personnel can be filled.
  9. Creates cordial industrial relations
  10. Provides guidance to newly appointed executives.

B] Benefits To Employees

  1. Create confidence among employees.
  2. Develop skills among employees
  3. Provides quick promotion opportunity for and self-development.
  4. Offers monetary benefits in the form of attractive remuneration.
  5. Facilitate self-management i.e. they do their work without supervision.
  6. Upgrade knowledge, information & skill and make them capable to face all types of situations.

STEPS IN TRAINING                                                                                (Nov. 01, 03)

  1. Identifying Training Needs: Training needs can be identified through the following types of analysis:
    1. Organisational Analysis – It relates to the determination of organisation’s goals and it includes (i) analysis of objectives (ii) resource utilisation analysis (iii) organisation climate analysis.
    2. Operations Analysis – It relates to the jobs regardless of the employee doing the job and it includes the identification of job contents, knowledge and skills required and the work behaviour.
    3. Manpower Analysis – It relates to the knowledge, attitudes and skills of the worker in each position.
  2. Setting Training Objectives as follows
    1. To impart basic knowledge and skills required for performing jobs.
    2. To assist employees to function more effectively.
    3. To build up a competent and capable officers.
    4. To broaden the minds of senior managers through exchange of information and experience.
  3. Designing Training Programme: For this, the following issues are decided:
    1. Who are the trainees?
    2. Who are trainers?
    3. What methods of training are to be used?
    4. What should be the type of training?
    5. Where the training programme is conducted?
    6. What results are to be achieved?
  4. Preparation of Learner: Introduction about training is provided to learner.
  5. Presentation of Operations and Knowledge: In this step, important components of job are explained, oral or written test is conducted.
  6. Implementing Training Programme: This means actual imparting training to trainees.
  7. Follow up and Evaluation: It is necessary in order to find out the extent to which the training objectives are achieved.

METHODS OF TRAINING                                                                       (Nov. 03, May 05)

A] On The Job Training                                           B] Off The Job Training

  1. Coaching 1. Role Playing
  2. Job Rotation 2. Case Study
  3. Apprentice Training                                        3. Conference & Seminars
  4. Internship & Assistantship                              4. Simulation
  5. Job Instruction Training                                  5. TV Programmes
  6. Orientation Training                                        6. Lecture

7. Special Study

8. Vestibules

9. Film Shows

10. Laboratory Training

(May 07)

On The Job Training Off The Job Training

It refers to the methods that are applied in the workplace. Here regular work and training move together.

It refers to the methods that are applied away from the workplace. Here training is separated from regular work.

As the employee cannot concentrate on training while performing the job, the quality of training is inferior

Employee concentrate on training as he is relived from the job, the quality of training is superior.
Cost involved

It is economical as it is given internally and also employee performing their job

It is costly as the company has to pay fees of training organisation and also the employee remain absent from the job

It is suitable for normal training of supervisors

It is suitable to higher-level managers.

Refer above

Refer above


Evaluation of training programme is conducted after the training is completed. It is necessary in order to find out the extent to which the training objectives are achieved. Evaluation is also conducted periodically in order to judge the effectiveness and practical benefits.

Evaluation offers following benefits:

  1. Find out the extent to which the training objectives are achieved
  2. Makes training programme result oriented
  3. Facilitates introduction of suitable modification in training programme.
  4. Makes training adaptable as per the changing needs of organisation.
  5. Ensures better result from training programme


Requirements for Effective Training Programme

  1. Training should be need based.
  2. It should be elaborate and systematic.
  3. It should motivate trainees to take interest in the training programme
  4. It should be theoretical as well as practical with a proper balance between these two.
  5. It should be of superior quality i.e. expert trainer should be appointed and good training materials like books, tools etc. are provided.
  6. There should be periodical tests for evaluation of candidates.
  7. It should be of a reasonably longer period.
  8. Effective involvement of trainees should be encouraged.
  9. Training programme should be reviewed periodically for updating the course.
  10. Provisions for rewards and penalties should be introduced.
  11. Place of training should be peaceful and convenient to both trainer and trainee
  12. Training should be followed by promotion or giving new assignment.

(May 06)

Employee Training Management Development

Training is imparting knowledge, education and guidance to develop skill among operative staff

It is also called HRD. 

Development is providing wider exposure to managerial personnel to make them capable to face organisational problems

Type & Duration

It relates to a specific job and is for short period.

It is general in nature and is long period process.
Methods used

On the job method is used extensively

Off the job method is used alongwith off the job methods
Cost Involved

It is economical due to internal training

It is costly due to off the job methods

Supervisors provide training to their subordinate

It is executed by top-level management and outside experts.

It is given at the beginning and at the time of promotions.

It is a continuous activity.

On the technical aspects of the work assigned

On the theoretical and conceptual aspects

METHODS OF MANAGEMENT DEVELOPMENT                            (Nov. 04)

A] On The Job Development                                               B] Off The Job Development

  1. Coaching & Counseling 1. Role Playing
  2. Job Rotation 2. Case Study
  3. Understudy Assignment                                             3. Conference & Seminars
  4. Junior Boards                                                              4. Simulation
  5. Delegation                                                                   5. TV Programmes
  6. Appointment as ‘assistant to’                                     6. University & Colleges
  7. Membership of committees                                         7. Management Institutions
  8. Project Assignment                                                     8. Sensitivity Training
  9. Promotions and Transfers                                           9. In-basket Exercise

10. Management Games

In-basket Training – Trainees are provided with basket or tray of papers and files related to their functional area. They are expected to study these and make recommendations on the problems.

Employee Empowerment                                                                 (May 07, Nov. 08)

This concept appeared in US in 1970. It is described as the reorientation of all forces, values and beliefs, which determine human behaviour in organisations. This concept seeks the redistribution of power in work settings. Under empowerment, has to give full freedom to managers to act as per the demand of the situation. Many Indian organisations have implemented empowerment, e.g. Shri Ram Group and Reliance Industries.

Industrial Relations (Nov. 07)

Industrial relation is a term used in labour-management or employer-employee relations. Employer provides capital and workers provide physical labour. The relation between them needs to be fair, friendly and cordial to run business efficiently.



JOB ROTATION (Nov. 02, 03, 06)

Job rotation means systematic movement of employees from one job to the other. Job remains unchanged but employees performing them shift from one job to other.

  1. Workers become competent in several jobs.
  2. Develop wide skills among workers
  3. Improve interdepartmental co-operation
  4. Motivate employees
  5. Reduce boredom
  6. Raise intrinsic reward potential of a job.

JOB TRANSFER (Nov. 03, 06)

In business organisation employees are shifted from one post to another or from one department to other or from one branch of company to other. This is called job transfer. It is more common in banks, government department and manufacturing companies. Transfer is neither a promotion nor demotion but horizontal or lateral movement of an employee.

Purpose of Transfer
  1. To meet the variation in volume of work in different department
  2. To provide training to employee
  3. To rectify any poor placement of employee
  4. To satisfy personal needs of employee
  5. To meet organisational needs arises due to expansion, fluctuation in work requirement or changes in organisational structure.
  6. To have a solution to poor performance of employee in a particular department.
  7. To avoid fatigue and monotony
  8. To remove poor personal relations
  9. To punish employees as a disciplinary action



PROMOTION                                                                                   (Nov. 01, 05, April 06)

According to Edwin Flippo, “Promotion involves a change from one job to another that is better in terms of status and responsibilities”.

Promotion Objectives (Nov. 07)

  1. To provide higher status, salary, and satisfaction to existing employees.
  2. To motivate employees to higher productivity and loyalty to the organisation.
  3. To retain the services of qualified and competent employees.
  4. To recognise, appreciate and reward the loyalty and efficiency of employees
  5. To support the policy of filling higher vacancies from within the organisation.
  6. To raise employees morale and sense of belongings

Principles of Sound Promotion Policy

  1. Rules of promotions i.e. qualifications, experience and other terms should be clear and precise
  2. Wide publicity should be given to promotion policy
  3. There should be no scope for partiality, favouritism or injustice.
  4. Should be based on scientific performance appraisal of employees
  5. Opportunity should be provided to every worker
  6. Promotion policy should be prepared for longer period
  7. Promotion should not be forced to accept by an employee
  8. Promotion should be given from within the same department
  9. Grievance relating to promotions should be settled properly.
  10. Promotion policy should be finalised after consultation with employees.


Separation is the cessation of services of personnel from an organisation. Separation takes place due to the following reasons:

A] Initiative of Employer

  1. Layoff – It is a temporary separation an employee for a definite period.
  2. Retrenchment – It is a permanent separation with due notice as per statutory provision
  3. Discharge or Dismissal – It is a permanent separation for violation of organisational rules.
  4. Voluntary Retirement – The employee offered attractive package for separation from organisation on voluntary basis.

B] Initiative of Employee

  1. Retirement – at the age of 60 years.
  2. Resignation – given by employee

LABOUR TURNOVER                                                                              (Nov. 06, 07)

Labour turnover is the separation of employees from the existing job or service. Labour turnover is expressed in terms of percentage of workers left during a specific period out of the total labour force employed. 2 to 3 % labour turnover is normal but more that 10% labour turnover is a serious problem. Here HR manager has to introduce suitable remedial measures in order to reduce the rate upto 2-3%.

Causes of High Labour Turnover (Steps to reduce labour turnover…write in other way)

  1. Unscientific promotion policy is the major cause.
  2. Low wages, low bonus and absence of monetary incentives.
  3. Hard nature of job, inadequate safeguards against accidents.
  4. Poor working conditions.
  5. Ill-treatment and harassment by supervisors.
  6. Availability of better employment opportunities.
  7. Absence of security of job and job satisfaction
  8. Personal reasons such as illness, marriage, death in family etc.

(Nov. 02)

Promotion By Merits Promotion By Seniority

Here, ability, interest, qualifications etc. are taken into account for promotions

Here, the length of service is the only consideration for promotion.
It is favored by management It is favoured by employees and trade unions
It is complicated method as merits are difficult to judge It is simple and objective method.
There is ample scope of partiality There is no scope for partiality
There is no guarantee of promotion to an employee even after many years An employee knows the likely date of his promotion
Employee develop to avail the benefit No encouragement to learn and grow
Only efficient worker get promotions Efficient an in efficient workers get promotions
Used extensively in private sector Used in government department



CAREER PLANNING (Nov. 06, May 04)

Career planning is a systematic process by which, one decide career goals and the path to achieve these goals. From organisational point of view, career planning means helping employees to plan their careers in terms of their educational background and capacities.


Career development is essential for implementation of career plan. It refers to a set of programmes designed to match the individual’s needs, abilities and career goals with future opportunities in the organisation. Career planning and career development moves together.

Benefits of Career Planning and Development (May 03)

  1. Organisation can achieve high quality of work from their employees and promote loyalty among employees.
  1. Keeps employee motivation high.
  2. Links organisational goals with the employee career goals.
  3. Facilitates managerial succession of employee.
  4. Facilitates career success of majority of employees including managers.
  5. Leads to job satisfaction to employees
  6. Reduce labour turnover and labour absenteeism due to job attraction.
  7. Helps employees to know career opportunities in the organisation.
  8. Create a better image of organisation in the job market thus attract competent and career conscious employees.
  9. Facilitate rapid expansion of organisation due to availability of highly skilled team of employees.

Steps in Career Planning & Development (Nov. 02, 03, May 05)

  1. Analysis of Personnel Career Situation – For analysis following information will be required:
    1. Total number of employees available
    2. Personnel need of the organisation
    3. Span of control available within organisation
    4. Facilities available for training and development
  2. Projection of Personal Situation – In this step, find out the situation likely to develop after the completion of career development plan.
  3. Identifying of Career Needs – Find out precisely the scope and limitations of career development needs in the future.
  4. Selection of Priorities – It is difficult to meet all the career development needs of the organisation and employees, therefore in this step select the pressing and urgent need. For this certain techniques like cost-benefit analysis, work measurement etc. are used.
  5. Development of Career Plan – In this step, the organisation should ensure following:
    1. Introduce systematic policies and programmes of staff training.
    2. Implement a system of study leave.
    3. Provide appropriate training facilities and opportunities.
    4. Develop the experience of employees by rotating them from one region to another.
    5. Give priorities to existing employees in the filling of vacancies
    6. Establish a register for promotion on merit-cum seniority basis.
    7. Ensure full participation of employees’ representatives in matters relating to training and promotions.
  6. Write-up of Formulated Plan – Prepare a brief report of career plan, which contain schedule, procedures and other details.
  7. Monitoring of Career Development Plan – In this step, compare planned target with the target actually archived and in case of any shortfall, introduce suitable remedial measures.
  8. Implementation of Career Development Plan – In this step, HR department implements the career development plan with the help of financial and administrative departments.
  9. Review and Evaluation of Plan – Evaluate the implemented plan to know the benefits available from this plan to individual employee and to organisation.
  10. Future Needs – It is the last step of the current career development plan and the first step for next plan. Here on the basis of the achievements of the current plan, the career needs of the future period are estimated.

Career Management Process (May 05)

It is the process of designing and implementing plans to enable the employees to achieve their career goals. It involves following steps:

  1. Career Needs Assessment – Career needs of employees are assessed by evaluating the attitudes, abilities and potentials of employees. Psychological tests, in-depth interview and simulation exercise can be used to judge the employee potential.
  2. Identification of Career Opportunities – Here, the management has to give publicity to career opportunities available in the organisation. For this appropriate job analysis is useful.
  3. Need-Opportunity Alignment – In this step, employee’s needs are adjusted with career opportunities available. The organisation has to design following programmes to help the employees in this regard:
    1. Individualised Technique such as work assignment, planned job rotation and job enrichment.
    2. Performance Appraisal Technique
    3. MBO Technique
    4. Career Counseling Technique – Supervisors provide career guidance to employees so as to enable them to decide their career goals.
  4. Monitoring Career Moves – In this step, progress towards target goals are monitored.


Succession refers to the filling of position fallen vacant or likely to fall vacant in near future. The basic purpose of succession planning is to identify and develop people to replace current personnel in key position in case of resignation, promotion, expansion etc. Career planning and succession planning are similar but not synonyms. There are three basic elements in the succession planning:

  1. Deciding the position for which the successor is needed
  2. Identifying most suitable successor
  3. Grooming of that successor to enable to make him competent for new position.

A succession plan consists of a runner up chart for a particular position in an organisation. The chart helps the MD to identify a successor.




Compensations are the monetary payment made by the employer to his employees for the work done or services rendered. Normally it involves following three components

  1. Basic Compensation – wage or salary
  2. Incentive Compensation – D.A., profit sharing, bonus
  3. Supplementary Compensation – Fringe benefits, employee service.


1. WAGES AND SALARIES (Nov. 03, May 04, 05)

Wage and salary is the payment as per the pay scale decided by the employer. Wage represent hourly rate of pay while salary refers to the monthly rate of pay. Salary payment includes dearness and other allowance payable to employer. Wages are now linked with the cost of living. The term ‘Take home pay’ is used to indicate the quantum of money available to an employee after statutory deductions of IT, PF etc.

2. INCENTIVES (Nov. 04)

Incentives are monetary benefits paid to the employees in recognition of their outstanding performance. ILO defines incentives as “payment by results”. There are two types of incentive wage plans”

  1. Individual Incentive Plans – it is meant for individual employee. He has to work efficiently, produce more and get the monetary benefit. It is of following types:
    1. Halsey Premium Plan
    2. Hynes Plan
    3. Rowan Plan
    4. Scanion Plan
    5. Taylor’s Differential Piece Rate System
  2. Group Incentive Plans – it is meant for group of employees working in one department. Here the group work efficiently, produce more and share the monetary benefit. It is of following types
    1. Profit Sharing
    2. Labour Co-partnership

3. FRINGE BENEFITS (May 06, 07, Nov. 01, 06, 07, 08)

Fringe benefits may be defined as a broad range of benefits or services that employees revive as an integral part of their total compensation package.

Types of Fringe Benefits
  1. Payment for time not worked by employee: Holidays, Venations, and Leave
  2. Contingent and deferred benefits:
    1. Pension payment
    2. Group Life Insurance / Health Insurance
    3. Sick Leave, Maternity Leave, Child Care Leave
    4. Service Award
    5. Severance Pay
  3. Legally required payments:
    1. Old age and Disability Insurance
    2. Unemployment Compensation
    3. Worker’s Compensation
  4. Miscellaneous benefits:
    1. Travel Allowance
    2. Meal Allowance
    3. Company car, membership pf club
    4. Tool expenses

Objectives / Relevance of Fringe Benefits

  1. To supplement the regular earning of the workers.
  2. To retain competent employees
  3. To develop good corporate image
  4. To raise employee morale
  5. To motivate employees


Perquisite is a benefit received by an employee from the employer in addition to salary or wages either in cash or in kind without actually payment of money.

Illustration of perquisites

  1. Provision of a motorcar or free use of a car
  2. Provision of house, free of cost or at a concessional rent.
  3. Free gas, electricity
  4. Free services of servant at house
  5. Free educational facilities of children
  6. Free transport to an employee or his family
  7. Club bills paid by employer
  8. Income Tax due on salary paid by employer


It includes comfortable working conditions, impartial promotions, support to workers facing special problems, welfare facilities, etc.

Profit Sharing (Nov. 01)

It is a type of group incentive plan in which employer is agrees to share a part of profit with employees in addition to their regular wages. This concept is popular in western countries; it was introduced in UK in 1891 by Southern Metropolitan Gas Company. However, profit sharing concept is not popular in India. Instead we have a system of bonus payment, which is now compulsory even when there is no profit to a company.

Objectives of Profit Sharing
  1. To create a sense of partnership among the workers
  2. (All points of fringe benefits)

Fair Wages (Nov. 02, 04, 08)

Fair wage is the wage, which is above the minimum wage (as specified by Minimum Wages Act) but below the living wage. Wages is fair when the employee is able to meet his essential needs and enjoys a reasonable standard of loving.  Fair wages depend on following factors:

  1. Prevailing rate of wages in the same or similar occupation
  2. Prevailing rate of wages in the same region or neighbouring areas
  3. Employer’s ability to pay
  4. Level of national income and its distribution
  5. Productivity of labour
  6. Status of the industry in the economy



PARTICIPATIVE MANAGEMENT (Nov. 01, 04, 06, 08, May 04, 05, 06)

Participative management means associating workers with the decision making process. The concept of participative management is directly related to the concept of industrial democracy. In industrial democracy, the opinion and suggestions of workers are taken into account while faming policies.

Objectives of Participative Management

  1. To create uniform approach of workers on various matters of common interest through direct negotiations.
  2. To establish cordial industrial relations and industrial peace.
  3. To take workers in confidence to give them an opportunity of self-expression.
  4. To introduce industrial democracy at the level of an industrial unit
  5. To improve industrial productivity and prosperity

Latest Trends / Techniques in Participative Management                                    (Nov. 03)

* (Nov. 02) (May 03)

1. *Quality Circles: QC consists of a small number of employees who come together on voluntary basis with one issue i.e. to improve quality or to improve productivity. Meetings are held once a week for one hour where members of QC are given free hand to solve the problems relating to quality. QC is a voluntary cooperation of workers to the management and is beneficial for both of them. QC is most popular in Japan; it is now functioning in many Indian companies as well.

2. *Collective Bargaining: Collective bargaining is a process in which the representatives of employer and employees meet together to negotiate a contract. It results into signing an agreement, which restricts each party that it cannot take unilateral decision harming the interest of other party. Collective bargaining is a better alternative to strikes and industrial disputes, as it provides a peaceful and democratic method for solving the problems and demands of workers. Shri V. V. Giri (Ex-President of India) was a strong supporter of collective bargaining.

3. Works Committee: It consists of representatives of management and workers for removing the cause of friction between employers and workers in day to day working of the factory. Works committees are most effective in UK and France but in India it is neither effective nor popular, though it is made compulsory by Industrial Dispute Act 1947 to have a Works Committee for the company employing 100 or more workers.

4. Workers Co-operative: It is called as “Auto Management”. Here, the workers take over the sick industrial unit and manage it completely on co-operative basis. E.g. Kamani Tubes Ltd. was closed down in 1985. The Kamani Employees Union took over the company and started it in 1989. The Supreme Court also allowed the workers to run the unit.

5. Co-partnership: In this method, workers are converted into shareholders of the company by offering equity shares to them and are allowed to participate in the management like other shareholders. They can elect their representative on the BOD. It is not popular in India, workers shows limited interest in purchasing of shares of their own company.

6. Joint Management Council: Its is similar to works committee with equal representation of employer and employees. Joint Consultative Committees exists in UK and Sweden. In India it is used for heated arguments and not for discussions.

7. Employee Directors: Here, two or three representatives of workers are taken on the BOD of the company. It is now practiced in public sector companies like Hindustan Antibiotics Ltd. and HMT, nationalised and co-operatives banks.

8. Suggestion Programme: In this method, worker are asked to give their suggestion to management on various matters like machine utilisation, waste management, energy conservation, safety measures etc. The suggestions, which are suitable, are accepted. This scheme encourages workers to think individually or collectively and participate in raising the efficiency of the organisation. TATA and DCM introduced this method.

9. Empowered Teams: In this, the authority is delegated to employees where they enjoy the power and sense of ownership and control over the job.

10. Job Enlargements and Job Enrichment: (Refer page no. 6 and 7)



Personnel Policies (Nov. 04, May 05)

Personnel policies refer to the policies concerning the manpower employed in an organisation. Scope of personnel policies is wide that includes policies relating to employment, training and development, compensation, transfers and promotions, working conditions industrial relations, etc. Personnel policies should be clear, objective oriented, long lasting, flexible written and just and fair.

Personnel Policy Manual (May 03, 04, Nov. 03, 06)

A document or booklet that contains the details of personnel policies of an organisation is called Personnel Manual. It is a comprehensive guide or reference book to employees, managers and supervisors. HR manager prepares the policy manual with cooperation of other managers.

Objectives of Personnel Manual

  1. To provide systematic approach to policies and practices
  2. To avoid difficulties due to misunderstanding of personnel policies
  3. To provide equal employment opportunities to everyone irrespective of race, religion and cast.
  4. To ensure consistent application of personnel policies in the organisation.
  5. To enable managers to maintain cordial personnel relations.

Contents of Policy Manual

  1. Objectives of personnel policy manual
  2. Philosophy of the organisation
  3. Authority of the policy manual
  4. Privilege and responsibility of supervisors, HODs and managers.
  5. Company and plant rules
  6. Grievance and cost control
  7. Policies and practices on personnel matters:
    1. Work flow chart
    2. Hours of work
    3. Recruitment, selection and placement policies
    4. Training and development policy
    5. Compensation policies
    6. Health, safety, security, welfare policy
    7. Performance appraisal
    8. Promotions, transfers and lay-off policy
    9. Attendance, punctuality and absenteeism

10.  Discipline, Disciplinary action

P.S.(Few topics are not covered, refer to Vipul Prakashan Textbook for those topics)


BMS Notes for all Semesters

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