Note to the student

Please note that this is only a compiled material of the course and you are strongly
advised to read the reference books listed in the course outline.

CHAPTER ONE
Overview of Human Resource Management

1. Definitions:

a) Human resource management (HRM) is concerned with all aspects of how

people are employed and managed in organizations. (Armstrong, 2014)

b) HRM is that part of management concerned with people at work and with
their relationships within an enterprise. It is to bring together and develop into
an effective organization the men and women who make up an enterprise
and, having regard for the well being of the individual and of working groups,
to enable them to make their best contribution to its success. (Graham et al
1992)

c) HRM refers to the concept or techniques needed to carry out the people or
personnel aspects of a management position including recruiting, screening,
training, rewarding, and appraising. (Dessler, 1994)

d) Human resource management is the process of accomplishing organizational

objectives by acquiring, retaining, terminating, developing and properly using
the human resources in an organization. (Ivancevich et 1990)

e) HRM is the planning, organizing, directing, and controlling of the

procurement, development, compensation, integration, maintenance, and
separation of human resources to the end that individual, organizational, and
societal objectives are accomplished (Flippo , 1984)

In the above definition, Flippo has tried to point out that a personnel/human
resource manager is a manager who exercises authority and leadership over other
personnel and thus must perform the basic function of management. This holds true
to all functional managers (such as Marketing, Operations, Production, Human
Resource, etc managers)

When the definition is broken down to its specific components, we find the basic
management functions when applied to managing human resources…

Planning: Establishing goals and standards, developing rules and procedure,

developing plans and forecasting – predicting or projecting some future occurrence.

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 • Determining, in advance, a personnel / HR program that will contribute to
the goals of an enterprise. This may include planning human resource
requirement in the organization and making the necessary preparation to
fulfill those requirements (procurement, recruitment, etc), planning training
programs to enhance HR skill in the required areas, etc…)

• Besides planning human resource management functions, the HRM

department is responsible to participate in setting up organizational
goals/objectives at the various levels of the organization.

Organizing: Giving each subordinates a specific task; establishing departments;

delegating authority to subordinates; establishing channels of authority and
communication; coordinating the work of subordinates.

• In addition, due to its specialization in the management of human resources

and increasing expertise, other parts of the organization may require their
advice in the general structuring and organizing of the enterprise.

Directing: Getting others to get the job done; maintaining morale; motivating
subordinates.

Controlling: Setting standards of performance, checking to see how actual

performance compares with these standards; taking corrective action as needed.

Procurement: Concerned with obtaining proper kind and number of human resources
necessary to accomplish organizational goals.

It specifically deals with determination of HR requirement, recruitment, selection,

and placement. This process is highly dependent on the job design ( the kind of job
performed), internal and external factors, etc.

Development: It is the increase of skill, through training and development programs,

needed for proper job performance.

This function is essential as nature of jobs change through time due to technological
advancements, realignment of jobs, and other complexities that come along with
expansion of a business. E.g. Businesses that started small need training to equip
their staff with the necessary skill and knowledge required to deal with a wider and
bigger organizational activity.

Compensation: It is the adequate and equitable remuneration of personnel for their

contribution to organizational objectives.

It could be made in the form of money - salary, bonus, or fringe benefits such as
medical insurance, transportation or housing allowance, dependency allowance,
stock options, etc.

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 Integration: It is concerned with the attempt to effect a reasonable reconciliation of
individual, societal, and organizational interest.

With the employees procured, developed, and reasonably compensated, integration

is the most difficult and frustrating challenges to managers. It rests upon the
foundation of a belief that significant overlapping of interests do exist in our society.
It is often the case that there is a difference in what employees, management, and or
society expect from each other. Consequently, it becomes a very challenging task to
deal with employees’ feelings and attitudes in conjunction with principles and
policies of an organization. Thus, HRM is responsible in identifying areas of
discontent from employees and try to consider them when developing personnel
policies and procedures, develop a system where employees could air their
grievances, and also a system where by an organization can take disciplinary action
on those employees who do not go by the established policies.

Maintenance: It is concerned with the perpetuation of the state where by interest of

individuals, organizations and the society is reconciled. It is going to be a continuous
effort that involves the active involvement of the HRM in ensuring that changes that
may affect the reasonably good working environment and make the necessary
corrective measures.

Separation: It refers to the process involved in HRM when an employee is separated

from an organization. Depending on the reason why an employee separates from an
organization, HRM will take the necessary action to ensure that such employees pass
through required processes as specified by the policies and procedures of the
organization. Some of these reasons include retirement, layoffs, out-placement,
discharge, etc.

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 Key Processes and Systems

HRP

Job Analysis
Procurement Transfer

Staffing: Promotion
Recruitment
Selection Orientation
Placement

Training &
Development

Performance Appraisal

Maintenance Compensation & Reward

Protection (Safety &

Health Management)

Resignation

Separation Discharge

Retirement

Lay-off

2. Objectives of Human Resources Manamgent

a) To help an organization reach its goals.

b) To employ the skills and abilities of the workforce efficiently. The primary
purpose of HRM is to make people’s strengths productive and to benefit
customers, stock-holders, and employees.
c) To provide the organization with well-trained and well-motivated employees.
This implies that an HRM should create an environment in which motivated
people can flourish.
d) To increase to the fullest the employee’s job satisfaction and self-
actualization. It tries to stimulate every employee to realize his potential.
Most employees regard their jobs as their identity.

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 e) To develop and maintain a quality of work life (QWL) which makes
employment in the organization a desirable personal and social situation. It
involves several aspects of a job experience. It may include:
f) Management and supervisory style
g) Freedom and autonomy to make decisions on the job.
h) Satisfactory physical surroundings, job safety, satisfactory working hours.
i) Meaningful tasks
j) To communicate personnel policies to all employees. It is the responsibility of
HRM to communicate managerial decisions to employees and also get
feedback from employees to identify areas that may require improvement.
k) To help maintain ethical policies and behavior.
l) To manage change to the mutual advantage of individuals, groups, the
organization and the society. There has been several trends and changes that
forced HRM change its policies or add new policies to accommodate the
emergence of new lifestyles and demands of employees. New trends and
changes in areas:
• Telecommuting
• Paternity Leave
• Quality of Work Life (QWL) Programs
• Spouse-relocation assistance
• Benefit cost sharing plans
• Union- Management negotiations, etc.

3. The Nature and Challenges of HRM

HRM is one of the most complex and challenging field of management. A human
resource manager is responsible for fulfilling the requirement of the firm for an
effective workforce and also be greatly concerned with the expectation of both
employees and society at large.

The role of the personnel manager has thus changed through time. At first, the
dominant role was to satisfy top management in processing and maintaining a
workforce that would be instrumental to organizational productivity. As knowledge
expanded in executing this role, the manager began to understand the necessity for
ascertaining and accommodating to the needs of the employees who constituted that
work force. Trying to satisfy employees’ needs as individuals and as a group poses a
great deal of challenge to the HRM as their needs and interests are seldom the same.
Although vast majority of people work to support themselves and their families,
some work for various reasons such as:

− To keep busy and feel useful

− To create and achieve something
− To gain recognition and achieve status (ambitious to gain power and prestige)
− To test and stretch their capabilities

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Thus, among other things, human resource management faces several challenges.
The following are some of the factors contributing to the challenges of HRM.

a) Multifarious (diverse) needs of employees as individuals, as groups and

also the organization.
b) The rise of modern labor union.
c) The increasing level of educational level of societal members. Such
workforce seems to have higher expectations about the work they are
willing to perform, the degree of autonomy they expect in making
decision, and sharing financial gains achieved by the organization.
d) The increasing size and complexity of the organizations.
e) Changes in the demographics of the workforce. Composition of the
workforce in terms of sex (more women in the workforce), age (younger
and more educated workforce), ethnic groups (more and more minorities),
religion, whether or not the work force constitutes dual-career families or
single-parent families, etc.
f) Increasing government regulation involving employment relation.
Example. Equal employment opportunity.
g) Technological advancement such as office automation (computers, word
processing, and management information systems) will change the work
environment by decreasing labor-intensive jobs and clerical functions. On
the other hand, it increases technical, managerial, and professional
functions. One other significant technological advancement is in
telecommunicating where by communication within organizational units
has become so easy that it is now very common for employees to work
from work.

4. The Role of HRM

Human Resource Manager is an individual who normally acts in an advisory or

“staff” capacity, working with other managers to help them deal with human
resource matters.
Now a day, HRM has a great deal of contribution in strategic decision making
involving the HR perspective. They play a major role in strategic decision-making.

Employees do have direct relationship with their line managers and thus their day-to-
day activities, needs and aspirations are left to their immediate superiors. However,
the HRM should develop HR policies and programs to be implemented by the line
manager and function as a catalyst and energizer of the relationship between the
employees and the line managers.

For example, a line manager may seek an able person for a vacant position in
his/her department. This information (with all the requirements including
qualifications, years of experience, etc) will be communicated to the human resource
manager who takes the responsibility of placing an ad and start the recruitment
process based on the specified requirements and arrange an interview or any other

6
selection mechanism. Usually, an interview, as a selection mechanism, is done in the
presence of the hiring department to ensure that potential candidates are asked
appropriate and job-related questions during the interview. Once the selection is
done, HRM will proceed with the placement process including orientation of the
new employee. Again, both HRM and the hiring manager do orientation. Usually,
the kind of orientation provided by the hiring department is job specific and will not
cover other parts of human resource related policies in the organization. This task of
familiarizing new employees with company policy and other aspects are covered by
HRM. (Processing the hiring process, documentation, providing company ID,
orientation kit or package containing company policy, etc.)

Everything that is done by the HRM is done with a support from the other line
departments and what HRM does supports the line managers in effectively executing
their tasks.

Basically, the HRM performs three major roles/ functions:

a) A Service Function: According to the needs of the other departments, the

HRM is required to render coordinating services such as

− Posting job advertisement

− Organizing Training Courses
− Keeping personnel records
− Operating wage/salary systems
− Looking after the firm’s health and safety arrangements at work, etc

b) Control Function:

− Analyzing key operational indices in personnel field like labor turnover,

wage costs, absenteeism, etc.
− Monitoring labor performance (compiling & reporting performance
appraisal results of employees)
− Recommending appropriate remedial action to line managers.
Example: identifying training needs, change of work methods, improved
work environments, etc.

c) Advisory Function: Offers expert advice on personnel policies and procedures

such as:

− Which employees are ready for promotion (as per the policy of the
organization, eg. Based on number of years of service, etc.)
− Who should attend certain training course?
− How a grievance procedure should be operated.
− Interpretation of contracts of employment, health and safety regulation,
etc.
− Ensuring equal employment opportunity etc.

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Because of the diverse activities performed by the HRM and the fact that both
external and internal factors affect its movement, the human resource manager is
required to have general knowledge of what goes on inside or outside the
organization.

5. Organization of the Human Resource Management Department

Organization of human resource department is dependent on the nature of an

organization, which might change its structure through time. Accordingly, the
emphasis given to the human resource department may also vary. One major factor
affecting the organization of the human resource department is the size of an
organization.

HRM in a Small Business

In such organizations, the same functions of HR are needed but at smaller scale. For
instance, an owner-manager most of the time performs the necessary HR functions
(outsourcing some of these activities). In other situations, small business human
resource departments are staffed with one individual, and possibly a full-time
secretary. Accordingly, such individuals are forced, by design, to be HRM generalists
who are required to properly perform the basic functions of human resources and
achieve the same goals that a larger department achieves. The main difference is that
they are doing the work themselves without benefit of a specialized staff. In such
situations, there is a tendency to use outside consultants to assist in HRM activities.
For instance, benefit administration may be beyond the capacity of small
businessperson. In that case, benefit administration may need to be contracted out.

HRM in Large Organization

As an organization grows in size and complexity the HRM department will be

undertaking specialized HR functions under separate departments/units. These
departments normally involve distinct areas in human resources such as
employment, training and development, compensation/benefit administration, and
employee relations. These departments are usually staffed with HR specialists who
have enough knowledge and expertise in the respective areas. Managers of these
departments have specific accountabilities and report, oftentimes, to the vice
president of human resources.

Another trend in HRM is in outsourcing some of the work HRM professionals once
handled. For example, private staffing agencies may perform the recruiting and
selection activities, several consulting firms providing training programs, and yet
another financial organization handling the majority of a company’s benefits
administration. However, it is still essential for managers and employees to
understand the basic HRM issues and activities in their organization.

8
6. Major HRM Activities

• Human Resource Planning (HRP)

Human Resource Planning is the process of systematically reviewing
human resource requirements to ensure that the required numbers of
employees, with the required skills, are available when they are needed.
It involves matching the internal and external supply of people with job
openings anticipated in the organization over a specified period of time.
• Job Analysis
Job analysis is the systematic process of determining the skills, duties,
and knowledge required for performing specific jobs in an organization.
It provides a summary of job's duties and responsibilities, its
relationship to other jobs, the knowledge and skills required, and
working conditions under which it is performed.
• Recruitment
Recruitment 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 the organization. It involves identifying and attracting a
pool of candidates, from which some will later be selected to receive
employment offers.
• Selection
Selection is the process of choosing from a group of applicants the
individuals best suited for a particular position in an organization.
Whereas recruitment encourages individuals to seek employment with a
firm the purpose of the selection process is to identify and employ the
best qualified individuals for specific positions.
• Orientation and Placement
Orientation is the formal process of familiarizing new employees with
the organization, their jobs, their work units and employees. Through
orientation new employees will acquire the knowledge, skills and
attitudes that make them successful members of the organization.
Placement, on the other hand, is the assignment of an employee to a new
or different job.
• Training and Development
Training and development aim to increase employee's ability to contribute
to organizational effectiveness. Training is a process designed to
maintain or improve performance in the present job. Development is a
program designed to develop skills necessary for future work activities.
It is designed to prepare employees for promotion.
• Performance Appraisal
Performance appraisal is a formal system of periodic review and
evaluation of an individual's or team job performance.

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• Compensation
Compensation refers to all types of rewards that employees receive in
return for their services.
• Safety and Health
Safety involves protecting employees from injuries caused by work-
related accidents. Health refers to the employees' freedom from illness
and general physical and mental wellbeing. These aspects of the job are
important because employees who work in a safe environment and
enjoy good health are more likely to be more productive and yield long-
term benefit to the organization.
• Promotions, transfers, demotions, and separations
Promotions, transfers, demotions, and separations reflect an employee value
to the organization. High performers may be promoted and transferred
to help them develop their skills, while low performers may be
demoted, transferred to less important positions, or even separated.
• Human Resource Research
Human resource research is a systematic gathering, recording, analyzing
and interpretation of data for guiding human resource management
decisions. Every human resource management function needs effective
research.
Other areas such as employee and labor relations, collective bargaining,
employee rights and discipline, and retirement are also the concerns and
functions of human resource management.

7. Environmental Factors Affecting Human Resource Management

I. External Environment affecting HRM

A. Economic Conditions

1. The Population and the Labor Force: The qualification, attitude, career
interest and motivations of people in the available workforce will influence
human resource activities and ultimately the effectiveness of the organization.

First, we need to clarify what we mean by available work force.

Population: Includes all the people

Those eligible to work + those ineligibles to work because of age or
institutionalization. (Below age of 14 and those in Prison or hospital)

Eligible to work = Labor reserve + total labor force

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 Labor reserve: those not working for economic gain even though they are
eligible to work. (Homemakers, college students, and retirees)

Total Labor force = Armed forces + civilian labor force

Civilian Labor Force = Unemployed + Employed

Impact of the labor force on the human resource function of an organization may
include

▪ Percent of minorities and women in the workforce influences equal

employment opportunity decisions.
▪ Qualifications and skills in the workforce influence need of training
programs, design of jobs, etc.
▪ Availability of various skills and demand for these skills by employers
influences salary and compensation decisions.
▪ The demand of the workforce for full-time or part-time jobs affects decision
on work schedule.

2. Labor Market Conditions: The labor market involves the job opportunities
and compensation offered by employers and the skills and contributions
offered by employees. The scope of the labor market is influenced by three
factors:

▪ Occupation: The skills and qualifications required in an occupation. This

refers to required training, education, or even licensing requirement to
perform a given type of job. E.g. accountant, medical doctors, lawyers, etc.
This may limit mobility among occupations.
▪ Geography: Distance employees are willing to relocate or commute.
Supply of labor force could be limited to a specific geographic area or
region. Example, supply of qualified human resource is very limited in
some regions of Ethiopia.
▪ Industry: The industry in which the organization competes for labor and
sells its products/services is also important. The more competition an
organization faces in the industry, the more it is expected to offer
employees better compensation for their contribution. This becomes even
more important if the supply of qualified employees is very limited.

3. Product/Service Market:

▪ Demands for products and services: The quality and quantity of people an
organization hires and its ability to pay its employees is affected by the
changes that occur in the product/service market. For instance, in times of
market growth, organizations increase employment levels while in times of
market decline, organizations economize their use of human resources.

11
 ▪ Inflation: It is the rate of change in prices we pay for goods and services. A
change in inflation rate affects human resource management especially on
cost-of-living adjustments (COLA) to salaries and pension plans. It also
has impact on cost of recruiting, interviewing, and training employees.

▪ Technology: Changes in technology will influence the nature of jobs to be

performed and consequently the qualifications and skills of people required
to perform them.

B. Government Influences: Government regulations have direct impact on

human resource management decisions by regulating terms and conditions of
employment. Involvement and intervention of government in employee and
employer relations is increasing over time. Some areas of legislation and
regulation include:

▪ Equal employment opportunity: it affects recruiting, selection, evaluation,

and promotion directly and employment planning, orientation, career
planning, training, and development indirectly.
▪ Sex and age discrimination.
▪ Compensation regulation: specifying the minimum pay for any job, for
employees with a certain educational level, etc.
▪ Hours of work, national holidays, etc.
▪ Benefit Regulations: affect pension and retirement plans. In some countries
government requires employers to have basic medical insurance plans for its
employees.
▪ Worker’s safety laws: affects health and safety programs in organizations.
▪ Privacy laws protecting employees’ personal information.
▪ Labor relations laws and regulations: affects the conduct of collective
bargaining.

C. The Technological Environment: The technological environment includes

advances in sciences as well as new developments in products, processes,
equipment, machinery and other materials that may affect an organization.
Technological advancements have tended to reduce the number of jobs that
require little skill and to increase the number of jobs that require considerable
skill. Technological advances also have training implication. The challenging
areas in human resource management will be training employees to stay up
with rapidly advancing technology. Because, as technological changes occur,
certain skills also are no longer required. This necessitates some retraining of
the current workforce.

D. The Socio-Cultural Environment: The socio-cultural dimension of the general

environment is made up of the customs, values, and demographic
characteristics of the society in which the organization functions.

12
 The socio-cultural dimension influences how employees feel about an
organization. Human resource management, today, has become more complex
than it was when employees were concerned primarily with economic survival.
Today, many employees have more social concerns than mere economic
interest as early times.

II. Internal Environmental Conditions

A. Mission: Mission is the organization's continuing purpose or reason for its

existence. Each management level should operate with a clear understanding of
the firm's mission. The specific organizational mission must be regarded as a
major internal factor that affects the tasks of human resource management.

B. Strategies and Operational Objectives: Organizations have strategic and

operational objectives determining the direction of the business. When
organizations change their strategies, they are determining the direction that it
should take. Consequently, all plans that follow the strategic decisions will also
change including the human resource requirement in terms of quantity, skill and
experience.

C. Policy: A policy is a predetermined guide established to provide direction in

decision making. As guides, rather than hard and fast rules, policies are
somewhat flexible, requiring interpretation and judgment in their use. They can
exert significant influence on how human resource managers accomplish their
jobs.

Although policies are established for marketing, production, and finance, the
largest number of policies often relate to human resource management. Some
potential policy statements that affect human resource management are:
• To provide employees with a safe place to work
• To encourage all employees to achieve as much of their human potential as possible
• To provide compensation that will encourage a high-level productivity in both quality
and quantity.
• To ensure that current employees are considered first for any vacant position for which
they may be qualified.

D. Financial Condition: Financial status of an organization has a particularly

critical influence on personnel activities. If an organization is in a good financial
condition, it is likely to increase the quantity of its employees or even offer higher
salary increments to its employees. However, if the organization is not in a good
financial condition, it is most likely to reduce its employees. This is especially
true for those labor-intensive organizations such as education, health care, and
government institutions where majority of the budget is assigned to cover salaries
and other benefits.

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E. Nature of the Task: The kind of employees found in a given organization is
highly influenced by the kind of tasks/ activities performed. Some of the issues
relevant for employees in choosing to work for a certain organization include
degree of physical exertion required, degree of environmental unpleasantness,
physical location of work, time dimension of work, human interaction on the job,
and degree of autonomy in the task.

F. Culture and Philosophy of Organizations: Organizational culture refers to the

“values, beliefs and traditions shared by all members in an organization.” If an
organization has a well defined and practiced culture its employees should be
able to feel comfortable to operate in that environment and adhere to the
established culture.

E.g., Culture of Productivity through people – described as “Treat employees as

the root source of quality and productivity gain.” Or “Respect for the individual.”
Culture of Autonomy and Entrepreneurship - “Foster many leaders and
innovators through the organization”

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 CHAPTER TWO
Job Analysis and Human Resource Planning
I. Job Analysis

1. Definition

Developing organizations result in jobs that have to be staffed. Job analysis is the
procedure through which you determine the duties and nature of the jobs and the
kinds of people (in terms of skills and experience) and who should be hired for them. It
provides data on job requirements, which are then used for developing job descriptions
(what the job entails) and job specifications (what kind of people to hire for the job).

As a supervisor or personnel specialist, you will normally aim to collect one or more of
the following types of information by doing the job analysis.

Job activities: First, information is usually collected on the actual work activities
performed, such as cleaning, sewing, galvanizing, coding, or painting. Sometimes such
a list of activities indicates how, why, and when a worker performs each activity.

Job context: Here you would include information concerning such matters as physical
working conditions, work schedule, and the organizational and social context for
instance, in terms of people with whom the employee would normally be expected to
interact. Also included here might be information regarding financial and non-
financial incentives the job entails.
Human behaviors: Information on human behaviors like sensing, communicating,
decision-making, and writing will also be compiled. Included here would be infor-
mation regarding personal job demands in terms of human energy expenditure, a job's
walking long distances, and so on.
Machines, tools, equipment, and work aids used: Included here would be information
regarding products made, materials processed, knowledge dealt with or applied (such
as physics or law), and services rendered (such as counseling or repairing)
Performance standards: Information is also collected regarding the performance
standards (in terms of quantity, quality, or time taken for each aspect of the job, for
instance), standards by which an employee in this job will be evaluated.

2. Products of Job Analysis

Job analysis is a conceptual and analytical process or action, which results in

tangible outcomes of mainly JOB DESCRIPTION and JOB
SPECIFICATIONS. Overall job analysis can have the following products.

a. Job Description (what a job entails): It is a list of a job’s duties,

responsibilities, reporting relationships, working conditions, and supervisory

15
 responsibilities. In short, it concentrates on the job and lists what a jobholder
does, how it is done and why it is done.

b. Job Specification (what kind of people to hire for the job): It is a list of a
job’s “human requirements,” i.e, the requisite education, skills, personality,
etc. In other words, it is a statement of the minimum acceptable qualifications
that a job holder must possess to perform the job successfully.

c. Job Performance Standards: They are the statement of attainable as well

as acceptable levels of job achievement. They indicate quality and quantity
of job performance.
d. Job Evaluations: In addition to providing data for job descriptions and
specifications, job analysis is also valuable in providing the information that
makes comparison of jobs possible. If an organization is to have an equitable
compensation program, jobs that have similar demands in terms of skills,
knowledge, and abilities should be placed in common compensation groups.
Job evaluation contributes toward that end by specifying the relative value of
each job in the organization. Thus, job evaluation is an important part of
compensation administration as will be discussed in detail in chapter 10.

3. Uses of Job Analysis Information

The information produced by the job analysis is used as a basis for several interrelated
personnel management activities.

Recruitment and Selection

Job analysis provides you with information on what the job entails and what human
requirements are required to carry out these activities. This job description and job
specification information is the bases on which you decide what sort of people to
recruit and hire.
Compensation
You also need a clear understanding of what each job entails to estimate the value and
appropriate compensation for each job. This is because compensation (such as salary
and bonus) is usually tied to the job's required skills, education level, safety
hazards, and so on-all factors that are identified through job analysis. We'll also
see that many employers classify jobs into categories (like Secretary III and IV),
and job analysis provides data for determining the relative worth of each job so
that each job can be classified.
Performance Appraisal
Performance appraisal involves comparing each employee's actual performance
with his or her desired performance. It is often through job analysis that industrial
engineers and other experts determine standards to be achieved and specific
activities to be performed.

16
Training
You will also use job analysis information for designing training and development
programs because the job analysis and resulting job description show what sorts
of skills-and therefore training-are required.
Ensure Complete Assignment of Duties
The job analysis is also useful for ensuring that all the duties that have to be done
are in fact assigned to particular positions. For example, in analyzing the current
job of your company's production manager, you may find she reports herself as
being responsible for two dozen or so specific duties including planning weekly
production schedules, purchasing raw materials, and supervising the daily
activities of each of her first-line supervisors. Missing, however, is any reference
to managing raw material or finished goods inventories. On further investigation
you find that none of the other people in manufacturing is responsible for
inventory management either. Your job analysis (based as it is not just on what
these employees report as their duties, but on your knowledge of what these jobs
should entail) has identified a missing duty that must be assigned. Missing duties
like this are often uncovered through job analysis. As a result, job analysis pl ays a
role in remedying problems of the sort that would arise if, for example, there was
no one assigned to manage inventories.

Compliance to legal requirements

Information on job contents and requirements helps organizations to comply with
government regulations and defend their actions from legal challenges like
discrimination during HRM decisions (to hire, to give a raise, to terminate, etc) . As
long as such decisions are made for job-related reasons, the organization will be in
compliance to government rules and regulations. For example, if fire fighters are
required to lift 34 kg objects, the job analysis can help the city defend itself from
gender discrimination. Another example is if a company requires its sales
representatives to have a valid driver’s license and how it via job analysis that driving
is an essential job in a sales rep’s job, it can easily defend itself from violating
regulations regarding disabled people.

In general, job analysis is one of the most important functions that need to be
performed effectively. Almost everything that HRM does is directly related to the job
analysis process. If an organization doesn’t do its job analysis well, it probably
doesn’t perform many of its human resource activities well. If employees in the
organization understand human resource activities, they should understand the
fundamental importance of job analysis. The job analysis is, thus, the starting point
of sound human resource management.

17
Typical Job Data Collected

Job Content/ Context Factors

Duties Communication Network

Tasks Output (Ex. Reports, Analysis)
Activities Working Conditions
Performance Criteria Time Allocation
Critical Incidents Resource Responsibility
Organizational Level Roles (eg. negotiator, monitor,
Reporting Relationships leader)
Communication Network

Worker Characteristics

Professional/ technical knowledge Managerial Skills

Prior experience Bargaining Skills
Manual skills Leadership Skills
Written skills Consulting Skills
Quantitative skills Human Relations Skills
Mechanical skills Aptitudes
Conceptual skills Values
Style

Work Characteristics

Risk Exposure Dependence/Independence

Constraints Pattern or Cycle

Choices Time Pressure
Conflicting Demands Fragmentation
Origin of Activities Sustained attention
Expected/Unexpected Time Orientation (Short or
long)

Interpersonal Relationships

Internal External

Boss Suppliers
Other superiors Customers
Peers Regulatory
Subordinates Consultants
Other juniors Professional/ Industry
Community
Union/ Employee Group

18
 4. Steps In Job Analysis

The six steps in doing a job analysis are as follows.

Step 1: Determine the use of the job analysis information. Start by identifying
the use to which the information will be put, since this will determine the types of
data you collect and the technique you use to collect them. Some techniques-like
interviewing the employee and asking what the job entails and what his respon-
sibilities are - are good for writing job descriptions and selecting employees for the
job. Your first step should therefore be to determine the use of the job analysi s
information. Then you can decide how to collect the information.

Step 2: Collect background information. Next, review available background

information such as organization charts, process charts, and job descriptions.'
Organization charts show you how the job in question relates to other jobs and
where it fits in the overall organization. The organization chart should identify
the title of each position and, by means of its interconnecting lines, show who
reports to whom and with whom the job incumbent is expected to communicate.

A process chart provides a more detailed understanding of the flow of work than
you can obtain from the organization chart alone. It shows the flow of inputs to
and outputs from the job under study. Finally, the existing job description, if there
is one, can provide a good starting point from which to build your revised job
description.

Step 3: Select representative positions to be analyzed. This is necessary when

many similar jobs are to be analyzed and it is too time-consuming to analyze, say
jobs of all assembly workers.

Step 4: Collect job analysis information. Your next step is to actually analyze
the job collecting data on job activities, required employee behaviors, working
conditions, and human requirements (like the traits and abilities needed to
perform the job). For this, you would use one or more of the job analysis
techniques explained in the remainder of this chapter.

Step 5: Review the information with the participants. The job analysis provides
information on the nature and functions of the job. This information should be
verified with the worker performing the job and the person's immediate
supervisor. Verifying the information will help to determine if it is factually
correct, complete, and easily understood by all concerned. This "review" step can
also he gain the person's acceptance of the job analysis data you collected by
giving the person a chance to modify your description of the activities he or she
perform

19
Step 6: Develop a job description, and job specification. In most cases, a job
description and a job specification are two concrete outcomes of the job analysis.
The job description (to repeat) is a written statement that describes the activities
and responsibilities of the job, as well as important features of the job such,
working conditions and safety hazards. The job specification summarizes the
personal qualities, traits, skills, and background required for getting the job done.
It may be either a separate document or on the same document as the job
description.

5. Methods of Collecting Job Analysis Information

Your next step is actually to collect information on the duties, responsibilities and
activities of the job. There are various techniques you can use for collecting these
data, and we'll discuss the most important ones in this section. In practice, you
could use any one of them or combine techniques that best fit your purpose.

Who Collects the Job Information?

Collecting job analysis data usually involves a human resource specialist, the
worker, and the worker's supervisor. The human resource specialist (like the
human resource manager, job analyst, or consultant) may be asked to observe and
analyze the work being done and then develop a job description and specification.
The supervisor and worker will also get involved, perhaps by filling out
questionnaires listing the subordinate's activities. Both the supervisor and worker
may then be asked to review and verify the job analyst's conclusions regarding the
job's activities and duties. Job analysis thus usually involves an integrated effort
among the specialist, the supervisor, and the worker.

a. The Interview

There are three types of interviews used to collect job analysis data: individual
interviews with each employee; group interviews with groups of employees hav-
ing the same job; and supervisor interviews (Technical Conference Method) with
one or more supervisors who are thoroughly knowledgeable about the job being
analyzed.
Interviews conducted with expert supervisors may be taken as a good data-
gathering method but may often overlook the incumbent workers’ perceptions
about what they do on their job.

The group interview is used when a large number of employees are performing
similar or identical work, since this can be a quick and inexpensive way of
learning about the ob. As a rule, the worker's immediate supervisor would attend
the group session; if not, you should interview the supervisor separately to get
that person's perspective on the duties and responsibilities of the job.

20
Whichever interview you use, it is important that the interviewee fully
understands the reason for the interview, since there's a tendency for interviews
like these to be misconstrued as "efficiency evaluations." When they are,
interviewees may not be willing to describe their jobs or those of their
subordinates accurately.
Pros and Cons
The interview is probably the most widely used method for determining the duties
and responsibilities of a job, and its wide use reflects its advantages. Most
important, interviewing the worker allows that person to report activities and
behavior that might not otherwise come to light. For example, important activi-
ties that occur only occasionally or informal communication (between, say, a
production supervisor and the sales manager) that would not appear on the orga-
nization chart could be unearthed by a skilled interviewer. In addition, an inter-
view can provide an opportunity to explain the need for and functions of the job
analysis. It can also allow the interviewee to vent frustrations or views that might
otherwise go unnoticed by management. An interview is also a relatively simple
and quick way of collecting information.
The major problem with this technique is distortion of information, whether
due to outright falsification or an honest misunderstanding. A job analysis is often
used as a prelude to changing a job's pay rate. Employees, therefore (to repeat),
sometimes view it as an efficiency evaluation that may (and often will) affect their
pay. Employees thus tend to exaggerate certain responsibilities while minimizing
others. Obtaining valid information can thus be a slow and painstaking process.

Typical Questions

Despite their drawbacks, interviews are widely used. Some typical interview
questions follow.

• What is the job being performed?

• What are the major duties of your position? What exactly do you do? What
different physical locations do you work in?
• What are the education, experience, skill, and (where applicable) certification an
licensing requirements?
• What activities do you participate in?
• What are the responsibilities and duties of the job?
• What are the basic accountabilities or performance standards that typify your
work?
• What exactly do the activities you participate in involve?
• What are your responsibilities?
• What are the environmental and working conditions involved?
• What are the physical demands of the job?
• The emotional and mental demands? What are the health and safety conditions?
• Are there any hazards or unusual working conditions you are exposed to?

21
These questions notwithstanding, it is generally agreed that the most fruitful
interviews follow a structured or checklist format. One such job analysis,
questionnaire is presented below. It includes a series o detailed questions regarding
such matters as the general purpose of the job supervisory responsibilities, job duties;
and education, experience, and skill; required. A form like this can also be used by a
job analyst for collecting information by observing the work being done or by
administering a questionnaire two methods that will be explained shortly.'

Interview Guidelines

There are several things to keep in mind when conducting a job analysis interview.
First, if you are doing the job analysis, you and the supervisor should work together.
Identify the workers who know most about the job, as well as workers who might be
expected to be the most objective in describing their duties and responsibilities.
Second, you must establish rapport quickly with the interviewee, by knowing the
person's name, speaking in easily understood language, briefly reviewing the purpose
of the interview, and explaining how the person came to be chosen for the interview.

Third, you should follow a structured guide or checklist, one that lists questions and
provides space for answers. This ensures that you'll identify crucial questions ahead
of time and that all interviewers (if there are more than one) cover all the required
questions. However, make sure to also give the worker some leeway in answering
questions and provide some open-ended questions like "Was there anything we
didn't cover with our questions?"

Fourth, when duties are not performed in a regular manner-for instance, when
the worker doesn't perform the same job over and over again many times a day -
you should ask the worker to list his or her duties in order of importance and
frequency of occurrence. This will ensure that crucial activities that occur
infrequently-like a nurse's occasional emergency room duties-aren't overlooked.

Finally, after completing the interview, review and verify the data. This is
normally done by reviewing the information with the worker's immediate super-
visor and with the interviewee himself or herself.

b. Questionnaires

Having employees fill out questionnaires in which they describe their job related
duties and responsibilities is another good method for obtaining job analysis
information.

The main thing to decide here is how structured the questionnaire should be and
what questions to include. At one extreme, some questionnaires are very
structured checklists. Each employee is presented with an inventory of perhaps
hundreds of specific duties or tasks (such as "change and splice wire"). He or she

22
is asked to indicate whether or not he or she performs each task and, if so , how
much time is normally spent on each. At the other extreme, the questionnaire can
be open ended and simply ask the employee to "describe the major duties of your
job." In practice, the best questionnaire often falls between these two extremes.
As illustrated below, a typical job analysis questionnaire might have several open-
ended questions (such as "state your main job duties") as well as structured
questions (concerning, for instance, previous experience required).

Whether structured or unstructured, any questionnaire has advantages and

disadvantages. A questionnaire is, first, a quick and efficient way of obtaining
information from a large number of employees; it's less costly than interviewing
hundreds of workers, for instance. On the other hand, developing the ques-
tionnaire and testing it (perhaps by making sure the workers understand the
questions) can be an expensive and time-consuming process. Therefore, the po-
tentially higher development costs have to be weighed against the time and
expense you'll save by not having to interview as many workers.

c. Observation

Direct observation is especially useful in jobs that consist mainly of observable

physical activity. Jobs like those of janitor, assembly-line worker, and accounting
clerk are examples. On the other hand, observation is usually not appropriate
when the job entails a lot of un-measurable mental activity (lawyer, design
engineer). Nor is it useful if the employee engages in important activities that
might occur only occasionally, such as a nurse who handles emergencies.

Direct observation is often used in conjunction with interviewing. One approach

is to observe the worker on the job during a complete work cycle. (The cycle is the
time it takes to complete the job; it could be a minute for an assembly-line worker
or an hour, a day, or more for complex jobs.) Here you take notes of all the job
activities you observe. Then, after accumulating as much information as possible,
you interview the worker; the person is encouraged to clarify po ints not
understood and explain what additional activities he or she performs that y ou
didn't observe. Another approach is to observe and interview simultaneously,
while the worker performs his or her task. It's often best to withhold questions
until after observations are made, however, since this gives you more chance to
unobtrusively observe the employee. This in turn helps reduce the chance that
the employee will become anxious or in some way distort his or her usual
routine.

d. Participant Diary/Logs
Participant diary/logs Daily listings, made by workers, of every activity in
which they engage, along with times. Workers can be asked to keep daily
participant diary/logs or lists of things they do during the day. For every
activity he or she engages in, the employee records the activity (along with the
time) in a log. This can provide you with a very complete picture of the job,

23
especially when it's supplemented with subsequent interviews with the worker
and his or her supervisor. The employee might, of course, try to exaggerate
some activities and underplay others. However, the detailed, chronological
nature of the log tends to mediate against this.

In summary, interviews, questionnaires, observations, and diary/logs are the

most popular methods for gathering job analysis data. They all provide realistic
information about what job incumbents actually do. They can thus be used for
developing job descriptions and job specifications.
Example of Job Analysis Questionnaire for Developing Job Descriptions
Source: Gary Dessler, Human Resource Management, 6thed., 1994

JOB QUESTIONNAIRE, KANE MANUFACTURING COMPANY

NAME _________________________________ JOB TITLE __________________________________________

DEPARTMENT ___________________________ JOB NUMBER

_______________________________________

SUPERVISOR'S NAME ______________________ SUPERVISOR’S TITLE ________________________

1. SUMMARY OF DUTIES: State in your own words briefly your main duties. If you are responsible for filling out
reports/records, also complete Section 8.
____________________________________________________________________________________________________
_________________________________________________________________________

2. SPECIAL QUALIFICATIONS: List any licenses, permits, certifications, etc. required to perform duties assigned to
your position.
_______________________________________________________________________________________
_______________________________________________________________________________________

3. EQUIPMENT.- List any equipment, machines, or tools (e.g., typewriter, calculator, motor vehicles, lathes, fork lifts,
drill presses, etc.) you normally operate as a part of your position's duties.

MACHINE AVERAGE N0. HOURS PER WEEK

________________________________________________________________________________________________
________________________________________________________________________________________________
__________________________________________________________________

4. REGULAR DUTIES: In general terms, describe duties you regularly perform. Please list these duties in descending
order of importance and percent of time spent on them per month. List as many duties as possible and attach
additional sheets, if necessary.
________________________________________________________________________________________________
___________________________________________________________________________________________________
_____________________________________________________________________

5. CONTACTS: Does your job require any contacts with other department personnel, other departments, outside
companies or agencies. If yes, please define theduties requiring contacts and how often.
________________________________________________________________________________________________
____________________________________________________________________________________________
________________________
6. SUPERVISION: Does your position have supervisory responsibilities? ( ) Yes ( ) No. If yes, please fill out a
Supplemental Position Description Questionnaire for Supervisors and attach it to this form. If you have responsibility
for the work of others but do not directly supervise them, please explain.

24
________________________________________________________________________________________________
_________________________________________________________________________

7. DECISION MAKING: Please explain the decisions you make while performing the regular duties of your job.
________________________________________________________________________________________________
____________________________________________________________________________________________
________________________________________________________________
(Continued)

(a) What would be the probable result of your making (a) poor judgment(s) or decision(s), or (b) improper actions?
____________________________________________________________________________________________________
_________________________________________________________________________

8. RESPONSIBILITY FOR RECORDS: List the reports and files you are required to prepare or maintain. State, in
general, for whom each report is intended.
(a) REPORT INTENDED FOR
_________________________________________________________________________________________
_________________________________________________________________________________________
_________________________________________________________________

FILES MAINTAINED
_________________________________________________________________________________________
_________________________________________________________________________________________
______________________

9. FREQUENCY OF SUPERVISION: How frequently must you confer with your supervisor or other personnel in
making decisions or in determining the proper course of action to be taken?
( ) Frequently ( )Occasionally ( )Seldom ( )Never

10. WORKING CONDITIONS: Please describe the conditions under which you work-inside, outside, air conditioned
area, etc. Be sure to list any disagreeable or unusual working conditions.
_________________________________________________________________________________________
______________________________________________________________________________________
______________________

11. JOB REQUIREMENTS: Please indicate the minimum requirements you believe are necessary to perform
satisfactorily in your position.
(a) Education:

Minimum schooling _____________________________________________________________________

Number of years _______________________________________________________________________

Specialization or major___________________________________________________________________

(b) Experience:

Type ____________________________________________________________________________
Number of years ___________________________________________________________________

(c) Special training:

TYPE NUMBER OF YEARS

_________________________________________________________________________________________
_________________________________________________________________________________________
______________________

(d) Special Skills:

Typing: _________________________w.p.m. Shorthand__________________________w. p. m.
Other: ________________________________________________________________________________

25
12. ADDITIONAL INFORMATION. - Please provide additional information, not included in any of the previous
items, which you feel would be important in a description of your position.
_________________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_______________________________

EMPLOYEE'S SIGNATURE __________________________________ DATE:_______________________

6. Job Design

Job design is the result of job analysis. A good job design will enable employees to
exercise discretion on decision-making in their work roles. Managers, to the extent
possible, must involve employees in the job design process. The manner in which
jobs are designed has an important bearing on what they ultimately deliver to the
organization. An effective job design specifies three characteristics of jobs: range,
depth, and relationships.

Range and Depth

Job range refers to the number of tasks a jobholder performs. The individual who
performs eight tasks to complete a job has a wider job range than a person
performing four tasks. In most instances, the greater the number of tasks performed,
the longer it takes to complete the job. Job depth, relates to the amount of discretion
an individual has to decide job activities and job outcomes. Job depth relates to
personal influence as well as delegated authority. Thus, an employee with the same
job title and at the same organizational level as another employee may possess more,
less, or the same amount of job depth because of personal influence.

Job Relationships
Job relationships are determined by managers' decisions regarding
departmentalization bases and spans of control. The resulting groups become the
responsibility of a manager to coordinate toward organization purposes. These
decisions also determine the nature and extent of jobholders' interpersonal
relationships, individually and within groups. Group performance is affected in part
by group cohesiveness. And the degree of group cohesiveness depends upon the
quality and kind of interpersonal relationships of jobholders assigned to a group. The
wider the span of control, the larger the group, and consequently the more difficult it
is to establish friendship and interest relationships. Simply, people in larger groups
are less likely to communicate than people in smaller groups. Without the
opportunity to communicate, people will be unable to establish cohesive work
groups. Thus, an important source of satisfaction may be lost for individuals who
seek to fulfill social and esteem needs through relationships with coworkers.

Perceived Job Content

Perceived job content refers to aspects of a job that define its general nature as
perceived by the jobholder and influenced by the social setting. Individuals perceive

26
and describe their jobs using many different adjectives. These adjectives describe
aspects of the job's range, depth, and relationship and are termed job characteristics.
The job characteristics model suggests that jobs should be designed to include five
important core dimensions that increase motivation, performance, and satisfaction,
reducing employee turnover and absenteeism.

The five characteristics of perceived job content are:

▪ Skill variety: the degree to which the job requires a variety of different
activities in carrying out the work.
▪ Task identity: the degree to which the job requires completion of an
identifiable task or output.
▪ Task significance: The degree to which the job has an impact on other jobs
within the organization or related organizations.
▪ Autonomy: The degree to which the job provides the worker with the
freedom and discretion in setting work schedules, and in determining the
appropriate means of doing the job.
▪ Feedback: the degree to which individuals are able to obtain data
concerning the fulfillment of the job requirements.

Redesigning Job Range

Job Rotation
Rotating an individual from one job to another to enable the individual to complete
more job activities because each job includes different tasks. The practice of job
rotation does not change the basic characteristics of the assigned jobs.

Job Enlargement

Job enlargement strategies focus on the opposite of dividing work they are a form of
increasing the number of tasks that an employee performs. For example, a job is
designed such that the individual performs six tasks instead of three. An enlarged job
requires a longer training period; job satisfaction usually increases because boredom
is reduced. The implication, of course, is that the job enlargement will lead to
improvement in other performance outcomes. If they have the required ability, then
job enlargement should increase satisfaction and product quality and decrease
absenteeism and turnover. If management desires to implement the redesign strategy
that enlarges job depth and job enrichment. Job enlargement is a necessary
precondition for job enrichment.

Redesigning Job Depth

Enrichment

The impetus for redesigning job depth was provided by Herzberg's two-factor theory
of motivation. The basis of this motivation theory is that factors, which meet

27
individuals' need for psychological growth, responsibility, job challenge, and
achievement, must be characteristic of their jobs. The implementation of job
enrichment is realized through direct changes in job depth. Managers can provide
employees with greater opportunities to exercise discretion by making the following
changes.
▪ Direct Feedback: the evaluation of performance should be timely and direct.
▪ New learning: A good job enables people to feel that they are growing. All
jobs should provide opportunities to learn.
▪ Scheduling: People should be able to schedule some part of their own work.
▪ Uniqueness: Each job should have some unique qualities or features.
▪ Control over resources: Individuals should have some control over their job
tasks.
▪ Personal accountability: People should be provided with an opportunity to be
accountable for the job.

Job enrichment incorporates high-level motivators, including more job responsibility,

greater recognition, more opportunities for personal growth, and greater job
discretion or autonomy

II. Human Resource Planning

1. What is Human Resource Planning?

The acquisition of people to perform each job within the organization is the role of
the staffing function. This function is interrelated closely with planning, because
human resource needs must be forecasted sufficiently in advance to enable qualified
individuals to be available for job openings as they occur. Human resource planning,
therefore, is the process of systematically reviewing human resource requirements to
ensure that the required number of employees, with the required skills, are available
when they are needed (Mondy & Noe, 1990). It is a means of deciding the number
and type of personnel that organization needs now and in the future. Then,
translates the organization's objectives into the number of employees required to
meet those objectives. Without clear-cut planning estimation of human resource
need is reduced to mere guesswork.

2. The Importance of Human Resource Planning

The following points represent the major reasons for undertaking human resource
planning.
1. Future Human Resource Requirements
Planning is vital for determining the human resource needs for the future.
2. Cope With Change
Human resource planning enables the management to cope with changes in
technology, competitive forces, markets, government regulations, etc. Such
changes often generate changes in job content, skill demands, number and
types of personnel.

28
 3. Decreasing or Increasing Growth of Organizations
The manner, the pace and the direction in which an organization is growing
dictates the need for a human resource plan. Years of comfortable growth
may give rise to slower growth prospects or even reduced growth prospect
(Chatterjee, 1995).
4. Foundation for Human Resource Functions
The plan provides essential information for designing and implementing
human resource functions such as recruitment, selection, employee mobility
(transfers, promotions, lay-off, etc.) and training and development.

3. The Human Resource Planning Process

Planning for human resource should be tied in with overall long-term organizational
plan. In other words, after organizational strategic plans have been formulated, human
resource planning can be undertaken. Strategic plans are reduced to specific
quantitative and qualitative human resource plans (Mondy & Noe, 1990).
Although there is no universally accepted set of procedures for undertaking human
resource planning process, there is a general agreement upon the major processes and
contents of human resource planning as illustrated below.

1. Determining organizational goal and strategic planning

Human resource planning is a part of the strategic planning for the entire organization.
Moreover, to be relevant, a human resource planning process should be clearly tied
to the organization's strategic goals (Mondy & Noe, 1990).

2. Current Human Resource Situation

The second phase of the planning process is the preparation of an inventory of human
resource within the organization. This is often called human resource inventory or a
manpower information system. The inventory consists of up-to-date information
concerning each employee's knowledge, skills and abilities. It enables management to
assess the type and number of employees available in the organization. Moreover, a
summary of this sort gives planners a comprehensive understanding of the
capabilities that are to be found in the organization's workforce (Werther & Davis,
1996).

This step enables planners to evaluate the status of current human resources. What
skills, interests, and experiences of current employees have? What jobs are being done?
How many employees are doing particular jobs? Current employees are the most likely
candidates to meet future needs and should be the first ones considered for new
positions (Baird, 1990).

29
 3. Human Resource Forecast

Human resource forecasting includes anticipating future human resource demand

(requirement) and supply (availability). It has Three components:
a. Forecasting human resource demand: require to determine the type and
number of personnel required in the future.
b. Forecasting human resource supply: require anticipation of supply of people
who will be available in the future.
c. Comparing future demand and internal supply:

Three possible results (figure) may be obtained out of the comparison process by
subtracting the current man power (supply) from the projected demand.
1. Surplus= HR demand < HR supply’
2. Shortage= HR demand > HR supply
3. Balanced= HR demand = HR supply

Human Resource Demand Forecasting Techniques

1. Judgment and experience:

Top level executives and experts come together and estimate future HR requirements.

2. Zero based forecasting

Using current level of employees as a starting point to determine future HR
requirements.

3. Bottom-up approach
Unit managers (managers from different levels of mgt) are asked to estimate their HR
requirements and send a proposal to top level management.

4. Work standard methods

Determining the relationship between the task and number of employees required to
perform the task.

Example:
✓ planned work for the next……. planting 100,000 seedlings
✓ Work standard…………………100 seedlings/ person/day
What are the numbers of people required/day to plant the seedling within two
months period (assuming that working days per months are 25)?
Solution… 20 workers per day are required

This technique is used only when:

✓ The volume of work can be quantified
✓ Total productions and activities are clearly estimated

30
 ✓ Time required to produce a unit is known
NB. The work standard methods cannot be applied for estimating professional
personnel requirements like managerial skills.

5. Key predictive factors

Identifying one major variable with which total human resource is highly correlated
e.g., Addis Ababa University may use number of students as key predictive factor to
determine academic staff requirement

Forecasting Human Resource Supply

Supply forecasting estimates future sources of human resources that are likely to be
available from inside and outside the organization.
Factors that affect human resource supply forecasts are:
• Internal Sources Forecasts
• External Sources Forecasts

Internal Sources Forecasts:

The Human Resource Inventory of existing human resources provides information
about human resources that are likely to be available from internal sources.

External Sources Forecasts

External sources consist of human resources who currently do not work for the
organization. The sources can be:
- Educational and training institutes
- Labor market
The information flow from the labor market about job seekers should be constantly
monitored to analyze trends.

4. Developing an action plan

Managers must develop an action plan to close the gap between demand and supply.
Accordingly;

If surplus is projected, plan must be made to:

➢ encourage early retirement
➢ lay off or dismiss employees. Is it possible?
➢ Reduce working hour/part time. Is it good?
➢ Restrict hiring

If shortage is projected, plan must be done to:

➢ Allow overtime work/part time

31
 ➢ To extend retirement
➢ Introduce labor saving technology
➢ Job enrichment/enlargement
➢ Recruit and select employees

5. Implement the action plan and Monitoring and evaluation.

Some of the major implementation actions are:

➢ Recruitment and selection
➢ Promotion, transfer, demotion and lay off
➢ Training and development

32
 CHAPTER THREE
Recruitment and Selection
I. Recruitment

1. Definition

Recruitment involves seeking and attracting a pool of people from which

qualified candidates for job vacancies can be chosen. In effect, it involves:

▪ Identifying the sources where the required number and kind of employees
are/will be available.
▪ Developing suitable techniques to attract the desirable candidates
▪ Stimulating as many candidates as possible and be able to attract large number
of candidates. The higher the number of applicants the better chance of being
selective in the hiring process.

In short, its basic purpose is to develop a group of potentially qualified people.

The term “qualified” indicates the difficulty involved in the recruitment process.
The ideal recruitment process will attract a large number of qualified applicants
who will take the job if offered. The most effective way of making sure
unqualified applicants are not attracted to a job is by providing adequate
information about the nature of the job so that unqualified applicants may self-
select themselves out of the job candidacy. This dual objective minimizes the cost
of recruiting unqualified candidates.

Some of the questions recruiters should be concerned with for effective

recruitment process include:

• What are the recruitment sources?

• How are they to be recruited?
• Who is to be involved in the recruitment process?
• What inducements does the organization have to attract qualified
candidates?

Recruitment is not a simple task and like most of the human resource functions, it
is affected by both internal and external environmental factors. These factors
could facilitate or limit the recruitment process in attracting large number of
qualified candidates.

Among the factors influencing effective recruitment are the following:

Internal Factors:

▪ Working Conditions

33
 ▪ Promotional Opportunities
▪ Salary levels, type and extent of benefits
▪ Other personnel policies and practices
▪ Image of the organization
▪ Ability and skill of the management to stimulate the candidates
▪ Quality of the recruitment process

External Factors:

▪ Personnel policies and practices of other organizations regarding working

conditions, salary, benefits, promotional opportunities, employee relations,
etc.
▪ Career opportunities in other organizations
▪ Government regulations

2. Sources of Recruitment

There are two sources of recruitment- Internal and External sources

Internal Sources:

Vacant positions in organizations could be filled by those existing employees

through transfers, promotions and recall from lay-off. Most large organizations
attempt to develop their own employees for positions beyond the lowest level.
The internal source is most effective if the organization has been effective in
recruiting and selecting employees in the past and has a strong employee
development program. This source of recruitment has its own advantages and
disadvantages.

Advantages:

a. The company has better knowledge of the strength and weakness of job
candidates. If accurate information is gathered about an employee under
consideration through qualification inventory, performance evaluation,
interview with prior and present supervisors of the employee, there is a high
chance of recruiting the best employee from within the organization.

b. Inside job candidates have better knowledge of the organization and its
operations. Thus, they require less orientation and training than outsiders.
Moreover, the likelihood of inside candidates having inaccurate expectations
and/or becoming dissatisfied with the organization is very low.

c. Employees see that competence is rewarded and moral and performance

may thus be enhanced. Recruiting from within an organization creates
promotion opportunities to employees. Thus, organizations providing first job

34
 opportunity to their employees are likely to win the loyalty and good
performance of their employees.

d. The return on investment that an organization has on its present work

force is increased. Most organizations sped sizable amount of investment on
their employees in a form of short-term trainings, fringe benefits, etc. Being
able to use this workforce to its maximum capability is considered as a return
on investment to the organization.

Disadvantages:

a. People can be promoted to the point where they cannot successfully

perform the job. An organization can suffer if it uses inferior internal sources
just for the reason of boosting the morale of its employees.
b. Infighting for promotions can negatively affect morale. Competition among
employees for promotions may be very intense to the extent of damaging the
morale of employees.
c. Inbreeding of ideas can stifle new ideas and innovations. When an entire
management team has been brought up through the ranks, there may be a
tendency to make decisions “by the book” and to maintain the status quo. It
is, therefore, necessary to take into consideration external sources in order to
bring “new blood” from the external sources.

External Sources

The external sources are varied and many. Most organizations cannot fill their
manpower needs from sources within and hence the organization must look for
outside sources, especially for lower entry jobs, for expansion and for positions
whose specific requirements cannot be met by people within the organization. This
outside pool of potential candidates includes.
a. New entrants to the workforce: These may be the college graduates who
have just finished studies and are entering the job market.
b. The unemployed: These are the people who may be temporarily out of a job.
These may be people with skills and abilities. They may be in jobs unsuitable
to them and may be looking for better opportunities.
c. Retired & experienced persons: These may be accountants, mechanics,
security guards, etc. They have the necessary experience and may be hired as
consultants or supervisors.

Advantages:

a. The pool of talent is much larger. Internal source may not lead to large
number of possible candidates for a given open position. Thus, using

35
 external sources provides the advantage of choosing from among large pool of
candidates.

b. New insights and perspectives can be brought to the organization.

Expertise, excellence and experience in other organization can be easily
brought into the organization.

Disadvantages:

a. Attracting, contacting, and evaluating potential employees is more

difficult. This is especially more difficult for higher level jobs.
b. Adjustment or orientation time is longer for external candidates. As a
result, it might take some time before they can perform with their full
potential.
c. Morale problem can develop among internal employees who feel qualified
to do the job. Current employees might feel neglected and their level of
performance may be affected.

3. Methods of Recruitment

a. Job Posting: It means posting notices of job openings on organization bulletin

boards for recruiting possible internal candidates. Accordingly, interested
employees could apply for the job. Job posting us usually not used when
promotion to a supervisory position is involved, since management often
prefers to select personnel itself for promotion to management levels.

Some organizations develop implementation policies for job posting to be

successful. This may include

1. Posting for a specific period of time before going to external sources

2. Set eligibility rules and communicate it to the employees
3. Specify standards that may be required for the job.

b. Skill inventory: it is an internal recruitment method to identify employees

with the attributes needed for a particular job. It is the systematic record,
either manual or computerized, listing employees’ education, career and
development interests, languages, special skills, etc.

c. Job Advertisement: It is a widely used recruitment method in order to reach

relatively large numbers of potential applicants. Advertisements are
commonly placed in daily newspapers, trade and professional newspapers,
and occasionally on radio, TV, and billboards. However, the choice of
appropriate media for a specific advertisement should depend on the type of
job and the required degree of coverage.

36
In addition to the media used, the construction of the ad is also important.
There are four basic guidelines job advertisements should follow:

Attract attention: using wider boarders or a lot of empty space around it might
help the ad to stand out by itself.
Develop/ Create interest in the job: Mentioning some key aspects of the job that
might spark interest of potential applicants. (location and exciting and
challenging assignments, etc.)
Create desire: amplifying on the interest factors and other benefits that may
part of the job (job satisfaction, career development, travel, etc.)
Instigate action: adding phrases such as “call today,” “write today for more
information,” etc. could make potential applicants take action towards
applying.

Generally, if advertising is to be used as a primary method of recruitment,

planning and evaluation of the advertising program should be a primary
concern of the human resource department.

37
 Advantages and Disadvantages of some Major Types of Media

Type of Advantages Disadvantages When to Use

Medium
News Papers Short deadlines Easy for prospects to ignore. When you want to limit
Ad size flexibility Considerable competitive recruiting to a specific area.
Circulation concentrated in clutter. When sufficient numbers of
specific geographic areas Circulation not specialized- prospects are clustered in a
Classified sections well you must pay for great specific area.
organized for easy access by amount of unwanted readers. When enough prospects are
active job seekers Poor printing quality reading help wanted ads to
fill hiring needs.

Magazines Specialized magazines reach Wide geographic circulation- When job is specialized.
pinpointed occupation usually cannot be used to limit When time and geographic
categories. Ad size flexibility. recruiting to specific area. limitations are not of utmost
High quality printing. Long Long lead time for ad importance. When involved
life-prospects keep magazines placement. in ongoing recruiting
and reread them. programs.

Radio and TV Can reach prospects that are Only brief, uncomplicated In competitive situations
not actively looking for a job messages are possible. Lack of when not enough prospects
better than newspapers and permanence; prospect cannot are reading your printed ads.
magazines. Can be limited to refer back to it. (Repeated When there are multiple job
a specific geographic area. airings necessary to make opening and there are
Creatively flexible. Can impression). Creation and enough prospects in specific
dramatize employment story production of commercials- geographic area. When a
more effectively than printed particularly TV-can be time large impact is needed
ads. Little competitive consuming and costly. Lack quickly. Useful to call
recruitment clutter. of special interest selectivity; attention to printed ads.
paying for waste circulation.
“Point-of- Calls attention to employment Limited usefulness; prospects Posters, banners, brochures,
purchase” story at time when prospects must visit a recruiting location audiovisual presentations at
(Promotional can take some type of before it can be effective. special events such as job
materials at immediate action. Creative fairs, conventions, as part of
recruiting flexibility an employee referral
location) program, at placement
offices, or whenever
prospects visit an
organization facilities.

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d. College Recruiting: It involves recruitment from educational institutions that
offer opportunities to recruit recent graduates. Educational institutions are
particularly excellent source of potential employees for entry-level positions in
organizations. It could also be an important source of professional and
technical employees.

e. Employment Agencies: There could be public or private employment

agencies. These agencies have information on job seekers in terms of
qualifications, skills, interests, etc. and can be a good source of employment
by organizations. Public agencies are a major source of both blue-collar and
white-collar works while private agencies are important sources of clerical,
white-collar, and managerial personnel.

Some specific situations in which employment agencies become handy:

▪ The organization does not have its own human resource department
▪ A particular opening must be filled quickly.
▪ If there is a need to attract a greater number of minority and female
applicants

These agencies usually pre-screen applicants for the organization. Although it is

advantageous to have part of the recruitment process done by specialists, it could
sometimes result in allowing poor applicants bypass the preliminary stages or
blocking qualified applicants from entering the final recruitment stage. To avoid
such problems, organizations are advised to do the following:

▪ Give the agency an accurate and complete job description.

▪ Specify the devices or tools that the employment agency should use in
screening potential applicants.
▪ Where possible, periodically review data on accepted or rejected
candidates.
▪ If feasible, develop a long-term relationship with one or two agencies.

f. Employee Referrals: Some organizations encourage their employees to refer

potential applicants to an open position. Announcements of openings and
requests for referrals are made in the organization’s bulletin and posted on
bulletin boards. Prizes could be offered for those referrals that result in hiring.
This method of recruiting potential employees can cut recruiting costs by
eliminating advertising and agency fees. It can also result in higher quality
candidates since most employees would not recommend someone unless
he/she believes that the individual can perform effectively.

However, there are some possible problems among those recommenders that
confuse friendship with job performance and competence. As a result, employee
referral method may result in nepotism and sometimes violet equal employment
opportunity laws (one group favoring each other).

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 g. Executive Recruiters (“head hunters”): There are people who are
exclusively known for seeking out top management talent for their clients.
Executive recruiters could be a very expensive method of recruitment but
their services might result in obtaining highly qualified personnel for crucial
executive and technical positions. These groups have many contacts are
especially skilled in contacting qualified candidates who are employed and
not actively looking to change jobs.

h. Walk- ins/ Write-ins or Unsolicited Applicants: Unsolicited applications

whether they reach the employer by letter, telephone, or in person, can be a
source of prospective applicants. Such applications are kept in file if there are
no particular openings at that time. Qualification of unsolicited applicants is
dependent on economic conditions, the organization’s images, and the job
seeker’s perception of the types of jobs available.

4. Who Does the Recruiting?

In most large organizations the human resource department is responsible to for

recruiting. These organizations normally have an employment office within the
human resource department. However, the recruiters and interviewers in these
departments are required to closely work with the hiring department. This helps
in accurately defining what is needed to look for either in the external or internal
sources.

The roles of Operating and Human Resource Managers in Recruitment

Recruiting Function Operating Manger (OM) Human Resource

Manager (HRM)
Set recruiting goals Set by OM with advice of Advises OM on state of
HRM labor market

Decide on sources of Policy decision, outside Advices on status of

recruits and recruiting versus inside, set by OM possible inside recruits
policies with advice of HRM

Decide on methods of OM advises HRM on HRM decides on

recruiting methods of recruiting recruiting methods with
advice of OM
College recruiting OM occasionally recruits
at colleges Normally recruits at
colleges
Cost/benefit studies of OM evaluates results of
recruiting cost/benefit studies and HRM performs
decides accuracy cost/benefit studies.

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II. Employee Selection

1. Definition

It is the process of choosing the individual who can most successfully perform the
job from the pool of qualified candidates. This process follows an effective
recruitment program which should result in supplying enough job applicants to a
given vacant position.

Employee selection is important for the following key reasons:

▪ Employees who do not have the right abilities won’t perform effectively
and thus have an impact on the success and image of the organization
▪ There is a very high cost associated with recruitment and hiring process
especially when hiring people for high level positions.
▪ There are legal implications associated with the effectiveness of the
selection procedures. Selection procedures need to be evaluated to ensure
that potential applicants are not discriminated on the basis of race, sex, etc.

2. Selection Process

A series of steps are normally followed in processing an applicant for a job. Each
step in the process seeks to expand the organization’s knowledge about the
applicant’s background, abilities, and motivation and it increases the information
from which decision makers will make their predictions and final choice. The
selection process used by organizations may vary depending on the size of the
organization, the type of jobs to be filled and also the number of people to be
hired. The basic selection process involves the following steps:

a. Preliminary Evaluation of Application Forms and Preliminary

Interview

Application Form

It provides basic employment information to be used at a later stage of the

selection process and also to screen out unqualified applicants. It involves basic
questions ranging from simple name and address kind of question to extended
personal history profile. Questions that do not relate to the job at hand or open
for discrimination should be avoided. Such questions like race, religion, etc. are
irrelevant unless they have direct impact on the job or are going to be used strictly
for statistical purposes.

Preliminary Interview

It is used to get necessary information from the prospective applicants and to

assess the applicant’s suitability to the job. The information obtained may be

41
related to the job or personal specifications regarding education, experience,
salary expected, aptitude towards the job, age, physical appearance and other
physical requirements. This may help to fine out, at an early stage, inappropriate
applicants as a result of inadequate experience or education.

At this step, the organization could also provide information to applicants

regarding the job, the work environment, salary range, etc. to help them make
decisions if they still want the job or not.

b. Employment Tests

The next step is to conduct various employment tests to gather further

information about applicants and thus be able to assess their suitability to the job.
Some of the employment tests used by organizations include the following:

i. Aptitude tests

Measure a person’s capacity or potential to learn and perform a job. Some of the
tests that measure a person’s aptitude include:

Verbal ability – ability to use words in communicating, planning, etc.

Numerical tests – ability to add, subtract, etc.
Perception speed test – ability to recognize similarity and differences
Spatial tests – ability to visualize object sin space and determine their
relationships
Reasoning tests – ability to analyze oral or written facts and make correct
judgment concerning these facts on the basis of logical implications.

ii. Job Knowledge and Proficiency Test

Job knowledge tests are used to measure the job-related knowledge possessed by
the applicant (either written or oral). It may include questions that differentiate
experienced worker from inexperience ones.

Proficiency test on the other hand measures how well the applicant can do a
sample of the work that is to be performed. The typical example is typing test for
a secretarial position. Another example could be a case study to a managerial
position.

iii. Interest Test

These are designed to determine how a person’s interests compare with the
interest of successful people who do the same type of job. For example, tests that
measure a person’s interest in situations that require him/her to work with people
or deal with people could measure a person’s interest in a salesperson’s position.

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The basic assumption underlying this test is people perform better if placed in
positions that interest them.

iv. Personality Tests

It measures the basic aspect of an applicant’s personality such as introversion,

stability, and motivation. They’re expresses as self-confidence, tact, emotional
control, optimism, decisiveness, conformity, objectivity, patience, fear, distrust,
initiative, judgment, dominance, impulsiveness, sympathy, integrity and stability.

c. Comprehensive Interview

It is used to supplement information gained in other steps in the selection process.

It is designed to probe into areas that cannot be addressed by the application
forms or tests. Questions to be asked in this interview should be job related. The
interview is usually done by a panel of interviewers consisting of human resource
personnel, potential supervisor, and other executives that may be of relevance in
assessing the applicant’s qualifications.

The interview could be structured or unstructured. The structured interviews are

preferred in situations where it is important to cover certain basic questions
related with the job to all applicants. It also increases the accuracy and reliability
of questions.

Problems in Conducting Interviews

▪ Interviewers may be favorably or unfavorably impressed with the job

applicant for the wrong reasons.
▪ Interviewers may have personal biases. Example: way of dress, hairstyle,
etc.
▪ Interviewers may allow a simple characteristic to dominate judgment of all
traits. For example, an applicant with a peasant personality may affect the
fair judgment of the interviewer. In this case, other work-related traits may
be overlooked.

In order to avoid these problems, interviewers should be acquainted with the

basics of conducting effective interviews. The following guidelines could help in
ensuring effective interviews

▪ Interviewers should be carefully selected and trained

▪ Interviews should be planned by outlining the information that is to be
obtained and questions to be asked
▪ The interviewer should put the interviewee at ease unless it is part of the
interview process
▪ The fact obtained by the interview should be recorded immediately
▪ Effectiveness of the interview process should be evaluated

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 d. Reference Checking/ Background Investigation

It involves contacting individuals who are listed as references t the applicant. It

may include contacting former employers to confirm the candidate’s work record
and performance level, contacting other job-related, personal, and educational
references to verify accomplishments shown in the application. In some cases,
this step may extend to the level of doing a background investigation on the
applicant.

e. Physical Examinations

It is given to determine whether an applicant is physically capable of performing

the job and also to determine the applicant’s eligibility for group life, health and
disability insurance.

Physical examination requests should be directly related to the job in order to

avoid any possible discrimination against disabled or handicapped applicants.
Since medical examination is very expensive, this step is usually the last step
before final decision. In some cases, however, this step is done after the final
employment decision is completed. This is a situation where the physical/
medical examination is used to determine the eligibility of the person for various
insurance benefits extended by the organization.

f. Final Employment Decision

If the above steps are successfully accomplished, the best qualified individual can
be identified. This decision is made by the hiring department as per the
qualifications set up for the job to be filled.

3. The Comprehensive Approach

The general selection process (discussed above) has multiple hurdles- beginning with
a screening interview and culminating with a final selection decision. This discrete
selection process is designed so that triping over any hurdle puts one out of the race.
This approach, however, may not be the most effective selection procedure for every
job. If, for example, the application form shows that the candidate has only two
years of relevant experience, but the job specification requires five, the candidate is
rejected without going any further in the process. Yet, in may jobs, negative factors
can be counterbalanced by positive factors. Poor performance on a written test, for
example, may be offset by several years of relevant job experience. This suggests that
sometimes it may be advantageous to do comprehensive rather than discrete
selection.

In Comprehensive selection, all applicants are put through every step of the selection
process, and the final decision is based on a comprehensive evaluation of the result
from all stages. The comprehensive approach overcomes, the major disadvantage of

44
discrete method (eliminating potentially good employees simply because they receive
an acceptable, but low evaluation at one selection step). The comprehensive method
is more realistic. It recognizes that most applicants have weaknesses as well as
strengths. But it is also more costly, since all applicants must go through all the
screening hurdles. Additionally, the method consumes more of management's time
and can demoralize many applicants by building up hope. Yet in those instances
where many qualities are needed for success in the job and where finding candidates
who are strong on all qualities is unlikely, the comprehensive approach is probably
preferable to the typical discrete method.

No matter which approach is used or which steps are involved, one aspect must be
present: the devices used must measure job-related fact; that is, these devices must be
able to indicate how one would perform on the job. That's critical for business
success; and it's necessary to defend and respond to an allegation that the hiring
practices are discriminatory.

4. Basic Testing Concepts

a. Reliability

For any predictor to be useful, the scores it generates must posses an acceptable level
of reliability or consistency of measurement. This means that the applicant's
performance on any given selection device should produce consistent scores each
time the device is used." For example, if your height were measured every day with a
wooden yardstick, you would get highly reliable results, but if you were measured
daily by an elastic tape measure, there would probably be considerable disparity
between your height measurements from one day to the next. Your height does not
change from day to day- the variability is due to the unreliability of the measuring
device.

Similarly, if an organization uses tests to provide input to the selection decision, the
tests must give consistent results. If the test is reliable, any single individual’s scores
should remain fairly stable over time, assuming that characteristic it is measuring is
also stable. An individual's intelligence, for example, is generally a stable
characteristic, and if we give applicants an IQ test, we should expect that someone
who scores 110 in March would score close to 110 if tested again in July. If, in July,
the same applicant scored 85, the reliability of the test would be highly questionable.
On the other hand, if we were measuring something like an attitude or a mood, we
would expect different scores on the measure, because attitudes and moods change.

b. Validity

High reliability may mean little if the selection device has low validity, that is, if the
measures obtained are not related to some relevant criterion, such as job
performance. Validity refers to how well a criterion predictor (test) actually predicts
the criterion of job success. A test’s validity answers the question: “What does this

45
test measure?” With respect to testing for employee selection, the term validity refers
to evidence that the test is job related. For example, just because a test score is
consistent is no indication that it is measuring important characteristics related to job
behavior. It must also differentiate between satisfactory and unsatisfactory
performance on the job. We should be aware of three specific types of validity:
content, construct and criterion-related.

Content Validity: It is the degree to which the content of the test or question
about job tasks, as a sample, represents the situations on the job. It shows that the
test constitutes a fair sample of the content of the job. It requires identification of the
most critical aspect of a job in terms of performance and including a sample of those
tasks and behaviors in the test. All candidates for that job are given the same test or
questions so applicants can be properly compared. A simple example of a content-
valid test is a typing test for a word-processing position. Such a test can approximate
the work to be done on the job; the applicant can be given a typical sample of typing
and his or her performance can be evaluated based on that sample. Assuming that
the tasks on the test, or the questions about tasks, constitute an accurate sample of
the tasks on the job (ordinarily a dubious assumption at best), the test is content
valid.

Construct Validity : It is the degree to which a test measures a particular trait

related to successful performance on the job. These traits are usually abstract in
nature, such as the measure of intelligence, and are called constructs. Construct
validity is complex and difficult. In fact, it is the most difficult type of validity to
prove because you are dealing with constructs, or abstract measures.

Criterion Related Validity: Criterion-related validity is the degree to which a

particular selection device accurately predicts the level of performance or important
elements of work behavior. This validation strategy shows the relationship between
some predictor (test score, for example) and a criterion, job performance, (e.g.,
production output or managerial effectiveness). It involves demonstrating that those
who do well on the test also do well on the job, and those who do poorly on the test
do poorly on the job. For example, a space visualization test given to an architect or
someone who is expected to read blue prints is valid as it is highly related to the job.
To establish criterion-related validity, either of two approaches can be used: predictive
validity or concurrent validity.

Predictive Validity: to validate a test predictively, an organization would give the test
(with an unknown validity) to all prospective applicants. The test scores would not
be used at this time; rather, applicants would be hired as a result of successfully
completing the entire selection process. At some prescribed date, usually at least a
year after being hired, the applicants' job performance would be evaluated by their
supervisors. The ratings of the evaluations would then be compared with the initial
test scores, which have been stored in a file over the period. At that time, an analysis
would be conducted to see if there was any relationship between test scores (the
predictors) and performance evaluation ( the measure of success on the job, or the

46
criterion). If no clear relationship exists, the test may have to be revised. However, if
the organization can statistically show that the employees who scored below some
predetermined score, called a cut score (determined in the analysis), were
unsuccessful performers, then management could appropriately state that any future
applicants scoring below the cut score would be ineligible for employment. What
happens to unsuccessful performers? They are handled like any other employee who
has experienced poor evaluations: training, transfer, discipline, or discharge.

Concurrent validity method validates tests using current employees as the subjects.
These employees are asked to take a proposed selection test experimentally. Their
scores are immediately analyzed, revealing a relationship between their test scores
and existing performance appraisal data. Again, if there is a relationship between test
scores and performance, then a valid test has been found.

Predictive validity is the preferred choice. Its advantage over concurrent validity is
that it is demonstrated by using actual job applicant, whereas, concurrent validity
focuses on current employees. Both validation strategies are similar, with the
exception of the people who are tested and the time that elapses between gathering of
predictor and criterion information.

While the costs associated with each method are drastically different, predictive
validation strategies should be used if possible. Concurrent validity, although better
than no validity at all, leaves many questions to be answered. Its usefulness has been
challenged on the premise that current employees know the jobs already and that a
learning process takes place. Thus, there may be little similarity between the current
employee and the applicant.

III. Orientation

1. Definition

It is the introduction of new employees to the organization, work unit, and job.
This can be done by oral or written communications like manuals, guidelines,
etc.

Following the final employment selection decision, one job candidate will be
hired in an organization. This, however, does not ensure the employee’s
successful performance in the organization. The degree of the new employee’s
knowledge about an organization affects his/her level of performance on the
job…at least in the first few months.

New employees may receive orientation either from their fellow work force or the
company. On either case, however, the organization should make sure that the
new employee goes through sufficient and relevant orientation period. Although
informal orientation is usually given by fellow workmen, it may end up in

47
 providing misleading and inaccurate information to new employees. Thus, it
needs to be supported by a formal and planned orientation.

2. When should it be given?

• Before or during the selection process followed by a formal orientation period

once an individual is hired.

• Immediately after a job applicant is hired.

3. Who does the orientation?

Major responsibility of orientation falls on the human resource department,

especially as it relates to the general information concerning the organization.
HRD is also responsible for initiating and coordinating both the general and job/
department specific orientations.

The new employee’s immediate supervisor takes the responsibility of

job/department orientation as he/she is likely to give accurate and relevant
information.

In some organizations, orientation may be conducted by fellow workmen.

However, the person selected to give the orientation should be properly trained.

4. Basic Levels of Orientation

There are two basic levels of orientation.

A. General Company Orientation: It covers topics of relevance and interest to

all employees. Some issues likely to be covered include:

Overview of the Organization

• Founding, growth, goals, priorities, problems, etc.

• Traditions and customs, Organization’s structure and relationship of
various parts of the organization
• Community relations, expectations & activities

Key Policies and Procedures

Compensation: pay rates, how pay is received, advances on payment, loans from
credit unions, etc.
Fringe Benefits: Insurance, holidays and vacations, sick leave, maternity, etc.,
retirement plans and options, training opportunities, recreation and social
activities, etc.

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Safety and Accident Prevention: health and first aid clinic, safety precaution, fire
prevention and control, etc.
Physical facilities: food service and cafeteria, parking, etc.

B. Departmental and Job Orientation

It refers to orientation that covers topics that are specific to the new employee’s
department and job. It is usually given by the new employee’s supervisor or
assigned co-worker qualified to give the orientation. The content depends on the
specific requirement of the department and the skills and experience of the
employee. Some of the topics covered include:

Department Functions: Goals and current priorities, department structure,

department’s relationship with other parts of the organization, etc.
Job Duties and Responsibilities: detailed explanation of the job description,
common problems and ways to overcome them, explanation on where and how
to get materials, have equipment maintained and repaired, overtime needs and
requirements, etc.
Policies, Procedures, Rules and Regulations: rules unique to the job/department,
safety precaution, tour of the department and other facilities, etc.

For an orientation to be effective, it should be supported by a written document

(Orientation Kit) incorporating basic policies and procedures all new employees
need to know. Such document is usually prepared by Human Resource
Department and has relevance to all employees. Some of the information
included:

• Organization Chart
• Copy of policies and procedures handbook
• List of Holidays and other benefits
• Copies of performance evaluation forms, dates, and procedures, telephone
numbers, etc.

In General, any orientation program should be carefully planned, be conducted

by a well-trained individual and also be evaluated at least annually to ascertain
ways to make improvements. Feedback can be gathered from employees on the
effect of the orientation program on their performance and general attitude
towards the organization.

IV. Placement
Proper placement builds a competent and satisfied workforce. Not only
should the person be suitable to the job but also the job should be suitable
to the person. Placement is the determination of the job to which an accepted
candidate is to be assigned and his/her assignment to that job. When selected
candidates report for duty, they should be placed in the right job. A

49
misplaced employee is a frustrated employee. The first placement is for a
probation period, usually extending from 3 to 6 months in the case of the
Ethiopian law.
Orientation and pre-service training are given to the employee during the
probation period. If the performance is satisfactory during the probation
period, the employee is given a permanent posting. If the performance is
unsatisfactory, the probation period may be extended or the employee is
asked to quit the job.

Some employees may themselves quit the job during the probation period
if they are not satisfied with the job or placement.

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 CHAPTER FOUR
Training and Development

1. Concept of Human Resource Development

Human Resource Development (HRD) is an important function of human resource

management. It ensures that organizations have adequate human resources with
capabilities needed for achieving goals effectively. Human resource development is
about two things:

• Training: Helping employees do their present jobs.

• Development: Helping mangers handle future responsibilities

Training seeks to improve ability to perform present jobs. It is skills- oriented.

Development seeks to improve experience to handle future challenges and
responsibilities. It is education-oriented, given to managerial employees who
supervise the activities of others.

Human resource development is concerned with preparing employees to work

effectively and efficiently in the organization. Degree of changes in the external
environment (technological changes, new legislation, etc.) and internal changes (new
work procedures, new markets, etc.) are making the jobs more complex and,
demanding. Organizations, through training and development, need to raise skill
levels and make their employees versatile.

 Distinction between Training and Development

Training Development
1. Focus on present jobs; task 1. Focus on future responsibilities; growth
oriented oriented.
2. Short-term periodic process. 2. Long-term on-going process.
3. Target is managerial employees
3. Target is operative employees 4. Develops conceptual, interpersonal,
4. Confined to hands-on skills technical and decision-making skills
and 5. Develop employee potential
knowledge
5. Remedial effort.

Major purposes of training are:

• Establish sound relationship between the worker and his/ her job
• Upgrade skills and prevent skills obsolescence
• Develop healthy and constructive attitude (Improves organizational climate)
• Increase productivity and quality of work
• Improve labor-management relations
• Minimize operational error (wastage, spoilage of materials and unnecessary
repetitions, reduce hazards and accident)

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 • Enhance employees’ moral and confidence
• Reduce employees turn over, absenteeism and job dissatisfaction

Major purposes of development are to:

• Improve managerial decision-making skills
• Stimulate managers use more creative problem-solving approach
• Provide managers with latest information on theory and practice of
management
• Prevent managerial obsolescence
• Give managers the opportunity to discuss with other people

2. Training Process

The training process consists of the following steps

I. Determine training needs (need assessment)

II. Establishing training and development objectives
III. Selecting instructional methods and medias
IV. Selecting trainees and trainers
V. Developing budget
VI. Conducting the Program
VII. Evaluating the training and development programs

I. Determining Training and Development Needs

Training or development should be given when there is a need. A need exists when a
work performance problem can be traced to a knowledge or skill deficiency. This
represents a gap between the capabilities of an employee and the requirements of the
job

Job Employee Training

Requirements Minus (-) Capabilities Equals (=) /Development
Needs

Training and Development Need Model

Training or development need is a specific skill that an employee/a manager needs

to acquire to get the jobs done efficiently and effectively. Proper identification of
need implies that performance gap can be overcome through appropriate training

Training and development need exists at three levels:

▪ Organizational level
▪ Task level
▪ Individual level

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Organizational level
This refers to shortcomings within the organization as a whole. The assessment of
need at this level is done to determine the problem areas where training or
development is needed. Training or development needs at organizational level can
be created by:
▪ Projected growth and development,
▪ Changes in environment, objectives, structure, technology
▪ Changes in products and productivity, and
▪ High absenteeism, turnover, reject rate and accidents

Task Level
The duties and responsibilities of the job, together with the knowledge, skills and
attitudes needed to perform them, are the focus of needs analysis at the task level.
Training or development needs at task level can be created by:
▪ Job redesign, task relocation,
▪ Changes in work methods and procedures, and
▪ Upgrading of job functions. An example is computerization in office

Individual Level
This refers to assessing present deficiencies in specific skills, knowledge and attitudes
on the part of individual employee. It identifies who needs training or development
in what and how long. This level is very important for assessing needs because
individual employees are the targets for training or development. A careful and
systematic determination of training or development needs is essential to diagnose
deficiencies at all the three levels: organizational, job, individual.

Training or development needs at individual level can be created by:

▪ Human resource policies and plans,
▪ Job descriptions and job specifications, and
▪ Skill deficiencies on the job.

Methods of Determining Needs

Training or development needs should be carefully and systematically determined.
They form the basis for formulating objectives. The major sources of information for
assessing needs are:
▪ Environmental changes
▪ Organization's objectives, strategies and structure
▪ Job description and job specification, job demand.
▪ Human resource plans, policies and practices-
▪ Performance standards.

There are various methods for assessing training and development needs. The widely
used methods are:
▪ Management Audit
▪ Performance Analysis
▪ Task Analysis

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 ▪ Supervisory Recommendations
▪ Need Survey

II. Establishing Training and Development Objectives

Once training and development needs are clearly identified, the next process is to
establish objectives. An objective is a specific outcome that the training or the
development program is intended to achieve. In most cases, training and
development objectives are set for the trainees. These objectives define the
performance that the trainee should be able to exhibit after training.

Human resource development experts suggest that objectives should be stated

explicitly and answer the following questions:
1. What should the trainees be able to do after training?
2. Under what conditions should the trainee be able to perform the trained behavior?
3. How well should the trainee perform the trained behavior?

Training and development objectives must be specific, measurable and time-targeted.

Objectives with such characteristics assist in developing the criteria to be used in
evaluating the training or development outcome. Objective and the evaluation
criteria also help in choosing relevant instructional method, media, and material.

III. Selecting Instructional Method and Media

The instructional method and media depend on the program content. The content in
turn is shaped by training or development need identification and established
objectives. The objective here may be to teach specific skill, provide needed
knowledge, or try to influence attitudes. The content, method, and media must
match the job requirement of the organization and the learning style of the
participant.

There are many different methods for developing managerial abilities and providing
opportunities for non-managers to acquire job-related skills. Some of the major
methods that can be employed for managers and non-managers are discussed below.

➢ Information Presentation Method

The aim of information presentation method is to teach fact, skill, attitude, or
concept without requiring trainees to practice the material taught or to experience
how the material taught translates into behavior. The three major methods that fall
into this category are (1) lecture, (2) conference, and (3) programmed instruction.

A. Lecture
The lecture method is applied in both training and development. In a lecture, the
material to be taught is presented by a subject-matter expert to a group of recipients.
It is the most widely accepted method and also economical because a large number
of people can be trained using one instructor. However, participants do not share

54
each other experiences and hence the learning is confined to what the lecturer has to
say. This method can be backed by a number of media such as slide, videotape,
closed-circuit television, motion picture, etc.

B. Conference
A conference is a group meeting conducted according to an organized plan in which
the members seek to develop knowledge and understanding by obtaining a
considerable amount of oral participation. The objectives of the conference method
are:
 to share idea and experience and pool information among participants
 to solve problem common to a group
 to get acceptance of new idea and policy
 to increase tolerance and understanding.

C. Programmed Instruction
Programmed instruction is a highly structured, individualized learning method that:
a) specifies what is to be learned
b) breaks down the learning topic into small step
c) requires the learner to respond to each step of the learning process
d) tests the learner's knowledge at the completion of each learning step
e) gives the learner feedback of whether a correct or incorrect response was
given
f) tests the knowledge or skill acquired at the completion of training

This method is used to teach a variety of technical and non-technical subjects.

Programed instruction as an individualized learning method has several advantages.
It:
• requires the trainee's active involvement and provides immediate feedback to
the trainee.
• permits the trainee to learn without being influenced by other, and at a time
that is convent.
• minimizes or eliminates the need for an instructor

➢ Simulation Method
Simulation method present trainees with an artificial representation of an
organizational, group, or personal situation and require them to react as though the
situation were real. Some of the methods that are included in this category are (1)
case study, (2) role-playing, (3) in-basket exercises, and (4) management games.

A) The Case Study Method

In the case method, the trainee is given a well-developed description of a situation,
instructed to identify the problem, analyze the situation, and devise a solution for the
identified problem. When cases are similar to work-related situations, trainees can
develop decision-making and problems-solving skills, as well as increase their
abilities in judgment.

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 B) Role Playing
It is a method, which involves the spontaneous acting of realistic situation by two or
more participants. The participants are provided the role script or "write up their
own role plays, which can make them totally relevant and realistic.

C) In-basket Exercise
In-basket method is mainly used to develop decision making ability. It is a method
in which participant act out the role of a manager in an organization. Then after,
he/she is given various materials, such as reports, memos, letters, and other
documents, which contain important and routine matters. As a manager, the
participant is required to examine the materials in the in-basket and take action. In
the in-basket exercise the participant is "analyzed and critiqued on the number of
decisions made in the time period allotted, the quality of decisions, and the priorities
chosen for making them.

D) Management Games
This method is used to develop the decision-making skill of managers or to transmit
information about how a real organization operates. The game allows two
competing management groups to make decisions about product/service, people,
technology and other variables. The decisions taken are computed to determine each
group's performance. This simulation exercise is used to help the participants
understand "the integration of several interacting decisions, the ability to experiment
with decisions, the provision of feedback experiences on decisions, and the
requirement that decisions be made with inadequate data, which usually simulated
reality”.

IV. Selecting trainees and Trainers

Selecting the right individuals for training is the next step. Since training is very
expensive there should be a clear and definite relationship between the training and
its contribution. To ensure this, it is essential to give the training to the right people
by considering factors such as the relevance of the training to the improvement of
performance, interest and motivation level of the trainee, etc.

It is also important to select the right trainers who are capable of delivering the
content and the required knowledge. Skills and attitudes. Trainers could be selected
from inside or outside of the organization

V. Developing Budget

Costing should be done for each training program. The budget to be set need to take
into account all costs involved in relation to the training programs.

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 VI. Conducting the Program

This phase is where the training program comes to life. Organizations need to decide
whether training will be delivered in-house or externally coordinated. This step
should consider employee engagement and learning KPI goals, as well as thoroughly
planning the scheduling of training activities and any related resources (facilities,
equipment, create questionnaire process etc.). The training program is then officially
launched, promoted and conducted. During training, participant progress should be
monitored to ensure that the program is effective.

VII. Evaluating the training and development programs

Evaluation is the final phase of the training and development program. Evaluation is
most commonly interpreted in determining the effectiveness of a program in relation
to its objectives.

In evaluating the worth of specific program, sets of measurement criteria should be

identified. These, according to writers in the area, are:

a. Reaction
What did the participant think about the program? Participants react to the
learning experience by forming opinion and attitude about the instructor, the
methodology, participation in the learning session and how well he liked the
program.

b. Learning
Did the participant learn what was intended? Learning evaluation requires the
measurement of what participant has learned as a result of his/her training
i.e., the new knowledge and skill he/she has acquired or the change in
attitude.

c. Job behaviors
Did the learning transfer to the job? Job behavior evaluation is concerned with
measuring the extent to which participant has applied his/her learning back
on the job.

d. Organizational impact
Has the training helped organizational performance? This evaluation attempts to
measure the effect of change in the job behavior of the trained employees on
the functioning of the organization and the behavior of other employees. The
changes may be ascertained in such terms as improvements in service
delivery, productivity or reduction in costs.

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 e. Ultimate Value
Has the training affected the ultimate well-being of the organization? Here
evaluation aims to measure how the organization as a whole has benefited
from the training in terms of goal achievement, survival or growth.

3. Type of HRD Programs

A. Types of training programs

There are different types of training programs. The most common ones are briefly
discussed below.

• On-the-job training
On-the-job training is conducted on the job, to develop the skills of non-managerial
employees. The employee is placed into the real work situation and shown the job
and the tricks of the trade by experienced worker or the supervisor. On-the-job
training includes several steps.
First,
the trainee receives an overview of the job, its purpose, and its desired
outcomes, with an emphasis on the relevance of the training.
Then,
the trainer demonstrates the job to give the employee a model to copy.
Next,
the employee is allowed to imitate the trainer's example. Demonstrations by
the trainer and practice by the trainee are repeated until the job is mastered.
Finally,
The employee performs the job without supervision.

• Off-the-job training
Off-the-job training program takes place outside the employee work environment.
These can be course work at local colleges or other training establishments.

• Vestibule training
Vestibule training is a form of intense education held in proximity to the actual work
environment Computer centers and the language laboratories can be used as
vestibule center to train typists and other administrative staff.

B. Types of management development programs

Methods of management development can be broadly classified into on-the-job
methods and off-the-job methods Organizations generally use more than one or
several methods for management development.

• On-the-job Management Development Methods

Management development takes place on the job. It is learning by doing in the
context of real work environment. The most common methods are:

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Coaching
It is actively guiding managers by their immediate supervisors. The coach gives the
guidance through direction, advice, criticism and suggestions. Learners learn as they
go along with the coaching.

Development Positions
Trainee managers are given staff posts under an experienced manager with a title "
assistant to". Trainees get a chance to learn the job under outstanding managers.
During vacation times, such understudy managers act as substitutes for the
managers.

Job Rotation
It involves shifting managers from position to position. It is generally horizontal or
lateral job transfer. It can be:

▪ Planned Rotation: Managers spend two or three months on a job and are then
moved on.

▪ Situational Rotation: Shifting is done to meet work schedules or to make the

job challenging to the manager.

▪ Line and staff Rotation: managers can be shifted between line and staff
positions.

• Off-the-job Management Development Methods

Most management development takes place off the job. Mangers are removed from
the stresses and demands of the workplace. They can focus on learning experience.
Management development programs can be:

▪ In-house classroom-based instruction

▪ Sponsored programs in universities, colleges and organizations specializing in
management development.

The methods widely used for off-the-job management development are:

Lecture/Seminar
Lectures are oral communication of information to managers by instructors.
Participants get opportunity to acquire knowledge and develop their conceptual,
analytical and technical abilities. Lectures can be tailored to meet the unique
management development needs of the organization. Seminars are formal
presentation of papers by experts to small groups. They are followed by discussions,
which is facilitated by the leader. Audio-visual aids like films, video, overhead
projector, etc. can be used for making the lectures and seminars interesting.
Videotapes are widely used for supervisory management development.

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Simulation Exercises
Simulation is the duplication of real-world situations in the classroom. The
participants are placed in artificial environment that closely resembles the actual
work environment. It can be used to practice decision-making. They also receive
feedback about their actions or decisions. Learning takes place without risk to
equipment and people.

 The simulation tools popularly used are:

▪ Case Study: It involves providing the background description of actual decision

problem situation to participants. The participants in small groups analyze
the problem and its causes, identify and evaluate alternatives for solutions,
and select appropriate solution for solving the problem.

▪ Role-play: It is human interaction involving realistic behavior in imaginary

situations. Participants are provided with a specific situation and act out the
role of a specific person facing the situation. They develop interpersonal skills
to understand human behavior.

4. Career Development

Definition

A career is a sequence of positions, jobs, and/or occupations that one person engages
in during his/her working life (Cascio, 1978).

Career development is the HRM activity which helps individuals plan their future
careers within the organization, in order to help the organization, achieve its
objectives and the employee achieve maximum self-development.

Everyone aspires a better life in society. So do employees in an organization.

Employees often ask questions like:
 How do we advance our career?
 What are the bases for promotion?
 Do organization human resource development programs enable our chances for
promotion?
 Do we have a job security?
 Why have not our organization given us career counseling?

The answer to the above questions enables to identify the actions required to further
one's career. Based on staffing need, organization can facilitate the career planning
process and help answer employees’ questions about career progress within the
organization. This being as it is, ultimate responsibility for career development and
planning rests on employees' shoulder. As Werther & Davis (1996) observed:

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Values of Career Development

Why should organization design a career development program? With regard to

effective career development program four positive results can be offered. These are:
- Aligns strategy and internal staffing requirements.
By assisting employees with career planning, organizations can better prepare
them for job openings identified in the human resource plan.
- Develops promotable employees
Career planning helps develop internal supplies of promotable talent to meet
job openings caused by retirement, resignations, and growth.
- Lowers turnover
Increased attention and concern for individual careers may generate more
organizational loyalty and lower employee turnover.
- Taps employee potential
Career planning encourages employees to tap more of their potential abilities
because they have specific career goals.
- Further personal growth
Career plans and goals motivate employees to grow and develop.
- Satisfies employee needs
With improved growth opportunities, an individual's esteem needs, such as
recognition and accomplishment, are more readily satisfied.

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 CHAPTER FIVE
Performance Appraisal
1. What is performance appraisal?

Performance appraisal is a formal system of periodic review and evaluation of an

individual’s job performance. When it is properly done, performance appraisal
provides feedback to employees that will improve their performance and thus
organizations also benefit by ensuring that employees' effort and ability make
contribution to organizational success. Moreover, performance appraisal data
enables management:
- to help with career planning, training and development, pay increases, promotion and
placement decisions.
- to assess the success of recruitment, selection, placement, training and development
programs, and other related activities.

2. Uses of Performance Appraisal

The main reason for appraising performance is to enable employees to use their effort
and ability so that organizations achieve their goals and consequently their own
goals. Generally, the following are the main uses of performance appraisal.
- Performance improvement: Performance feedback allows the employee, the
manager, and personnel specialists to intervene with appropriate actions to
improve performance.
- Compensation adjustments: Performance evaluation help decision-makers
determine who should receive pay raises. Many firms grant part or all of their
pay increases and bonuses on the basis of merit, which is determined mostly
through performance appraisals.
- Placement decisions: Promotions, transfer, and demotions are usually based on
past or anticipated performance. Often promotions are a reward for past
performance.
- Training and development needs: Poor performance may indicate a need for
retraining. Likewise, good performance may indicate untapped potential that
should be developed.
- Career planning and development: Performance feedback guide career decisions
about specific career paths one should investigate.
- Staffing process deficiencies: Good or bad performance implies strengths or
weaknesses in the personnel department's staffing procedures.
- Informational inaccuracies: Poor performance may indicate errors in job
analysis information, human resource plans, or other parts of the personnel
management information system. Reliance on inaccurate information may
have led to inappropriate hiring, training, or counseling decision.
- Job-design errors: Poor performance may be a symptom of ill-conceived job
designs. Appraisals help diagnose these errors.

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 - Equal employment opportunity: Accurate performance appraisals that actually
measure job-related performance ensure that internal placement decisions are
not discriminatory.
- Feedback to human resources: Good or bad performance throughout the
organization indicates how well the human resource function is performing.

3. The Performance Appraisal Process

The basic purpose of performance appraisal is to make sure that employees are
performing their jobs effectively. In order to realize the purpose of performance
appraisal organizations should carefully plan appraisal systems and follow a
sequence of steps as illustrated in the figure below:

I. Establishing Performance Standards

The first step in appraising performance is to identify performance standard. A
standard is a value or specific criterion against which actual performance can be
compared. Employee job performance standards are established based on the job
description. Employees are expected to effectively perform the duties stated in the
job description. Therefore, job descriptions form the broad criteria against which
employee’s performance is measured.

II. Communicating Standards to Employees

For the appraisal system to attain its purposes, the employees must understand the
criteria against which their performance is measured. Providing the opportunity for
employees to clearly understand the performance standards will enhance their
motivation and commitment towards their jobs.

III. Measuring Performance

Once employees have been hired their continued performance and progress should
be monitored in a systematic way. This is the responsibility of the immediate boss to
observe the work performance of subordinates and evaluate it against the already
established job performance standards and requirement. The aim of performance
measure is to detect departure from expected performance level.

IV. Comparing Performance with Standard

After evaluating and measuring employee's job performance it is necessary to
compare it with the set standard to know whether there is deviation or not. When
one compare performance with the standard either performance match standards or
performance does not match standards.

V. Discussing Appraisal with Employees

For the appraisal system to be effective, the employees must actively participate in
the design and development of performance standards. The participation will

63
enhance employee motivation, commitments towards their jobs, and support of the
evaluation feedback.

VI. Initiating Corrective Action

The last step of the performance appraisal is taking corrective action. The
management has several alternatives after appraising performance and identifying
causes of deviation from job-related standards. The alternatives are 1) take no
action, 2) correct the deviation, or 3) review the standard.

4. Responsibility for Appraisal

Effective appraisals can be done by those who have:

 the opportunity to observe performance;
 the ability to translate observation into useful assessments;
 the motivation to provide useful performance evaluations (Chatterjee, 1995).

This being the case, the following are responsible for employee's performance
appraisal.

Immediate Supervisor
An employee's immediate supervisor is a common alternative for appraising job
performance. There are several valid reasons for this approach. These are:
- the supervisor is the one most familiar with the individual's performance
- in most jobs, the supervisor has the best opportunity to observe actual
performance.
- since the supervisor has the proper understanding of organizational
objectives, needs and influences, he/she is best able to relate the individual's
performance to departmental and organizational goals.
- since the supervisor is held accountable for the successful operation of his/her
department, it is logical for him to exercise control over personnel and
administrative decisions affecting his/he subordinates.
Moreover, since the supervisor is in a better position, he can link effective
performance with rewards such as pay and promotion.

Peer Evaluation
In work place, peer is an individual working with and at the same level as the
employee. In this evaluation approach the co-workers must know the level of
performance of the employee being evaluated. For the approach to work effectively
it is desirable for the peers to trust each other and evaluation should not be seen as
means for pay rises and promotions rather as a means to improve work performance.
Peer appraisal is reliable if work group is stable over a reasonably long period of time
and performs tasks that require considerable interaction.

Self-Appraisal
If employees understand the objectives they are expected to achieve and the
standards by which they are to be evaluated, they are in the best position to appraise
their own performance. Since there is a tendency of over-exaggerating work

64
achievement, this evaluation approach acts as inputs into supervisory appraisals or as
employee development tools.

Subordinate Evaluation
In the subordinate evaluation system, it is believed that employees are in a good
position to view their immediate bosses' managerial effectiveness. In academic
environment:
- Students appraise the teaching performance of their instructors.
- Faculty members evaluate department heads, and deans.

Group Appraisal
Group appraisal involves the use of two or more managers who are familiar with the
employee's performance to evaluate it as a team. For example, if an individual
regularly works with the administrative and financial managers, these two managers
might jointly make the evaluation.

Combinations
The combination of the above appraisal approaches can provide greater insight into
an employee's job performance. The section head's employee appraisal can be
supplemented by peer and by the head of the department.

5. Performance Appraisal Methods

A number of different appraisal methods are used to assess employees' job

performance. Some of the most commonly used methods are briefly discussed
below.
Rating Scales
A widely used appraisal method, which rates employees according to defined factors,
is called the rating scales method. The method requires the evaluator to record his/her
subjective assessment of the employee on a scale as shown below.

The rating factors include job-related and employee's personal characteristics.

Factors related to job performance are the quantity and the quality of work, whereas
employee's personal factors include cooperation, initiative, and the like. The
evaluator is expected to complete the appraisal form by indicating the degree of each
factor that is most appropriate descriptive of employee performance.

S.No criteria excellent good acceptable fair poor

5 4 3 2 1
1 Attendance
2 Cooperation
20 -----------------
Total

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Critical Incident Method
The critical incident method requires that written records be kept of highly favorable
and unfavorable work actions. When such an action affects the department's
effectiveness significantly either positively or negatively the manager writes it down
and it is called a critical incident. To be effective supervisors are required to record
incidents as they occur on their logs. At the end of the valuation period, the
evaluator used the log along with other data to assess employee job performance.

Essay Method
The essay method requires the rater to write a brief narrative description of employee's
performance and characteristics. To do a thorough job, the supervisor has to devote
considerable time and thought to writing his analysis. This is so because essays
generally have to be constructed from diaries/logs of observed critical incidents kept
by the evaluator during the performance assessment period.

Ranking Method
In the ranking technique, the rater is asked to assess employees in a rank order of
overall performance. Hence, if an employee performance is better than the others in
a department, that particular employee are ranked highest, the employee with poor
performance is ranked lowest.

Work Standards Method

The work standards method compares each employee's performance to a predetermined
standard or expected level of output. This approach can be used in all types of jobs,
mainly applied to production related jobs. Here since standards are used as
evaluation criteria, there is no room for subjectivity.

Checklist appraisal method

The rater uses a list of behavioral descriptions required to do a job and put a check
mark against those behaviors that apply to the employee. In a simple checklist
method, the rater is asked to provide yes and no answer to the list of behaviors.

Example: Does the employee volunteer to help other employees?

Does the employee approach customers promptly?
Does the employee complete assignments on time?
Does the employee accept constructive suggestion? Etc.

If some of the listed behaviors are more relevant to the job than others, it is possible
to use a weighted checklist method that attaches a weight to each item and thus
permitting the development of a more accurate rating score. Although this method
minimizes bias, it is time consuming and costly to assemble the questions for each
job category.

Management By Objectives (MBO)/Goal-Setting Method

In the MBO technique of appraisal, objectives are set by the management and
communicate it to the employees. It is a measurement of job performance in terms

66
of objectives. If objectives are achieved, the employees are assessed to be a success.
MBO is conducive to elicit employee involvement and commitment.

6. Problems in Performance Appraisal

The most common problems seen in performance appraisal include the following:

Lack of Objectivity: Some traits used for evaluating performance are difficult to
measure and thus lack objectivity. These factors may include loyalty, attitude,
personality, etc.
Halo Error: raters may perceive one factor as having significant importance and
give a good or back overall rating to an employee based on this one factor.
Leniency: rating consistently higher than the expected norm or average.
Strictness: being unduly critical of employees’ performance and thus result in
consistently lower rating than the expected norm.
Central tendency: Consistently rating employees near the average. In such cases,
it would be very difficult to differentiate good performers from poor performers.
Recent Behavior bias: raters basing their evaluation on the employees’ recent
behavior. This may not be a representative of the overall performance of the
employee throughout the evaluation period.
Personal bias: raters having biases related employees’ personal characteristics,
race religion, gender, or age.

7. Characteristics of an Effective Appraisal System

Although an appraisal system may not reach perfection, there are some factors which
may contribute to its effectiveness. Thus, for an appraisal system to be effective, it
should possess the following essential characteristics.

a. Reliability and Validity: An appraisal system should provide consistent,

reliable and valid information and data, i.e., if two appraisers equally
qualified and competent to evaluate an employee using the same appraisal
technique, their rating should agree with each other. Appraisal technique
should also be valid by measuring what it is supposed to measure, i.e., the
factors used to measure performance need to be related to the job.
b. Job Relatedness: the criteria used for appraising employee performance
should be job related. Information for the criteria should be determined
thought job analysis.
c. Performance Expectations: Managers should clearly explain performance
expectations to their subordinates in advance of the appraisal period. This will
ensure that employees direct their efforts towards the expected performance
level.
d. Standardization: Employees in the same job category should be appraised by
using the same appraisal technique. Appraisal forms, procedures,
administration of techniques, ratings, etc., should be standardized as appraisal
decisions affect all employees of the group.

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e. Qualified Appraisers: Responsibility for evaluating employee performance
should be assigned to the individual(s) who directly observe at least a
representative sample of job performance. In order to ensure consistency,
appraisers should be well trained to provide insights and ideas on rating,
documenting appraisals, and conducting appraisal interviews.
f. Employee Access to Results: An effective appraisal system should provide
feedback to employees on how well or bad they’ve performed.
g. Due Process: A formal procedure should be developed to permit employees
to appeal appraisal results that they consider inaccurate or unfair.

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 CHAPTER SIX
Compensation

1. Definition

It refers to all forms of pay or rewards going to employees and arising from their
employment. Employee compensation has two components. It includes direct
financial payments in the form of wages, salaries, incentives, commissions, and
bonuses; and indirect payments (fringe benefits) in the form of financial benefits
like employer-paid insurance and vacations.

Employees need to be rewarded for the service they provide an organization. The
organization, on the other hand, has the obligation to reward employees fairly
according to the contribution they provide to the organization. Organizational
reward includes, both intrinsic and extrinsic, that are received as a result of
employment by the organization.

Intrinsic rewards: rewards that are internal to the individual and are normally
derived from involvement in certain activities or tasks. Example: job satisfaction,
feelings of accomplishment, etc.

Extrinsic rewards: these are directly controlled and distributed by the

organization and are more tangible. Example: salaries and fringe benefits.
Provision of extrinsic rewards usually leads to intrinsic reward.

Compensation should be equitable to the employer and the employee alike. It

should be adequate in order to meet the needs of the employees, the employers
and also meet the minimum requirements of the government, union and
management. Just like other human resource functions, compensation policies
and procedures are also affected by internal and external factors in the
environment including government regulations, economic conditions, union’s
influence and demand, the labor market, wage rates offered by competitors,
organization’s financial condition, its size and complexity, managerial
philosophy and strategy, etc.

2. Importance of Compensation

To employees:

▪ It is the primary (and often the only) source of income for employees and
their family.
▪ It is a fair reward for the work employees perform and the benefit they
provide for the employer.
▪ It determines employees’ social status. Income level is often used as a
measure of a person’s worth.

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To employers:

• To attract capable employees to the organization

• To motivate them towards superior performance level
• To retain their services for an extended period of time

3. Factors affecting compensation

a. Government: government rules, regulations, executive orders, and laws have

their influence on an organization’s compensation policy. Every government
provides laws for compensation in areas like, minimum wage rate, equal pay
provisions – to avoid pay differentials based on sex in jobs requiring
substantially equal skill, effort, responsibility, and working conditions. etc
b. Cost of Living: Cost of living as measured in terms of consumer price index
may affect the organization’s compensation policy as it tries to adjust its
employees’ earning to the rate of inflation. This process is called cost of living
adjustment (COLA). As per the policy of the organization, compensation
could be adjusted at the same rate as the inflation or at different rates.
c. Comparable wage rates: The wage pattern in the industry and community
could have an impact on the compensation policies and practices of
organizations. Comparing wage and salary rates in given areas may help in
ensuring that the organization is offering a salary that is not substantially
higher or lower than those paid by others in the same area. Comparison could
also be done based on occupation to provide a comparable pay to similar
occupations around the country.

In order to ensure that a comparable level of payment is offered to

employees, organizations conduct salary and wage survey on other
companies to avoid costly mistakes. This could also be done to offer
comparable benefit packages to employees.

d. Market Conditions: Regardless of other factors involved, the supply and

demand relationship in the labor market will determine the wage and salary
level in organizations.

e. Ability to Pay: Regardless of other factors, wage and salary rates are
ultimately dependent on the employer’s ability to pay. Ability to pay, in turn,
is dependent on how well the organization is functioning and its ability to
continue to earn revenues.

4. Job Evaluation

The primary objective of any base wage and salary system is to establish a
structure and system for the equitable payment of employees, depending on their
job and their level of performance in their job.

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There are several policy issues that need to be addressed for establishing a fair
and equitable compensation system. Most base wage and salary systems establish
pay ranges for certain jobs based on the relative worth of the job to the
organization and wage and salary survey. Determining the relative worth of a job
to the organization maintains fair and equitable pay structure internally by
comparing jobs within the organization while wage and salary survey ensures
that the payment range is comparable to the payment systems in other similar
establishments or occupations. An individual’s performance on the job should
then determine where that individual’s pay fall within the job’s range.

Equitable Payment Structure

Job Evaluation – Internal Wage and Salary Survey

Equity – External Equity
(Relative worth of the (Pricing the different jobs
different jobs in by comparing them with
organization) other similar
establishments)

a. Job Evaluation:

It is a systematic determination of the value of each job in relation to other jobs in

the organization. If done properly, the relative value of the jobs is reflected in the
relative wage rats for the jobs.
It involves
• To enumerate the requirements of a job
• The job’s contribution to the organization
• Classifying it according to importance

b. Steps in Job Evaluation

i. Gather information on the jobs being evaluated. The information is obtained

from job analysis.
ii. Determining factors that are to be used in determining the worth of different
jobs to the organization like education, skill, initiative, responsibility, working
conditions, physical and mental effort, experienced, etc. or example, a job of
design engineer involves complex requirement and has greater contribution to
goal achievement when compared to the job of an assembler of the product
designed.
iii. Determine the method of evaluation that will use the chosen factors for
evaluating the relative worth of the different jobs. The most common kinds of
job evaluation methods include point method, factor comparison, job
classification, and job ranking. The first two methods use quantitative

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 measurement in their evaluation. They break the job down into its component
parts such as education, skill, initiative, responsibility, job conditions,
physical and mental efforts, and experience. Then, each of these factors are
appraised and a numeric value is assigned to it added together to find a total
score to the job. The scores of each job is then ranked according to its
importance and grouped together into job ranges or classifications.

Job classification and ranking methods use a qualitative in nature. They

involve determining the importance of jobs and ranking them in descending
order and assigning appropriate numeric values to each job.

iv. Grading the jobs according to their importance.

c. Problems in Job Evaluation

• The worth of all occupations cannot be precisely measured with the same
yardstick (standard). In some cases, a job that requires great effort to
execute may not be that important. Therefore, the job may be rated high in
one factor while it is rated low in another factor.
• It is difficult to measure the worth of scientific, technical, professional, and
managerial jobs.
• It is difficult to separate the individual’s contribution from the job being
evaluated. Even though a job’s contribution is low, it may seem to have a
great deal of contribution if being handled by a skilled individual.

5. Wage and Salary Survey

It is used to collect comparative information on the policies, practices, and

methods of wage payment from selected organizations in a given geographic
location or a particular type of industry.

Conducting wage and salary survey is useful to ensure external equity by

providing information about the labor market. It also helps in correcting
employees’ misconception about certain jobs as being too important or paying.
Employees will also be motivated when they know that they’re getting a
comparable payment with employees of other organizations.

In order for the survey to be effective, it is essential to identify the jobs to be

surveyed and also the organizations and their geographic location. Then the
appropriate wage survey will be designed. Some of the issues usually included in
the survey include

Length of workday Overtime Pay

Starting wage rates Vacation and holiday practices
Base wage rates Pay ranges, Incentive plans, etc.

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 6. Types of Compensation

In general, there are two types of compensation. These are:

• Financial
• Non-financial

Financial compensation
Financial compensation, as shown in the figure next page, includes direct
compensation, which is paid to employees in the form of wages, salaries, bonuses, and
commission in exchange for their performance, and indirect compensation includes
all financial rewards that are not included in direct compensation. Genet, an
employee of XYZ PLC, for example, will receive indirect financial compensation
because her organization pays 50 percent of all medical and hospital costs.

It is important here to distinguish wage from other forms of direct financial

compensation. Wages are payments based on the number of units (hours, days) that a
person works for the organization or the number of units produced (piece rate
system). It is a payment to manual workers. Salaries are money paid on monthly or
annual basis to employees whose output cannot be easily quantified. Clerical and
administrative staff receives salary. Bonuses, on the other hand, are lump-sum
payments offered to employees in recognition of successful performance, whereas
commission is a special form of incentive in which payments to sales representatives
are made on the basis of a percentage of the sales value they generate.

Non-financial Compensation
Non-financial compensation includes any satisfaction, which employees receive from
the job, such as the need for recognition, responsibility, personal growth and the like
or from environment in which they work. This job environment consists of
comfortable working conditions, competent supervision, pleasant work companions
and other related physical and social needs of employees. For example, being an
accepted member of the work group results in social motive satisfaction.

7. Benefits (Indirect Compensation)

• In addition to financial compensation, employees enjoy other benefits because of

their membership in the organization.

• What then are benefits? Employee benefits are the indirect form of the total
compensation; they include paid time away from work, insurance and health
protection, employee services, and retirement income Recall that direct
compensation such as salaries, wages or bonuses are based on the nature of the
jobs and employee’s performance. Benefits, however, are indirect compensation
that organizations provide to their employees and are not directly related to
performance.

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Objectives of Benefit Administration
• What do organizations gain from benefits? Benefits enable organizations to
retain and attract qualified personnel. Moreover, employee benefits policies of an
organization are to:
- Reduce fatigue
- Discourage labor unrest
- Satisfy employee objectives
- Aid recruitment
- Reduce turnover
- Minimize overtime costs
Major Categories of Benefits

Employee benefits can be divided in the following major categories:

Insurance Benefits
The financial risks encountered by employees and their families can be spread by
insurance. These risks are shared when funds are pooled in the form of
premiums. Then, when insured risks occur, the covered employees or their
families are compensated. Here organizations can purchase life, health and
work-related accident insurance.

Security Benefits
These are non-insurance benefits that provide income protection to employees
before and after retirement. Provision of such benefits is based on earnings and
years of services in the organization. The benefits are effective during separation,
retirement, death, and disability.

Time-off Benefits
In this type of benefit employees are paid for time not involved in performance.
Time-off benefits include sick leave, holidays, vocations, maternity leave,
education leave and other related leave of absence. Here employees are provided
with an opportunity to rest and refresh their minds.

Employee Services
These services include educational assistance, subsidized food services, financial
and social services and the like.

8. Methods of Payment

There are three basic methods of payment:

a. Time-based payment: It is a payment computed in terms of sometime unit –

hours, days, weeks, months, years, etc. Remuneration does not vary
according to quantity and quality of performance. One good example is
salary.

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 Advantage:
• It is easy to administer since it is fixed amount
• It improves employees’ integration to the organization by enhancing
employees’ security. (Knowing what they earn at the end of a certain
period of time).

Disadvantage:
• It is not a good motivator as it is not associated with performance.
• In times of need to reduce costs due to financial problems,
organizations are forced to lay-off salaried employees as opposed to
reducing working hours and keeping employees with the organization.

b. Performance-based payment method (Incentive Plans): In this method,

remuneration depends upon the quality and quantity of work.

Advantage:
• It may result in motivating employees to improve performance.

Disadvantage:
• It is difficult to administer (setting standards to measure performance
and computer payments)
• It may result in sacrificing quality of work for quantity.

c. Combination of time-based and output-based methods: It involves paying

salaries to employees and adding other output related payments (like bonus or
commissions) to create a financial incentive for employees.

In general, method of payment is determined by legal requirements, the

nature of the job, ability to standardize and other factors.

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 CHAPTER SEVEN
Promotion, Demotion, Transfer and Separation

1. Promotion

A promotion occurs when an employee is moved from a job to another position that is
higher in pay, responsibility, and/or organizational level. It is mechanism in which
organization recognizes employees past job performance and its effort to aid the
organization in furthering its objectives. Promotions usually are based on merit
and/or Seniority.

2. Transfers

Transfers refer to reassignment of an employee from one job to another position with
similar status, equal pay and/or responsibility. Demotions on the other hand, refer
to the downward movement of an employee to a position that is lower in
responsibility, status, and perhaps lower pay. Transfers are beneficial to both the
organization and to the employees. In this regard, transfers:
- honor employee preference for working in different jobs, training in new
skills, or changing work location.
- accommodate shifts in an organization's work
- further employee development or cross trains them in new jobs.
- alleviate boredom and revive burnt-out employees.

3. Demotions

Demotions may occur due to discipline; poor performance or inappropriate behavior

such as absenteeism. It can be used as an alternative to firing an employee because
of inefficiency. In this case, the reason for the demotion should be beyond the
control of the employee. With demotion, there could be decrease in pay,
responsibility and power.

4. Separation

An employee may be separated as consequence of resignation, removal, death,

permanent incapacity, discharge or retirement. The employee may also be separated
due to the expiration of an employment contract or as part of downsizing of the
workforce.

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