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Chapter 1
INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

Objectives:

After studying this chapter, you would be able to:

1) Know the basic concepts of human resource management (HRM)

2) Be acquainted with the major human resource management functions.

3) Understand personnel issues under different schools of thoughts

4) Analyze the context (the environment) within which human resource

management functions.

INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

What is human resource management?

Before giving an answer to this question, it would be better to define "management" it self.
The reason to this is that human resource management belongs to the broader field of study and
practice known as management.

Management can be defined as the process of reaching organizational goals by working with
and through people and other resources. Management in all areas of life implies achieving
goals with effective and efficient use of organizational resources.

Organizational resources can be grouped into four major categories:

· Human resources
· Financial resources
· Physical resources
· Information resources

Human resources are among the fundamental resources available to any organization.
Emphasizing the importance of human resources, some prominent writers define management
as the process of getting things done with and through other people.

Human resource management (HRM) is thus a part of the field of management. HRM, can be
defined as the utilization of human resources to achieve organizational objectives. It can
broadly be seen as that function of all organizations which provides for effective utilization of
human resources to achieve both the objectives of the organization on one hand and the
satisfaction and development of employees on the other hand (Glueck, 1992).
In defining and studying human resources management some points need to be emphasized:

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· Human resources management is concerned with the people dimension of the

organizational management.
· Human resource management is a pervasive activity, meaning a universal activity in
any type of organization : government, business, education, health, defense,
recreation, etc.
· The human resource is said to be the most important ( or critical) element in an
organization since people make the decisions concerning all other organizational
resources. Therefore, getting and keeping good people is critical to the success of
every organization, whether profit or non-profit, public or private.

In an organization, managers at all levels must concern themselves with human resource
management at least to some extent. Basically, it has been said, managers get things done
through the efforts of others, which basically requires effective human resource management
(Monday & Noe, 1990).

A 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. The
human resource manager is primarily responsible for coordinating the management of human
resources to help the organization achieve its goals.

Some writers in the field and other management people may use such names as "personnel",
"personnel management", "manpower management", and "employee relations" to say the same
thing: human resource management.

Major Human Resource Management Functions

Human resource management functions are the set of activities performed in utilizing human
resources for better achievement of organizational objectives. Following are the major
elements (Mondy & Noe, 1990):

1. Human Resource Planning

Human resource planning (HRP) is the process of systematically reviewing human
resource requirements to ensure that the required numbers of employees, with the
required skills, are available when they are needed. HRP is the process of matching the
internal and external supply of people with job openings anticipated in the organization
over a specified period of time.

2. Recruitment
Recruitment is the process of attracting individuals in sufficient numbers and
encouraging them to apply for jobs with the organization. It is the process of
identifying and attracting a pool of candidates, from which some will later be selected
to receive employment offers.

3. Selection
Selection is the process of choosing from a group of applicants the individuals best
suited for a particular position. Whereas recruitment encourages individuals to seek

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employment with a firm, the purpose of the selection process is to identify and employ
the best qualified individuals for specific positions.

4. Orientation
Orientation is the formal process of familiarizing new employees with the organization,
their job, and their work unit. Through orientation (also called socialization or
induction) new employees will acquire the knowledge, skills, and attitudes that make
them successful members of the organization.

5. 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 (and skills) in the present job. Development is a programme designed to
develop skills necessary for future work activities. It is designed to prepare employees
for promotion.

6. Compensation Administration
Compensation administration refers to the administration of every type of reward that
individuals receive in return for their services. In its boarder sense, compensation
represents all sorts of rewards that individuals receive as a result of their employment.

7. Performance Evaluation
Performance evaluation is a formal system of periodic review and evaluation of an
individual's job performance.

8. Safety and Health

Safety involves protecting employees from injuries caused by work-related accidents.
Health refers to the employees freedom from illness and their general physical and
mental well-being. These aspects of the job are important because employees who
work in a safe environment and enjoy good health are more likely to be productive
and yield long-term benefits to the organization.

9. Promotions, transfers, demotions and separations

Promotions, transfers, demotions, and separations reflect an employee's value to the
organization. High performers may be promoted or transferred to help them develop
their skills, while low performers may be demoted, transferred to less important
positions, or even separated.

10. 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.

11. Other areas such as employee and labour relations, collective bargaining, employee
rights and discipline, and retirement are also concerns of human resource
management.

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Historical Development: an overview

Personnel, according to some writers, at least in a primitive form, have existed since the dawn
of group effort. Certain personnel functions, even though informal in nature, were performed
whenever people came together for a common purpose. During the course of this century,
however, the processes of managing people have become more formalized and specialized,
and a growing body of knowledge has been accumulated by practitioners and scholars.

For many decades such responsibilities as selection, training and compensation were
considered basic functions constituting the area traditionally referred to as personnel. These
functions were performed without much regard for how they related to each other. From this
narrow view the world has seen the emergence of what is now known as human resources
management.

Human resources management (HRM), as it is currently perceived, therefore, represents the

extension rather than the rejection of the traditional requirements for managing personnel
effectively.

Understanding Personnel issues under different schools of thoughts: Scientific

management and human Relations School

1. Scientific Management
Scientific management is one of the classical schools of thoughts in management. This
approach was initially formulated with the aim of increasing productivity and makes the
work easier by scientifically studying work methods and establishing standards.

Frederick W. Taylor played the dominant role in formulating this theory and he is usually
named as the father of scientific management. Scientific management, sometimes called
Taylorism, has a strong industrial engineering flavor. Taylor himself was a mechanical
engineer whose primary aim was maximizing profits and minimizing costs of production.
The guiding principle of this school was "getting the most out of workers".

Taylor disliked wastage and inefficiency. During his time, in some working areas,
employees tended to work at a slower pace. And this tendency, according to him, was a
cause for less productivity and efficiency. Managers were unaware of this practice
because they had never analyzed the jobs closely enough to determine how much the
employees should be producing.

Frederick Taylor based his management system on production-line time studies. Instead
of relaying on traditional work methods, he analyzed and timed each element of workers'
movements on a series of jobs.

Once Taylor has designed the job, he thereby established how many workers should be
able to do with the equipment and materials at hand. Next, he implemented a piece-rate
pay system. Instead of paying all employees the same wage, he began increasing the pay
of each worker who met and exceeded the target level of output set for his job.

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Taylor encouraged employers to pay more productive workers at a higher rate than others.
To realize this he developed a differential rate system, which involves the compensation
of higher wages to more efficient workers (Stoner & Freeman, 1992).

Frederick Taylor rested his philosophy on some basic principles (Stoner & Freeman,
1992):

1. The development of a true science of management, so that the best method for
performing each task could be determined.

2. The scientific selection of workers, so that each worker would be given

responsibility for the task for which he best suited.

3. The scientific training (education) of the worker.

4. Intimate, friendly cooperation between management and labour.

5. A division of responsibility between management and labour.

Frederick Taylor saw scientific management as benefiting both management and the
worker equally: management could achieve more work in a given amount of time; the
worker could produce more and hence earn more-with little or no additional effort.
Taylor strongly believed that employees could be motivated by economic rewards,
provided those rewards were related to individual performance.

Scientific management, according to Rue and Byars (1992), was a complete mental
revolution for both management and employees toward their respective duties and
toward each other. It was, at that time, a new philosophy and attitude toward the use of
human effort. It emphasized maximum output with minimum effort through the
elimination of waste and inefficiency at the operative level.

Scientific management basically had a focus on such areas as:

¨ techniques of production
¨ the most efficient method
¨ rigid rules of performance
¨ using the shortest time possible
¨ workers productivity /efficiency
¨ minimum cost of production hence maximum profit
¨ highly refined tools and materials
¨ training and closer supervision, etc.

Scientific management, because of its fundamental ideas, has been subject to strong
critics. This school of thought was and still is considered to be limited by its basic
assumptions, particularly, about human beings.

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During the time of Taylor, the popular model of human behavior held that people were
rational and motivated primarily to satisfy their economic and physical needs.
Employees were considered as an extension of machine, as a factor of production, and
as an economic unit. Thus, employees, according to Taylor, could be motivated solely
by economic rewards or material gain.

Nevertheless, the Taylor's model of motivation overlooked the human desire for job
satisfaction and the social needs of workers as a group, failing to consider the tensions
created when these needs are frustrated. Furthermore, the emphasis on productivity and
profitability led some managers to exploit both workers and customers of the
organization. As a result more workers started to join labour unions to challenge the
behavior of management.

2. The Human Relations Movement

The human relations movement, as the name implies is said to stress the human element
in the work place. This movement was started as a reaction against the doctrines and
practices of scientific management. According to the beliefs of this theory, labour is not
a commodity to be bought and sold. Workers must be considered in the context of the
groups of which they are a part (Griffith, 1979).

The human relation was interdisciplinary in nature. It was founded on new knowledge's
developed in the areas of psychology, group dynamics, sociology, political science, and
labour economics.

The human relations movement basically grew from the Howthrone Experiments
conducted by a scholar known as Elton Mayo. After extensive studies, Elton Mayo
argued that workers respond primarily to other social context of the work place, and his
conclusions include:

¨ Work is a group activity

¨ the need for recognition, security, and a sense of belonging is more important in
determining workers' morale and productivity than the physical conditions
under which he works.

¨ The worker is a person whose attitudes and effectiveness are conditioned by

social demands from both inside and outside the work place.

¨ Informal groups within the work place exercise strong social controls over the
work habits and attitudes of the individual worker.

The proponents of scientific management are criticized to look on the employee as an

economic unit, a factor of production, and an extension of a machine who is motivated
only by a desire for material gain. The human relationists, on the other hand,
considered the worker as a complete human being with attitudes and needs which

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profoundly affected his work. It follows then that organizations must provide for the
satisfaction of all human needs to obtain the most from their employees.
Scientific management did not consider the existence of informal relationship as it
exists side by side with the formal one. As recognized by the human relationists,
informal organizations exist and play important part in the life of the worker. Informal
organizations consist of social relationships among employees.

Informal organization is voluntary in origin, its purpose is not clear, it has no hierarchy
of positions and it ceases to exist when its members left. Many workers get their
satisfaction in the informal groups where they are treated as individuals, not as a part of
a machine in the plant. The friendliness and recognition of their co-workers
compensate for their impersonal treatment by the large and complex formal
organization.

In these informal and shifting groupings, leaders arise. They are not elected or
appointed, they have no legal standing, but they assume leadership roles on the basis of
their colleagues' esteem, and together they constitute the informal authority structure.

The attitude of an employee's primary group, as voiced by the group leader, may
determine whether an official directive will be supported or subverted, whether
employees will cooperate with administrators, or whether work norms will be raised or
lowered. The group can influence a member to interpret rules narrowly or broadly, to
slow down to speed up, to comply or resist.

A skillful administrator knows the various informal organization in his work

environment and he knows their leaders. In discussion with the leaders of informal
groups, he hears opinions, which might not be openly expressed in formal meetings.
This leader recognizes that the informal organization adds a flexible dimension, which
enables the formal organization to adjust to special cases and situations.

After several studies and investigations Elton Mayo and his associates tried to show that
workers primarily respond to group, not as individuals. It follows, then, that
administrators should not deal with workers as individual units, isolated from those
they work with, but as members of work groups subject to group pressure.

The human relations movement also emphasizes that:

· Communication is the life blood of an organization. Therefore, unlike the

thinking of the classical school, information must flow freely, up, down, and
horizontally through established net works of the formal organization and non-
official networks of the informal organization,

· Participative decision making has strong motivating force. Participation in

decision making increases members' level of satisfaction, their enthusiasm for
their organization and their positive attitude towards their organization and
their superiors.

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The Human Resource Management Model

The Human Resource Management Model includes four interrelated phases (Milkovich &
Boudreau, 1991):

1. Assess human resource conditions,

2. Set objective based on the assessment,

3. Choose a course of action from alternatives generated to achieve objectives, and

4. Evaluate the results (evaluating the results provides feedback on the success of the actions).
ASSESS
CONDITIONS
External
Organizational
Employee

EVALUATE SET
RESULTS OBJECTIVES
Planning

CHOOSE
ACTIVITIES
Staffing
Development
Compensation
Employee/Labour
Relations

The Diagnostic Model

The Environment of Human Resource Management

Many interrelated environmental factors affect human resource management. Such factors are
part of either the organization's external environment or its internal environment. The
organization has little, if any, control over how the external environment affects management
of its human resources. These factors impose influences of varying degrees on the organization
from outside its boundaries. Moreover, important factors within the firm itself also have an
impact on how the organization manages its human resources.

The environment of an organization consists of the conditions, circumstances, and influences

that affect the organization's ability to achieve its objectives. Every organization exists in an
environment that has both external and internal components. As such, a human resource
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management programme functions in a complex environment both outside and inside the
organization. Human resource managers therefore should be aware that rapid changes are
occurring within the environment in which organizations operate.

The External Environment

According to Griffin (1990), the external environment consists of everything outside an
organization that might affect it. However, the boundary that separates the organization from
the external environment is not always clear and precise. The external environment has a
significant impact on human resource management policies and practices. It helps to determine
the values, attitudes, and behavior that employees bring to their jobs.

The external environment is composed of two layers: the general environment and the task
environment.

The General Environment

An organization's general environment consists of the nonspecific dimensions and forces in its
surroundings that might affect the organization's activities. These elements are not necessarily
associated with other specific organization or groups. Instead, they are general forces or
processes that interact with each other and also affect the organizations as a whole. Each
embodies conditions and events that have the potential to influence the organization and its
human resource management activities in significant ways. The general environment of most
organizations has the following dimensions:

1) The Economic Environment

The economic environment refers to the general economic conditions and trends that may
affect the human resource management activities of an organization. The economic
variables include unemployment, demand and supply, inflation, interest rates, the labour
market, and others.

When, for example, unemployment is high, the organization is able to be very selective
about whom it hires. Increased or decreased demand for a firm's products or services will
have important implications for recruitment or layoff. Inflation has had a significant
impact on human resources programme, necessitating periodic upward adjustments in
employee compensation.

2) 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.

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3) 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.

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.

4) The Political-Legal Environment

Political variables are the factors that may influence an organizations activities as a
result of the political process or climate. The political-legal environment is also made
up of the laws and regulations within which an organization conducts its affairs.

Government has a significant impact on human resources management. Each of the

functions performed in the management of human resources, from employee
recruitment to termination, is in some way affected by laws and regulations established
by the government. Human resource managers must follow all laws and government
regulations.

5) The Physical Environment

The physical environment includes the climate, terrain, and other physical
characteristics of the area in which the organization is located. The physical element
can help or hinder an organizational ability to attract and retain employees. Housing
and living costs can vary from one location to another and can have a significant impact
on the compensation, employees will expect.

The Task Environment

The task environment of an organization consists of individuals, groups, and organizations that
directly affect a particular organization but are not part of it. The task environment refers to the
specific environment of an organization and may include (Barney, 1992):

The Customers
The Suppliers
The Regulators
The Owners
The Competitors
The Partners

All these elements are much close and specific to a given organization. Whereas the
elements of the general environment affect virtually all organizations in the society, the
elements of the task environment are pertinent (more relevant) to a specific
organization.

The Internal Environment

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The environment that exists within an organization is known as the internal environment. The
internal environment consists those factors that affect an organization's human resources from
inside its boundaries. The internal environment of an organization includes (Mondy & Noe,
1990):

· 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.

· 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.

· Organizational Culture

As an internal environmental factor affecting human resource management, organizational

culture refers to the organization's social and psychological climate. Organizational culture
is defined as the system of shared values, beliefs, and habits within an organization that
interacts with the formal structure to produce behavioral norms.

Other factors include:

· The organization's management

· The organization's employees
· The organization's structure
· The organization's rules and procedures etc.

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Review and Discussion Questions

1. Define " management".

2. What are the major categories of organizational resources?
3. What is human resource management (HRM)?
4. "HRM is a pervasive activity". Explain
5. Human resources are said to be the most important element in organizations. Why?
6. Define the following terms:
a) Human resource planning b) Recruitment c) Selection
d) Orientation e) Training and development
f) Compensation administration g) Performance evaluation
7. Define "Scientific Management". Who played the dominant role in formulating this
theory?
8. What are the basic principles of Scientific Management?
9. What is "Human Relations Movement"?
10. Describe the major conclusions drawn from the Howthrone Experiment.
11. How do you compare " Scientific Management" and "Human Relations Movement"?
12. Describe the human resource management model.
13. What is "environment"?
14. What are the components (layers) of the external environment?
15. Describe the major dimensions of the "general environment".
16. Outline the major components of the "task environment".
17. What is the difference between the "general environment" and the "task environment"?
18. Define the internal environment"
19. Describe the components of the "internal environment"

References:

1. Glueck, William, Personnel: A Diagnostic Approach, (Plano, Texas: Business

Publications, Inc. 1992).
2. Mondy, Wayne and Robert Noe, Human Resource Management, (Boston: Allyn and
Bacon, 1990).
3. Stoner, James and Edward Freeman, Management, (5th Ed. Englewood Cliffs, NJ: Prentice
Hall 1992).
4. Rue, Leslie and Lioyd byars, Management: Skills and Applications, (6th Ed., Illinois:
Irwin, 1992).
5. Griffith, Francis, Administrative Theory in Education: Text and Readings, (Michigan:
Pendell Publishing Company, 1992).
6. Milkovich, George and John W. Boudreau Human Resource Management, (Homewood,
Ill: Irwin, 1991).
7. Griffin, Ricky, Management, (3rd Ed., Boston: Houghton Miffin Company, 1990).
8. Barney, Jayb, The Management of Organization Strategy, Structure, Behaviour, (Hoston:
Houghton Mifflin Company, 1992).

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Chapter 2
HUMAN RESOURCE MANAGEMENT TOOLS

Job Analysis

A job in an organization is created when tasks, duties and responsibilities justify hiring of one
or more people for accomplishing the organizational purposes. A Job according to Mondy and
Noe (1990) consists of a group of tasks that must be performed for an organization to achieve
its goals. A job may need the services of one individual, such as that of the Prime Minister or
the services of ten or more, as might be the case with ministers in a country. In a work group
consisting of an auditor, two chief accountants, and three accounting clerks, there are a total
of three jobs and six positions. A position is the collection of tasks and responsibilities
performed by one person; there is a position for every individual in an organization (Mondy &
Noe, 1990). If a job is so fundamentally important in an organization, what then is a job
analysis?

Job analysis is the systematic process of determining the skills, duties and knowledge required
for performing jobs in an organization (Mondy & Noe, 1990). It is an important human
resource techniques and is also a method that enable to obtain information regarding jobs
available in the organization.

The major purpose of job analysis is to provide answers to the following six important
questions ( Mondy & Noe, 1990).
1. What physical and mental tasks does the worker accomplish?
2. When is the job to be completed?
3. Where is the job to be accomplished?
4. How does the worker do the job?
5. Why is the job done?
6. What qualifications are needed to perform the job?

Job analysis is a procedure used to determine:

- tasks, duties and responsibilities
- the relationships of one job to other jobs
- the working conditions
- the qualifications needed for each job.
The job facts are gathered, analyzed and recorded with respect to the job as it exists. Moreover,
job analysis is conducted after the job has been designed, the necessary training has been given
to the employees to perform job. According to Mondy & Noe, 1990, job analysis is performed
on three different accessions. These are:

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1) It is done when the organization is founded and a job analysis program is

initiated for the first time.
2) It is performed when new jobs are created
3) It is used when jobs are changed significantly as a result of new technology,
methods, procedures, or systems.

In most cases, job analysis is carried out because of changes in the nature of jobs. It is used to
prepare both job descriptions and job specifications. The job description is a written statement
that explains the title, duties, responsibilities, working conditions, and other aspects of a
specified job. Job specification, on the other hand, describes the skill, knowledge, work
experiences required to perform the job. (Milkovich & Bourdean, 1991)

Reasons For Conducting Job Analysis

Data obtained from job analysis has an impact on every aspect of human resource management
as shown in figure (Mondy & Noe 1990) below.

Job Analysis: The Most Basic Human Resource Management Tool

As can be seen above, a major use of job analysis data is in the area of human resource
planning. Since jobs in an organization are different in nature, each requires different
knowledge, skills and experiences. Hence, effective human resource planning can only take
place when these job requirements are taken into account.

Human resource activities, such as recruitment and selection largely depend on job
information. In order to match the personnel to the job, the recruiter must know the
qualifications and other pertinent features of the job. It is only then can organizations select
and hire the right person for the right job. Furthermore, job analysis information can help
organizations to decide the nature of examinations or interviews to be conducted.

Job specification information, such as the knowledge, skills and abilities an employee need to
perform a task is crucial in identifying human resource training and development
requirements. Mondy & Noe (1990) state that if the specification suggests that the job requires
a particular knowledge, skill, or ability and the person filling the position does not possess all
the qualifications required-training and/or development is probably in order.

Performance standards are developed from job information and then actual employee
performance is measured (Werther & Davis, 1996). It is important to note here that employee
would be evaluated in terms of how well they discharge their responsibilities specified in the
job descriptions. Thus, performance appraisal, which is based on job analysis information,
enables organization to measure employee performance against written standard and provide
feedback concerning their contribution. The relative value of a particular job to the
organization must well known before a monetary value can be allotted to it. Mondy & Noe
(1996) believe that the more significant its duties and responsibilities, the more the job is worth
relatively. Jobs that require greater knowledge, skills, and abilities should be worth more to the
organization. For example, the relative value of a teaching job that calls for doctorate's degree
normally would be higher than that of a teaching job that requires a master's degree.

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Information obtained from job analysis is also important in identifying safety and health
considerations. It, according to Chatterjee, (1995), enables management to provide for special
measures for the physically handicapped or infirm employee, the pregnant mother or other
vulnerable sections among workers. Job analysis information is also important to employee
and labour relationships. Management relies on job description to consider promotion,
transfer, or demotion, on the basis of comparison of talent. Moreover, information derived
from job analysis enables management to make decisions regarding employees in the
organization.

In general, job studies are undertaken in order to bring about improvement in work methods,
reduction in errors, elimination of handling unnecessary materials and duplication of effort,
reduction in fatigue, increased employee commitment and responsibility and consequently to
improve the performance of the employee. These studies, therefore, enable the job analyst to
think in terms of designing/ redesigning jobs to achieve the above objectives (Chateerjee,
1995).

Human Resource
Planning

Recruitment

Tasks Responsibilities Duties Selection

Human Resource
Development

Job Performance
Description Appraisal

Job Compensation
Analysis and Benefits
Job
Specifications Safety and
Health

Employee and

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Labour Relations
Knowledge Skills Abilities
Human Resource
Research

Equal
Employment

Types of Job Analysis Information

All relevant information concerning the job is vital for successful accomplishment of job
analysis. The job analysts seek to identify the job's actual duties and responsibilities and collect
other types of data as shown in the table (Glueck, 1978) below.

1. Work activities
a. Work activities and processes
b. Activity records (in film form, for example)
c. Procedures used
d. Personal responsibility
2. Worker-oriented activities
a. Human behaviors, such as physical actions and communicating on the job.
b. Elemental motions for methods analysis.
c. Personal job demands, such as energy expenditure.

3. Machines, tools, equipment, and work aids used

4. Job-related tangibles and intangibles

a. Knowledge dealt with or applied (as in accounting).
b. Materials processed.
c. Products made or services performed.
5. Work performance
a. Error analysis
b. Work standards
c. Work measurements, such as time taken for a task
6. Job context
a. Work schedule
b. Financial and non-financial incentives
c. Physical working conditions
d. Organizational and social contexts
7 Personal requirements for the job
a. Personal attributes such as personality, interests
b. Education and training required
c. Work experience.

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Types of Data Normally Gathered in Job Analysis.

Job analysis information is used to define staffing needs of an organization. It, according to
Baird et.al., (1990), includes analysis of:
Work activities - What needs to be done?
Work tools and technology - What machines, tools and technology people will use.
Knowledge requirement - What people must know to perform the job?
Personal requirement - What skills and experience people must possess to perform well?
Job context - the work schedules, physical conditions, and social environment of the job.
Performance Standards - expected results.

This information enables the job analyst to determine the type and level of education, training
and work experience.

Job Analysis Methods

Job analysis information provides the base for human resource information system. Basically,
in order to get information for job analysis, the job analyst need to know that organization and
the work it performs.

Methods used to conduct job analysis are different; this is because organizational needs and
resources for conducting job analysis differ. However, some of the most common methods of
obtaining information for job analysis are:
1) Questionnaires
2) Interviews
3) Observation
4) Employee Log
5) Combination of Methods

Questionnaires
To study jobs, job analyst design questionnaires to collect information uniformly. These
questionnaires reveal the duties and responsibilities, human characteristics and working
conditions and performance standards of the job to be investigated. The questionnaire method
is quick and economical to use. However, accuracy is lower because of misunderstood
questionnaires (Werther & Davis, 1996). Since, there is a possibility that some workers may
tend to exaggerate the significance of their tasks, suggesting more responsibility than actually
exists; the same type of questionnaire can also be administered to supervisors to verify the
worker responses.

Interviews
Face-to-face conversation is an effective method to collect job information. This method
provides an opportunity for the interviewer "to explain unclear questions and probe into
uncertain answers (Werther & Davis, 1996). The job analyst often talks with a limited number
of employees first, and then contacts the supervisors for checking the accuracy of the
information obtained from the employees. Although, the interview method is time-consuming
and expensive, but the method ensures a high level of accuracy.

Observation

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The observation method is slow and less accurate than other methods. This is because the job
analyst may miss irregularly occurring activities. Nevertheless, actual observation acquaint the
analyst with the machines, tools, equipment's and work aids used, the work environments and
to obtain visual impression of what is involved in the job. According to Armstrong (1996), this
method is used primarily to study jobholders at work, noting what they do, how they do it, and
how much time it takes. Moreover, it enables the analyst to see the interrelationships between
mental and physical tasks. However, observation alone is usually an insufficient means of
conducting job analysis, particularly when mental skills are dominant in a job (Mondy & Noe,
1990).
Employee Log
This method enables the job analyst to collect job data by having the employees summarize
their work activities in a diary or log. If entries are made over the entire job cycle, the diary
can be quite accurate and feasible way of collecting job information (Chatter jee, 1995). This
method is not popular because it is time-consuming and less reliable as some employees may
tend to exaggerate their tasks. However, valuable understanding of highly specialized jobs,
such as a financial analyst, may be obtained in this way (Mondy & Noe, 1990).

Combination of Methods
Since each method of obtaining information for job analysis has its own defects, job analyst
often rely on combinations where two or more techniques are used concurrently. For example,
in annualizing clerical and administrative jobs, the analyst might use questionnaires supported
by interviews and limited observation (Mondy & Noe, 1990). On the other hand, in analyzing
production jobs, interviews supplemented by work observation may provide the required
information. Combination of methods can ensure high accuracy at minimum costs. Basically,
the job analyst would employ the combination of methods required to carry out an effective and
efficient job analysis.

Conducting Job Analysis

The expert who conducts job analysis is interested in collecting information on what is
involved in doing a particular job. Job analysis is not one man affair; it requires the
participation of employees and their immediate supervisors. Organizations may use employed
human resource experts or use outside consultants to perform job analysis. Before
conducting job analysis, the analyst seeks to gain general understanding of the organization and
the job/jobs to be studied. Then, the analyst develops the desired job analysis methods to
gather information about the jobs; employee characteristics, and job performance standards.
Before starting to gather data, the employees' supervisor should introduce the analyst to the
employees and explain the main purpose of the job analysis. The job information collected by
using one or more job analysis methods allow management to draw up a job description, job
specifications and job standard.

Job Descriptions
Information collected by using one or more job analysis techniques allows management to
develop job descriptions. A job description is a written statement of what employee does, how
it is done and why it is done. In other words, the job description contains the total requirements
of the job, i.e. who, what, where, when why and how.

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According to Mondy and Noe (1990), among the items frequently included in a job description
is:
- Major duties performed
- Percentage of time devoted to each duty.
- Performance standards to be achieved.
- Working conditions and possible hazards.
- Number of employees performing the job and how they report to.
- The machines and equipment used on the job.

Within an organization, all the job descriptions should follow the same format, although the
form and content may differ from organization to organization. A sample of job description for
a secretary in an-organization is provided in the exhibit (Mondy & Noe, 1990) below.

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POSITION TITLE POSITION NUMBER

SECRETARY II

DIVISION OR STAFF DEPARTMENT REPORTS TO EFFECTIVE DATE

January 2000

DEPARTMENT SECTION GRADE REVISES

6

JOB SUMMARY
Performs clerical and administrative duties for a manager and often one or more staff
members of a major function.

NATURE OF WORK
Performs a wide variety of office duties including most of the following:
a. Typing correspondence, report, manuscripts, graphs, charts, etc., from notes, dictating
machine, and/or hand written drafts proficiently and with minimum, direction and
instructions.
b. Receiving telephone calls and visitors skillfully and handling incoming mail
efficiently.
c. Originating routine correspondence and handling inquiries, and routing & non-routine
inquiries and correspondence to proper persons.
d. Establishing and maintaining department files and records.
e. Assuming responsibility for arranging appointments and meetings, screening calls,
and handling personal and confidential matters for superior.
f. Assembling, organizing, processing, and evaluating data and reports; operating office
machines needed for accomplishing this.
g. Performing administrative duties and special projects as directed, such as collecting
and compiling general reference materials and information pertaining to company,
division, or department practices and procedures.
QUALIFICATIONS
h. High school education or its equivalent plus three years of clerical experience, and a
typing skill of at least 60-WPM. Demonstrated proficiency in English grammar,
punctuation, spelling, and proper word usage.

A Job Description

Job description outlines what the jobholder is actually supposed to do how he does it and why it
is done. Although the contents of the job description vary, most job descriptions include:
- Job Identification
- Date of the Job Analysis
- Job Summary
- Duties Performed

Job Identification
The section on job identification includes the title of the job, department/section, and
reporting relationship, date of the job description, and job code or number. A good job title,
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according to Mondy and Noe, (1990), will closely approximate the nature of the work content
and will distinguish that job from others.

Date of the Job Analysis

The date of the job analysis is indicated on the job description to help in identifying how old
the description is. It ensures periodic review of the job content and minimizes the number of
obsolete job descriptions.

Duties Performed
This section provides the major duties to be performed. Usually one sentence beginning with
an action verb such as receives, performs, establishes, or assembles, adequately explains each
duty (Mondy & Noe, 1990).

Job Specification
Job description and specification are essential documents when management begins recruiting
and selecting employees. According to Werther and Davis, 1996, a job description defines
what a job is; it is a profile of the job, on the other hand, job specification describes the job
demands on the employees who do it and the human skills that are required. It is a profile of
human characteristics needed by the person performing the job. These requirements include
experience, training, education, and the ability to meet physical and mental demands (Werther
& Davis 1996). In other words, job specification is identification of knowledge, skill and
attitude needed to perform a particular job. It is important to not here that since job descriptions
and specifications both focus on the job, job specifications are often included as one section of
job description. For example, the qualifications required for the job of "secretary II" include
typing at least sixty words per minute and demonstrated proficiency in English. This type of
information, as stated earlier, is extremely important in recruiting and selection process.

Job Performance Standards

Job performance standard is the third application of job analysis. Job descriptions as stated
earlier are statements of what activities are to be performed, where as performance standards
make explicit the quantity and/or quality of performance expected in basic tasks indicated in
the job description. Job performance standards, according Chatterjee (1995), are statements of
the expected as well as attainable levels of achievement on a particular job. Job performance
standards serve three functions. These are:

1) Standards become objectives or targets for employee effort. The challenge or pride
of meeting objectives may serve to motivate employees. Once standards are
met, workers may feel a sense of accomplishment and achievement. This
outcome contributes to employee satisfaction.

2) Standards are criteria against which job success is measured. Without standards,
no control system can evaluate job performance (Werther & Davis, 1996).
When measured performance strays from the job standard, corrective action is
taken. As illustrated in figure below, the action serves as feedback, which in

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turn can lead to change standards if they are in appropriate or improve the actual
performance.

3) Job Actual
Correction
Actual
Job of
Job Performance
Performan Deviations
ce
Standard

A job control system

4) Performance standards benefit both the jobholder and the superior who evaluates
him. The more the employee understands what is expected of him, the more likely
it is that he or she will be able to carry out the responsibilities of the position
successfully. On the other hand, in evaluating the performance of each employee,
the supervisor can compare the actual performance of each person with the written
standard. Performance appraisals can never become fully objective, but the usage
of written standards helps to make them more objective (Chatterjee, 1995).

JOB DESIGN
Jobs are the foundation of organizational productivity and employee satisfaction. How well
jobs are designed will play an important role in the realization of organizational objectives.
Well-designed jobs, therefore, enable to attract and retain motivated employees capable of
discharging their work responsibilities.

Job design is the process of determining the specific tasks to be performed, the methods used
in performing these tasks, and how the job relates to other work in the organization (Mondy &
Noe, 1990). It specifies how the job is to be done and how workers can be satisfied doing the
job. Workers must also sense that they are accountable for specific results and feel that the job
has meaning beyond pay (Mondy & Noe, 1990). According to Werther and Davis (1996), the
design of a job reflects the organizational, environmental, and behavioral demands placed on it.
Job designers need to consider these elements and try to create jobs that are productive. The
figure below illustrates a systems view of job design.

Elements of Job Design

 Organizational Elements

Organizational elements of job design according to Werther and Davis (1996), includes:
- Mechanistic approach
- Work flow
- Work practices
- Ergonomics

Mechanistic Approach

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This approach involves identifying every task in a job so that task can be arranged to minimize
the time and expended by workers. Once task identification is complete, a limited number of
tasks are grouped into a job. The result is specialization: Specialized jobs lead to a short job
cycle, the time to complete every task in a job. The mechanistic approach stresses efficiency in
effort, time, labour costs, training and employee learning time.

Work Flow

The product or service usually suggests the sequence of and balance between jobs if the work is
to be done efficiently. For example, the frame of a car must be built before doors can be
added. Once the sequence of jobs is determined, the balance between jobs is established.

Ergonomics

Optimal productivity requires that the physical relationship between the worker and the work
be considered in designing jobs. Ergonomics is the study of how human beings physically
interface with their equipment. The apparatus and other related work product must be modified
for ease of work process.

Environmental Elements

Environmental elements of job design are concerned with ability and availability of potential
employees and their social expectations (Werther & Davis, 1996).

Employee Abilities and Availability

Efficiency considerations must be balanced against the abilities and availability of the people
who are to do the work. The level of technology and the type of work in an organization
should not exceed the abilities of the organization's workforce.

Social and Cultural Expectations

Job design can also be influenced by workers social and cultural expectations. Working hours,
holidays, religious beliefs, management styles, are some of the factors that must be considered
when designing jobs. Failure to consider these social expectations can create dissatisfaction,
low motivation, low quality of work life and the like.

Behavioral Elements

Jobs cannot be designed by using only the elements that aid efficiency. Instead, job designers
draw heavily on behavioral research to provide a work environment that helps satisfy
individual needs. Any job, according to Scarrpello and Ledvinka (1988) can be described in
terms of five core dimensions. These are:

 Skill variety. The extent to which the job requires a variety of activities, skills, and talents
to carry out the work.

 Task identity. The extent to which the job allows its employees to complete whole tasks
rather than just parts of tasks.
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 Task significance. The extent to which the job can be regarded as important to others
inside and outside the organization.

 Autonomy. The extent, to which the job provides freedom to plan, schedules and decides
about work procedures.

 Feedback. The extent to which the job allows its employees to obtain clear and direct
knowledge about how well they perform.

Further more, there are factors that play a vital role in job design or redesign. These
are:

Technology

Technology has an impact on job design. The type of machines, tools, equipment, and
other work aids, as well as particular work layout and methods, used in producing goods
and/or services tend to act as constraints.

Economic Factors

Economic factors also affect job design. If management believes that job redesigning
can improve output and the level of workers satisfaction, it must consider the adequacy
of the firm's other resources. Since job redesign is an expensive undertaking, the
management must carefully balance the benefits of job design or redesign with its costs.

Laws and Government Regulations

Job design or redesign is also affected by government regulations. Management needs

to observe whether or not laws relating to labour, environment and the like are being
violated.

Union Pressure

The philosophy, policy, and strategy of the union can affect Job design or redesign. The
contact between union and management specifies and defines the type of jobs and the
duties and responsibilities of employees. In most cases, unions may perceive job
redesign to be attempts by management to squeeze more work out of the workers
without increasing wages.

Employees' Potential

The abilities, attitudes, and motivation of the organization's workers must be considered
when planning to design or redesign a job. Designing a job that would be far more
complex than the ability level of employees available to do it wouldn't make sense
unless they are willing to be trained or new employees with the necessary capabilities
can be hired (Mondy & Noe, 1990).

Management Philosophy

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The general organizational policies and strategies can determine the degree to which job
redesign is possible. Top management must be convinced regarding the beneficial
outcomes of the job redesign before it is undertaken.

Techniques of Job Redesign

The major purpose of job design and redesign is to improve employee performance. There are
many methods of enhancing jobs through job design/redesign. The following represent the
more viable techniques of job redesign.

Job Rotation

This technique refers to the movement of employees from one job to another. It is important to
bear in mind that jobs themselves are not actually changed only the employees are rotated. As
Werther and Davis (1990), stated rotation breaks the monotony of highly specialized work by
calling on different skills and abilities. The organization benefits because workers become
competent in several jobs rather than one. Learning and developing new skills,
- helps the worker's self-image
- provides personal growth, and
- makes the worker more valuable to the organization (Werther & Davis, 1996).

On the other hand, according to Chatterjee (1995), job rotation is not without its drawbacks.
The main drawbacks are:

- Apart from costs involved in the movement of personnel, productivity inevitably

drops in the initial phase of a worker's taking on a new job. Also, efficiencies
derived through experience are lost as a result of job rotation and these can be
substantial.

- Job rotations also create disruptions. Members of work groups have to adjust to the
new employees as much as he/she to them. The supervisor has to spend more time
answering questions and monitoring the work of the recently rotated employee.

- Job rotation is a weak solution to jobs that score low on motivation potential.
Critics point out that this approach involves nothing more than having people
performing several boring and monotonous jobs rather than one.

Job Enlargement

Job enlargement is a technique used to expand the number of related tasks in a job. In other
words, it increases job scope. According to Beard Well and Holden (1999), job enlargement
gives greater variety in job content and thereby helps to relieve monotony in repetitive jobs.
For example, instead of knowing how to operate only one particular machine, a worker is
taught to operate two or even three with the same level of responsibility. Here, through job

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enlargement, management can reduces monotony, and increase job satisfaction by creating task
variety.

Job Enrichment

Job enrichment is a technique is which employees are given autonomy to set their own work
pace, design their own work methods, participate in making decisions affecting their work
units, and evaluate their accomplishments (Baird, et.al, 1990). It refers to basic changes in the
content of the job and increasing the level of responsibility, autonomy, and control. It is a
means of expanding jobs vertically. Job enrichment, add more planning and control
responsibilities. These additions to the job, in-turn, can lead to increased motivation.

According to Herzberg (1979), job enrichment efforts should be based on the following
principles:

1. Increase job demands: Changing the increase the levels of difficulty and
responsibility of the job.

2. Increase Worker's accountability: Allowing more worker control and authority

over the work, while retaining the manager's ultimate accountability.

3. Providing Work Scheduling freedom: Within limits, allowing workers to schedule

their own work.

4. Providing feedback: making timely periodic reports on performance directly to the

worker.

5. Providing New Learning experience: Creating opportunities for new personal

experiences and growth.

The management would make use of job enrichment techniques based on the nature of the job,
and the prevailing environment.

As discussed above, job redesign options also includes job rotation and job enlargement. The
major differences between these two techniques and job enrichment are:

- Job enlargement and job rotation are horizontal expansions while job enrichment is
a vertical expansion.

- Job enlargement and job rotation increase job scope while job enrichment increases
job depth. Job depth is the degree of control or autonomy and individual has over
his/her own work (Baird, et.al, 1990).

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Review and Discussion Questions

1. What is job analysis? Why is it conducted?

2. What is the difference between a job and a position?
3. State the different conditions that initiate the performance of job analysis.
4. Name and describe the components of job analysis.
5. Describe the various techniques of collecting job analysis information.
6. Define:
- Job description
- Job specification
- Job standard
7. What are the major issues to consider when a job description is prepared?
8. Discuss the benefits of job performance standard.
9. What is job design? Name and describe the important elements of job design.
10. What are the different methods of job design and what are the advantages of each
method?
11. What are the items included in job specification?
12. Job enrichment is a means of expanding jobs vertically. Discuss.

References:
1. Mondy, R. Wayne & Noe, Robert M., Human Resource Management, (Massachusetts:
Simon & Schuster, Inc., 1990).
1. Werther, William B. & Davis, Keith, Human Resources and Personnel Management,
(New York: McGraw-Hill Inc., 1996).
2. Milkovich, George T. & Boudreau, John W., Human Resource Management, (USA:
Richard D. Irwin, Inc., 1991).
3. Chatterjee, Bhaskar, Human Resource Management, (New Delhi: Sterling Publishers
Private Limited., 1995),
4. Baird, Lloyd S., e al., Management: Functions and Responsibilities, (New York: Harper
& Row, Publishers. Inc., 1990).
5. Glueck, William F., Personnel: A Diagnostic Approach, (Texas: Business Publications,
Inc., 1978).
6. Armstrong, Michael, A Handbook of Personnel Management Practice, (London: Clays'
Ltd., St Ives Plc, 1996).
7. Scarpello, Vida G. & Ledvinka Personnel/Human Resource Management, (Boston: PWS-
Kent Publishing Company, 1988).
8. Beardwell, Ian & Holden, Len, Human Resource Management: A Contemporary
perspective, (Delhi: Macmillan India Ltd., 1996).

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Chapter 3
HUMAN RESOURCE PLANNING

Objectives:

After studying this chapter you would be able to:

1. Define human resource planning and explain why organizations conduct it.
2. Understand the basic relationship between strategic planning and human resource
planning
3. Explain the human resource planning process.
4. Describe some of the most common used human resource forecasting techniques.
5. State what management can do:
- When shortage of employees exists
- When surplus of employees exists.
6. Explain the role of inventory or employee information in the preparation of human
resource plan.
7. Distinguish between demand for and supply of employees in an organization.

HUMAN RESOURCE PLANNING

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.

To ensure that people are available to provide the continued smooth development,
organizations engage in human resource planning. The purpose of developing human resource
planning is to asses where the organization is, where it is going, and what implications these
assessments have on future supplies of and demands of human resource. Attempts must then
be made to match supplies and demands, making them compatible with the achievement of the
organization's future needs.

The Importance of Human Resource Planning

Organizations are composed of financial, material and human resources. Of these human
resource represents one of the organization's most valuable assets. However, because the

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organization does not own people, as it does physical and capital assets, this resource is seldom
given proper attention.
Its supply of personnel must be sufficient to ensure the healthy operation of the organization.
Toward this objective of continuing healthy operations, the organization needs to be undertaken
human resource planning. Human resource planning, according to Chatterjee (1995),
therefore:
- assumes a crucial role in the future success or failure of an organization.
- enables a manager to predict his/her manpower requirements, to determine the
deployment of personnel and to control wage and salary costs.
- provides management information about the existing strength and weaknesses of the
people in the organization.
- assesses the kinds of skills required to be developed as well as recruited.
- estimates human resource requirements over a specified time frame in relation to the
organization's goals. Provides an indication of the lead-time that is available to evolve
new strategies in selecting and training the required additional manpower or reducing
the strength of the workforce.

In general, the following are 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 enable 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.

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.

In general, human resource planning:

- Should be planning - something done in advance rather than just as a spur-of-the-
moment reaction to immediate pressure.
- Should guide and coordinate all personnel activities so that they work together to
support the overall strategy rather than operate independently of one another.
- Should be responsive to both the external and the organization environment.
- Should be strategic - linked with high level planning rather than performed in
isolation (Scarpello & Ledvinka, 1995).

The Human Resource Planning Process

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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). Many organizations carry out systematic
planning only for those categories of personnel, which have been in short supply or for those
types of skills which require a long development time within the organization. This being as it
is, most organizations identify short term and long-term human resource needs by examining
their strategic plan.

As can be seen in the figure (Mondy & Noe, 1990) next page, below, the human resource
planning has two components. These are requirements and availability. Forecasting human
resource requirements involves determining the type and number of people needed in an
organization.

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EXTERNAL ENVIRONMENT
INTERNAL ENVIRORNMENT

Strategic Planning

Human Resource Planning

Forecasting Comparison of Forecasting

Human Resource Requirements Human Resource
Requirements and Availability Availability

Demand Surplus of Shortage of

Supply Workers Workers

Recruitment

Restricted Hiring
Reduced Hours,
No action Early Retirement
Layoff Selection

The Human Resource Planning Process

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These projections will reflect various factors, such as development plans in government
organizations where as production plans in business firms. Forecasting human resource
availability involves identifying both the internal sources and external sources. It is important
here to not that one of the major objectives of human resource planning is to enable the
organization not be understaffed or overstaffed. Thus, it is the responsibility of the
management to compare requirements and availability to determine whether there will be a
surplus or shortage of employees. If a surplus is projected, then, the organization must use
different employee reduction methods, such as early retirements, restricted hiring, dismissal,
etc. On the other hand, if shortage is predicted, the organization must obtain the right type and
number of people from the labor market through recruitment and selection.

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.

Organizational Current Forecasting Implementation Audit

Goals & Plans Human Human Programs &
Resource Resource Adjustment
Steps in the Human Resource Planning Process.

Organizational Goals and Plans

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). For example, a business firm Human
Resource Manager and his staff can not make operational plans, unless they have information
about sales forecasts, market trends, technological advances, organizational expansion, and the
like.

The organizational goals are the result of its strategic planning. Different kinds of public or
business plans can be designed ahead for different number of years. Some organizations plan
ten to twenty years ahead. Such long range planning by organizations is an exception. Most
organizations plan only for the fairly short run of say one to five years. Generally speaking,
however, human resource planning for up to one year is considered short range and is widely
practiced in many organizations. On the other hand, planning for two to four years is
considered medium range and planning for five years and beyond is long-range.

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).

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The inventory or employee information has several important uses. The major ones are:
- It enables to compare the number, types and skills specified by the forecast with the
present baseline.
- It enables to ascertain what skills must be developed from the current personnel, via
training.
- It enhances the opportunities for employees to satisfy their career aspirations through
promotion and development.
- It enables to reconcile human resource demand with supply.

Human resource inventory includes job classifications, age, gender, organizational level, rate of
pay, and functions. It may also include resume date, skill, education, training received, and
career interest (Mondy & Neo, 1990). This manpower information can be collected, stored and
retrieved manually by means of filing system in small organizations, where as computerized
system is practically a must for the larger organizations that wish to handle employee
information for many years.

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).

Human Resource Forecast

Human resource forecasts are attempts to predict an organization's future demand for
employees (Werther & Davis, 1996). It is a determination of the demand for employees for
given time periods in the future such as one, three and five years. The forecast also requires the
preparation of an estimate of the supply of people who will be available for the selected time
period. The supply is composed of two main parts. There are:
- an estimate of the numbers and types of personnel presently on the payroll.
- The portion which must be recruited externally.

These figures for the planning period are obtained by subtracting the current available
manpower from the projected demand. If the figures are positive, employees will have to be
recruited, selected and hired; if the figures show negative, employees may eventually have to
be laid off.

The demand forecast is an estimate of types and numbers of personnel the organization will
require in the future. It is derived from goals and plans. For example, the public organization's
goals and plans should provide the human resource planners with information on such factors
as projected social service, development activities, number of population to be served, new
bureaus or departments to be created, and the like.

Generally, human resource planners must use several techniques of forecasting manpower
requirement and availability. Some of the techniques available are qualitative and quantitative
in nature.

Human Resource Forecasting Techniques.

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Forecasting technique range from judgment to sophisticated quantitative models. The most
commonly used techniques of forecasting are:
 Judgment and Experience
 Zero-Base Forecasting
 Bottom-up Approach
 Work Standard Data
 Key Predicative Factors.

Judgment and Experience

This method is based on the estimates made by people like executives or experts who are very
familiar with the entire nature of the jobs in the organization. It is appropriate for short-range
forecasts. The manager and heads of various units of the organization make estimates of future
human resource requirements by judgmentally converting information on future organizational
activities into numbers and types of personnel needed. For example, these activities in public
organization may include services to be provided, population to be served, projects to be
completed, etc.
Zero-Base Forecasting
The zero-base forecasting approach uses the organization's current level of employment as the
starting point for determining future staffing needs (Mondy & Noe, 1990). Whenever
vacancies exist due to retirement, layoff, death, or resignation, the vacant positions are not
immediately filled. Instead, personnel requirement analysis is made to determine whether the
organization can justify filling them. The same procedure is followed when organizations
create new positions. Zero-base human resource forecasting, therefore, requires management at
different levels to thorough study and analysis their human resource needs.

Bottom-up Approach
In bottom-up approach, managers from various levels are asked to contribute to employment
forecasting. It has the advantage of drawing many managers into the process and giving them a
sense that they are participating in one of the importance activities of the organization. Here,
unit managers send their employment needs forecasting proposals to the top management who
compare these with the plan and finalize them. According to Mondy and Noe (1990), human
resource forecasting is often most effective when managers periodically project their human
resource needs, comparing their current and anticipated levels, and giving the human
resource department adequate lead time to explore internal and external source.

Work Standard Data

Another means of forecasting human resource requirements is to use work measurement
standard. This is a means of determining the relationship between tasks and the number of
employees needed to perform the tasks. In this case many organizations have established data
for man-hours or unit times to perform tasks. According to Chatterjee (1995), the technique is
useful only in cases where the volume of work can be satisfactorily quantified, total production
and activities in terms of clear units are estimated and the number of man hours required to
perform/ produce each unit is carefully calculated.

The total projected units of work for the organization are translated into man-hours or man-
days and the number and type of employees by using the pre-established time standards.
However, work standard technique cannot be applied for estimating professional personnel
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requirements. For this, judgment, experience and managerial intent are some of the major
determinants of how many and what types of employees are needed.

Key Predictive Factors

The core element of the "key predictive factors" method is to identify one major indicator with
which total human resource requirement correlates highly. For example, one of the useful
predictors of academic staff employment levels in the Ethiopian Civil Service College is the
number of students to be served. Moreover, to identify predictor variables, the manpower
planning office of business organization must examine several variables such as sales volume,
units produced, or number of customers served to find which variable or variables provides a
good correlation between the number and type of employees needed.

Implementation Programs
After the optimal alternative for addressing the organization's human resource issues has been
chosen, it is translated into operational programs with specific plans, target dates, schedules,
and resource commitments (Mondy & Noe, 1990). The implementation phase of the human
resource planning requires translating the plan into action. For example, if a shortage of
accountants in Region 5 has been forecasted and if the plans reveal, both recruitment plus
upgrading of the present accounting talent, then both recruitment and training programs will
have to be strengthened and expanded. The following are the major implementation actions.

Recruitment and Selection

The analysis of human resource requirements indicates a shortage of specific skills such as
accountants, economists, administrators and the like. In such case, the human resource
manager must examine both the internal and the external sources of supply, and then efforts
must be made to attract the best-qualified candidates to the organization.

Most experts are agreed that the search for manpower must always begin within the
organization where a thorough check on the quantity and quality of existing employees can be
made to yield a manpower audit. The organization itself is a captive source and when the
qualifications, experiences and capacities of manpower within is known, offering them new
avenues and openings can act as powerful incentives (Chatterjee, 1995).

After analyzing the internal human resource availability, the organization will have to examine
the labor market. Recruiting new personnel from the open labor market can be costly and
complicated process that has a strong impact on organizational effectiveness. In order to
acquire the best-qualified people, organizations must have a good policy to ensure that
employment conditions are sufficiently attractive. Once a pool of potential applicants has been
developed there is a need to assess this pool to predict which candidates will assist the,
organization in the attainment of its objectives if selected. Here, employee selection refers to
the development of policies and procedures, and evaluating potential employees in terms of job
specification. It is a means of determining, which people best meet the needs of the
organization.

Performance Appraisal
Performance appraisal is the process by which organizations evaluate individual job
performance. When it is done correctly, employees, their supervisors, the human resource

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department, and ultimately the organization benefit by ensuring that individual efforts
contribute to the strategic focus of the organization (Werther & Davis, 1996). Organizations
use performance appraisal for manpower planning purposes, as input into personnel
information systems. Moreover, it provides reliable data for management decisions in regard
to:
- employee's readiness for taking a new jobs, through transfers and promotions
- training and management development needs.
In general, information collected through performance appraisals enables management to assess
employees' performance and potential for future development.

Promotion, Transfer, Layoff and Retirement

Organizations are ever changing. Because of the needs of the organization and employees, the
occurrence of some sort of employee movement is always there. In implementing the human
resource plans, some employees may be promoted from jobs to another positions that are
higher in pays, responsibilities and/or organizational levels while others may be transferred to
another jobs either to fill vacant positions or to provide the employee with new skills and to
enable him/her be a better candidate for promotion in the future.

When human resource plan reveals that the internal supply of employees exceeds the
organization's demand, reduction of surplus workers becomes unavoidable task. Such situation
can be corrected through layoffs, early retirements and/or restricted hiring. When the
organization is unionized, layoff procedures are usually stated clearly in the labor management
agreement. Typically, workers with the least seniority are laid off first. If the organization is
nonunion, it may base layoff on a combination of factors, such as seniority and productivity
level (Mondy & Noe, 1990). In early retirement some employees are reluctant, but others may
be willing to retire. This being the case, early retirement is supposed to be voluntary and the
organization must offer some sort of inducement.

Training and Development

Training and management development must be in the context of the organization's human
resource development policy. They must be based on recognized needs such as:
- changes in technology
- the introduction of new products
- changes in organizations set-up
- organization's desire to upgrade the skills and knowledge of employees with a view to
help them do their current jobs properly and prepare them for future responsibilities,
and the like.
The training and management development programs are relevant and useful only when they
are implemented towards the attainment of organizational objectives.

Motivation and Compensation

The system of motivation and compensation should serve to help the organization achieve the
manpower plan. Compensation is what an organization provides its employees in exchange for
their work contribution. If the organization is not paying competitive rates, the current
employees are likely to leave the organization. Pay dissatisfaction not only affects the quality
of work life but it also has a trouble in recruiting and retaining employees. On the other hand,

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if the treatment of employees is perceived to be arbitrary, then the organization will also have
problem of meeting its human resource requirements.

Audit and Adjustment

Human resource planning requires considerable time, personnel, and financial resources. The
return on this investment may not justify the expenditure for small firms. Increasingly,
however, large organizations use human resource planning as a means of achieving greater
effectiveness (Werther & Davis, 1996). For any of various reasons, the human resource
programs for meeting the desired targets may be falling short of organizational objectives. A
system for evaluating and measuring progress should be set up. Many systems of measurement
can be used depending upon the specific program being evaluated.

Moreover, another reason for reviewing progress is to check if changes in the human resource
plans are made necessary, because of changed circumstances or because of the original
planning has been proven wrong.
Review and Discussion Questions
1. What is human resource planning? Why is it necessary?
2. Human resource represents one of the organization's most valuable assets-Discuss.
3. Describe the major importance of human resource planning.
4. Briefly describe the human resource planning process.
5. In what way human resource planning interact with the organizational strategic plan?
6. Suppose you as administrative head or region 5 and HR department head estimated that
because of several technological innovations you region will need 25 percent fewer
employees in the coming three years. What actions should you recommend to be taken
today?
7. As a human resource planning head in region 6 what actions should you recommend if
there are employees shortage:
- Too many employees in financial area.
- Too few employee administrative area.
8. What are the purposes of inventory or employee information system?
9. What is the distinction between supply and demand forecast?
10. Identify and discuss the commonly used methods of forecasting future employment
requirements.
11. Describe the implementation phase of human resource planning.
12. Explain the main uses of performance appraisal, promotion, transfer, layoff, and
retirement in human resource planing.
13. Explain the necessity of human resource audit.

References:
1. Mondy, R. Wayne & Noe, Robert M., Human Resource Management, (Massachusetts:
Simon & Schuster, Inc., 1990).
2. Chatterjee, Bhaskar, Human Resource Management, (New Delhi: Sterling Publishers
Private Ltd., 1995).
3. Scarpello, Vida G. & Ledvinka, James, Personnel/Human Resource Management,
(Boston: PWS - Kent Publishing Company, 1988).

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4. Werther, William B. & Davis, Keith, Human Resources and Personnel Management,
(New York: McGraw Hill Inc., 1996).
5. Baird, Lloyd S., et.al., Management: Functions and Responsibilities, (New York :
Harper & Row, Publishers Inc., 1990)

Chapter 4
Staffing Organizational Jobs

Objectives:
After studying this chapter, you would be able to:
1. Define: Recruitment, Selection, Orientation, Performance appraisal, Transfer,
promotion, demotion, termination and retirement
2. Describe how recruitment and selection strategies depend on job analysis and human
resource planning.
3. Identify the different sources and methods of recruitment and know the various
alternatives to recruitment.
4. Describe the recruitment and selection processes.
5. Explain the role tests and interviews play in selecting the right person for a vacant job.
6. Identify the environmental factors that affect the selection process.
7. Explain orientation and describe its importance.
8. Define performance appraisal, realize the main reason for appraising performance and
describe the performance appraisal process and methods.
9. Distinguish the differences among placement, termination, promotion, transfer,
demotion and termination.

HUMAN RESOURCE MANAGEMENT FUNCTIONS

Staffing Organizational Jobs

The achievement of organizational objectives largely depends on effective utilization of human
resources. In today's highly competitive market, the selection of the right person, in terms of
quality and quantity, have far-reaching implications for any organization. Hence, the
maintenance of staffing system becomes the important management functions.
Staffing refers to the process of attracting, selecting, and placing of employee in the position.
It begins with job analysis. In addition to its other roles in human resource management, job
analysis has a role in staffing by specifying the requirements of job, which helps identify the
kind of candidates required for vacant positions (Scarpello & Ledvinka, 1988).

Recruitment
The Recruitment Process
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 an organization
(Mondy & Noe, 1990). It is one of the means of meeting the organization's staffing
requirements. As can be seen in the figure (Werther & Davis, 1996) next page, the groundwork
for successful recruiting effort lies on human resource planning and job analysis information.
Once organizations identify job openings, thorough human resource planning, managers need
to design and implement recruitment programs to attract qualified applicants, because the type

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of people selected are the one who determine the success or failure of the organization.
However, in large organization, human resource department is responsible for the recruitment
process. On the other hand, in small organization, recruitment is likely the responsibility of
recruitment and selection committee or the individual manager.

The recruitment process of an organization aims at organizing recruitment activities in terms of

who does the recruiting, how they do it, and where they seek recruits. As mentioned earlier,
human resource planning indicated the job vacancies now and in the future. In other words,
before a recruitment decision can be made, the organization must reflect upon any vacancy that
occurs and link the decisions to the objectives set by the human resource plan of the
organization (Howe, 1995). Once vacant positions have been identified, management initiates
an employee requisition. As the figure (Mondy & Noe, 1990) below illustrates, the employee
requisition is a document that specifies job title, department, the date the employee is needed
for work and other related details. With this information, the recruiter can refer to the job
description to determine what each job requires.
JOB JOB
Human ANALYSI
resource OPENING S
INFORM JOB SOURCE METHOD
plannin S S
g IDENTIFI AT-ION REQUIRE
ED MENTS OF OF
RECRUIT RECRUIT
Manager' MENT MENT
s
comment The Recruitment Process
s

JOB JOB TITLE DATE OF DATE REPLACEMENT

NUMBER JOB VACANCY NEEDED

Permanent Temporary Part-Time

PLEASE CHECK

REASON FOR REQUEST:

BRIEF DESCRIPTION
OF MINIMUM
QUALIFICATIONS FOR
THE JOB CANDIDATES

BRIEF DESCRIPTION
OF JOB DUTIES:

LOCATION NAME
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DATE MANAGER'S SIGNATURE

An Employee Requisition Form

The next major decision concerning recruitment is to identify the sources of recruitment. This
is a means of determining whether competent personnel are available within the organization
(the internal source) or must recruit externally.

Sources of Recruitment
The objective of recruitment is to provide a sufficient group of qualified candidates for
employment. In order to realize this recruitment objective, organizations make use two sources
of recruitment. These are internal and external sources.

Internal Recruitment
Internal employees are a major source for vacant positions in an organization. This usually
takes the form of employee promotion or transfer within an organization. Internal recruiting
improves the probability of a good selection, since all the necessary information on employ's
performance and behavior is readily available. Moreover, it has the following advantages.
1. It can be a motivating factor for employees, since; it lets them know that hard work can
lead to better jobs.
2. Internal candidates do not need the extensive familiarization with organizational policies.
3. Internal recruiting efforts are much less expensive than external efforts (Scarpello &
Ledvinka, 1988).

However, a policy of filling vacant positions using the internal recruiting approach has its own
disadvantages. Some of the major ones are:
1. 'Inbreeding' is a drawback. The employee tends to demonstrate on the job only what he/she
has learned in the organization and has few new ideas.
2. Inadequacy of supply would also arise since fewer people would be available to choose
from as opposed to external recruitment.
3. Recruiting friends/ relatives of present employees may often create unnecessary tensions
and charges of favoritism, nepotism, etc. It often leads to serious erosion of discipline as
well (Chattterjee, 1995).

In order to acquire candidates within the organization, who are capable of filling vacancies,
organizations, use an approach called job posting and bidding.

Job Posting
Job posting is a method of internal recruitment, which can facilitate promotion and transfer
within the organization. It is a procedure used to notify the current employees that job
openings exist. Job bidding, on the other hand, is a technique that permits employees who
believe that they possess the required qualifications to apply for a posted job (Mondy & Noe,
1990). In organizations vacant positions are posted on a bulletin board. Any staff who can
satisfy the criteria is encouraged to apply.

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It is important here to remember that qualifications and other facts typically are drawn from the
job analysis information. Then, through self-nominations or the recommendation of a
supervisor, employees who are qualified and interested in the posted opening report to the
human resource department and apply (Werther & Davis, 1996).

External Recruitment
When vacant positions can not be filled internally, the desired employees must be attract from a
number of external sources. In other words, according Mondy and Noe (1990), at times, a firm
must look beyond itself to find employees, particularly when expanding its workforce. The
following circumstances require external recruitment:
1. to file entry- level jobs;
2. to acquire skills not possessed by current employees, and
3. to obtain employees with different backgrounds to provide new ideas (Mondy & Noe,
1990).

External recruiting can offer many advantages. Among the advantages of external recruiting
are:
1. Outside people can often bring new and innovative ideas to the workplace.
2. New recruit is less susceptible to conformity pressures and other negative group
phenomenal that adversely affect employee morale and productivity.
3. It is less expensive to hire a well-trained specialist or professional from outside the
organization than to train and develop existing personnel (Scarpello & Ledvinka, 1988).

Depending on the type educational qualifications desired, individuals may be attracted from a
member of external sources. These are:
High Schools and Vocational Schools
High schools and vocational schools are excellent sources for hiring clerical and other entry-
level operative employees. For example, many vocational school in Ethiopia have outstanding
training programs for specific occupational skills, such as auto-mechanics, wood-works,
electricity, and the like.

Colleges and Universities

This is a major source of entry-level administrative, technical, and professional talent. College
and university recruiting provide a good opportunity for both graduates and organizations.
According to Chatterjee (1995), for students coming out of educational institutions, this form of
recruitment is very convenient and satisfying. For employers, it serves a great deal of time and
processing costs and they get access to a large number of bright, young people at one place
from among whom they can choose and with whom interviews can be fixed at short notice.

Walk-ins and Write-ins

These are inexpensive sources of qualified job seekers. Walk-ins are job candidates who
physically arrive at the organization in search of a job. Write-ins are job seekers who send
application letter to an organization's employment office.

Self-employed Workers

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This may also be a good potential recruit. The self-employed workers constitute a source of
job applicants for any number of jobs requiring managerial, technical or professional within an
organization.

External Methods of Recruitment

Once recruitment sources are identified, organizations then seek to attract job seekers by
specific recruitment methods. Advertising, employee referrals and employment agencies are
external recruitment methods most commonly used by many organizations.

Advertising
Many job seekers are attracted through advertising. It is a means of communicating the
organization employment requirements to the general public. To this effect, various media are
used such as daily newspapers, magazines, television and radio broadcasts. The advertisements
should provide a clear and honest picture of the job and also the organization to the prospective
employees. In other words, a good, carefully worded advertisement can help in building the
image of the organization since very often, potential candidates are first introduced to the
organization through advertisements in the media (Chatterjee, 1995).

Employee Referrals
This is a technique in which current employees refer job seekers from out side the organization.
The technique is inexpensive and effective when organizations are looking for candidates in
particular job skills that may be urgently required within the organization. According to
Werther and Davis (1996), employee referrals have several advantages including the following:
1. Employees with hard-to-find job skills may know others who do the same work.
2. New recruits already know something about the organization from the employees who
referred them.
3. Employees tend to refer their friends, who are likely to have similar work habits and
attitudes.
Although employee referrals appear to be an easy and quick way to attract potential candidates
to an organization, they tend to maintain the status quo of the workforce in terms of race,
religion, sex, and other characteristics, possibly leading to charges of discrimination (Werther
& Davis, 1996).
Employment Agencies
An employment agency is an organization that helps firms to recruit employees and, at the same
time, aids individuals in their attempts to locate jobs (Mondy & Noe 1990). They conduct
recruitment and selection activities for many organizations. For example the main public
employment agency in Ethiopia is the Civil Service Commission which coordinates recruitment
and selection functions for service organizations, where as the Ministry of Social Affairs is
responsible for all labor cases regarding workers in the production organizations.

Alternatives to Recruitment
Recruitment is not always the best method to fill vacant positions in an organization.
Recruitment and selection are not only time consuming activities but also expensive.
Moreover, they don't solve the immediate employee demand of an organization. Therefore, an
organization should carefully consider all viable alternatives before involving in recruitment
functions. Alternatives to recruitment include overtime, temporary employees, subcontracting
and employee leasing.
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Overtime
Overtime is the most commonly used technique to deal with temporary increase in work
volume. It benefits both the organization and the employee. The Organization is able to satisfy
employee demand while avoiding recruitment, selection and training costs. The employee who
is employed on overtime basis may benefit from a higher rate of pay. Although organizations
benefit by using overtime, they should carefully check their use of overtime as it also has its
own problems. Some of major problems of related to the use of overtime include the
following.
1. Employees may become fatigued and lack the energy to perform at a normal rate, especially
when excessive overtime is required.
2. Employees may, consciously or not, pace themselves so that overtime will be assured.
3. Employees may elevate their standard of living to the level permitted by the additional
income. Then, when overtime is no longer required, and the paycheck shrinks, employees
may become disgruntled (Mondy & Noe, 1990).

Temporary Employees
The total cost of permanent employees is usually high. To minimize costs and maintain
flexibility as work volume varies, most organizations make use of temporary employees. The
costs of recruitment, selection and employee benefits are avoided since organizations will agree
with the employee to only pay wage for a specific period of time.
It is important here to note that unless the tasks that the temporary employee is asked to do are
simple and easy to learn, however, the organization may encounter quality control problems
and additional training expenses. Further, management should recognize that a temporary
person is not going to posses the same degree of loyalty to the organization that a permanent
employee has (Scarpello & Ledvinka, 1988).

Subcontracting
Another alternative of meeting increases in demand for employees is choosing someone else as
a sub contract to perform tasks. According to Mondy and Noe (1990), this approach has a
special appeal when the subcontractor actually has greater expertise in producing certain goods
or services.

Employee Leasing
In this method, organizations acquire certain employees by contracting for the services of
employees from another organization. Instead of the organization having to recruit, select and
hire employees, they simply lease employees. Employee leasing is desirable for small business
organizations because it eliminates the problem human resources management.

Selection
What is Selection?

The human resource planning indicates that additional employees are required to get
organizational job done, hence, recruitment process takes place. This process provides a group
of potential candidates to enable the organization select and hire the best person or persons
from the group. Selection is the process of choosing from a group of applicants the individual
best suited for a particular position Mondy and Noe, (1990). The purpose of selection is to

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identify the recruits that most likely help the organization in achieving its objectives. Selection
is affected by, and also affects other human resource management activities. For instance:
¨ Job analysis identifies the personal attributes to seek out among job candidates.
¨ Human resource planning can play a role in employee selection by providing a forecast of
position openings.
¨ Recruiting is related to selection in that a high selective selection procedure requires the
recruitment program to generate a larger or more qualified candidate pool.
¨ Training is, in one sense, a substitute for selection: if selection neither does nor results in
hiring employees with the necessary skills, training might be used to impart those skills.
¨ Career management focuses on internal selection. If a career management system is in
operation, the selection system should identify employees with the aptitude to benefit from
the career sequence that is planned. If there is no formal career planning system, then the
selection system should focus more on identifying candidates who already have the skills
that would be developed through a well-planned career in the organization.
¨ Compensation is critical aid in selection because if pay is not high enough, the organization
will not attract enough candidates who can pass the selection requirements.
¨ Labor relations are important in selection because an effective selection process can
contribute of a positive union-management relationship. Although union contracts often
specify promotion based on seniority, if the organization does a better job of selection in its
initial hiring, it is less likely to have to promote less-qualified people later on (Scarpello &
Ledvinka, 1988).

The Selection Process

The selection process as shown in the figure below, is a series of specific steps through which
job candidates pass. Although the sequence of steps may differ from one organization to
another, the process ends in acquiring the right person for the right job.

Preliminary Reception of Applications

Selection process often starts with preliminary reception of applications. At this stage, the job
seekers may visit the organization in person or send job application letter. The organization
then examines the applications to check whether there is a match between the applicants'
qualification and the vacant position.

Although the information requested on application forms vary from one job type to another and
even from organization to organization, it generally contains sections for personal data, job
interest, education and training and work-related history. Those applicants who best satisfy the
selection criteria will be selected for selection tests.

Selection Tests
Selection tests are instruments that enable organizations to assess the match between the
prospective employees and the requirement of job opening. They enable the management to
make rational hiring decision. On the other hand, ability and motivation to perform a task
determine employee job performance. Selection tests, therefore, may accurately predict an
applicant's ability to perform the job, but be less successful in indicating the extent to which the
individual will want to perform it.

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According to Glueck (1978), there are various kinds of tests. Of which performance tests,
simulations of performance and paper-and-pencil tests will very briefly be discussed below.

Performance Tests
A performance test is an experience that involves actually doing a sample of the work the job
involves in a controlled situation. Examples of this type of tests include typing tests for
secretarial position.

Performance Simulations
A performance simulation is a non-paper-and-pencil experience designed to determine abilities
related to job performance. The simulation is not direct performance of part of the job, but it
comes close to that through simulation. For example, drivers may have learned to drive by
performing first on simulation machines.

Paper-and-Pencil Tests
The paper-and-pencil tests are designed to measure general intelligence and aptitudes.
Intelligence and mental ability tests attempt to sample intellectual and mental development or
skills. Examples of paper-and-pencil tests include math test for a bookkeeper.

EXTERNAL ENVIRONMENT

INTERNAL ENVIRONMENT

Preliminary reception R
Of applications e
J
e
Selection tests c
t
e
d
Selection interview
A
p
References and back p
l
Ground checks i
c
a
Hiring Decision n
t
s
Medical examination

Employed individual

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Steps in the Selection Process (Mondy & Noe, 1990 Modified)

Characteristics of Selection Tests

Well-designed and properly administered tests have the following characteristics. These are:
- Standardization
- Objectivity
- Norms
- Reliability
- Validity

Standardization
This refers to the uniformity of the procedures and conditions related to administering tests
(Mondy & Noe, 1990). In order to compare test results of candidates, it is important to ensure
uniform conditions. For example, if a group of candidates takes a test in a hall where the light
is dim and another group takes the same test in a hall where the light is bright, differences in
performance are likely to occur. Management, therefore, should strictly observe that
standardized conditions are provided when test is administered.

Objectivity
Objectivity in testing is achieved when everyone scoring a test obtains the same results (Mondy
& Noe, 1990). The job candidates taking objective tests either choose the best answer or do
not. Multiple-choice questions and true-false questions are examples of objective test.

Norms
A norm provides a frame of reference for comparing an applicant's performance with that of
others (Mondy & Noe, 1990). It indicates the distribution of many scores obtained by people
similar to the applicant being tested.

Reliability
The term reliability refers to the extent to which a test provides dependable or consistent
results. Reliability data reveal the degree of confidence that can be placed in a test. If a test
has low reliability, its validity as a predictor will also be low. But the existence of reliability
does not in itself guarantee validity (Mondy & Noe, 1990).

Validity
In personnel measurement, the term validity refers to how well a test measures what it is
supposed to measure. In other words, validity means that test scores relate significantly to job
performance or to another job-relevant criterion (Werther & Davis, 1996) if a selection test
cannot be used to assess a candidate's suitability for employment; it has no value as a predictor.
Hence, validity should be a concern of organizations that use tests as one of the selection tool.

Selection Interview
Interview is a formal conversation conducted to assess the suitability of candidate for a
particular job. According to Werther and Davis (1996), the interviewer seeks to answer three
broad questions. These are:-

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- Can the applicant do the job?

- Will the applicant do the job?
- How does the applicant compare with others who are being considered for the job?

Interviews are the most common selection technique. They can be used to evaluate candidate
acceptability for all types of employment in an organization. Moreover, selection interviews
allow two-way face-to-face communication in which organizations not only obtain additional
information from the candidates but also provide information concerning the organization.
The selection interview is especially significant because the applicants who reach this stage are
the most promising candidates (Mondy & Noe, 1990). They have successfully passed the
preliminary screening and obtained good results on selection tests. Hence, the candidates seem
to be qualified for the jobs in question. The specific content to be used in selection interviews
varies from organization to organization and the level of the job. However, the following
general topics (Mondy & Noe, 1990) appeal consistently in interviews:
 Academic Achievement. The interviewer needs to try to discover any underlying factors
related to academic performance.
 Personal Qualities. Personal qualities normally observed during the interview include
physical appearance, speaking ability and assertiveness.
 Occupational Experience. Exploring an individual's experience requires finding out
about the applicant's skills, abilities, and willingness to handle responsibility.
 Interpersonal Competence. The interviewer should ask questions regarding the
applicant's interpersonal relationships with family and friends and how he/ she behaves
in other social and civil situations.
 Career Orientation. Questions about a candidate's career objectives may enable the
interviewer to determine whether the applicant's aspirations are realistic.
Types of Interviews
Interviews have to be appropriate for the job and the candidate. They are tools used by many
organizations to predict applicant future success. Moreover, interviews solicit the following
types of information from applicants. These are:-
- ability to perform the job;
- motivation to stay on the job; and
- adaptability to the job situation

There are different interview types. Organizations may use one or more of the interview types
to select the best among applicants. In general, interview types that are used are:-
¨ Structured interview
¨ Unstructured interview
¨ Mixed interview
¨ Behavioral interviewing
¨ Stress interview

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Structured Interview
Structured or directive interview depends on a predetermined set of job-related questions. List of
questions is prepared before the interview begins and the interviewer does not allowed to deviate
from it. In this type of interview, interviewers should follow a structured, systematic interview
procedure in order to obtain the information necessary to evaluate the candidate fairly and
objectively (Mondy & Noe, 1990). The interviewers use a standardized evaluation form to note
the candidate's responses to the questions. A structured job interview typically contains four
types of questions (Mondy & Noe, 1990). These are:
- Situational questions pose a hypothetical job situation to determine what the applicant
would do in that situation.
- Job knowledge questions probe the applicant's job-related knowledge. These questions
may relate to basic educational skills or complex scientific or managerial skills.
- Job-sample simulation questions involve situations in which an applicant may be
required to actually perform a sample task from the job.
- Worker requirement questions seek to determine the applicant's willingness to confirm to
the job requirements. For example, the applicant's willingness to work in the rural part of
the country.

The problem with the structured interviews is that it is very restrictive. The information obtained
is confined within certain parameters only and the interviewer has no chance of displaying either
his own talents or skills nor adapt to the individual candidate (Chatterjee, 1995). The rigid
format is equally constraining to the candidate, who is not in a position to elaborate or qualify on
answer to the questions.

Unstructured Interview
The unstructured interview consists of open-ended questions such as:
- What do you believe are your primary strengths and main weaknesses?
- How will our organization benefit by having you as an employee?
In this type of interview, the interviewer can prepare questions while the interview is in progress.
The overriding advantage of the unstructured type is the freedom it allows the interviewer to
adapt to the situation and to the changing stream of applicants (Glueck, 1978). Unfortunately,
this method, which also is called non-directive interviewing, lacks the reliability of structured
interview because each applicant is asked a different series of questions. Even worse, this
approach may overlook key areas of the applicant's skills or background (Werther & Davis,
1996).

Mixed Interview
This is an interviewing method in which the interviewers use harmonious combination of
structured and unsaturated set of questions. According to Werther and Davis (1996), the
structured questions provide a base of information that allows comparisons between candidates;
the unstructured questions make the interview more conversational and permit greater insights
into the unique differences between applicants.

Behavioral Interviewing

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Behavioral interviewing focuses on problem or a hypothetical situation that the applicant is

asked to solve (Werther & Davis, 1996). In this type of interviewing, questions are limited to
hypothetical situations and the candidate is asked what should be done. The purpose is to
understand the candidate's analytic abilities and reasoning. Here not only the candidate's answer
but his/her approach is also evaluated. The interview might consist of situations similar to the
following:
Suppose you had to decide between candidates for a promotion. Candidate A is loyal,
cooperative, punctual, and hardworking. Candidate B is a complainer and is tardy and
discourteous but is the best producer in your department. Whom would you recommend for
promotion to supervisor? Why? (Werther & Davis, 1996).

Stress Interview
The idea of using this type of interviewing is to understand the candidate's ability to cope with
stress on the job. Chatterjee (1995) noted that stress interview is a deliberate attempt to create
tension and pressure in an applicant to see how well he/ she responds to these tensions and
pressures. For example, candidates for police duty are selected using a stress interview in
connection with other relevant interview formats.
The major purpose of interviewing is to increase the effectiveness of selection by:
- Identifying the basic qualities necessary for success on the job and using those qualities
to evaluate candidates.
- Standardizing the interview method, and
- Training interviewers to gather, interpret, and relate data to qualities of success on the job
(Scarpello & Ledvinka, 1988).

Interview needs to identify the application and job description. Moreover, the entire nature of
interview is directly related to the job. The following summary indicates the type of interviews
(Werther & Davis 1996) discussed earlier.

References and Background Checks

Is the applicant a good, reliable worker? Are the job accomplishments, titles, educational
background, and other facts on the resume' or application true? What type of person is the
applicant? Most important, what information is relevant to matching the applicant and the job?
(Werther & Davis 1996).

In order to provide answer to these questions, organizations use references and background
investigation. Checking references and investigating the candidate's background history are
important tools that enable organizations to determine whether past work experience is related to
qualification required for the new job. Moreover, candidates may also be required to submit
recommendation letters. The letters reveal past behavior, the candidate's job interest, relation
with immediate boss and co-workers, and reason for termination. According to Glueck (1978),
for a letter of recommendation to be useful, it must meet certain conditions:
- The writer must have know the applicant's performance level and be competent to
assess it.
- The writer must communicate the evaluation effectively to the potential employer.
- The writer must be truthful.

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Another major reason for conducting references and background checks is to verify candidate's
credential. It is important to bear in mind that some people are not what they present themselves
to be and not even whom they say they are. Background checks can confirm or disprove claims
made by job applicants (Mondy & Noe,1990).

INTERVIEW TYPES OF QUESTIONS USEFUL

FORMAT APPLICATION
UNSTRUCTURE Few if any planned Useful when trying
D questions. Questions are to help interviewees
made up during the solve personal
interview. problems or
understand why they
are not right for a
job.
A predetermined
STRUCTURED checklist of questions, Useful for valid
usually asked of all results, especially
applicants. when dealing with
large numbers of
applicants.
MIXED A combination of
structured and Realistic approach
unstructured questions that yields
that resemble what is comparable answers
usually done in practice. plus in-depth
insights.
BEHAVIORAL Questions limited to
hypothetical situations. Useful to understand
Evaluation is one the applicant's reasoning
solution and the and analytic abilities
approach of the applicant under modest stress.

STRESS A series of harsh, rapid- Useful for stressful

fire questions intended to jobs, such as
upset the applicant. handling complaints.

Different question formats in Interview

Hiring Decision
After obtaining and evaluating information about the finalists, the manager must take the most
critical step of all: making the actual hiring decision (Mondy & Noe, 1990). Manager's decision
to select those individuals best suited for employment must be based on reliable and valid
information. Moreover, since the success of any organization largely depends on employee
performance, the manager before making the final employment decision must:
- be familiar the job requirements.

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- organize a forum with the selection committee or human resource department, whereby
the entire selection process is reviewed.
- be convinced that rational decision is made at every stage of the selection process.
- obtain information from the immediate supervisor of the new employee concerning the
match between their qualifications and the requirements of the new vacant position.
Among the candidates decided to be hired, some of them may not accept the job offer or may
even fail the physical examination, it is, therefore, important to keep a waiting list. This, among
other things, enables the organization to fill the vacancy immediately rather than starting the
recruitment process, and it also avoids additional cost of recruitment and selection.

Medical Examination
After the hiring secession has been made, the next process of selection involves a medical
examination for the successful candidate. In most cases, a job offer is conditional upon
presentation of a medical certificate that testifies the applicant is both mentally and physically
capable of performing the job in question. If there is no disqualifying medical problems during
the examination, the candidate can now be employed and be given a letter of employment.
Environmental Factors Affecting the Selection Process
The following environmental factors (Mondy & Noe, 1990) can affect the selection process.

Legal Considerations
Legislation, executive orders and court decisions have had a major impact on selection.

Speed of Decision Making

The time available to make the selection decision can have a major effect on selection process.
An organization may only conduct an interview to fill a vacant position if a certain department
can not operate unless that particular position is immediately filled. On the other hand, speed
may not be crucial to select a deputy dean of a college. Here a careful attention need to be
devoted to study the application, intensive reference and background checking and time for the
interview.

Organizational Hierarchy
Different techniques to selection are required for filling job openings at different levels in the
organization. For instance, consider the variations in hiring a Head of Finance and
Administration Department and in hiring a person to fill a secretarial position. Extensive
reference and background checks and in-depth interviewing needs to be carried out to verify the
character and capabilities of the applicant for a high-level position. However, an applicant for a
secretarial position would most likely take only a word processing test and perhaps have a short
selection interview.

Application Pool
The number of available people to be recruited from the labour market for a particular job can
affect the selection process. If there are many candidates as compared to the number of people to
be hired, the selection process can be complicated and takes a long period of time. On the
contrary, if there is only two candidates for one vacant position, the selected process is relatively
easy and it also takes a short duration. This can best be illustrated using selection ratio (Werther
& Davis, 1996):

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Number  of  applicants  hired

Selectionratio =
Total number of  applicants
Thus, if the selection ratio is 1:40, the selection process is detailed and high. High selection
ratio, among other things, implies that either the job is attractive or the inability of the labour
market to match would-be-employees to jobs. On the other hand, if the selection ratio is 1:3, the
selection process is short and unsophisticated. A low selection ratio means that there are few
applicants from which to select. In many instances a low selection ratio also means a low quality
of recruits (Werther & Davis, 1996).

Type of Organization
The public, private or not-for-profit sectors of the economy for which people are to be hired can
also affect the selection process. A government in the public sector is heavily service oriented.
Civil servants are hired with regard to how they can help accomplish service goals. In business
organizations selection process largely depends on how employees are able and motivated in
achieving the organization's profit objectives. On the other hand, not-for-profit organizations in
most cases provide free services to the community. Their salary schemes may not be attractive
as compared with business and public sectors. Therefore, a person who is going to apply in these
organizations must be dedicated to their objectives.

Probationary Period
Many organizations use a probationary period to check the employee's ability and motivation to
work. This may be either a substitute for or a supplement to, the use of interview and/or tests. If
an individual is found to be productive during the probation period, the management will
confirm for the permanent.
Orientation
Once suitable applicants have been selected to join the organization, it is desirable to integrate
them into the organization and the job to which they are responsible. Helping new employees fit
in, i.e. designing orientation program is one of the functions of human resource department.
Orientation, therefore, is a formal program of indoctrination to introduce new employees to their
job responsibilities, organizational policies, co-workers, and work environment (Holt, 1993).
The orientation program is composed of two elements. The first involves general topics of
interest to most employees which includes organizational issues and employee benefits, and job-
related issues of concern only to specific jobholders. "Organizational issues" like history of the
organization, names and titles of key executives, organization policies and rules, and "employee
benefits" like salary scales, training and education benefits, retirement, vacations and other
similar fringe benefits are explained by the human resource department. On the other hand, the
employee's immediate boss presents job-related matters such as the job and its objectives, tasks,
safety requirements, and the like.

Purposes of Orientation
Orientation serves a number of purposes if effectively done. In general, the orientation process
is similar to what sociologists call socialization (Glueck, 1978). The major purposes of
orientation (Holt, 1993) are as follows:

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¨ It develops realistic job expectation.

¨ It impervious productivity
¨ It saves time and effort
¨ It improves employment stability
¨ It reduces conflict

Performance Appraisal
What is performance appraisal?
Performance appraisal is a formal system of periodic review and evaluation of an individuals
job performance (Mondy & Noe, 1990). It occurs constantly in both public and private
organizations. 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
programmes, and other related activities.

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

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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.
- 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 (Werther & Davis, 1996).

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:

Establish Communic Measure Compare Discuss

Performa ate Actual Performa Apprais Initiate
nce Standards Performa nce with al with Correcti
Standard to nce Standard Employ ve
1. Employees Establishing Performance ees Action
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 (Baird, et.al,
1990). 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 employees performance is
measured.

2. Communicating Standards to Employees

For the appraisal system to attain its purposes, the employees must understand the criteria against
which their performance is measured. As Werther and Davis (1996), stated to hold employees
accountable, a written record of the standards should exist and employees should be advised of
those standards before the evaluation occurs. Providing the opportunity for employees to clearly
understand the performance standards will enhance their motivation and commitment towards
their jobs.

3. 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.

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4. 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.

5. 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 enhance employee
motivation, commitments towards their jobs, and support of the evaluation feedback. In other
words, employees must understand it, must feel it is fair, and must be work oriented enough to
care about the results (Glueck, 1978). After the evaluation, the rater must describe work-related
progress in a manner that is mutually understandable. According to Baird et.al. (1990), feedback
is the foundation upon which learning and job improvement are based in an organization. The
rater must provide appraisal feedback on the results that the employee achieved that meet or
exceed performance expectations. As Glueck (1978) noted, reaction to positive and negative
feedback varied depending on a series of variables such as:
- the importance of the task and the motivation to perform it
- how highly the employee rates the evaluator
- the extent to which the employee has a positive self-image, and
- the expectancies the employee had prior to the evaluation; for example, did the employee
expect a good evaluation or a bad one?
In sum, it is important that employees should be fully aware that the ultimate purpose of
performance appraisal system is to improve employee performance, so as to enhance both
organizational goal achievement and the employee's satisfaction.

6. 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. If problems identified are insignificant, it may be wise for the management to do
nothing. On the other hand, if there are significant problems, the management must analyze and
identify the reasons why standards were not met. This would help to determine what corrective
action should be taken. For example, the cause for weak performance can range from the
employee job misplacement to poor pay. If the cause is poor pay, corrective action would mean
compensation policy reviews. If the cause is employee job misplacement, corrective action
would mean assign employee to a job related to his/her work experience and qualification.
Finally, it is also important to revise the performance standard. For example, the major duties
stated in the job description and the qualification required to do the job may not match. In this
case corrective action would mean to conduct job analysis to effectively determine the job
description and job specification. Hence, the evaluator would have a proper guide i.e.,
performance standards that make explicit the quality and/or quantity of performance expected in
basic tasks indicated in the job description (Chatterjee, 1995).

Responsibility for Appraisal

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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 (Chatterjee,1995).
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 (Mondy & Noe,
1990).

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 (Mondy
& Noe, 1990). Since there is a tendency of over-exaggerating work 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 (Mondy & Noe, 1990). For example, if an individual
regularly works with the administrative and financial managers, these two managers might
jointly make the evaluation.

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Combinations
The combination of the above appraisal approaches can provide greater insight into and
employee's job performance. The section head's employee appraisal can be supplemented by
peer and by the head of the department. For example, in order to minimize subjectivity,
Regional Presidents' maybe rated by Bureau Heads, Woreda and Zone Administrators, and
people in the regions.

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 (Mondy & Noe, 1990). The method requires the evaluator to record
his/her subjective assessment of the employee's 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.

Employee's Name____________________ Department_____________

Rater's Name_______________________ Date _________________

Excellent Good Acceptable Fair Poor

5 4 3 2 1
1. Dependability _____ ____ _____ _____ ____
2. Initiative _____ ____ _____ _____ ____
3. Quality of work _____ ____ _____ _____ ____
4. Attendance _____ ____ _____ _____ ____
5. Attitude _____ ____ _____ _____ ____

6. Cooperation _____ ____ _____ _____ ____

.. . . . . .
.. . . . . .
.. . . . . .

20. Overall output

Results _____ ____ _____ _____ ____
Totals _____ + ____ + _____ + _____ + ____ = ____
Total Score
A Sample Rating Scale for Performance Evaluation

Critical Incident

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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. It is called a critical
incident (Mondy & Noe, 1990). 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 alongwith
other data to assess employee job performance.

Essay
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 (Chatterjee, 1975).

Ranking
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
The work standards method compares each employee's performance to a predetermined standard
or expected level of output (Mondy & Noe, 1990). 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.

Management By Objectives (MBO)

For organization to be effective, employees must clearly understand the objective of his/her
organization. Management must provide opportunities for every employee to make contribution
in the attainment of objectives. This is possible through a system of establishing objectives
known as management by objectives (MBO). MBO, therefore, is defined as follows:
A process whereby the superior and subordinate managers of an organization jointly identify
its common goals, define each individual's major areas of responsibility in terms of the
results expected of him, and use these measures as guides for operating the unit and
assessing the contributions of each of its members (Baird & et.al., 1990).

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 of objectives. If objectives are
achieved, the employees are assessed to be a success. MBO is conducive to elicit employee
involvement and commitment (Agarwal, 1997).
According to Beach (1980), the major features of MBO are as follows:
1. Superior and subordinate get together and jointly agree upon and list the principal duties
and areas of responsibility of the individual's job.
2. The person sets his own short-term performance goals or targets in cooperation with his
superior. The superior guides the goal-setting process to insure that it relates to the
realities and needs of the organization.
3. They agree upon criteria for measuring and evaluating performance.

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4. From time to time, more often than once per year, the superior and subordinate get
together to evaluate progress toward the agreed-upon goals. At these meetings, new or
modified goals are set for the ensuring period.
5. The superior plays a supportive role. He tries, on day-to-day basis, to help the man reach
the agreed-upon goads. He counsels and coaches.
6. In the appraisal process the superior plays less the role of a judge and more the role of
one who helps the person attain the goals or targets.
7. The process focuses upon results accomplished and not upon personal traits.

Employee Placement and Termination

Placement
Staffing needs of an organization are met when new employees are hired from outside and a
reassignment of current employees due to promotion or transfer. Placement refers to the
assignment or reassignment of an employee to a new job. To attain organizational objectives,
organizations must harness the efforts of its employees. To this effect, employees must be
placed in a position related to their academic qualifications and/or work experiences. Employee
placement is mainly decided jointly by both the employee's immediate supervisor and the top
management. In this case, the human resource department should provide advice and counseling
services regarding employee assignment or reassignment.

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 (Werther & Davis, 1996). It is mechanism in
which organization recognizes employee's past job performance and its effort to aid the
organization in furthering its objectives. Promotions usually are based on merit and/or Seniority.

Transfers and Demotions

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 (Holt, 1993 ).
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.

Termination
Termination is a permanent separation of an employee from an organization. It may occur when
employees are fired, laid off, resign, retire or die. The are many reasons for employee
terminations. Some of the major ones are:

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- Some employees may find a position in an other organization that best suit their personal
behavior.
- Some employees may simply want a change
- Some employee may separate from the organization for economic reasons.

Terminations may even be beneficial to employees, since retirement benefits are provided for
those who have served a long period of time in an organization. Retirement occurs when an
employee stops regular work in an organization. The retired employee may shift to another work
that best suit his capability.

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Review and Discussion Questions

1. Define the following terms:

- staffing
- recruitment
- selection
- job posting
- selection ratio
2. What background information should an organization have before starting to recruit job
seekers?
3. Describe the basic components of:
- recruitment process
- selection process
4. What is internal recruitment? Describe its advantages and disadvantages.
5. Describe the various methods used in:
- internal recruitment
- external recruitment
6. Identify the major sources for external recruitment's and discuss the reasons for external
recruitment.
7. In small administrative zones, administrators usually handle their own recruiting. What
techniques would you as an administrator use for the following conditions? Why?
- The regular secretary is going on annual leave for twenty-six days.
- The head of finance is setiring and must be replaced with qualified individual.
- The cashier has the flu.
- Two more tax collectors are required: one to help the tax collector in the zone and one to
open a tax office in another district within the zone.
8. List and discuss the various human resource management activities that may affect selection.
9. What is selection test? Identify and discuses the major types of tests.
10. Identify the characteristics of selection tests. Briefly explain each.
11. What is a selection interview? What are the major things an interviewer needs to identify
during the interview?
12. Describe the types of interview commonly used in the selection.
13. What is main purpose of references and background checks?
14. Explain orientation. Why is orientation programme necessary?
15. Briefly describe the purposes of performance appraisal. Discuss the steps in the performance
appraisal process.
16. Identify the major methods of performance appraisal. Briefly describe who should conduct
performance appraisal.
17. Discuss
- Placement
- Promotion
- Transfer
- Demotion
- Termination
- Retirement

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References:
1. Scarpello, Vida G. and Ledvinka, James, Personnel/Human Resource Management,
(Boston: PWS-Kent Publishing Company, 1988).
2. Mondy, R. Wayne and Noe, Robert M., Human Resource Management, (Massachusetts:
Simon & Schuster, Inc., 1981).
3. Werther, William B. and Davis, Keith, Human Resources and Personnel Management,
(New York: McGraw Hill Inc., 1996).
4. Howe, Sally, Essential Elements of Human Resource Management (London: Guernsey
Press Co. Ltd., 1995).
5. Chatterjee, Bhaskar, Human Resource Management, (New Delhi: Sterling Publishers
Private Limited Inc., 1990).
6. Glneck, William F., Personnel: A Diagnostic Approach, (Texas: Business Publications Inc.,
1978).
7. Hold, Davis H., Management: Concepts and Practices (New Jersey: Prentice Hall,
Englewood Clifts, 1993).
8. Baird, Lioyd S., et.al., Management: Functions and Responsibilities, (New York: Harper &
Row Publishers Inc., 1990).
9. Beach, Dale, Personnel: The Management of People at Work (New York: Macmillan
Publishing Co. Inc., 1980).

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Chapter 5
HUMAN RESOURCE DEVELOPMENT

Objectives:
After studying this chapter, you would be able to:
1. Distinguish among training, education, and development programs.
2. List the main purposes of training and development.
3. Explain employee training and management development process.
4. Discuss the reasons why human resource experts include need assessment in the design of
training and development programs.
5. Describe the various instructional methods and media and understand the role learning
principles play in training and development.
6. Justify management motives for evaluating training and development programs.
7. Identify the types of training and development program.
8. Define career development and understand its importance.

HUMAN RESOURCE DEVELOPMENT

What is human resource development?
Human Resource Development (HRD) is planned, continuous effort by management to improve
employee competency levels and organizational performance through training, education, and
development programs (Mondy & Noe, 1990). Training program is directed toward helping
employees effectively perform their jobs after training, while developmental program helps the
individual handle future responsibilities, with little concern for current job duties (Werther &
Davis, 1996). It is a program focused on leadership competency and organizational issues.
Education, on the other hand, is learning experiences that improve overall competence in a
specific direction (Scarpello & Ledvinka, 1988). The term education mainly is associated with
university or college programs in a particular field of study. Either in public or private
organizations "non managers are much more likely to be trained in the technical skills required
for their current jobs, whereas managers frequently receive assistance in developing the skills
required in future jobs-particularly conceptual and human relations skills" (Stoner et.al., 1996).
In the subsequent pages emphasis will be given to the discussion of employee training and
management development programs.

Why training and development?

Employee Training
Recruiting, selecting, orienting and then placing employees in jobs do not ensure success. In
most cases, there may be gap between employee knowledge and skill and what the job demand.
The gap must be filled through training programs. Hence, personnel training and retraining is
one of the major way that work organizations attempt to maintain the competency levels of their
human resources and increase their adaptability to changing organizational demands (Scarpello
& Ledvinka, 1988).
Training can bring tangible benefits to both the organization and the employees. Hence, the
major purposes of training (Chatterjee, 1995) are:

¨ It establishes a sound relationship between the worker and his/her job-

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the optimum man-task relationship.

¨ It upgrades skills and prevents obsolescence.
To keep pace with changing technology training becomes mandatory for employees in order
to update them, teach them newer skills and increase their efficiency.
¨ It develops healthy, constructive attitudes.
Training programs are aimed at mounding employee attitudes to achieve support for
organizational activities and to obtain better cooperation and greater loyalty.
¨ It prepares employees for future assignments.
One of the objectives of training is to provide an employee an opportunity to climb up the
promotional ladder or to move on to assignments which will help upward mobility.
¨ It increases productivity.
The most efficient and cost-effective ways of performing jobs are taught to the employees
which naturally leads to enhanced productivity.
¨ It minimizes operational errors.
Unnecessary repetition, wastage and spoilage of materials are brought down; deficiencies in
methods of doing work are ironed out in training thereby also reducing the hazard of
accidents. Consequently, a safer and better work environment is created.
¨ It enhances employee confidence and morale.
With better knowledge and skills, the employee approaches his/her job with greater
confidence and sureness. It also improves the morale of the employees.
¨ It brings down employee turnover and absenteeism.
Training is a powerful tool that breeds in the employee a sense of pride as well as of
belonging. Both these contribute in a major way to checking and reducing turnover as well
as absenteeism.

Moreover, training can improve the relationship between the employees and their immediate
supervisor. It also helps in understanding and implementing organizational policies.

Management Development
Management development is designed to improve the overall effectiveness of managers in their
present positions and to prepare them for greater responsibility when they are promoted (Stoner,
et.al., 1996). In other words, Glueck (1978) defined management development as the process by
which managers gain the experience, skills, and attitudes to become or remain successful leader
in their enterprises. Among other things, making the organization a better environment to work
is the responsibility of a manager. To effectively discharge this and other managerial
responsibilities organizations must provide an opportunity for managers to improve their
knowledge and skills through management development program.
Effective management development program helps managers at all levels to learn to perform
their jobs better. Moreover, among the many good reasons for conducting development program
the following are the major ones:
¨ To stimulate a more creative and innovative approach to problem solving and decision
making and provide the manager with the latest information on theory and practice of
management.
¨ To broaden the manager's vision and understanding in preparation for additional
responsibility.

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¨ To give the managers the opportunity to discuss ideas and problems with other people. It
very often givens people the opportunity to check out their thinking with other managers
and to compare the ways in which they define and solve problems.
¨ To teach managers how to determine the consequences of various specific managerial
actions and behaviors (leadership, planning, controlling,-------).
¨ To reduce or prevent managerial obsolescence. Obsolescence can occur unless
managers are kept up with the changing methods of doing their managerial jobs. (EMI,
)

The Human Resource Development Process

In today's changing environment, employees at all levels need additional training and
opportunity to managers to develop their management thinking. In this respect, organizations are
required to be engaged in continuous employees training and management development
programs.

As shown in Figure (Mondy and Noe, 1990) below, the steps in the human resource development
process are:
1. Identifying training and development needs
2. Establishing training and development objectives.
3. Selecting training and development methods and media.
4. Implementing the actual training and development program.
5. Conducting evaluation and follow-up.

Needs Assessment

Establish Objectives

Select Methods and Media

Implement the actual program

Conduct Evaluation and Follow-up

Steps in the human resource development process (modified)

Need Assessment
The first step in human resource development process is to identify training and management
development needs. Since training and development is a need-oriented effort, determining the

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level, type and duration of the training and development is of prime importance at this stage of
the process. If human resource development need analysis is incorrect at this stage:
- then the later development activity will be inappropriate
- organization could end up in wasting time, resource and also demotivating staff.
- employees will develop negative attitudes towards future program.

The dominant framework for identifying organization's human resource development needs has
been McGehee and Thayer's three-category need analysis approach (Scarpello & Ledvinka,
1988),
1) Organizational analysis
2) Task (job) analysis
3) Person analysis

Organizational Analysis
Organizational analysis is the process of identifying job-related knowledge and skills that are
needed to support the organization's short-range and long-range goals (Scarpello & Ledvinka,
1988). This implies that organization's strategic goals and plans must carefully be examined in
line with the human resource planning.

In this approach, information related to organizational structure, size, growth, objectives and
other factors is gathered to effectively determine where and how training and development
programs should be conducted. In other words, according to Chatterjee, 1995), essentially, there
are three requirements:
1. Are there an adequate number of people to fulfill organizational objectives?
2. Are these people equipped with the necessary skills and knowledge and is the general
level of their performance up to the required standard?
3. Does the prevailing organizational climate provide a wholesome environment for the
fulfillment of tasks and objectives?
Chatterjee (1995) further pointed out the approaches that can be used to arrive at meaningful
conclusions to each of the above queries. Some of these are:
- Observing employees
- Asking supervisors about employees
- Examining the problems of employees
- Performance assessment and attitude surveys
- Assessment of the organization's public image
- Looking at rules, procedures and systems
Interpretation of the information collected from the above approaches would provide guidelines
and clues to the training need.

Task Analysis
This approach refers to the determination of skill and knowledge, the job requires. In collecting
job information as input into training decisions, however, the job analysis must include
(Scarpello & Ledvinka, 1984):
¨ A detailed examination of each task component of the job.
¨ The performance standard of the job.
¨ The method and knowledge the employee must use in performing the job task

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¨ The way employee learns the method and acquires the needed knowledge.

Thus, job analysis is a means by which facts relating to the job are obtained. It includes a job
description and a job specification. If a human resource development program mounted for a
specific job is to be successful, there is a need for a clear definition of what the job entails and of
the qualities needed for its performance. Furthermore, if information relating to the nature of a
specific job was collected prior to the organization of all development programs, then the
program would have much greater relevance to the needs of the job and would also enable to
produce staff who were much better prepared for their responsibilities.

Person Analysis
Another training and development need analysis approach is person analysis. Here the
concentration is on the individual employee. It is used to analyze the substantive knowledge and
skill possessed by the employee (Scarpello & Ledvinka, 1988). This approach deals with two
basic questions. These are:
- Who needs to be trained?
- What kind of training is needed?

Information about the person's job behavior can be obtained by:

1. Directly observing job performance
2. Reviewing supervisory evaluations of performance
3. Using diagnostic tests, such as written ability tests and work samples
4. Comparing the behaviors of well-performing employees with those of poorly performing
employees
5. Discussing with employees their individual job performance and factors that may inhibit
that performance (Bass & Vaughan, 1966):

Once actual employee's performance is identified to be below standard, the next step is to
determine the kind of training or development needed to equip the employee with specific
knowledge and skill required for better performance. Generally, training and development can
improve the individual's performance only when:
1. the employee does not have the knowledge and skill to do the job.
2. the low performance is not due to lack of practice
3. the low performance is not due to other causes (Laird, 1983).
Finally, since training and development costs money, organization must ensure maximum return
in terms of organization current and further performance.
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 programme is
intended to achieve (Scarpello & Ledvinka, 1988). 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 (Scarpello & Ledvinka, 1988).

Human resource development experts suggest that objectives should be stated explicitly and
answer the following questions (Scarpello & Ledvinka, 1988):
1. What should the trainees be able to do after training?

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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 (Werther
& Davis, 1996). Objectives with such characteristics serve a number of purposes. According to
Scarpello and Ledvinka (1988), they 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.

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
(Werther & Davis, 1996). The content, method, and media must match the job requirement of
the organization and the learning style of the participant.

Training and development are more effective when learning is based on principles. Learning
Principles are guidelines to the ways in which people learn most effectively (Werther & Davis,
1996). The learning principles and their merits are described as follows:

Participation. Learning usually is quicker and longer-lasting when the learner participates
actively. Participation improves motivation and apparently engages more senses that reinforce
the learning process. As a result of participation, people learn more quickly and retain that
learning longer. For example, most people never forget how to ride a bicycle because they
actively participated in the learning process.

Repetition. Repetition apparently etches a pattern into one's memory. Studying for an
examination, for example, involves the repetition of key ideas so that they can be recalled during
a test. Similarly, most people learn the alphabet and the multiplication tables by means of
repetition.

Relevance. Learning is helped when the material to be learned is meaningful. For example,
trainers usually explain the overall purpose of a job to trainees before explaining specific tasks.
This allows the owner to see the relevance of each task and of following the correct procedures.

Transference. The more closely the demand of the training program matches the demand of the
job, the faster a person learns to master the job. For example, pilots usually are trained in flight
simulators because the simulators very closely resemble the cockpit and flight characteristics of
the plane. The close match between the simulator and the plane allows the trainee to quickly
transfer the learning in the simulator to actual flight conditions.

Feedback. Feedback gives learners information on their progress. With feedback, motivated
learners can adjust their behavior to achieve the quickest possible learning curve; without it, they
cannot gauge their progress and may become discouraged. Test grades are feedback on the study
habits of test takers (Werther & Davis, 1996).

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In selecting instructional methods and media, trade-off exists. That is, no single method or
media is always best; the best method or media depends on (Werther & Davis, 1996):
¨ Cost-effectiveness
¨ Desired program content
¨ Learning principles
¨ Appropriateness of the facilities
¨ Trainee preferences and capabilities
¨ Trainer preferences and capabilities

The significance of the above trade-offs depends on the situation. For example, a chalk-board
lecture method may be the best technique to communicate academic content in the most cost-
effective manner in a large classroom.

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 (Campbell et. al., 1970). The three major methods that fall into this
category are (1) lecture, (2) conference, and (3) programmed instruction.

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 each other experiences and hence the learning is
confined to what the lecturer has to say (Chatterjee, 1995). This method can be backed by a
number of media such as slide, overhead projector, videotape, closed-circuit television, motion
picture, etc.

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 (Ahuja, 1988). 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 (EMI).

Programmed Instruction
Programmed instruction is a highly structured, individualized learning method that:
1) specifies what is to be learned
2) breaks down the learning topic into small step
3) requires the learner to respond to each step of the learning process

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4) tests the learner's knowledge at the completion of each learning step

5) gives the learner feedback of whether a correct or incorrect response was given
6) tests the knowledge or skill acquired at the completion of training (Campbell et.al., 1970)

This method is used to teach a variety of technical and non-technical subjects. For example it
has been used to teach managers the principles of motivation (Scarpello & Ledvinka, 1988).
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 (Scarpello & Ledvinka, 1988).

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 (Campbell et.al.,
1970). 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.

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
(Scarpello & Ledvinka, 1988). 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.

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 (Scarpello & Ledvinka, 1988). In the role
play method issue and problem that emerged during the enactment are examined, so that both the
role players and the observers understand the underlying principles that were demonstrated and
their organizational implications (Chatterjee, 1995). Moreover, the following are some of the
major advantages of role playing:
1. Practice in trying out new behaviors.
2. immediate feedback from other participants and the instructor
3. a high degree of transfer of learning to future job behavior (Scarpello & Ledvinka, 1988).

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 (Glueck, 1978).

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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"
(Glueck, 1978).

Implementing the Human Resource Development Program

Human resource development program should aim at enabling organizations to achieve their
objectives. Hence, the program should be set up after having clear-cut objectives in mind. In
every program decisions have to made as who should be trained, who are the instructors, where
and when the program is to be conducted and what are the material requirements. Moreover,
according to Chatterjee (1995), providing answers to questions like what skills are going to be
taught, what kind of employee development is sought, what long or short term objectives are
proposed will determine the design and details of the programs.

Since human resource development program decisions are based on cost considerations, the
management must believe that the program will:
- increase the skill and knowledge of employees and hence, they will perform better
towards organizational success.
- motivate employees to learn and attain their personal goals.
- provide feedback to improve the program.

Evaluation of Training and Development

Evaluation is the final phase of the training and development program. It is a means to verify the
success of the program, i.e. whether employees in the program do the jobs for which they have
been trained. As Ahuja (1988) noted, the concept of evaluation is most commonly interpreted in
determining the effectiveness of a program in relation to its objectives. Human resource
development is an investment in people. The major reason why management invest in training
and development program is to help employee to perform better in the achievement of
organizational objectives. Hence, evaluation is a means to assess the cost/benefit of the program
to the organization. However, as Milkovich and Boudreau (1991) noted, evaluation is like
brushing your teeth after every meal everyone advocates it but few actually do it. Evaluation can
be done for various purposes. It may be done:
- To increase effectiveness of the program while it is going on.
- To increase the effectiveness of the program to be held next time.
- To help participants to get feedback for their improvement and efficiency.
- To find out to what extent the objectives are achieved (Ahuja, 1988).

In evaluating the worth of specific programs, sets of measurement criteria should be identified.
These, according to writers in the area, are:
1. Reaction

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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.
2. 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.
3. 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.
4. 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 employee. The changes may be
ascertained in such terms as improvements in service delivery, productivity or reduction
in costs.
5. 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.
To measure the effect of human resource development program using the criteria mentioned
above requires to use data gathering method such as questionnaire, interview and observation.
Other measures like management audit, survey, analysis of record and performance data, expert
opinion, test and the like can be used to collect evaluation information (EMI, ).

In sum, human resource development to be useful to both the organization and the employee the
management concerned should:
- properly assess needs
- formulate clear objectives
- design program to meet the needs and to attain objectives
- conduct cost/benefit evaluation
If the training and development shaped the employees in such a way as to fit the job
requirements, then it can be concluded that organizations have achieved their objectives and in
turn they have also justified the investment made in human resource.

Type Of HRD Programs

Training Program
Training is one of the most important tools available to organizations. Management can make
use of training programs to enable the organizations achieve their objectives. This is possible by
developing the skills and competencies of their employees. There are different types of training
programs. The most common ones are briefly discussed below.

On-the-job Training

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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 (Glueck, 1978). According to Werther & Davis (1996),
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 like that of the Ethiopian
Management Institute which have been specially equipped and staffed for both managerial and
vocational training. On the other hand, Regions that wants to develop the skill of their
accountants and lawyers are sent to the Ethiopian Civil Service College (ECSC) for short-term
off-the-job training.

Vestibule Training
Vestibule training is a form of intense education held in proximity to the actual work
environment (Holt, 1933). For example, the AAUCC new instructors might move to Kotebe
College of Teachers' Education to develop their teaching methodology skills. The computer
center and the language laboratory of AAUCC can be used as vestibule center to train typists and
other administrative staff.

Management Development Programs

The realization of organizational objectives depends to a greater extent on the quality of
leadership provided by administrators/managers. To this effect, organizations need to improve
supervisory, managerial, and executive skills so that they may lead and motivate employees for
the betterment of their organizations. There are many types of development programs for
managers/administrators. The most common types are briefly discussed below.

Formal Training
Formal training courses of managers can be conducted in classroom using instructors from
within the organization or by experts from other institutions. The classroom instruction may be
coupled with field assignments. Subjects that are going to be covered may include decision-
making, financial management, setting objectives and priorities, motivation techniques,
performance appraisal, communication, holding meetings and other managerial topics. Field
assignments may consists of controlled exercises in simulated situations or actual work with
colleagues who act as coaches, often called monitoring (Holt, 1993).

Off-the-job Formal Training

In this program, managers/administrators are removed from their work situation for concentrated
programs. With a view to increase the capacities of their leaders, organizations send them to
colleges or universities or get them enrolled in seminars, workshops, conferences and other

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programs conducted by training institutions. The Ethiopian Management Institute is a

professional organization serving many organizations with development courses and seminars.

Job Rotation
This involves rotating trainees for one job to other related jobs to broaden their managerial
experience. Besides, giving an opportunity to acquire new managerial skills, rotation enables the
organization when resignation, retirement, death, transfer or vacation occur. Advocates of job
rotation assets that this approach:
- broadens the manager's back ground,
- accelerates the promotion of highly competent individuals,
- introduces more new ideas into the organization, and
- increases the effectiveness of the organization (Glueck, 1978).

Development Position
In this management development program, organization assigns less experienced administrator
to work temporarily as an assistant to more experienced administrator. This learning program
involves the implication that experienced administrator will create a condition whereby the
assistant acquire knowledge and skill needed for effective performance of the world of
managing. It is also a means through which organizations develop employees' managerial skills
to provide a pool of competent administrators to meet future needs.

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 personnel 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 (Glueck, 1978).

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 enable 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:
The principal aim of career development programs has been to help employees analyze
their abilities and interests to better match personnel needs for growth and
development with the needs of the organization. In addition, career development is a

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critical tool through which management can increase productivity, improve employee
attitudes toward work, and develop greater worker satisfaction.

When organization encourage career planning, employees will try to identify their career
objectives and determine what they need to do to achieve them. Hence, the career objectives
may motivate employee to pursue further education, training and development activities. This,
in turn, will provide the organization internal pool of qualified personnel for promotion.

From employees stand point, organization should be fair in matching its aspirations and abilities
with its needs. What other things do employees want? According to Werther & Davis (1996), a
study of one group of employees revealed the following factors:
- Career equity
Employees want equity in promotion system with respect to opportunities for career
advancement.
- Supervisory concern
Employees want their supervisors to play an active role in career development and
provide timely feedback on performance.
- Awareness of opportunities
Employees want knowledge of opportunities for career advancement.
- Employment interest
Employees need different amounts of information and have different degrees of interest
in career advancement, depending on a variety of factors.
- Career Satisfaction
Employees, depending on their age and occupation, have different levels of career
satisfaction.

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. (Werther & Davis, 1996)

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Review and Discussion Questions:

1. Define
 education
 employee training
 management development
2. Distinguish between training and development and give examples of each.
3. What are the major purposes of training and development?
4. Identify and describe the three ways of conducting human resource development need
analysis.
5. Name the learning principles and describe the advantage of each principle.
6. What is the difference between simulation and information presentation methods?
7. Describe the major conditions that management needs to consider in the implementation
of human resource development programs.
8. What methods are used in management development?
9. Discuss the measurement criteria used in evaluating training and development programs
effectiveness.
10. Distinguish between on-the-job training and off-the-job training.
11. Briefly discuss the various types management development program.
12. What are the general purposes of job rotation?
13. What is career development?
14. Why is career development program necessary in an organization?
15. Discuss the reasons as why management consider training and development as a strategic
investment.

References:
1. Mondy, R. Wayne & Noe, Robert M., Human Resource Management, (Massachusetts:
Simon & Schuster, Inc., 1990).
2. Werther, William B. and Davis, Keith, Human Resources and Personnel Management,
(New York: McGraw-Hill Inc., 1996).
3. Scarpello, Vida G. and Ledvinka, James, Personnel/Human Resource management,
(Boston: PWS - Kent Publishing company, 1988).
4. Stoner, James A. F., et. al., Management, (New Delhi: Prentice-Hall of India Private
Limited, 1996).
5. Chatterjee, Bhaskar, Human Resource Management, (New Delhi: Sterling Publishers
Private Ltd., Inc., 1990).
6. Glueck, William F., Personnel: A Diagnostic Approach, (Texas: Business Publications
Inc., 1978).
7. EMI (Ethiopian Management Institute), Training and Development (unpublished training
material), Addis Ababa: ( )
8. Bass, Bernard M., and Vaughan, James A. Training in Industry: The Management of
Learning, (Belmont, California: Wadsworth, 1966).
9. Laird, Dugnan, Approaches to Training and Development (Mass.: Addison - Wesley,
1983).
10. Campbell, John P., et. al., Managerial Behavior, Performance, and Effectiveness (New
York: McGraw Hill, 1970).
11. Ahuja, K. K., Personnel Management, (New Delhi: Kalyani Pub., 1998).

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12. Milkovich, George T. & Boudrean, John W., Human Resource Management, (USA:
Richard D. Irwing, Inc., 1991).
13. Holt, Davis H., Management: Concepts and Practices, (Eagle Wood Cliffs, New Jersey:
Prentice Hall, 1993).
14. Casio, Wayne R., Applied Psychology in Personnel Management, (Reston, va.: Reston
Publishing, 1978).

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Chapter 6
COMPENSATION AND BENEFIT ADMINISTRATION

Compensation
Employees are the backbone of the organization. The attainment of organizational objectives
largely depends when employees are motivated to work. Among other things, employees are
motivated to work when they are provided a fair financial and non-financial compensation for
work rendered to the organization. What, then, is compensation? What is its significance?

Compensation is reward employees receive in exchange for their performance. It is concerned

with wages and salaries, pay raises, and similar monetary exchange for employees’ performance
(Holt, 1993). Well-designed pay or compensation system enables the organization:
- To attract qualified employees required
- To retain and motivate the existing workforce toward its goal achievement.
On the contrary, if compensation is not tied to work, employees are likely to look for a better
paying job. Moreover, other implications of pay dissatisfaction are illustrated in the figure
(Werther & Davis, 1996) below.
A Model of the Consequences of Pay Dissatisfaction

Performance

Desire for
more pay Strikes

Grievances
Absenteeism

Search for a
higher-paying job Turnover

Psychological
Pay Lower withdrawal
Dissatisfaction attractiveness
of the job
Job Dispensary
Dissatisfaction visits

Absenteeism Poor mental

health

As can be seen from the above figure, in organization where employees are dissatisfied with the
types of compensations, their contribution toward goal achievement tend to be lower. In severe

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cases, pay dissatisfaction may lower performance, cause strikes increase grievances, and lead
to forms of physical or psychological withdrawal ranging from absenteeism and turnover to
increased visits to the dispensary and poor mental health (Werther and Davis 1996).

Objectives of Compensation
The objective of a compensation administration is to establish fair and equitable rewards to the
employees, so that they are motivated to do the job in a better way for the organization.
Moreover, Werther and Davis (1996) listed the following objectives, which are sought through
effective compensation management.
- Acquire qualified personnel
Compensation needs to be high enough to attract applicants. Pay levels must respond to
the supply and demand of workers in the labour market since organizations compete for
employees.
- Retain current employees
Employees may quit when compensation levels are not competitive, resulting in higher
turnover.
- Ensure equity
Compensation management strives for internal and external equity. Internal equity
requires that pay be related to the relative worth of a job so those similar jobs get similar
pay. External equity means paying employees what comparable employees are paid by
other organizations in the labour market.
- Reward desired behavior
Pay should reinforce desired behaviors and act as an incentive for that behavior to occur
in the future. Effective compensation plans reward performance, loyalty, experience,
responsibility, and other related behaviors.
- Control costs
A rational compensation system helps the organization obtain and retain employees at a
reasonable cost. Without effective compensation management, employees could be
overpaid or underpaid.
- Comply with legal regulations
A sound wage and salary system considers the legal challenges imposed by the
government and ensures the employer's compliance.
- Facilitate understanding
Human resource specialists, operating managers and employees should easily understand
the compensation management system.

Further administrative efficiency

Wage and salary programmes should be designed to be managed efficiently, making
optimal use of the organization’s human resource.

Types of Compensation
In general, there are two types of compensation. These are:
1. Financial
2. Non financial

Financial Compensation

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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 (Mondy & Noe, 1990). Genet, an employee of the Ethiopian Civil
Service College, for example, will receive indirect financial compensation because her college
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) (Baird, et, al, 1990). It is a
payment to manual workers. Salaries are money paid on monthly or annual basis to employees
whose output can not 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
(Armstrong, 1996).
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.

Compensation

Financial Non financial

Direct Indirect The Job Job Environment

Wages Insurance Plans: Interesting Duties Sound Policies
Salaries Life, Health, Challenge Competent Supervision
Commissions Social Assistance Responsibility Congenial Co-Workers
Bonus Benefits: Opportunity Appropriate Status
Retirement For Recognition Symbols
Educational
Assistant, Feeling of Comfortable Working
Employee Services Achievement Conditions
Paid Absences:
Vacations, Holidays Advancement Job Sharing
Sick Leave, etc. Opportunities

Components of Compensation
Source: Mondy & Noe, 1990

Determinants of Financial Compensation

Financial compensation system is influenced by a series of internal and external factors. As
Monday & Noe (1990) pointed out the organization, the labour market, the job and the

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employee have an impact on the job pricing and the ultimate determination of employee’s
financial compensation. The major parties and issues of concern are shown in the figure
(Scarpello and Ledvinka, 1988) below.

PARTIES MAIN ISSUES OF CONCERN

Government Ensure that financial compensation
supports the social and economic interests
of the broader society.
Occupational groups Protect members’ human capital
investment
Unions Protect, maintain, and increase the welfare
of the worker.
Individual Ensure that a balance is maintained
between contributions to work and the
outcomes received from work.
Organization Within budget constraints, attract
individuals into the organization, retain
employees, and motivate behavior toward
achievement of organizational goals.
Organizational Interest in Compensation
Why are organizations interested in compensation? Organizations view compensation mainly as
a means:
- To attract qualified candidates for vacant positions
- To retain competent and dedicated employees
- To facilitate performance
- To comply with government employment policies.
Moreover, compensation is an expense in the sense that it reflects the cost of labour (Mondey &
Noe, 1990). Organization often has compensation policies. As organizations differ in size and
purpose, so do in pay levels. According to Glueck (1978) there are three alternative strategies,
this might be chosen by organizations. These are high, low, and comparable.
The high-pay-level strategy
In this strategy, the organization chooses to pay higher than the average pay levels. The
assumption is that paying a higher salary or wage will enable organizations attract and retain
competent employees and this, in turn enhance employees' productivity.
The low-pay-level strategy
In this alternative, the organizations pay a minimum salary or wage to employees. This may
be because of poor financial condition or the work does not require highly qualified
personnel. The low compensation policy does not save money; rather it is quite expensive.
In addition to being unproductive, low paid workers usually damage their work instruments
because of insufficient knowledge and skill. On the other hand, organizations using low pay
strategy may also have a high labour turnover rate.
The comparable-pay-level strategy
This strategy requires organizations to follow “equal pay for equal work”. Here employees
are paid based on comparable value of jobs they are performing.

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The choice of any of the above pay-level strategies may be affected by factor internal or external
to the organization. The following are some of the major factors that affect compensation
decision.
- Quality and quantity of needed skill
- The organization’s current financial position and financial prospects for the coming year.
- Cost of living index
- Employees behavior, such as performance, turnover, absenteeism, unionization attempts,
and sabotage (Scarpello & Ledvinka, 1988).

Furthermore, the profit levels of an organization can also affect employees’ salaries or wages.
This being the case, who is a pay policy-decision maker? In most organizations, the top-level
management makes pay decisions by considering the above factors.

Labour Markets Influence On Compensation

The number and types of employees indicated in the organization’s human resource planning are
mainly drawn from the labour market. Since the market directly affects the pay-levels, analysis
of the demand for and supply of labour is imperative. The demand for human resources largely
depends on organization's ability to pay. On the other hand, the supply focuses on the number
of persons of work age; the attractiveness of the job in pay, benefits, and psychological
rewards; the availability of training institutions, and so on (Glueck, 1978). When the supply of
employees exceed the demand, the initial pay-levels tend to go down. On the contrary, when the
demand for employees exceed the supply, the initial pay-levels tend to go up.

Job Influence on Compensation

Organizations appear to attribute similar values for similar jobs and different values to different
jobs. In other words, jobs employees are assigned to perform are a major decisive factor of the
amount of pay they will in turn receive. Organizations pay for the value they attach to certain
duties, responsibilities, and other job-related factors (Mondy & Noe, 1990). If this is the case,
the question of what are the techniques used to determine the value of jobs is an important one
that requires an answer. Compensation techniques used by organizations for determining the
relative value of jobs are job analysis and job evaluation.

Job Analysis
If compensation policy is to be based on the nature of job, a job analysis activity must be
conducted to identify the similarities and differences among the various jobs in the organization.
As we discussed earlier, job analysis is a systematic process of determining the skill and
knowledge required for performing jobs. It reveals the major tasks, duties and responsibilities,
the relationship of a job to other jobs, the skill and knowledge required for each job, the
outcomes that are expected and working conditions. The basic premise underlying job analysis
is that jobs are more likely to be described, differentiated, and evaluated consistently if accurate
information is available to reward managers (Bratton & Gold, 1995).

As can be seen in the figure next page, to develop job descriptions, job specifications, and job
standards, information relevant to the jobs to be analyzed must be collected through
questionnaires, interviews, operation, and other related methods of data collection.

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PREPARATION FOR JOB ANALYSIS

COLLECTION JOB ANALYSIS DATA

Job Questionnaire Data

Identification development collection

APPLICATION OF JOB ANALYSIS INFORMATION

Job Job Job

Description Specification Standards

The process of analysis. Source: Bratton & Gold; 1995

What are job description, specification and standard? If we recall, job description is written
document that describes the duties and responsibilities of a specified job. Job specification is a
statement that explains the skill, knowledge, and experience needed to perform the job. Job
standard, on the other hand, is a minimum acceptable level of performance.

It is based on job analysis that organizations assign a financial value to each job. Thus, unless
there is a clear definition of the job and job performance standards it would be difficult to
imagine how pay can be linked to individual performance (Bratton & Gold, 1995). It is worth
noting that job evaluation is also a means to compare the relative values of various jobs in an
organization. Hence, the next pages briefly examine how it is used to determine financial
compensation.

Job Evaluation
A certain public enterprise may hire a chief administrative officer, accountant, mechanic,
engineer, janitor, economist, and so on. Here it is necessary to get a clear understanding of how
is compensation determined for various jobs in an organization. Compensation within an
organization is determined by comparing one job to other job. This comparison is made possible
with job evaluation. Thus, what is job evaluation? Job evaluation is that part of a compensation
system in which a firm determines the relative value of one job in relation to another
(Henderson, 1985). The major reason of job evaluation is to maintain internal pay equity among
various jobs in the organization. Moreover, job evaluation is used to:
- Identify the organization’s job structure
- Bring equity and order to the relationships among jobs
- Develop a hierarchy of job value that can be used to create a pay structure

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- Achieve a consensus among managers and employees regarding jobs and pay with in the
firm (Plachy, 1987).
Job evaluation rates the job and not the employee performing the job. It is, therefore, a process
of analyzing the worth of a job to that of another, without regard to personalities on the jobs. In
this process accurate job descriptions and job specifications must be available to analyze and
assign monetary value to organizational jobs. As Ahuja (1988) noted, the more skill, education
and responsibility required in a job, the more it worth.

Organizations use four major types of job evaluation methods. There are:
1. Job Ranking
2. Job Grading
3. Factor Comparison
4. Point System

Job Ranking Method

The simplest method of job evaluation is ranking. A committee or evaluators review the job
descriptions and rank each job from the simplest to most challenging job in the organization.
This job-ranking method is based on subjective evaluation of relative value. Compensation for
each job will be based on the job hierarchy. The ranking method is more suitable for small
organizations having a limited number of employees.

Job Grading Method

The job grading or the classification method works by having each job assigned to a grade by
matching standard descriptions with each job’s description, as shown below.

A Job classification Schedule for Use with the Job Grading Method
Directions: To determine appropriate job grade, match standard description with job description.

JOB GRADE STANDARD DESCRIPTION

I Work is simple and highly repetitive, done under close supervision,
requiring minimal training and little responsibility or initiative.
Examples: Janitor, file clerk
II Work is simple and repetitive, done under close supervision,
requiring some training or skill. Employee is expected to assume
responsibility or exhibit initiative only rarely.
Examples: Clerk-typist I, machine cleaner
III Work is simple, with little variation, done under general
supervision. Training or skill required. Employee has minimum
responsibilities and must take some initiative to perform
satisfactorily.
Examples: machine oiler, clerk typist II
IV Work is moderately complex, with some variation, done under
general supervision. High level of skill required. Employee is
responsible for equipment or safety; regularly exhibits initiative.
Examples: Machine operator I

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V Work is complex, varied, done under general supervision.

Advanced skill level required. Employee is responsible for
equipment and safety; shows high degree of initiative.
Examples: Machine operator II, tool specialist.
Source: Werther & Davis, 1996.

Here jobs are assigned to grades by comparing the job description with the standard description.
The sample above indicates five grades. Jobs, which might be classified under grade I, are
simple and routine. Jobs become more difficult as the grade level increases. For example, jobs
under grade IV are believed to be complex and require high-level skill. In attaching monetary
values to the various jobs, the rater makes pay-level differentials between jobs, based on their
complexity. More challenging jobs in an organization are paid more. In this non-analytical
method “complex jobs are difficult to fit into the system; a job may seem to have the
characteristics of two or more grades (Bratton & Gold, 1995).

Factor Comparison Method

This method demands a more quantitative analyses of the jobs involved. In this method, each
job is broken down into factors, which are considered common to all types of jobs. The
compensable factors used to compare jobs in the organization are skill, mental requirements,
physical requirements, responsibilities and working conditions. For each job in the
organization, the factors are “ranked according to their relative importance in each job (Brotton
& Gold, 1995) and then the job evaluator assigns a monetary value to each factor. For example,
a job with worth of Birr1,200 per month may have its different contributing factors costed as
follows:

Compensable Factors Allotted Birr

Skill Requirements 240

Mental Requirements 360
Responsibility 240
Physical Requirements 192
Working Conditions 168
Total Job Value Birr1,200/=P.M.

As can be seen above, the monthly salary Birr1,200 is allocated among the five factors. Though
its application is complex in the sense that, each factor has to be costed, the criteria for
evaluating job are explicit.
Point Method
The point rating system is the most accurate and widely used method of job evaluation. This
system resembles the factor comparison method in that, in both cases, jobs are broken down into
factors like skill, mental effort, responsibility, physical effort and working conditions. However,
unlike the factor comparison where monetary value is assigned to each job, here points are used
to determine the worth of jobs in the organization.

In allocating range of points to each job factor, the following steps may be followed.
1. Assign a number (between 1 and 100) to each factor.

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2. Closely examine each factor in terms of its importance in relation to the other. For example,
as shown in the figure below, the physical effort requirements for the job of labour is thrice
as important as skill requirements.
3. Finally, each factor point value is added, to place job in order of importance.

Factor
Job Title Mental Respons- Physical Working
Skill effort ibility effort condition Total
s
Inspector 20 20 40 5 5 90
Secretary 20 20 35 5 5 85
File clerk 10 5 5 5 5 30
Labourer 5 2 2 17 9 35
Point System Matrix
Source: Bratton & Gold, 1995.

As can seen from the above table, it would mean that the inspector’s salary rate is thrice that of
the file clerk. In this manner, point-rating system would result into a logical monetary job-worth
for all jobs in organizations.
Employee Influences On Compensation

The major goals of compensation are to attract and retain qualified employees to the
organization. In most cases, employees are willing and cooperative to do their jobs to the best of
their abilities if they believe that pay is relatively equitable to performance. In other words,
compensation affects employee decision to stay or leave the organization, to work effectively
and to accept additional responsibilities. An effective compensation system is designed to
satisfy employee needs and reinforce job behavior consistent with organizational objective
(Brattin & Gold, 1995).

Recall from the earlier discussion that organization, labour market, and the job influence
compensation system. Moreover, factors related to employee like performance, seniority, and
experience also determine pay levels in an organization.

Compensation and Performance

As Armstrong (1996) put it, paying for performance is the process of providing a financial
reward to an individual, which is linked directly to his/ her performance. Nothing is more
demotivating to productive employees than to be paid equal salary as less productive employees.
If this is the case, organizations need to practice varies method to improve job performance. The
most common once are piecework, bonus schemes and commission. Piecework (Payment-by-
Results) is a reward system in which rewards are related to the pace of work / effort (Bratton &
Gold, 1995). That is, the faster an employee works, the higher the output and the greater the
reward. Bonuses are rewards for successful performance and are paid to employees as lump
sum. Commission, on the other hand, is a reward paid on the performance of individual,
typically salaried/sales (Bratton & Gold, 1995). The commission earned is a proportion of the

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total sales and may be added to basic salary. As discussed above compensation system serves as
an incentive for employees to do their jobs to the best of their abilities and efforts. Therefore,
organizations must have a reasonable standard against which performance can be compared.
This, among other things, enables organizations to have a fair determination of reward.
Otherwise, the incentive system may rather demoralize employees if it does not reflect expected
performance levels.

Seniority and Experience

Seniority refers to the length of time employees have been working in an organization.
Employees are more likely to be committed to the achievement of organizational objectives, if
their long services are considered as a basis for pay increases or have some value during
promotion. Advocates of paying for seniority believe that it enables the organization to maintain
stable workforce without excessive turnover. The seniority must be linked with experience on
the job. Organizations compensate employees on the basis of experience, because “sometimes
the practice is justified because of the valuable insights that can only be acquired through
experience on the job" (Mondy & Noe, 1990).

Pay Structures

In the process of considering the values of jobs in an organization, attention must paid to the job
evaluation results and the pays in the labour market. The relative value of jobs, in the
organization, is determined by the job evaluation whereas its absolute value is determined by
the labour market (supply and demand). To set the pay level the job evaluation and pay survey
rates are combined using graph. As shown in the graph next page, the horizontal axis shows job
structure originated through job evaluation. All similar jobs are classified in one grade and they
have the same range.

A pay grade is the grouping of similar jobs to simplify the job pricing process (Mondy and Noe,
1990). For example, as can be noted from the graph, key jobs ABC (grade 1) have lower pays
and pay range than jobs DEF (grade 2). The pay range defines the lower and upper limits of pay
for jobs in a grade (Bratton & Gold, 1995). The range allows organizations to pay according to
seniority and or performance.
The vertical axis in the graph represents the pay rates. The midpoint can be established by the
use of pay-survey data from similar jobs. In the graph, on the vertical axis the pay level policy
line has been set to equal the average paid by the organization’s competitors for each of the jobs:
a matching-competition policy (Bratton & Gold, 1995). Here, if the organization wants to lead
or lag behind the market rate, the pay policy line can be shifted up or down. The pay policy line
represents an organization’s pay level in the market and serves as a reference point around which
pay structures are established (Bratton & Gold, 1995).

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Pay

* **
External * * ** * * *
Competitiveness *
*
* *

Key Jobs ABC DEF GHO JKL MNO

Grade/point values Job structure

The construction of pay levels

Source: Bratton & Gold, 1995

Benefits (Indirect Compensation)

In addition to financial compensation, employees aspire various 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 (Milkovich, 1991). Recall that direct
compensation such as salaries, wages or bonuses are based on the nature of the jobs and
employees performance. Benefits, however, are indirect compensation that organizations
provide to their employees and are not directly related to performance.

Objectives
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 labour unrest
- Satisfy employee objectives
- Aid recruitment

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- Reduce turnover
- Minimize overtime costs (Werther & Davis, 1996).

Major Categories of Benefits

Employee benefits, according to Werther and Davis, can be divided in the following major
categories:
1. 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.
2. 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.

3. 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.

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

Non-financial Compensation
So far, we have discussed employee benefits, which cost the organization money either directly
or indirectly. Advocates of motivation claim that employees are not only be satisfied with basic
needs, but other subsequent needs such as social, ego, and self-actualization are becoming more
important (Mondy & Noe, 1990). These higher order needs may be satisfied through the job or
job environment or both. The benefits each employee would value depend on their personal
preferences. In most cases, employees may get personal satisfaction if the job provides them
opportunities for recognition, feeling of achievement, and above all advancement opportunities.
Jobs to be challenging, meaningful, and interesting, organizations must attempt to match the job
requirements and individual abilities. The selection and placement processes are extremely
important in this context (Mondy & Noe, 1990). In addition, organizations must establish the
proper working environment so that employees perform their jobs effectively. By creating a
conducive job environment, supervisors should enable their subordinates to do their jobs to the
best of their abilities. Other major factors that are part of job environment include sound
policies, congenial co-workers, appropriate status symbols and comfortable working
conditions. These factors, among other things are hoped to lead to job satisfaction, improve
morale and increase employee commitment.

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Review and Discussion Questions:

1. Define
 Compensation
 Direct financial compensation
 Indirect financial compensation
 Non-financial compensation
2. How does:
a) effective compensation administration helps an organization accomplish its
objectives?
b) Pay dissatisfaction affect work performance in an organization?
3. Distinguish between internal equity and external equity.
4. Identify and briefly describe the major determinants of financial compensation.
5. Distinguish salary, wage, bonus, commission, and piecework.
6. Briefly explain the role of job analysis in assigning a financial value to jobs in an
organization.
7. What is job evaluation? Identify and distinguish among the four basic techniques of job
evaluation.
8. What is pay range? What is its purpose?
9. What are the major purposes of benefits?
10. Distinguish between security and time-off benefits.
11. What are the major categories of non-financial compensation? Give examples.
12. Why does employee has time-off benefits?

References:
1. Holt, Davis H., Management : Concepts and Practices, (New Jersey: Prentice Hall, Engle
Wood Cliffs, 1993).
2. Werther, William B. & Davis, Keith, Human Resources and personnel Management, (New
York: McGraw Hill Inc., 1996).
3. Mondy, R. Wayne & Noe, Robert M., Human Resource Management, (Massachusetts:
Simon & Schuster, Inc., 1981).
4. Baird, Lloyd S., et. al., Management: Functions and Responsibilities, (New York: Harper
& Row Publishers Inc., 1990).
5. Armstrong, Michael, A Handbook of Personnel Management Practice, (London: Clays
Ltd., St Ives Plc., 1996).
6. Scarpello, Vida G. & Ledvinka, James, Personnel/Human Resource Management, (Baston:
Pws-kent Publishing Company, 1988).
7. Glueck, William F., Personnel: A Diagnostic Approach, (Texas: Business Publications, Inc.,
1978).
8. Bratton, John & Gold, Jeffrey, Human Resource Management: Theory and Practice,
(London: Macmillan, 1995).
9. Henderson, Richard I., Compensation Manager, (Reston, VA: Reston Publishing Company,
1985).
10. Ahuja, K.K., Personnel Management, (New Delhi: Kalyani Pub. 1998).

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Chapter 7
EMPLOYER-EMPLOYEE RELATIONSHIP

EMPLOYEE/ LABOUR RELATIONS

What is Employee Relations?

Management of all organizations is mainly concerned with what should be done to enhance the
contributions of its employees to achieve objectives. This means maintaining good employee
relations through creating good working atmosphere, providing attractive rewards, having
good leadership, and assigning employees to interesting and challenging jobs. Employee
relations is the interactions between the employer (represented by management) and the work-
force (represented by trade unions) (Beech & McKenna, 1995). Here, interactions imply that
management must support and address issues of employee job satisfaction and employees must
show commitment towards the success of the organization. Moreover, according to Armstrong
(1996) employee relations is concerned with:
- Managing and maintaining formal and informal relationships with trade unions and
their members.
- Sharing information with employees and involving them in decision making on matters of
mutual interest
- Creating and transmitting information of interest to employees.

Employee Relations Objectives

Milkovich and Boudreau (1991) noted that employee relations activities are those, whose
objective is to create an atmosphere of trust, respect, and Cooperation. Further more, employee
relations:
- Provide a conducive work environment in which employees can do their jobs better
- Help management to mutually solve employees problems which otherwise might affect
performance
- Helps employee to control over important aspects of work life.

Labor Unions and Collective Bargaining

Labor Unions
Labor union is an organization of workers whose purpose is to protect and maintain the interests
of union members. As workers representative, trade unions "provide workers with a 'collective
voice' to make their wishes known to management and thus bring actual and desired conditions
closer together (Armstrong, 1996). This worker organization is established to bargain with
management about pay, working hours, conditions of employment and to make joint decisions
with management on matters affecting their members' well being. Furthermore, the following
broad objectives characterize the trade unions as a whole.
- To secure and, if possible, improve the living standards and economic status of its
members.
- To enhance and, if possible, guarantee individual security against threats and
contingencies that might result from market fluctuations, technological change, or
management decisions.

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- To create mechanisms to guard against the use of arbitrary and capricious policies and
practices in the workplace (Mondy & Noe, 1990).

Collective Bargaining
Collective bargaining is basic to labor- management relations. It is a joint process of job
regulation undertaken by management and trade unions that negotiate to establish pay and
conditions of employment (Beardwell & Holden, 1996). This contractual agreement is hoped to
give workers and management an identity of purpose and provide an atmosphere in which both
focus their attentions towards the achievement of organizational objectives. Such union-
management agreement enables to negotiate better position to urge workers to do their jobs as
per the contract.
In an organization where a trade union is established and recognized by the management,
collective bargaining will take place. For the bargaining to take place, according to Beardwell
and Holden (1996) the following conditions must exist:
- Employees must be prepared to act collectively and recognize their common interests.
- Management must recognize trade unions and their representatives as legitimate
bargaining agents for labour, trade unions must be free to organize employee without
pressure from state or employer control.

Collective bargaining is a means to reach negotiable agreements on matters pertaining to

employment. This joint labour-management agreement has two outcomes. These are:
Substantive agreements- they set out agreed terms and conditions of employment
covering pay and working hours and other aspects such as holidays, overtime regulations,
flexibility arrangements and allowance (Armstrong, 1996).
Procedural agreements - which set out an agreed course of action for various
eventualities such as equal opportunities, recruitment, redundancy, discipline etc. (Howe,
1995).

The process of bargaining is carried out by negotiation where workers' representative (union) and
management discuss issues with a view to relating a common agreement. As noted by Beardwell
and Holden (1996) negotiation can be conducted using distributive and integrative approaches.
Distributive bargaining. One party will seek to achieve gains at the expense of the other.
The aim is the division of a limited resource between groups both of whom wish to maximize
their share. The important factor in this approach is the power each side has to damage their
opponent if they do not comply with their demands. Thus the threatened use of sanctions, for
example, is strike and lock-out.
Integrative bargaining. This approach seeks mutual gains in areas of common interest with
a problem solving approach from the parties involved.

Having outlined approaches to negotiation, what are the stages to be followed in negotiation? is a
question, we are now required to provide an answer. According to Howe (1995), formal
negotiations often follow the following stages.

Preparation:
Set objectives. These are normally prioritized into three levels. These are:
- The basic minimum requirement that must be achieved,

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- The desirable requirements that the negotiator would like to achieve,

- The optimum requirement or best level of achievement;
Research the background to the negotiation including the bargaining power of the other
party. Prepare the case to be argued.
Select the negotiators who should be good communicators, persuasive, acceptable to the
other party, and authoritative.

Negotiation
- Exchange information;
- Listen to the other party's position;
- Signal likely compromise points
- Propose ways forward.

Closing
- Summarize positions;
- Propose a final offer, which meets the needs of both parties;
- Reach agreement.

Although the aim of collective bargaining is to reach a common agreement, sometimes there may
be disputes that need resolution. How can such disputes of two parties be resolved? Various
methods can be used to resolve disputes. These are conciliation, mediation or arbitration.
Conciliation - a means where by a neutral third party acts as a go-between to settle the
disputes.
Mediation - a means where by a third party propose recommendations which enable the
two parties to resolve the disagreement.
Arbitration - the submission of a dispute to a neutral third party. Both sides of the issue
are heard by an arbitrator who acts as judge and jury. After weighing the facts, the
arbitrator renders a decision (Werther & Davis, 1996).

Employee Relations Practices

In many organizations, the immediate bosses are responsible for assigning tasks, counseling and
providing information to employees. This being the case, concerning issues related to the entire
organization " managers and human resources departments directly affect employee relations
through communication, counseling discipline practice" (Werther & Davis, 1996). In-addition,
employee participation can also affect employee relations.

Communication
If management is getting things done with and through employees, management must
communicate all the necessary information that affect employee's interests. As a result, a feeling
of belongings on the part of the workforce may be created. This in turn enables the organization
to generate commitment of employees to the achievement of objectives. As stated by Howe
(1995) communication involves the sharing of ideas, plans and targets throughout the
workforce and involves both vertical dimension (up and down the organization hierarchy) and a
horizontal dimension (between peers).

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In addition to promoting good relationships between employees and the management, effective
communication enables administrators/managers to achieve the functions of planning,
organizing, directing and controlling. Furthermore, from an organizational viewpoints,
communication also plays an important role in manager's job as described below.
- In managers' interpersonal roles, they act as a figurehead and leader of their
organizational unit, interacting with subordinates, customers, suppliers, and peers in the
organization.
- In managers' informational roles, they seek information from peers, subordinates, and
other personal contacts about anything that may affect their job and responsibilities.
- In managers' decisional roles, they implement new projects, handle disturbances, and
allocate resources to their unit's members and departments (Stoner & Freeman, 1992).

In order to have a clear picture of communication; it is necessary to understand the

communication process and channels of communication. These vital issues in communication
will briefly be presented below.

The Communication Process

The communication process consists of encoding a message by a sender, transmitting it through
a medium, decoding the message by a receiver, and then authenticating receipt and
understanding of the message by receiver through feedback, as illustrated in the figure in the next
page.

Sender Encoding Channel Decoding Receiver

Initiates Symbolic Medium of Symbols Receives
Message message transmission interpreted message
Created into message

Feedback
Receiver reverses process to respond to sender
The Basic Communication Process (Holt, 1993)

Sender: The sender is the source of the message who initiates the communication. In an
organization, the sender will be a person with information, needs, or desires and a
purpose for communicating them to one or more other people (Stoner & Freeman,
1992).
Encoding: The transmission of information using symbols such as words, pictures, signals,
and the like. For example, a green light in a traffic signal is a symbols for the
word pass. Encoding takes place when the sender translates the information to be
transmitted into a series of symbols (Stoner & Freeman, 1992).
Channel: The medium of communication from the sender to the receiver. For example, air
is a channel of communication for or spoken words and paper for written letter.
Feedback: The process is not over until communication completes a full cycle back to
sender. Feedback occurs when a receiver responds to a sender's message with

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understandable return message. This may be in the form of acknowledgement, or

it may be an answer or elaboration (Holt, 1993).

Channels of Communication
Communication channels are intended to facilitate understanding and coordination among
sections, departments and levels in the organization. The channels through which information
travel is categorized into two types, namely formal and informal channel of communication.
Formal Communication Channels
Formal channels of communication are reporting relationships determined by the structure of
management through which prescribed messages are sent (Holt, 1993). In every
organization, the structure prescribes who should report to whom. For example, in the
Ethiopian context, Ministries performance reports may be required by the Prime Minister
Office, who must pass them to the House of People's Representative. This network can be
divided into vertical and horizontal/lateral communications.

Vertical Communication Channels

Vertical channels of communication are a flow of information up or down the chain of
command. Such approaches can be categorized into downward and upward communications.
Downward Communication is the passing of information by manager/administrator to junior
employee. The major purposes of downward communication are to advise, inform, direct,
instruct, and evaluate subordinate and to provide organization member with information
about organizational goals and policies (Stoner & Freeman, 1992). Upward Communication,
on the other hand, is the passing of message or information from the employee to the upper
level management. The main purposes of this communication system is to give an
opportunity to employee to present his/her activities report, work progress and problems
related to his/her jobs.

Horizontal Communication
A horizontal or lateral communication is a process that occurs between co-workers, heads of
different departments, divisions, sections, and peer managers. According to Stoner and
Freeman, (1992) lateral communication:
- Provides a direct channel for organizational coordination and problem solving.
- Enables organization members to form relationships with their peers.

Informal Channels of Communication

Depending on friendship, social interaction, common interest, .., an informal communication
network can be established within an organization. As defined by Holt (1993), informal
channel of communication is the unsanctioned personal network of information among
employees. The most common informal channel of communication is grapevine, which are
unofficial and voluntary interpersonal relationships between members of an organization.
The grapevine is used by employees to make sense of unclear or confusing management
actions or to file information missing from formal communication channels (Baird et.al,
1990).
Organizational communication to be effective, management must allow information to flow
from management to other employee and from employee to management in order to ensure
efficient functioning through feedback. In this way, management not only avoids

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misunderstanding but also creates good and open relationship between employee and
supervisor.

Counseling
Many organizations provide a number of services to their employees. Thus, counseling is one of
the many services organizations offer to employees. Counseling is a discussion of a problem
with an employee that is intended to help the worker resolve or cope with the problem (Werther
& Davis, 1996). Family troubles, stress, financial and other personal problems are likely to
affect employee's performance. In such situations, it is the responsibility of the management to
arrange counseling services to help them do their jobs in a better way.
Counseling services usually are provided by human resource department because the department
is in constant contact with employees. All matters discussed during counseling session are
confidential. The counselor is responsible to follow whether the employee avail the counseling
programmes to solve the problem encountered. When counseling an employee does not resolve
performance-related issues, discipline may be the next step (Werther & Davis, 1996).

Discipline
The organizational rules and regulations are intended to direct and control the effective
functions of employees. Thus, to ensure compliance with organizational standards rules and
regulations must be communicated to all employees. This will enable employees to maintain
desired discipline in the workplace. Discipline, according to Mondy and Noe (1990), is the state
of employee self-control and orderly conduct and indicates the extent of genuine teamwork
within an organization. Werther and Davis (1996) suggest two ways to handle disciplinary cases
in an organization. These are:
Preventive discipline is an action taken to encourage employees to follow standards and rules
so that infractions are prevented. Its basic objective is to encourage self-discipline.
Corrective discipline is an action that follows a rule infraction. It seeks discourage further
infractions and ensure future compliance with standards and rules. The corrective or
disciplinary action is a penalty, such as warning or suspension without pay. These action are
initiated by the employee immediate supervisor but may require approval by a higher-level
manager. In principle, disciplinary action should aim at correcting unaccepted behavior.
Most organizations take progressive disciplinary action in order to give employees
opportunities to learn from their mistakes. In this regard, Chandler and Plano (1988) have
suggested that there are five steps, which can be used to discipline employees in an
organization. These are:
1. Informal talk or counseling is used for minor first-time infractions. A friendly
discussion will often clear up the problem. The supervisor explains what is expected
from the employee and allows employee to express his/her views. The discussion is
documented.
2. Oral reprimand or warning is used for second offenses or more severe first-time rule
violations. The employee is told the interview is an oral reprimand. Previous
violations are mentioned. The employee is also told that his/her behavior could lead
to serious disciplinary action if not corrected. The employee is left with the feeling
that he/she must improve in the future. The interview is documented.

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3. Written reprimand or warning is a letter or memorandum written to the employee

listing prior accidents, specifies on what behavior is expected, how the employee is
not meeting the expectations, what will happen if the behavior is not corrected, and
period of time for correcting the behavior. A copy of the letter is placed in the
concerned employee's file.
4. Suspension or disciplinary layoff occurs if the behavior is not corrected. The
employee is suspended or laid off for one to thirty day(s). This is the final step that
attempts to correct behavior before discharge.
5. Discharge is the most drastic form of disciplinary action as it separates the employee
from the job. It is reserved for the most severe offenses and is taken after other
corrective efforts have failed.

Employee Participation
As discussed earlier, management is getting things done with and through other people. If this is
the case, people to help organization attain its objective, it is desirable that management
approach should be participative. As Chandler and Plano (1988) defined, Participative
management is a process by which workers are brought into organizational decision-making
processes to varying degrees, primarily on matters that directly affect them. In addition to
meeting the personal satisfaction of individual employees, participation enables organizations to
increase efficiency. The involvement of employees tapes their knowledge and skill for the
betterment of organizational activities.

According to Armstrong (1996) employee participation should aim to:

- Generate commitment of all employees to the success of the organization
- Enable the organization better to meet the needs of its customers
- Help the organization to improve performance and productivity
- Improve the satisfaction employees get from their work
- Provide all employees with the opportunity to influence and be decisions, which are
likely to affect their interests.

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