Strategic HRM

Course Outline

Prof. B.D. Singh

Dean (Executive Education)
Asia-Pacific Institute of Management, New Delhi
Objective:-
To appraising students of changing business paradigms
and changing role of strategic HRM
To give students skills of aligning HR functions with
changing business requirement
To expose students of the value adding nature of HR,
making HRM strategic partner in business
Content
1. Changing business environment, requiring continuous change in
Organizational strategies (Strategic Management) to meet
challenges of changes. Changes in HR Strategies. Challenges
before HRM Professionals.
2. Strategy and the HR professional-why strategic
HRM is vital?
• What is strategy?
• What is strategic HRM?
• HRM and organisational Performance
• HR’s role as a Strategic Business Partner –
• linking HR strategies to organization strategies.
• Essential competencies of HR professionals.
3. HRM and change
• Managing Technological Revolution
• Global Labor Market,
• Diversity in Employment.

4. Organisational Strategy – HR Strategy

• Strategic fit
5. Human Resource Planning
• HRP: An Overview
• Business Strategy and HRP
• Significance of HRP in a Changing Environment
• Perspectives of HRP
• Objectives of HRP
• Job Analysis
• Job Analysis and SHRM
• Competency Mapping
• HRP Process
• Special Challenge-
• HRP and Outsourcing
• Automation/ New Gazettes
 Case Study
Human Resource Issues in Private
Participation in Infrastructure—A case
Study of Orissa Power Reforms
5. Acquiring Human Resources/Talent
Acquisition
 Human Resource Acquisition: An Overview
 External Influences on Staffing
 Internal Influences on Staffing
 Recruitment Sources: Internal versus External
 Methods of Recruitment
 New Approaches to Recruitment
 Outsourcing the Recruitment function
 Methods of Employee Selection
 New Approaches to Executive Selection
 Various Types of Tests
 Selection Outcomes
 Strategic Recruitment and Selection
 Hiring for a Diverse Workforce
 Alternatives to Hiring Permanent Employees
 Hiring Considerations in BPO Firms

Case Study
 Hiring for Excellence at Cisco System

6. Managing Internal Movement for staffing

Promotion, demotion, transfer, exit.
7. Performance Management and
Development Systems
 Performance Management
 Developing Performance Management Systems
 Problems in Performance Management
 Technology and Performance Management
 Strategic Linkage of Performance Management
Case study
 Performance Appraisal at Amber Limited
8. Investing HR- Training and Development of Human
Resources – A strategic approach
 The Need for Training and Development
 Training and Development: Basic Concepts
 Purposes of Training and Development
 Significance of training and Development
 HRM Approaches to Training and Development
 Linkage between Business Strategy and Training
 The process of Training and Development
 Special Forms of Training and Development
 New Developments in Training and Development

Case Study
 McDonald’s
9. Compensation and Rewards Management – A
strategic approach
 Compensation and Rewards
 Compensation and Rewards—Determinants
 Compensation and Rewards-Approaches
 Pay-for-Performance Approaches
 Equity in Reward Decisions
 Compensation and Rewards—New Developments
 Trends in Top level Executive Compensation
 Business Strategy and Compensation
 Total Compensation and Rewards Strategy

Case Study
 Rewards System of a University
10. Managing Careers – as a strategy
 Careers—Contemporary Notions
 Career Planning, Development, and Management
 Career Stages
 Career Planning
 Career Development
 Career Management System
 Design and Implementation of Career Management Systems
 Organizational Career Management: A Typology
 Career Management for Specific HR Issues: HRD Approach
 Career Management: An SHRM Approach

Case Study
 Career Development at Data ware Services and Systems
11. Employee relations—Employees empowerment, engagement
for excellence performance

12.Work-Life Integration – an approach to reduce attrition

 Changing Notions of the Work-Family Relationship
 Work-Life Issues
 Work-Life Balance
 Family-friendly Workplace
 Work-Family Culture
 HRD Approaches to Work-Life Integration
 Development of Work-Life Initiatives
 Towards a Strategic Approach to Work-Life Integration
Case Study
 Narmada Bank International
13. Global HRM to meet global challenges
Case
Natural Pharmaceuticals
Reference books
Strategic Human Resource Management by
Tanuja Agarwala, published by OXFORD Higher
Education
HRM 6th editon by K Ashwthapa, Mcgraw Hills
Note: Examination schedule, marks, and project
etc. will be decided in consultation as per
Institute’s practice.
HRM
Introduction
1) The old joke---Future organizations are going to be so advanced that
they will be run by a person and a dog-----the person to feed the dog
& the dog to prevent the person to touch any thing over there.
“Charles Dickens wrote in A Tale of Two Cities----- “ It was the best
of times, it was the worst of times, it was the age of wisdom, it was
the age of foolishness, it was the epoch of belief, it was the epoch of
incredulity, it was the season of light, it was the season of darkness,
it was the spring of hope, it was the winter of despair, we had
everything before us, we had nothing before us, we were all going
direct to heaven we were all going direct the other way”.
2) Organization require a number of things to
achieve its objectives.
 Physical resources, including the manufacturing
facilities and equipments to produce a product or
service
 Financial resources, including equity, leverage
(debt), and retained earnings
 Marketing capability to connect whatever products
or services are created with customers
 Human resources, including the experiences, skill,
knowledge, judgment, and creativity belonging to
the organization,(Human Capital) along with the
means of organizing, structuring, and rewarding
these capabilities.
3) Journey of HRM---From welfare officer to Strategic
Business Partner
4) Top Challenges for Organizations and the HR Profession
Challenges and Characteristics
Environment
• Rapid Change
• Rise of the Internet
• Workforce Diversity
• Globalization
• Legislation
• Evolving Work and Family Roles
• Skill Shortages and the rise of the Service Sector
• Natural Disasters
Organization
- Competitive Position: Cost, Quality, Distinctive
Capabilities
- Decentralization
- Downsizing
- Operational Restructuring
- Self –Management Work Teams
- Small Businesses
- Organizational Culture
- Technology
- Outsourcing
Individual
• Matching People and Organization
• Ethical Dilemmas and Social Responsibility
• Productivity
• Empowerment
• Brain Drain
• Job Insecurity
 HRM as Profession?
- What is HRM?
- Do Organizations need HR?
- Personnel—HRM—HCM
- Building human capital (Deliverables) is major function of
professional HR they are to be align with Organizations
strategy.
- HRM assumes that people make difference---Generating
value adding competitive advantage to organization.
- HR activities both doables and deliverables are not sole
responsibility of the HR specialists. Line managers are
equally responsible.
- Most happening function
- How do people lead competitive advantages?

i) By aligning HR Strategies to Business Strategy

ii) Innovation key to competitive advantages
iii)Converts—threats into opportunities/ weaknesses into
strengths
iv)Develops competitive organization designs---
v) Acts as Effective change masters
vi)Less of “ doable” & more of deliverables
vii)Build Human Capital
The HR manager values people and works to create
both competitive and compassionate organizations.
When HR professions develop competencies and play
appropriate roles, they become partners and players in
business.
HR managers have started speaking the language of
business. They seek to justify the economic value of
their actions. Cost-benefit analysis is being
increasingly applied to all the areas of HR activities.
Across the corporate world, as much as 36% of boards
time is spent on people related issues. Human
resource is now a board-level issue(Source: Mercer,
2008)
 Common to all the best employers: They have built
an inventory of people practices that are both unique
and tailored for their firms.
i) Effective and committed leadership
ii) Astute management of talent
iii)Spotting and attracting talent
iv)Setting high goals
v) Coaching for performance
vi)Strong review and reward systems
vii)Building skills for the future
viii)Building growth into every job,
 Porter’s Business Unit Strategies
Business Strategy Common HR Strategies
Organizational
Characteristics

Overall Cost Leadership -Sustained capital -Efficient production

investment and access to -Explicit job descriptions
capital -Detailed work planning
-Intense supervision of -Emphasis on technical
labour qualifications and skills
-Tight cost control -Emphasis on job-specific
requiring frequent, training
detailed control reports -Emphasis on job-based
-Low-cost distribution pay
system -Use of performance
-Structured organization appraisal as a control
and responsibilities device
-Products designed for
ease in manufacture
Differentiation -Strong marketing -Emphasis on
abilities innovation and
-Product engineering flexibility
-Strong capability in -Broad job classes
basic research -Loose work planning
-Corporate reputation -External recruitment
for quality or -Team-based training
technological -Emphasis on
leadership individual-based pay
-Amenities to attract -Use of performance
highly skilled labour, appraisal as
scientists, or creative developmental tool
people
Focus Combination of cost- Combination of HR
leadership and strategies above
differentiation strategy
directed at a particular
strategic target
HR professionals as strategic business partners
Making HR a partner in assisting corporate leaders in
navigating the uncharted waters of the new business
realities
Integrating people strategies with business strategies
Having HR processionals create new options and
possibilities---thinking outside the box (Example—
outsourcing, off-shoring)
 
Leading change in the organization
Leading organizations in adapting to a faster pace of
change
Continually changing relations between
organizations and employees
Driving diversity into all aspects of the
organizations----Diversities to be leveraged as
dividend then disaster
Assisting organizations in analyzing, planning, and
implementing change
Teaching HR competencies to line managers
Downsizing HR
Decentralizing HR
Moving important “people” tasks to front-line
managers
Having front-line managers with HR competencies

Coping with more complex laws and labour

shortages
Understanding increasingly complex labour laws
Grasping the impact of government policies on the
basic needs and demands of working people

28
Working within and beyond public education and
government training to fill critical positions in the
organization

Keeping up with changing technology

Leveraging technology in the delivery of HR services
to employees
Using technology to track applicants’ and employees’
skills and experiences
Allowing technology to handle administrative aspects
of HR so that HR professionals can devote time to
other aspects of their organizational role
5)Excellence in HRM is characterized by a service
orientation and a willingness to be in partnership
with constituents. Specific earmarks of world class
HRM include the following:
Having an HR vision oriented to the strategic needs
of the organization
Being seen as a business unit within the firm and
operating in the same way as other units: having
customers and quality management and so forth
Being organized in a way that brings maximum
service to the customer and maximum motivation to
the HR staff
Having the best HR products available to customers
Championing HR programs that fulfil the agendas of
the HR professionals and customers
Having an HR vision that is actively shared by the
HR professionals in the organization
Being a proactive, not reactive, group
Being involved in the key business issue discussions
Being seen as successfully creating a great place to
work
6) HRM as profession:-
Why it is not as definite/matured as finance or operation or
marketing or material.
It is because of
i) Content----It deals with
ii)Context----In which it operates
i) Content:- HR is most difficult (live-wire):- Positive aspects—
negative aspects
- Individual, group, organization
- Intrapersonal,Interpersonal, Intragroup, intergroup,
intraorganization, interorganization relations both horizontal and
vertical---norms , principles, policies, procedures, interventions.
ii) Context:-
Very complicated and competitive challenges
Globalization----Global labour/Employment Market
Technology----Inevitable adoption & its implications
Managing change---Leading change
Managing talent and human capital
Responding to market requirement----Customer
requirements
Cost containment
Employees diversities----age distribution, gender
issue, educational and skill level, cultural diversities
etc.
Employees right----Equal remuneration (opportunity)
Privacy issues---Safe and dignified working
environment
Family concerned---work life--Balance
i) Globalization and HRM-----Competition and Cooperation(M&A)
with foreign companies
 WTO, world bank IMF
 MNCs, Transnational’s, cross cultural issues
ii) New Technology & HRM
 Knowledge workers
 HR’s automation, cybernation
 All impinging on HRM
iii) Managing change & HRM
 Proactive than reactive
 Lead change—link change to business strategy architect HR design to
leverage opportunities of changes
iv) Human Capital
 Talent management
v) Responding to Market
 TQM
 Six Sigma and
 HRM-Re engineering & HRM
vi) Containing cost
 Down -sizing
 Outsourcing/off-sourcing/Employees leasing
 Atomizing—productivity enhancement 
vii) Partnership of Line Managers and HR Departments.
 Advice & counsel
 Provide service
 Policy formulation & help implementation
 Employees advocacy
7)Competencies of HR Managers
i) Business Mastery
 Business acumen, customers orientation
 Workflow, Balance sheet, Market requirements etc
ii) HR Mastery
 Planning & Staffing
 PMS and compensation
 T&D
 Communication Systems
 Organization designs
iii) Change Mastery
 Innovativeness and creativity
 Problem solving skills
 Personal Credibility
 Trust, courage, lived value etc. 
Job Analysis
- Job description
- Job-specification
Competency based job analysis
- Measurable, observable behavioral competencies
(SKA)
- Not only what, but How also
- Traditional job analysis is job focus but competency
based analysis is employees focused
HRP
The process of anticipating demand and identifying
supply from within and without---in case of surplus
devising wage and means to mange that.
Forecasting
- Consideration
- Product/services’s demand
- Technological requirement
- Org. growth
- Absenteeism and turnover/ attrition
Techniques
- Trend analysis
- Work-study
- Managerial estimate
- Delphi-techniques
Supply Forecasting
- Availability inventory
- Markov analysis (method for tracking the Pattern
employee's movement)
Balancing Supply/Demand
- Shortages—Recruitment
- Surpluses—Reduction Techniques

External Considerations
- Demographic changes
- Employment market
- Govt. Laws/Policies
Recruitment
Philosophy of Recruitment-
 Right man on right job at the right time.
What is Recruitment?-
 Recruitment is the process of searching for prospective employees
and stimulating them to apply for the job so that the organization can
select the most appropriate people to fill in job needs
 It differs from Selection. Recruitment is a positive process - building a
roster of potentially qualified applicants, selection is a “negative”
process of rejecting/ screening / eliminating to search the most
suitable one.
Recruitment policy-
 Corporate goals – short/long term
 Identification of recruitment needs
 Preferred sources of recruitment
 Criteria for recruitment
 Financial implications of recruitment
Recruitment has two main aims-
 Projection of positive image organization the organization
 Attracting & retaining them
Recruitment is the first contract that the organization
makes with potential/ prospective employees- A
critical function
Recruitment is directly related with a number of
activities- HR Planning, Employment Planning,
Selection, Orientation, Placement, etc.
 Human Resource Plans
. Number & type of vacancies

Recruiting goals & Priorities Recruiting Philosophy

•Attract large numbers of applicants •Internal or external sources?
•Attract applicants willing to accept offers •Fill vacancies or hire for
•Fill vacancies quickly careers?
•Fill vacancies at minimal cost •Commitment to diversity?

•Hire people who perform well •Marketing orientation to

candidates?
•Hire people who will stay with the
organization •Ethics in recruiting

•Generate positive public relations “Spillover”

Recruiting choices and behaviors
•Plans
•Timing
•Methods
•Sources
 Factors Influencing Recruitment
 External
 Principles of supply & demand
 Labour- market / unemployment
 Political/ Legal Considerations
 Company’s image
 Internal
 Recruiting Policy (Internal source)
 Local Citizens (MNCs) / Expatriates
 Size of the Company
 Cost
 Growth of the Organization

 Internal Recruitment
 Less costly +
 Better knowledge of candidates
 Enhances employees morale/ commitment
 Stagnation -
  No fresh blood
 No cross – fertilization

External Recruitment
 (+)
 Benefits of new skills, new talents and new experience to
organizations
 Compliance with reservation policy become easy.
 Scope for resentment, jealousies and heartburn are avoided.
 (-)
 It is costly
 Chances of creeping in false positive and false negative errors.
 Adjustment of new employees to the organizational culture takes
longer time.
Recruitment Process
 HR Planning
 Job vacancies (Number, Types etc.)
 Recruitment Planning
 Strategy development
 From where?
 How ?
 When?
 Target/ Applicants Population
 Searching Activities-
 Selling, Message, Media
 Application – pool (Application Blank)
 Screening
 Potential Hires
 To selection
 Final Checks
 Induction
Methods of Recruitment
 Direct – Method – Campus Recruitment
 Indirect Method – Advertisement
 Third Party Method- employment agencies- public + private
 Sources of Recruitment

Newspaper advertising

Search firms

Employment agencies

Employee referrals

Networking

College recruiting

Internal posting

Internet

Unsolicited
 Self application- stray application
 Through references – managers, union leaders, professional
 Employment- exchange
 Job/Head Hunters
 Institute/College- Campus Interviews
 Advertisement
 Wants ads- Identifies the job, benefits, org.
 Blind Ads- No identification of Org.- To apply in Box
 AIDA
 A- Attract attention
 I- Create interest in the job/org.
 D- Create desire to apply
 A- action- to apply
 Walk- Ins, Write- ins & Talk- Ins
 Radio/ T V / Cinema/ Posters/ Cassettes/ Videos, etc.
 Competitions- Poaching/ Raiding
Why Recruit on the Internet? Opinion of HR Managers & Headhunters

Access to more candidates

Improved ability to target specific audience
Cost of placing the job postings
Speed
Absence of middleman
Convenience
Distribution of postings
Quality of candidates
Less paperwork
Resume management
Quality of service
Not presently using the Internet
Recruitment in Multinational Organization
Ethnocentric, where all key positions are filled by
nationals of the parent company. (A typical strategy
employed in the earlier stages of a venture)
Polycentric, where host country nationals fill all key
positions in the subsidiary.
Geocentric, where the ‘best’ people are recruited
regardless of nationality e.g. a national of a country in
which neither the parent nor subsidiary is based could
also be considered.
Regiocentric, where decisions will be made on a
regional basis (the new subsidiary will be based in one
country within this region), with due regard to the key
factor for success of the product/ service. For example, if
local knowledge is paramount, host country nationals
will be recruited, if knowledge of established product is
the key factor, parent country nationals are likely to be
targeted.
Requirement
Country
The culture of the country in which the subsidiary is
based, in particular its perceived ‘ toughness’.
Host government requirements regarding the
employment of ‘foreigners’ and immigration
requirements.
Individual
Language competence
General international awareness
Personal ‘fit’ with cultural requirements above
Requirements for training
Degree of technical competence to do the job
Organizational considerations
Considerable costs of international relocation of the
individual and her/his family.
High levels of expatriate failure rates discovered to be
between 25-40%
Opportunities for individuals to develop career paths
without international experience.
Selection Processes
Selection is a weeding out process- arriving at most suitable
candidate by process of rejection- essentially a negative
process.
Selection follows the recruitment of a pool of job applicants.
The selection process involves assessing the applicants to
decide who will be hired.

Selection is the process by which an enterprise chooses

from a list of applicants the person or persons who best
meet/s the selection criteria for the position available,
considering current environmental conditions.
Typical order in which selection devices are used
Application blank Reject some candidates
Screening interview Reject some candidates
Tests Reject some candidates
More interviews Reject some candidates
Reference checks Reject some candidates
Conditional offer Offers rejected by
some candidates
Physical examination
Hire
Comprehensive application blank
Stage I – Screening of Application forms/ Curriculum Vitae
(C.V) – preliminary application blank – comprehensive
application blank
Stage II- Tests
(a) Preliminary Test
(b) Performance/Simulation tests / written/ screening
 Work Sampling- replica of a job
Assessment- Centers- Line – Managers, Qualified
Psychologists, Exercises that stimulate real problems-
Interviews, In basket problems solving exercises, G. D. etc.
 b) Psychological Tests – Supplement not substitute
 Intelligence Tests- quick learning, alert, reasoning etc.
 Aptitude test – a. clerical , mechanical,
 b. Interest test - individual’s activity – preference – career choosing
 Personality Tests
 Emotional Tests etc.
 Situation Tests- performance + personality- for managerial position- problem
solving

 C) Physical Test

 Stage III - Selection & Interviews

 Types :-
 Preliminary Interviews
 Final Interviews
 In depth- interview
 Stress Interview
 Unstructured Interview
 Structured Interview
 Group interview
 Panel interview
 In Trays
Interview content
 Personal qualities
 Physical health, personality etc.
 Academic achievements
 Experience
 Interpersonal competence (getting along with others)
 Career orientation (Aspiration, goals
Interview Problem
 Snap judgment
 Decision on negative impression
 Pressure to favour
 Halo effect
 Strategic faults
Requirements
Preparation
Reception
Soliciting information
Core interview
Freezing discussion
What we look when finally dealing the selection of a candidate
A passion for winning
A clear ability to deal
Strong analytical skill
The ability to think innovative
Positive orientation towards work
The ability to work collaboration with others
A drive for continuous self development & a genuine interact in the
development of others
Decisiveness & assertiveness

Stage IV
Checking the reference
Checking the antecedents
Medical – check up
Placement & Orientation
Placement means posting on the job
Probation – (a) job fit (b) job mismatch (c ) skill
deficiency
Orientation is the personnel activity which
introduces new employees to the enterprise and
to their tasks, superiors, and work groups.
Welcome
Introduction
Integration
Removing fear
Creating good impression
Providing information
Socialization
Adjustment
 (c ) relieves anxiety – makes him feel at home
- Rapport with the environment
- Lasting impression
Induction programmes
The HR department may initiate the following steps
while organizing the induction programme:
Welcome to the organization
Explain about the company / History Philosophy
Show the location/department where the new recruit will
work/ products/ services
Give the company’s manual to the new recruit
Provide details about various work groups and the
extent of unionism within the company
Give details about pay, benefits, holidays, leave, etc.
Emphasis on the importance of attendance or
punctuality
Explain about future training opportunities and career
prospect.
Clarify doubts, by encouraging the employee to come
out with questions
Take the employee on a guided tour of buildings,
facilities, etc. Hand him over to his supervisor.
Safely meaning
INTERNAL MOBILITY
It is internal movement within the organisation. It
contains following internal processes like (i) placement (ii)
promotion, (iii) demotion (iv) transfer (v) separation
Placement : Placing the new employee to suitable jobs-
trying him on different jobs, job enlargement, job
enrichment, pooled job, independent job, etc.
Promotion : Promotion is the upward assignment/
movement of an individual in an organisation’s hierarchy-
more responsibility, enhanced status & increased income.
Promotion is different than upgradation of a post. In
upgradation only increase in wages takes place.
Why promotion?
 Recognition of a job well done.
 Retain/Reward an employee
 Org./ Individual effectiveness
 Job- satisfaction
 Loyalty
PROMOTION POLICY
 Ratio of Internal promotion to External recruitment
 Finalizing promotional channel / LOP
 Relationship of any disciplinary action to promotion
 Determining the criteria for promotion- Elibility Periodicity, Appraisal,
Interview etc.
Criteria for Promotion-
 Seniority
 Merit
 Merit vs. Seniority
 Seniority- cum-merit
Types of Promotions
 Time Scale Promotion (based on seniority)
 Merit Promotion (based on merit)
 Merit-cum-Seniority (Striking a balance between merit & Seniority)
 Adhoc promotions or Expediency promotions
 Need based
Advantages
 Satisfaction & Prestige
 Recognition & Incentive to better employees
 Reduces turnover
 Motivates people
Disadvantages
 In breeding/ stagnation
 Peter’s Principle “Level of Incompetence”-

Demotion
Why Demotion?
 Adverse business conditions
 After accepting promotion an employee request to revert to his old
job due to various reasons
 A mismatch between promotee’s ability/ interest and the demand
of the new job
 Demotion punishment
Demotion policy
 Clear, reasonable & transparent rules for demotion
 Well communicated
 Fair, firm & Consistent
 Periodical Review
 Transfer: Transfer is lateral movement. It is change in job assignment-
May involve promotion or demotion or administrative requirement or job
requirement – no reduction in salary, no change in status – May be reward,
May be punishment.
 There are two types of transfers (1) Personal transfer or request (2)
Company’s driven transfer
Transfer
 Personal Transfer : Individual driven transfers are those occasioned by
the characteristics and desires of the employee, and are primarily in his/her
interest. The reasons for this could be many.
 To correct erroneous placement
 To relieve the monotony of a job, acquire better working conditions, and join
friends.
 To provide an outlet from blind alley jobs
 To avoid interpersonal conflicts
 To escape an unpleasant work situation
To reduce commuting distance
To pursue educational opportunities, self activism
To accommodate a dual career problem
In the interest of age/health, education of children, housing
difficulties, and to joint immobile dependents.
A search to creating opportunities
To avail of training elsewhere, to facilitate later advancement
or promotion
Better opportunities for advancement
Company’s Driven Transfers A company may initiate
transfers for the following reasons:
 Need for temporary adjustment for leave and absence etc.
 Fluctuation in work requirement
 Better utility of employee
 Versatility transfer or job rotation
 Shift transfer
 Remedial transfer to correct faulty placement
 On compassionate ground
 Panel transfer- punishment/reward
Employees generally resist Co. driven transfer
 Suspect victimization by management
 Unwilling to move to unknown place

 Painful to leave social groups, friends & relatives

 Develops interests in work, place etc. and dislikes leaving them

 Develop “Craft consciousness” and leaving becomes painful

 Transfer policy

 Transfer is a costly affair. There are number of transfer benefits –

advanced pay, disturbance allowance, packing- allowance, transport
allowance, tranist leave etc.
 It is risky, also full of IR potential .

 Policy should answer the following:

 Transparency- circumstances in which transfer is made
 Basis on which transfer is made

 Principle followed in transfer- seniority, juniority, skill attitude required on

the job
 Details about future job to which transfer is made

 Assurance about perks and benefits

Separation : Separation occurs because of
variety of reasons.
Legal separation of Redundancy separation
 Lay off
 Retrenchment
 Golden handshake
 Outplacement

Natural wastage
 Death
 Retirement
 Prolonged sickness

Voluntary separation
 Resignation, due to domestic problems, job hopping
Performance Management

by Prof. B.D. Singh IMT

Mind boggling changes, technological revolution, fierce
competition. Perform or Perish ,survival of the fittest --
survival instinct -And like the story of the two men on a
safari, in order to survive you will have to die trying. While
walking through the jungle, they came upon a hungry tiger,
when one of them started putting on his running shoes. “How
is this going to help? We can’t outrun the tiger.” asked the
other. The first man replied: ”I don’t have to outrun the tiger, I
only have to outrun you.”

Organizations redefining their strategies-- performance

appraisal to performance management to performance culture
in which every member of the organization knows the goals &
consistently make efforts to achieves high performance

Behaviorism in performance
Performance=skill + will
Or
Individual performance = Ability x Motivation x
Organizational Support + or – Chance Factors?
Iccha (desire, motivation), Gyan, (knowledge) (Know
how), Kriya, (action, to achievement).
Work is sublime—to do nothing is to be nothing—karma
is dharma— dharma of each person to contribute to the
larger society in excess of what she consumes out of its
resources. We can work to destroy ourselves, or to
improve our lot. -Understand the intrinsic meaning of
work can guide us to better ways of controlling and
directing this powerhouse of human energy.
“Work- as – life”
Economic : Gainful, productive work performed to meet
the economic needs of a person or her family.
Cultural : Functions, such as the rituals of birth, marriage
and death, death, performed as moral duty in the course of
one’s various life- passages.
Psychosocial : Interpersonal and interfamilial interactions
in one’s role as member of a social unit.
Physical : All movements from birth to death that the
human body engages in.
Peter Drucker and three stonecutter .
Will to work, to achieve, to contribute, to seek recognition
Help enhance self- esteem of the worker.
 What is performance–Behavior+ Outcome –
achievement, accomplishment at work –being,
(‘Chance’, ‘favors the prepared mind’) – doing (‘Ideas
are funny little things. They won’t work unless you do.)
relating (role network – vertical, horizontal or
otherwise.)
input—throughput –output (exceeds the value of
output?)–feedback
Output or result dimension;
Input dimension;
Time dimensions;
Focus dimension;
Quality dimension; and
Cost dimension.
Performance means both behavior & result,
behavior emanates the performance
 performance management is creating culture in
which organizational & individual learning are a
continuous process – integration of learning &
work
Normal vs excellent performance - Better than the
best- outstanding/ extraordinary performance-- Bench
Marking,record breaking,
Excellence is not a skill but an attitude/culture
The Geeta – Yogah, Karam su kaushalam
The road to excellence is always under
construction.
It is necessary to always surpass oneself and this is
a lifelong occupation.
You got to be the first or the best or different.
When better is possible, good is not good enough.
Target for the day: 1% improvement.
Excellence is not a destination- it is an endless
road– excellence seeker do not follow the laid
down path, they break new paths & leave their
trail behind-they accept the challenge so that they
may feel the exhilaration
Churchil- “excellence seekers never, never quit,
they walk on with optimism as their hope helps
them visualize the invisible, touch the intangible
& materialize the impossible”
Excellence is not through chance /freak
Luck is what happens when preparation meets
opportunity PMS encourages individuals to
anticipate opportunity & prepare to grab it.
 “Chance favors the prepared mind” –Fortune favors the
brave
Bench marking– up gradation to match with the best
Fighting fit with six sigma
 Jack Welch’s directive that his GE managers could wriggle out of
Six Sigma training at the cost of losing their promotion only goes
to show how important it is to enforce this practice from the top.
 The people involved in Six Sigma execution are
 Master black belts who are well versed in the rules of the game,
 Black belts (technically oriented individuals involved in the process of
organizational change and development)
 Green belts (employees who lead six sigma project teams).
Six Sigma Fundas
Strong customer-oriented approach that relies on data to
create more efficient processes or refine existing processes
Under the prescribed specifications, there cannot be more
than 3, 4 defects (defined as anything that doesn’t add
value to the end customer), per million opportunities.
You can apply it to anything, from making a movie to
manufacturing truck tyres
It needs the unstinted support of organizational leaders,
and emphasizes teamwork and lifelong evolution of
practices and processes.
Excellence happens through unleashing human
potential which is infinite- culture of excellence
Peter And Waterman –In search of Excellence
(1982) –
care for customer,
craze for creativity
 concern for people
By investing in HR, your company will grow and
succeed.
“the ability to learn faster than your competitor may
be the only sustainable competitive advantage”
Performance Management?

 PfM is another way of envisioning the totality of a manager’s function.

It views the managerial function holistically
 Performance management is the process of creating a work
environment of setting in which people are enabled to the best of
their abilities.
 In a traditional system, performance tends to be evaluated and
looked at only in the short run and for immediate results.
Organisations need to understand that for sustained performance, it
has to nurture a creative, motivated and committed workforce, and
for that employee’s performance has to be planned, analysed,
developed and appraised continuously rather than being constricted
to annual reviews and evaluations.

 P M S is concerned with creating a culture in which individual

learning & development are continuous process
 It provide means for integration or learning and work so that every
one learns form success & challenges inherent in day to day activities
The desire to enhance performance is making ever
greater demands on the knowledge & skill of the work
force & on people, who carry a much greater
responsibility for their own performance.
It is a holistic, systematic & continues management
function.
It is about performance & not just apprising.
Performance & result important but people equally
important.
High performing people are critical for high
performing organization
Performance Appraisal systems
 Focus is on performance appraisal and generation of ratings
 Emphasis is on relative evaluation of individuals.
 Annual exercise-normally though periodic evaluations are made.
 Emphasis is on ratings and evaluation.
 Rewards and recognition of good performance is an important
component.
 Designed and monitored by the HR Department.
 Ownership is mostly with the HR department.
 KPAs & KRAs are used for bringing in objectivity.
 Developmental needs are identified at the end of the year on the
basis of the appraisal of competency gaps.
 There are review mechanisms to ensure objectivity in ratings
 It is a system with deadlines, meetings, input and output and a
format.
 Format driven with emphasis on the process.
 Linked to promotions, rewards, training and development
interventions and placements.
Performance Management systems
 Focus is on performance management.
 Emphasis is on performance improvements of individuals, teams
and the organization.
 Continuous process with quarterly performance review discussions.
 Emphasis is on performance planning, analysis, review,
development and improvements.
 Performance rewarding may or may not be an integral part.
 Designed by HR and Line departments but monitored by the
respective departments themselves.
 Ownership is with line managers, HR facilitates its implementation
KPAs or KRAs are used as planning mechanisms.
 Developmental needs are identified in the basis of the competency
requirements for the coming year.
 There are review mechanisms essentially to bring performance
improvements
 It is a system with deadlines, meetings, input, output and a format.
 Process driven with emphasis on the format as an aid.
 Linked to performance improvements and through them to other
HR decisions as and when necessary.
What is New?
Move away from appraisals.
Move away from numbers to qualitative assessment
Continuous innovation. Process is more important than
formats
Emphasize learning and development, empowerment
and growth and problem. Solving more than assessment.
Use multi ratter assessment as a supplements
Synergies with other systems
Encourage employees to own their own performance
management.
Follow up actions must be taken and taken on time. It
may be training or job rotation or removing blocks or
any other things.
 PMS is change in managerial style of doing work.
 It is creating & nurturing performing culture.
 The performance culture has to be built into the management & the enterprise.
Great workplaces with high performance cultures tend to foster growth and feed an
individual’s need for learning and development. Several successful companies have
shown that high performance culture is the sine qua non for attaining sustainable
competitive advantage.

Frame work of Performance Management.

Conduct Future Mapping
Create Transformational Vision, Mission and Core Values
Craft business strategy linked to Vision

Annual corporate objective

 Annual corporate strategy-& the other details cascade down --use of balance
score card in Moser Baer
Performance planning
- Task analysis and/or activity analysis;
- Key performance areas (KPAs);
- Key result areas (KRAs);
- Task & target identifications;
- Activity plans/action plans; and
- Goal-setting exercises.
If the following questions can be answered positively after the exercise,
one could say that KPAs have been well identified:
1. Do the KPAs and targets emphasize/ indicate what the manager
(appraise) is expected to do by himself (rather than what his
department, subordinates etc, are expected to do)?
2. Together, do they cover a large part of his job and include all
significant contributions expected from his role?
3. Do they indicate the priority areas of work for the appraise during
the year?
4. If all KPAs are well done, can the appraise be labeled as a
good performer?
5. Are the targets set challenging and stretch the capabilities
of the appraise moderately rather than being routine?
6. Are they comprehensive?
7. Do they specify the standards of performance expected
from the appraise?
8. Do they take into consideration realistically the
conditions under which the appraise is expected to
function during the year?
9. Do they satisfy both the appraise and appraiser?
10. Has adequate time been spent on the process of
identifying KPAs and gaining role clarity?
2.Goals — directions- if you do not know where you are
going, any road will be OK–
Goal setting is a process intended to increase efficiency &
effectiveness by specifying the desired outcomes towards
which individuals, teams & organisation should work
Goals includes deadline, budget, and other standards of
behaviour and performance
Goals are quantifiable , consistent, precise, challenging,
measurable, achievable, shared, time related, team work
oriented.
SMART
 S – Simple
 M – Measurable
 A – Agreed
 R – Realistic
 T – Time related
3. Performance agreement -- performance
agreements set the direction & form the basis of
measurement, feedback, assessment in the
performance management system
- Defines work to be done
- The attributes required (skill +knowledge +
attitude)- competencies required
- Identified measures use to monitor review and
access
- Corporate core values required
4. Performance Measures – “If you can not measure you
cannot improve” – What is not measured is not worth
doing– Simple Measurements (Production, Quality, Cost,
Delivery, Safety etc .– profitability gets measured on-
-return on investment
-return on sale
-return on total capital
-return on book quality
-net income by total assets
Performance measures provide evidence of whether or not the
intended result has been achieved & extend to which the job
– holder has produced the result.
Performance measure becomes the basis of generating feedback
information.
Bench marking – “ if you know your self & your
enemy well, you can win thousands of wars”
“Benchmarking is a tool to help you improve your
business process. Any business process can be
benchmarked”
“Benchmarking is the process of identifying,
understanding, and adapting outstanding practices
from organisations anywhere in the world to help your
organisations improve its performance”
“Benchmarking is a highly respected practice in the
business world. It is an activity that looks outward
operations against those goals”
-performance appraisal for individual & team- each
organisation have its own- Moser bear has one
-balance score card for organization team and
individual
Financial performance
Customers satisfaction
Internal business processes
Employees learning and growth
 The Balanced Scorecard Provides a Framework to
Translate a Strategy into Operational Terms
Vision & corporate Strategy
0

Financial
•Objective
1 To succeed financially, how
•Measures
should we appear to our
shareholders? •Targets
•Initiatives
0

To achieve Customer
2
our vision,
•Objectives
how
should we •Measures
appear to
•Targets
our
customer? •Initiatives

3 To satisfy our Internal Business Process

shareholders
and customers, •Objectives
what business •Measures
processes must
we excel at? •Targets
•Initiatives
The weights assigned to different performance measures in the
balanced scorecard as used by 60 large companies surveyed by
Towers Perrin New York, is shown below:-

Innovation/
learning results 5%
Developmental
result 9%

Internal
business
results 12%
Financial results
55%
Customer focus
19%
5. Competency– Competency Mapping, Competency
Profiling, Competency Matching and Job
Matching- at two levels behavioral & technical.
 Competence is skill based attributes- measures
what, what people can do.?
 Competency is behavior based attributes, applies
on performance, measures, how, how they do it –
Behavior or set of behaviors' that describe
excellent performance in particular work
context– Applied knowledge and skill– Behavioral
application of knowledge that produce results
Competency Model
performance
Informance & understanding
needed to fulfill responsibilities
knowledge

Acquired ability or experience

skill needed to fulfill responsibilities

Natural ability that prepares a person

aptitude
to fulfill responsibilities
attitude
attitude
Way of thinking or Behavior
needed to fulfill responsibilities
Competency caused flow chart
Input Action Outcome

Personnel
attributes Behavior Job performance
& skills
Why Strategies Fail

8%

17%
35%

40%

75% fail because of people- lack of competency and reluctance

reluctance to change.

‘People don’t resist change, they resist change without being changed’
In a study conducted by Mc Kensey in 340 organizations
worldwide on “Why Strategy Fails”, only 17 percent of
strategic failures were due to bad strategy and 8 percent
due to other reasons such as ‘September 11, War natural
calamity, etc. the remaining 75 percent were due to lack of
competency of the people who implemented the strategy;
precisely 40 percent due to lack of knowledge and skills
and the other 35 percent due to lack of right attitude, i.e.
willingness to change, managing feeling and emotions, etc.
People who excel at their jobs demonstrate behavior that
distinguish them from their peers. Directing these
behaviors are “Competencies” which we define as
underlying personal characteristics that differentiate
outstanding performance from average performance in a
given job, role, organization or culture.
 List of managerial competencies
1. Planning ability
2. Organizing ability
3. Co-ordination
4. Supervision
5. Leadership & dynamism
6. Initiative
7. Resourcefulness (oral & written)
8. Creativity & Imaginativeness
9. Development of subordinates
10. Contribution to team spirit
11. Analytical abilities
12. Delegation
13. Public relations
14. Sociability
15. Self-confidence
16. Decision-making
17. Cooperativeness
18. Flexibility
19. Problem-solving
20. Risk –taking
21. Ability to motivate subordinates
22. Conflict management
23. Communication skills
24. Perseverance
25. Hard work
26. Integrity
27. Drive
28. Empathy
29. Assertiveness
30. Originality
31. Data management
 Threshold competency – minimum, essential for every manager but that does
not distinguish
 Differentiating competency – superior from average performers
Competency for high achiever
1. Personal drive (achievement motivation)
2. Analytical power
3. Strategic thinking
4. Creative thinking (ability to innovate)
5. Divisiveness
6. Commercial judgment
7. Decision making
8. Team management & leadership
9. Interpersonal relationships
10. Ability to communicate
11. Ability to adopt & cope with changes & pressure
12. Impact on result
 Creativity & innovativeness– Creativity is more than just inspiration. It is
perspiration and hard work too… many of us believe that creativity is a gift given
to only chosen few. Nothing can be further from the truth. All of us are creative
in our own little way. Creativity is a route to self-fulfillment and satisfaction.
COMPETENCY MAPPING –A TOOL FOR OPTIMIZING THE HUMAN

CAPITAL
The term “Human Capital” describes the economic value of the
organization's knowledge, skill, and capabilities.
Human Capital is intangible and hence cannot be managed the
way organizations manage jobs, products, technology etc.
“Can a round peg fit a square hole? So can’t a wrong employee in
a right organization”
The organization will have to find a correct person who will fulfill
its expectations or will have to chisel and shape up the existing
employee to fit its expectations.
“Know the dimensions of the square hole And buy a square peg
Or chisel the round peg to fit.”
“Successful Companies of the 21st Century will be those who do
the best job of capturing storing and leveraging what their
employees know”
Thomas Stewart in his book “Intellectual Capital: The New
Wealth of Organisation” says that Intellectual Capital is
the intellectual material, knowledge information,
intellectual property, and experiences that can be used to
create wealth.
The term ‘intellectual Capital’ represents the awareness
that information is a factor of production, as economists
would describe it, in the same category with land, labour,
capital and energy. In the early mid 1990s there was an
increasing awareness in the business community that
knowledge was an important organizational resource that
needed to be nurtured, sustained, and, it possible,
accounted
5. Monitoring & Mentoring performance----
monitoring employees performance & mentoring their
development is the heart & soul of performance management.
Performance management aims at sustained effort for –
a. performance improvement
b. enhancement of managers competencies
c. organisational learning
- differentiating leadership with leader
A leader is one who knows the way, who shows the way, who
goes the way
-situational leadership (Directing, Coaching, Supporting, Delegating) -
Introducing movers of human behaviors – coaching & mentoring –
continuous search for drivers of performance & movers of human
behavior – creating achievers - enriching performance through
diversity- creating building trust- encouraging change - measuring
results
-Mid term review.
How can managers get extra ordinary performance from ordinary
people - by effectively & systematically managing performance
– three basics principles of high performance-create trust, encourage
change, measure the performance, -----(reinforce and reward)
Some monitoring
Manager meets employees regularly, on the spot, during
work process, facilitate change .
Praises good performance
Sharing feeling than passing remarks
Demonstrating & demanding integrity in behavior &
intent
Exacibility & availability to the employees
Correcting faults then condemning
Nurturing effective working through continuous
improvement.
Counseling/coaching/mentoring behaviors
Pygmalion effect
 6. Performance Appraisal
7. ANNUAL Stock taking /Performance Review Discussion and
feedback- Performance review- letting employee know where he stands-
process of analysis of achievement and deficiency- providing opportunity
for in-depth exploration for introspection with the mentor -
reinforcement in case of deficiency, (T & D, counseling, coaching,
mentoring etc.), appropriate reward in case of target fulfillment
Objectives –
1. Helping him to realize his potential as a manager or a leader etc.
2. Helping him to understand himself –his strengths and his weakness.
3. Providing him an opportunity to acquire more insight into his
behaviour and analyze the dynamics of such behaviour.
4. Helping him to have better understanding of the environment.
5. Increasing his personal and inter-personal effectiveness by giving him
feedback about his behaviour and assisting him in analysing his inter-
personal competence.
6. Encouraging him to set goals for further improvement.
7. Encouraging him to set goals for further improvement.
8. Creating an empathic atmosphere to share and discuss his
tensions, conflicts, concerns and problems.
9. Helping him to develop various action plans for further
improvement.
10. Helping him to review in a non-threatening way his progress in
achieving various objectives.
Condition for performance review discussion
 General climate of openness and mutuality
 General helpful and empathic attitude of management
 Sense of uninhibited participation by the subordinates in the
performance review process
 Dialogic relationship in goal setting and performance review
 Focus on work-oriented behavior
 Focus on work-related problems and difficulties
 Avoidance of discussion on rewards and punishment
Methods of review
-tell & sell, tell & listen, problem solving
7. Feedback- Feedback is transmitting information from
one part of system to another part to do corrective
action or initiate new action. Self feedback is highly
desirable feature of PMS but there is always need for
managers, colloquies, inter and external customers to
provide feedbacks based on their observation (360
feedback). Feedback is considered positive because it is
developmental –
8. build feedback in to the job
9. on the actual event
10. describe do not judge
11. refer specific behavior
12. be positive
13. suggest correction
8. Conditions for effective feedback
 Descriptive and not evaluative
 Focused on the behaviour of the person and not on the person himself
 Data based and specific and not impressionistic
 Reinforces positive new behaviour
 Suggestive and not prescriptive
 Continuous
 Mostly personal, giving data from one’s own experience
 Need-based and solicited
 Intended to help
 Focused on modifiable behaviour
 Satisfies needs of both the feedback given and one who receives
feedback
 Checked and verified
 Well timed
 Contributes to mutuality and building up relationship
Unhelpful and helpful response of the appraisal
1. Unhelpful
 Not encouraging creative acts
 Passive listening
 Lack of verbal response
 Critical
 Criticizing
 Pointing inconsistencies
 Repeated mention of weaknesses
 Belittling
 Reprimanding
Directive
 Prescribing
 Ordering
 Threatening
 Giving no options
 Pointing out only one acceptable way
 Quoting rules and regulations
2. Helpful Appraisal
Empathic
Leveling
 Rapport building
 Identifying feelings
Supportive
 Recognizing
 Communicating
 Availability
 Committing support
Trusting
Exploring
 Questions
 Reflecting
 Sharing
 Probing
Closing
 Summarizing
 Concluding
 Contracting for follow-up and help
 Performance Reward, Development & Recognition
The outcome of performance appraisal should be linked
to:
1. Performance linked pay.
2. Development opportunities.
3. Challenging assignments in various task forces in
the company.
8. Counseling and Coaching & mentoring –directing
people to do has always produce inferior results
compare to inspiring people to do an excel. While
counseling helps people to come out of
helplessness, coaching & mentoring inspires people
to an excel
Counseling is helping people to help themselves to
achieve what they want to-complete acceptance,
empathy, listening, sensitivity, impartiality, helping
to explore his own confusion, working out
improvement plan along with him.
Coaching is to assist others to make changes in their
work lives or to adjust to changes with view to
improving the performance-not teaching, not
instructing, not training it is on the job to help
people develop their skills and level of competence,
making people aware of their deficiency and
encouraging them to improve- coaching is a process
were by one people helps another to unlock their
natural ability to perform learn an achieve- to
increase awareness of the factor which deterring
performance,
to increase their scene of self
responsibility and ownership of their
performance, to self coaching to
identifying & remove internal barriers
of achievement
A mentor is experienced and trusted
advisor – combine four roles- coach,
teacher, sponsor (adding new
challenges), devils advocate (unusual
way of looking at things)- role model
Conclusion
As Sherman Roberts of Harvard university puts it:
“The best way to run an organization is also the best
way to treat people”
In the words of Edward Gibbons, an English
historian, “The winds and waves are always on the
side of the ablest navigator.”
 COMPENSATION & REWARD
C/R possibly the most critical & strategic area of HRM
Employers perspective , Employees perspective,
Concept of compensation,
An organization exists to accomplish specific goals &
objectives hence, hires employees. The individuals hired
by the organization have their own needs. One is for
money, which enables them to purchase a wide variety
of goods & services available in the marketplace. Hence
there is a basis for an exchange: the employee offers
specific behaviors desired by the organization to meet
its goals and objectives in return for money, goods, & /
or services.
Sale of hands – brains – soul??
Compensation emphasizes on fair- day’s pay for
fair day’s work.
Purely extrinsic – A quid pro quo contract All
forms of financial returns and tangible services
and benefits employees receive as part of
employment relationship-
Cash- compensation –Base Pay, D. A. Short Term
Incentives, Long Term Incentives (Equity Incentives)
Benefits – Income Protection, Allowance, work/Life-
Protecting ones
Bonuses (attendance, performance based etc)
Shifts, Supplements.
Danger money/ Dirt money
Immediate focus
Trade – off between pay & efforts
Monetary contract
 CONCEPT OF REWARD

Composite of all organizational mechanisms, and strategies

used to finally acknowledge Employees’ behavior &
performance. It includes all forms of compensation,
specially non- monetary, awards & recognition, training
opportunities, promotions, assignments, working conditions
etc.
Located more in behavioral science
It part of broader strategies of enhancing loyalty, motivation &
satisfaction
Encompasses career opportunities, job- securities, learning
opportunities, achievement, recognition
 Economic incentives are becoming rights rather than rewards”. So
we must acknowledge that insufficient monetary rewards for
performance can not be rewards for performance can not be
compensated by good human relations.
 If talent is an organization’s most important asset, maximizing
that talent is its most critical challenge. The challenge lies in issues
relating to developing the skills to motivate people to perform at
their best, making work meaningful and rewarding, fostering
commitment & innovation, retaining top performers & improving
their job performance today & giving them the edge they need to
become the leader of tomorrow.
 More prospective in focus
 To unleash latent potentials
 To create sustained commitment
 Psychological contract
 “Personal recognition can be more motivational than money”
asserts Bob Nelson, author of 1001 Ways to Reward Employees
(Workman Publishing, 1994). “You can obtain from your
employees any type of performance or behaviour you desire simply
by making use of positive reinforcement.
New Trends in Compensation
Management
It should be variable performance-based pay and not
annual increments.
It should be risk-sharing partnership and not
entitlement.
It should provide flexible opportunity to contribute,
and not tied to a fixed job.
It should provide for lateral promotions and not
career parts.
It should ensure employability and not job security or
pay security.
It should encourage team working and not individual
working.
Charles Handy-” The new organization
equation for success is that profit and productivity are
best created by half of the workforce, paid twice as
well and producing three times as much.” This can be
achieved through performance linked incentive and
reward system.
 ADVANTAGES OF C & R SYSTEM – A MANAGEMENT PERSPECTIVE
Attracting & retaining good performer
Improving Individual & Corporate Performance
Improving Motivation
Clarifying job- role & duties
Improving communication
Reinforcing management control
Identifying developmental opportunities
Importance that job deserves (Status, Skill, Responsibility)
Encouraging loyalty to the Organization
Controlling cost
Complying Govt.’s Policies/ Laws
Maintaining Co.’s Image
ORGANISATION’S COMPENSATION POLICY

Business Strategy –
To attract, retain, motivate the Right man
What org. can afford
What talent will be required to meet org. strategic
goals
The economy- macro level factors like global
trends, national wage policies- minimum, fair &
living wages, legal provisions
Employer employee are having different perspective of
compensation.
Compensation & reward different concepts
Macro National level compensation policy
Industry ( micro level compensation policy)
PAY POLICY

1. Motivational strategies Internal Consistency –

Adams equity theory of motivation
Job evaluation – to find the worth of the job
2. External Parity
Labour Market/Ongoing rates
Capacity to pay –
3. Organization strategy
Wage structure
Wage/job family
 Managerial
 Technical/supervisory
 Administrative/clerical (staff)
 Manual- Highly skilled, skilled, semi skilled, unskilled
Components of wage structures
 Basic pay
 Base pay (fixed pay+ variable pay)
 Dearness allowance
 Other allowances & Incentives like bonus etc.
Incentive Scheme
Schemes where the workers’ earnings vary in the same
proportion as output
Schemes where earnings vary less proportionately than output
Schemes where earnings vary proportionately more than
output
Schemes where earnings differ at different levels of output.
This points to designing appropriate reward programmes
linked to performance.
Total reward system-
Total Reward System has both monitory and non-
monitory components, comprising incentives such as
base- pay, variable pay, benefits, an exciting and
challenging work environment the opportunity to work
with excellent colleagues and leaders and industrial
growth opportunity- the concept has been derived from
Herzberg’s theory of motivation- Hygiene factors +
motivators
 Direct financial- Base-pay, variable –pay, incentives, stock options,
Bonus, Merit increases, Spot-rewards, deferred- payment etc.
 Indirect-financial- Benefits, Perquisites, non-cash-recognition,
sabbaticals, Q.W.L-/Clubs, Co’s paid holidays, children schooling,
home-office, career-counseling etc.
Profit is the most important criteria
Scheme may use cash, or share
Gain sharing
Share office scheme
Employees share ownership plan
Higher software system offers a platinum stock
option – no real share transfer, employers receives
a cash payment equivalent to the rise in value of
national stock
Incentive ………Non cash awards
Skill based pay allows employees to program
through a range of grade
Broadband pay
 Compensation system

Indirect compensation Direct compensation

Protection programs Pay for time not worked Services & Perquisites
•Medical insurance •Vacations •Recreational facilities
•Life insurance •Holidays •Care Base pay Merit pay
•Disability income •Sick leave •Financial planning
•Low –cost or free meals
•Pension social security •Jury duty

Incentive pay
•Bonus
•Commission

Salary •Piece rate

•Profit sharing
•Stock option
•Shift differential

Deferred Pay
•Savings plan
Wage •Stock purchase
•Annuity
Legal aspect of Compensation
 Minimum wages act
 Payment of wages act
 Equal remuneration act
 Payment of bonus act
 Income tax act
Principle of compensation
Equitable compensation systems
 Internal equity – through job evaluation methods
 External parity – market survey methods
 Job pricing
 Pay ranges
 Broad banding
Wage structure
Wage Differential
Fair Wages Committee
The degree of skill
The strain of work
The experience involved
The training required
The responsibilities undertaken
The mental & physical requirements
The disagreeableness of the task
The hazard attendant on the work, and
The fatigue involved.
Wage component
Basic/ DA + variable pay + fringe benefits
 Standard Pay Package
Government Department
 Basic
D A : 100% to 50% neutralization of dearness
 HRA : different for different category of cities Delhi 30% of basic
 CCA : According to city (A class, B Class, C class
 Conveyance : Different for different slabs of pay

Public sector undertakings

 Basic : Rs 4/- per point of price indices
 DA : According to city (A class, B Class, C class
 Conveyance : Different for different slabs of pay
 HRA: 30%, 20 % & 15% of A, B, C category of citied
 Tiffin Allowance : Rs 30 /- per day
 Education Allowance : Rs. 125/- per child, subject to maximum of two
 Electricity Water Allowance; Rs. 150/-
 General
 Annual Bonus or ex-gratia
 LTC/ LLTC
 Medical – self, wife, children, parents, unmarried sister, widow sister
 Leave Encashment
 Private sector
 Basic (fixed + variable )
 HRA 35 % of basic 45%
 Education & Hotel Allowance
 CCA
 Servant Wages
 Cost of living Allowance
 Special pay
 Annual
 Bonus
 Executive commission
 Medical
 LTC

 Note
 Statutory Elements:
 PF (12%- 12%)
 Pension- as per scheme (legal scheme or developed by company)
 Statutory Bonus
VARIABLE PAY SCHEME/ PAYMENT BY RESULT
Wages for Fair Day’s work, for More Work-wage
incentive
Linking pay to performance
Variable pay
What is performance related pay?
“Financially measurable reward to an individual which
is linked directly to individual team, or co’s
performance.”
PRP links pay progression to performance and/or comp
rating
Merit Pay individual incentive bonuses individual
discretionary bonuses, team / to prefer bonuses, skilled
based payment etc.
Merit pay – basic salary increase by ….. Performance
alone (i) incremental system (ii) percentage increase
Individual bonuses – Senior executives, sales managers
production managers - reward for performance subject
to assessment after the event.
Team /group bonus- designed for group performance
CO wide scheme – separate, identifiable reward to all or
some, depending on co’s performance
 Types of Variable
Pay Plans

Individual
•Piece rate
•Sales commissions Group/ Team Organization- wide
•Profit sharing
•Bonuses • Gain sharing
•Employee stock options
•Special recognitions •Quality improvement •Executive stock options
•(trips, merchandise) •Cost reduction •Deferred compensation
•Safety awards
•Attendance bonuses
 Factors for successful Variable Pay Plans
Sufficient
Financial
Resources Consistent
Linked to
Available With
Organizational
organization
objectives
Culture

Clearly
Results in
Separated
Desired
From base
behaviors
pay
Variable
Pay
Clear
Clearly
Understandable
communicated
Plan details

Performance
Results
Measurable
Linked
performance Current To
Updated payouts
plans
Broad Classification of Fringe Benefits-
Different
 Perspective
Broad Classification of Fringe Benefits- different
perspective
Legally required – (a) Old-age, disability, health insurance
(b) Unemployment compensation, (c) State Sickness
benefits
Retirement Benefits
 Pension
 Profit Sharing
 Stock Bonus
Life Insurance
Medical
Paid rest period
Payment for time not worked
Miscellaneous + trends
 Discounts on goods/services
 Employees’ Education
 Employees meals
 Child care
 Elder care
 Early retirement windows – golden offerings
 Consulting Services
 EAP
 Personal Services – Picnic, Club
 Job related services help employees to prefer their jobs better
 Subsidized transport
 Food service
 Education
 Family friendly benefits
 Some popular forms of non-monetary
rewards
Treats Knick- Awards Environm Social Tokens On-the –
Knacks ent Acknowledge job
ment Rewards
•Decorati • Trophies • • Informal • Movie • More
•Free ve Renovatio recognition tickets responsibilit
lunche • Plaques
•Co. n • Recognition at • y
s •
Watches Certificates • Music office get- Vacatio • Job
•Festiv
•Tiepins • Scrolls • Flexible together n trips rotation
al
bashes •Brooche • Letters of hours • Friendly • • Special
s appreciation • E-mail greetings Coupon assignment
•Coffe
• Solicitation of s s
e •Diaries
advice/suggesti redeem • Training
breaks •Calenda on able at •
•Picnic rs stores
s • Membership Representin
• Wallets of clubs • Early g the
•Dinne • T-Shirts time-offs
• Company company at
r with
facilities for • public fora
the
Executive Compensation

Perquisites

Supplemental Benefits

Long- Term Incentives

Annual Bonuses

Executive Salaries
 Common Executive
Perks

Transportation
Financial/Legal Memberships
•Financial planning
• Company car or car allowance • Country club
•Tax planning/ tax preparation
•First class air travel
•No or low interest loans •Health club
•Company airplane usage
•Legal counseling •Luncheon club
 Arguments in the Executive Pay debate
Criticisms Counter- Arguments
 Boards of Directors give sizable  The market for executives is tight.
rewards to both high & low Bidding wars & concern over
performing executives retention drive compensation
 Executives should not get rewards & packages.
bonuses for laying off much of the  Executives are paid for making
workforce difficult decisions to benefit
 Total compensation packages, companies
especially with the “golden  Sports & entertainment stars earn
parachutes” for failure, are out of as much or more for playing games
line. or acting.
 Many people contribute to a  CEOs earn their money with
company’s success, not just the endless hours, great pressures, and
CEO. Others are paid only a fraction skill sets that few others possess.
of CEO’s salaries  Measuring executive performance
 Executive compensation frequently is difficult, and stock prices alone
is not linked to company are insufficient.
performance.
Latest Indian Scenario
 Average Wage Hike May Be 15.2% In 2008, Real Estate &
Infrastructure To Get Highest
 Pay hike in India moved up from 14.4% in 2006 to 15.1% in 2007. And
despite global concerns of an economic slowdown in the US, 2008 is
expected to be better with a 15.2% average pay hike in India.
 For real estate and infrastructure sector, average pay hike was 25.2%
in 2007 and expected to remain at a similar level this year.
 The average salary increase rate in India is expected to slow down to
9-10% by 2012.
 The top five attrition prone sectors were insurance (35.2%), ITeS
(28.9%), hospitality (27.1%), retail (24.7%) and telecom (23.6%). The
sectors that recorded the least attrition include automotive, energy,
chemicals, electronics and FMCG.
Tax Planning
The basic purpose of tax planning exercise is to
minimize the incidence of tax to both the
employer and the employee.
All constituent parts of employees remuneration
are deductible as business expense to the extent
possible.
Remuneration received by the employees should
qualify for concessional rate of taxation so that
their post tax income is maximized.
Tax planning and tax avoidance are two distinct
legal concepts.
Emerging Trends
Charles Handy- “The new org equation for success is
that profit & productivity are best created by half of the
workforce, paid twice as well and producing three times
as such.” This can be achieved through performance
linked incentive and reward system.
Such a system works on a very simple promise- “If you
measure it, people will do it. If you measure it & pay for
it, people will do it in spades. If what you measure
matches corporate goals and strategies, the co. will be
successful.”
TRAINING &DEVELOPMENT FOR PERFORMANCE
IMPROVEMENT

Philosophy of T & D

“Amantro……………………………………” Rigved

Today’s organizations must emphasize the characteristics of

quality and continuous improvement, flexibility and
adaptability in order to survive and be effective.

A life long process

 The training function, now popularly called human resource
development (HRD), coordinates the provision of training and
development experience in organisations
 Training & Development refers to imparting of specific skills, attitude
and knowledge to an employee for improved performance
 It is any attempt to improve current or future employee performance by
increasing an employee’s ability to perform though learning, usually by
changing the employee’s attitude or increasing his or her skills and
knowledge.
 The need for training and development is determined by the
employee’s performance deficiency, computed as follows:-
Training & development need= standard performance
–Actual performance
Education, training, development
 Why training?
Newly recruited employees require training
Existing employees require training for higher level job
Existing employees requires training
Training is required for attitudinal & behavioral changes.
T & D Process
Training need identification
Training need assessment
Training need judgment
Budgeting and controlling the cost
Selection of learning process & training
methodology
Planning, designing & conducting the process
Evaluation of programme, the trainee & the feed
back records
Systems Model of Training PHASE 4
Evaluation
•Reactions
PHASE 3 •Learning
Implementation •Behavior
•On – the- job (transfer)
methods •Results
•Off- the – job
methods
PHASE 2
•Management
Design development
•Instructional
PHASE 1 objectives
Note
Needs Assessment •Trainee U.S. Organizations spend more than $50
readiness Billion annually on training.
•Organisation
•Learning Much of that investment is wasted
analysis Because it is not done in
Principles
•Task analysis a systematic way
•Person analysis
The HRD budget normally covers the following:
1. Cost of Staffing
2. Cost of planning
3. Cost of TNI & TNA
4. Cost of appraisal
5. Cost of recruitment or selection
6. Cost of testing progress
7. Cost of trials
8. Cost of running programme
9. Cost of valediction
10. Cost of training materials & training aids.
11. Cost of revising and re-testing
12. Cost of publishing or awarding
13. Cost of updating competence
14. Cost of feedback system
An instructional Systems Design Model

DESIGN & DEVELOP

ASSESS NEEDS DELIVER EVALUATE
Design & develop
Assess training training, applying Deliver Evaluate training:
needs knowledge of learning Training Were objectives
•Organizational principles met?
analysis •Select training •Reaction
•Job & task methods
•Learning
analysis •Develop detailed
content •Behavior
•Person analysis
•Develop training •Results
Develop training .
objectives materials
•Pilot test training
program
•Train trainer
Methods & Sources of Information for Needs Assessment

Methods of Gathering Data Sources of Information

for Needs Assessment  Existing records (e.g., output, quality,
waste, downtime, complaints, accidents
 Search of existing records reports, requests for training, exit
 Individual interviews interviews, performance appraisals,
equipment operation manuals,
 Group interviews procedures manuals, job descriptions,
 Questionnaires hiring criteria, personnel files,
 Performance tests competency models & profiles)
 Written tests  Incumbents
 Assessment centers  Superiors
 Observation  Subordinates
 Collection of critical  Subject matter experts
incidents  Clients
 Job analysis
 Task analysis
Training need analysis
 Org. analysis
 Job/Task analysis
 Man analysis
 Analysis of equipment
 Manpower analysis
 Brain storming

Method of training
On the job training:- Formal on-the-job training (OJT) is
conducted at the work site and in the context of the actual job.
 Orientation training
 Job instruction training
 Apprentices’ training
 Internship
 Job rotation / job enlargement / job enrichment
 Coaching
 multiskilling
Off the job training
 Lectures
  Films / computerized / packaged / programmed instruction
 TVs
 Discussion / conferencing
 Case & studies
 Role Playing
 Simulations /games
 Sensitivity training
 In basket / in tray, method

Different techniques of Training

 Ice Breakers – games to know each other
 Leadership Games – different styles of leadership
 Skill Games – analytical skill
 Communication games – bias free listening & talking
 Team- building games – collaborative effort
 Mirroring – external
 Monodrama – insight
 Outward- bound Training- stress, courage
 Cross cultural training – varied culture
 E-Learning
E-learning methods include training delivered by
CE-ROM, intranet, satellite broadcasts; virtual
classrooms; and digital collaboration between
trainees.

Advantage of E-learning
- Training can be conducted at remote or
international sites, 24/7.
- Training is available on demand, when needed or
when the work schedule permits.
- Costs for trainers and travels are very limited.
- New programs and updates can be delivered
worldwide simultaneously.
- Very large numbers of people can receive the training
at the same time.
- Programs can provide online assessment/certification
and immediate feedback to learners.
Different Instructional Methods for Employee Training
INSTRUCTIONAL METHODS
 Classroom programs – live
 Workbooks/ manual
 Videotapes
 Public seminars
 Computer- based
 Intranet/organization's internal network
 Self- study programs (Non computerized)
 Internet/ WWW
 Self assessment instruments
 Role plays
 Case studies
 Games/ simulations (not computer based)
 Audio cassettes
 Games/ simulations (computer- based)
 Video conferencing (to group)
 Satellite/ broadcast TV
 Teleconferencing (audio only)
 Outdoor experiential programs
 Videoconferencing (individual desktops)
 Virtual reality programs
Contribution of Training
Increased productivity
Improved morale
Reduced supervision
Reduced accidents
Increased organizational stability

Evaluation of training Programme:

Questionnaires (feedback forms)
Test / Exams
Interview
Observations
Supervisions
Kirkpatrick’s Four Levels of Training Evaluation
Evaluate Reactions
 Did the trainees like the program, the
trainers, the facilities? Distribute & analyze questionnaires
 Did they think the course was useful?
 What improvements can they suggest? Administer
Evaluate Learning  Written tests
 To what extent do trainees have greater  Performance tests
knowledge or skill after the training  Graded simulations
program than they did before?
Evaluate Behavior Collect performance data from
 Are trainees behaving differently on the  Superior
job after training?  Peer
 Are they using skills & knowledge they  Client
learned in training?  Subordinate
Evaluate Results Measure
 Is the organization or unit better  Accidents
because of training?  Quality Costs
 Productivity profits
 Turnover
How to make training effective?
Management commitment
Comprehensive, continuous & systematic approval
Need based training
Link T& D with performance
Review of training policies/ practices
System of evaluation of training effectiveness.
 By:
B.D Singh
Prof. HRM & Dean MDP & Consultancy
IMT, Ghaziabad
 Understanding IR

 IR is most misunderstood & even maligned subject

 People have written its obituary
 IR is basically a relationship management &
relation will continue till humanity/ industries exists.
 Relationship can be co-operative or adversial (conflicting)
 In our life personal or organisational, we have relate
ourselves to others - relationships gets built
 I R is a culture of working together in industry – a network of
relations
 Cooperation can not be regulated /bought
 Co-operation requires positive approach of manage people –
it requires building, nurturing & developing relationship on
continuous basis – bringing in transparency & fairness in our
dealings, communicating , motivating & leading etc. –
inculcating ownership & we – feeling – introducing devices
for lasting bondage – building bridges of trust – developing
healthy relationships
 Conflict in inevitable. It is generally harmful. Requires immediate
resolution.
Two( broadly) types of conflict –
1. Interpersonal – employer & employee
2. 2. Inter group/ inter organizational
 Interpersonal conflict arises out of terms of employment between
employer & employees (Workmen) – Regulated by laws.
 Govt. employees,
 Industrial workmen –
 Managers in industries
 Inter group/ Inter organizational – individual employee is not able to
deal with mighty employer, they form unions / association on the
principles of individual dispensability and collective indispensability –
survival instinct fundamental right / ILO convention
 Collective disputes/ industrial disputes – wage settlement, service
condition, retrenchment etc.
 Instrument like collective bargaining & strike & lockout
 Actors in the game of ER act & interact - managing human resource
means directing, controlling, motivating & in the process reciprocating to
their responses, most of the times bitter ones. ,resulting in conflicts.
 All these actions & interactions are regulated by laws/ & judiciary
 Industrial employment (standing orders) act, industrial dispute act, trade
union act, High Court, Supreme Court judgments.
ER is a complex subject
 Highly susceptible to forces within and outside the organisation
 Economic, Social, Psychological,Political, Technological and Market: local
and global
 Network of Relationship – non leaner/Criss - Crossed
 Social relation at workplace
Does not have a fixed profile
 Changes as per the pulls and pushes of the market
 Started as reaction to exploitation by mighty employers
 Post independent IR : CRP
 Post liberalization ER : LPG
- Global competition
- Global networking
- Global mindset
- Global standards
- Speed and responsiveness
- Total quality
- Customer concern
- Survival and excellence

- Change both in context & contents

Changing Business Skylines / Environment and
Employee Relations
Post industrial societies- the third wave- (toffler)
Sunrise industries – IT, ITES, Telecom, Hotel, Health
services, Insurance, Pvt. Banking, Pharmaceuticals, Retails,
etc. more of employment in these sectors
– Employee Based Organizations
 Require: Service oriented work force
 E-industries (BPOs, KPOs) mushrooming
 Knowledge workers
Shrinking organized sector:
 Traditional Manufacturing sector
 Technological upgradation, restructuring, retrenchment,
Disinvestment, Mergers & acquisitions
Entirely different organisation structure: Flatter, leaner-virtual
organizations
Employers: mostly MNCs, professionally driven, competitive mindset
– In the new context, heavier responsibilities fall on employers and
their organizations. Some need to give greater attention to
empowerment, rather than exploitation of human resources. Building
skills and giving the workforce greater say and stake in the enterprise
becomes imperative.
Employees: Diverse in character, white collar, pink collar, female
workers, multi-ethnic/multi-cultural workforce, migrant labour,
contract labour etc. – The colour of the collar of the worker in the
organized sector is changing. There is a gradual reversal in the ratio of
executives to non-executives. Over the years, in most companies,
executives outnumbered non executives. Technological changes
eliminating the 3D jobs – dirty, dangerous, and drudgerous – and
lower and middle level information gathering and processing tasks
warranting different kinds of age, contracting out and outsourcing
whereby the permanent employee strength shrinks to accommodate
those with core and critical skills, while banishing the rest to the
periphery of the organization in casual, contract, and contingent
employment.
• Changing role of Govt.: Controller  Facilitator (GOI has not
done much under political pulls and pushes)
Some states are waking up to the need for wooing investment, foreign
and domestic, and creating jobs. In the process they are resorting to
competitive labour policies that are ‘investor friendly’. The components
of the industrial relations policy of Kerala, the relaxations and
exemptions to labour inspections in Rajasthan and Uttar Pradesh, the
liberal response of the Tamil Nadu Government to requests from
employers for notice of change, lay-off, etc., and the cancellation of
the registration of an unusually large number of unions in West Bengal,
have had far reaching implications for industrial relations.
Central laws being the same, their interpretation by the judiciary is
changing. In 2005 alone, in five different cases, the Supreme Court
held that sleeping on duty, using abusive language against superiors.
Strikes have to be not only legal (refer to the strike by government
employees in Tamil Nadu,) but also justified. Where trade union action
is lacking, non-governmental organizations are rushing to fill the
vacuum, particularly in matters concerning minimum wages and living
conditions in the unorganized sector, and occupational safety,
environment, etc. in both the organized and the unorganized sectors.
• The core conventions of ILO and dictates of WTO, IMF and

SWB

International pressure is mounting to link labour standards

with international trade either through sanctions through
bi-,tri-, or multi-lateral institutions (governments and
international agencies, such as

New Actors on the Horizon – The consumers and community

have emerged as the new actors on the horizon. Since they
represent the larger aggregations of population and wider
societal interests, when their rights are impinged upon by the
action or inaction of either employees or employers the court –
consumer courts to the Supreme Court – rule that the
interests of workers and managements should take a back
seat.
Changing nature of work practices

• Contracting – outsourcing in place of self-sourcing

• Casualisation of work places
• Hiring work facilities
• Use of electronic gadgets
• PCs, SMSs, E-Mailing, Internet, Fax, Video Conferencing
• Changing work System: TQM, JIT, CAM, CIM
Contd…
Changing look of the offices-transparent, smart
24x7x365 Work culture
Paperless or less paper at least
Offices software
E-Documentation/ office software
Intelligent offices
Flexibility: Flexi timing, Flexi payment
Changing Employment pattern
 Life long employment
 Part time, Home working, Tele working, Share working
Contd…
Changing reward/ compensation system
Variable pay in place of guaranteed pay
Employee’s ownership: ESOP
Gain sharing/Profit sharing
Cafeteria benefit system
Emphasis on insurance and social security
New crop workers want to share power, responsibility
and gain
Emerging Trends and Issues
IR at cross road- unprecedented pressure- Meant for
CRP economy
Slow, Ad hoc, Reactive, Passive: Strike, Gherao,
Collective bargaining, Litigation
You cannot play the modern game of cricket with old
rules/dispensation of gulli-danda
Forces of inertia (Status Quo)
Emerging market requires: Speed, Quick
Responsiveness, Customer focus, zero defect, just in
time (JIT)
No nonsense, trade union taken as nuisance , non
unionism individual bargaining
Changing Pattern of C & R Management – Fixed /
Assured Time Wages are replaced by variable /
performance – based wages.
Job security to employability.
Pro-labour stance of government is getting
reduced.
The attitude of judiciary is also changing.
New players in the game of employee relations
 The aggressive approaches of Indian employers in the
service sector to trade unionism;
 The two extreme styles and strategies – ‘bleak house’ and
‘happy house’.
 The declining membership of trade unions, The decline in
the number of ‘skill’ workers and their replacement by
‘knowledge’ workers; and
 Trade unions should focus on managing the expectations of
the successive new generations of workers rather than being
content with their role in situations of discontent.

 Initiatives such as the recently formed Trade Unions

Partnership for Environmental Protection (TUPEP) are
welcome in the wake of mounting concern about the health,
safety, and environment in and around work. TUPEP may,
in association with other social partners, address itself to
new problems arising out of closure of units due to
environmental considerations, etc.
 Collective Bargaining – in collective bargaining, some of the
shifts include:

1. Centralization to decentralization;
2. Collective to individual contracts;
3. Parity to disparity;
4. Increased wages/incomes and benefits accompanied by
erosion of job control;
5. Concession bargaining
6. Assertion of managerial rights than the rights of workers;
7. Skill-up gradation
Social security – the shift from welfare to ‘money fare’ through the
conversion of several of the welfare benefits into cash is, however, a
worrisome development. The other trend is a shift in retirement
benefits from defined benefits to defined contributions. This puts the
real value of retirement benefits at serious risk.

• Employers directly reaching the work men and negotiating with

them
• Disinvestment / Privatization and VRS are almost accepted facts of
Industrial Relations.

Shifting roles of traditional actors – Over the years, a number of

changes have taken place in the industrial relations scenario. Not
only have the players changed (the inclusion of consumers and
community), techniques, technology, and power structures have
been re-examined and altered time and again.
 Burning problems at ER front
1. Volatile labour market
2. Attrition rate very high
3. Work life balance disturbed
4. Union free organisations
5. Gender related problems
6. Issues regarding multi cultural & multi ethnic workers
7. Almost law free atmosphere- SEZ
8. Government as facilitator & not as regulator

• All these activities have become regular features and are

increasingly impinging on emerging E.R.s. This trend is
going to be accelerated, in future.

Employee Relation has to address to all the issue

Towards new Management of ER

Managerial Beliefs/Practices and Structural Contradictions

1. The company is viewed as the property of the management. Workers have

no say/stake.
2. Mainly the management is interested in the organization, not the
union/workers.
3. Organizations expect commitment, while viewing people as ‘dependable and
disposable’.
4. There is conflict of interest and little concern for mutuality in rights and
obligations.
5. Workers can be punished, but not managers for wrong personnel
decisions/abuse of authority.
6. Continued emphasis on direction and control
7. In the name of responsible unionism, organizations expect unions to
manage (maintain) discipline, but later on grudge that unions have become
the de facto management.
8. Management responsibility is permanent and that of unions is transient (or
quasi permanent).
9. Third party dominance invited willy-nilly which causes a shift in the locus of
control.
Typology of the Effect of old Beliefs and New Values
Old Beliefs New Values
Aims: Both can have many things in common,
Capital and labour pursue different aims despite some legitimate differences
Mode of Operation: Facing realities, creating space within
Win-lose, hard nosed management decides which self-control is possible, and
and adjust if necessary contracting around agreements which
take account of differences: boundary and
inter dependence management,
situational management
Outcomes: Realistic plans, sharing in gains, genuine
Procedures, rules, agreement increases in productivity/competitiveness,
trust, harmonization
Information: Openness, transparency
Hold information close to one’s chest
Style of Management: controlling Mature, situational, and varied, but
consistently so
Feelings Generated: Negative Positive, mutual confidence and trust
Current and Suggested Role of HRM

Current Role Suggested Role

1. Strategic Orientation:
 Independent goals, not clearly  Strategic linkage with the goals of
linked to that of the organization, the organization
leading to activity trap  Flexibility. Human resource policies
 Standardization of HRM policies, to be tailored to fit the targeted
etc market niche view of rapid changes in
environment and growing emphasis
on competition
2. Management Philosophy:
 Emphasis on direction & control  Seek to achieve consensus and
commitment of people through
peoples’ participation
 Employees as a cost  People as a resource
 Hire and fire  Attract and retain motivate people
 Maintain discipline and seek  Build positive work ethos and
compliance with organizational needs organization culture for employee
motivation
 Hierarchical personnel policies and  Emphasis on horizontal personnel
practices practices with a view to harmonize
employee pay, benefits, and working
conditions
3. Performance Management:
 Emphasis on feelings and reliance  Develop database for objective
on subjective appraisal systems with measurement of facts for analysis
an eye on harmony with an eye on the bottom line –
developmental
4. Relationships:
 Master and servant relationship  Emphasize reciprocity and
reinforcing the negative, apartheid mutuality in relations
features of the social system in
workplace
5. Change in Approach:
 Power centre  Service centre
 Fire-fighting role  Proactive approach
 Building organizational pyramids to  Restructuring the organization to
take care of employee aspirations make them flat/horizontal
 Employee orientation  People and business orientation (to
include care of customers and other
constituents)
 People training (includes not only
 Employee training employees but also vendors, dealers,
customers, etc. and retaining
Handling the interface between Human Resource
Management and Industrial Relations

The management can establish a good industrial relations interface

with HRM in the following ways:

• Develop sensitivity to human needs and human problems at work

and beyond work.
• Evolve a value system based on trust, transparency, fairness, and
equity. Pay attention and practice the core values professed by the
organization: walk the talk and talk the walk. In all areas of decision-
making - specifically transfer, promotion, and reward systems –
there is a need for objectivity and concern for balancing the
aspirations of the people with that of the organization.
• Institutionalize openness in subordinate – superior relationships.
Allow the subordinates to speak hard facts and ventilate their
grievances even though they appear to be initially, unpalatable and
fictitious assumptions respectively.
• Deal with employee grievances promptly and explain the logic and
People cooperate when they understand.
• Tell the human resource management department and
professionals to operate through the line of
departments/professionals
• Consciously provide exposure and understanding to line managers
on human resource management aspects.
• Let line managers handle the day-to-day human resource
management activities and issues/problems.
• Information sharing and consultation are prerequisites for shared
understanding and co-operation.
• Review HR/IR policies and practices from time to time. Rules and
procedures should unleash and facilitate, not block and hinder
human potential in the organization.
Case-let

A few decades ago, Rusi Mody was invited by J.R.D. Tata, the
then Chairman of Tata Iron and Steel Company, and Abdul
Bari, veteran trade union leader in the same company and a
renowned politician, to require why the workers in the
company, where young Rusi Mody was Personnel Officer,
were not joining unions even though workers in all the other
firms in similar lines of business in the same neighborhood in
Calcutta were forming into trade unions. Rusi Mody replied
that the management was doing what the union could have
done – taking good care of the employees – and that if ever
the management were to shirk back in its responsibilities to
the employees they would need the shoulder of a trade union.
In other words, if employees are regarded as people and
taken good care of, they would not need a trade union.

Do you agree with this viewpoint? Discuss this in today’s

context.