Definition, scope, techniques of HRM and performance evaluation

1. Chapter 2
Human Resource Management
1
• Meaning ,definition and evolution of HRM
• HRP
• Job analysis
• Recruitment ,
• Selection
• Performance appraisal;
• Wage and salary adjustments

2. HRM Meaning and Definition
 Human Resource Management is concerned
with the people dimension in management.
 Since every organisation is made up of people,
acquiring their services, developing their
skills, motivating them to higher levels of
performance and ensuring that they continue to
maintain their commitment to the organisation
are essential to achieving organisational
objectives.
 This is true regardless of the type of
organisation – government, business,
education, health, recreation or social action.2

3. Evolution of Concept of HRM
 The Commodity Concept ( labour was regarded as
commodity to be bought and sold )
 The Factor Of Production Concept ( labour is like any
other factor of production )
 The Good will Concept ( welfare measures have positive
impact on labors )
 The Paternalistic Concept ( fatherly and protective
attitude towards employees )
 The Humanitarian Concept ( fulfill physical , social &
psychological needs of employees )
 The Human Resource Concept ( employees are most
valuable assets of organisation )
 The Emerging Concept ( employees should be accepted as
partners in the progress of company)
3

4. Strategic HRM
1. The human resources are major
source of competitive advantage ,
people can make or break organisation .
2. Successful organisational
performance depends on a close fit
between business and human resource
strategy
3. Individual HR strategy should cohere
by being linked to each other to offer
mutual support .
4

5. Role of HR Manager
 “Human resource managers , now days ,
wear many hats . They perform mainly
three different types of roles while meeting
the requirement of employees and
customers , namely
1. administrative ,
2. operational and
3. strategic .”
5

6. 1. Administrative Roles –
Plays major role of manager
Administrative expert
Welfare officer
Advisor
Counsellor
Policy maker
Legal consultant
6

7. 2. Operational Roles –
Recruiter
Trainer , developer and
motivator
Co-ordinator / linking pin
Mediator
7

8. 3. Strategic Role –
 The strategic role of HR management focuses
attention on how to enable ordinary employees
to turn out extra ordinary performance ,
taking care of their ever-changing expectations .
 The key areas of attention include effective
management of key resources ( employees,
technology , work process ) while delivering
cost effective , value enhancing solutions .
 Change agent
 Strategic partner
8

9. Skills for HR Professionals
9

10. 10

11. Functions of HRM
 There are two types of functions of HRM
as follows :
1- Managerial
2 – Operational: Procurement, Development, Motivation
And Compensation, Maintenance, Integration, Emerging Issues,
 Managerial functions are as follows :
A – Planning
B – Organizing
C – Staffing
C – Directing
D – Controlling
E – Co-ordinating
11

12. Operative functions are as follows
12

13. Difference Between HRM and PM
13

14. 14

15. 15

16. 16

17. HUMAN RESOURCE PLANNING
What to discuss
The concept and meaning
of manpower planning
The process of planning
and
Different techniques for
forecasting.
17

18. HUMAN RESOURCE PLANNING
 Human Resource Planning is the process of forecasting
a firm’s future demand for, and supply of, the right type
of people in the right number to achieve organizational
goals and objectives.
 The process of determining manpower
requirements and the means of meeting those
requirements in order to carry out the
integrated plan of the organization
 Without a clear cut planning, estimation of an
organization's human resource need is reduced
to mere guesswork.
18

19. Steps of HRP Process
 Analyzing corporate and unit level strategies
 Forecasting Demand based on organizational plan
 Forecasting Supply based on human resource
market inventory
 Estimating net human resources requirements
 In case of future surplus – plan for redeployment,
retrenchment (cut with compens.) and layoff(temp)
 In case of future deficit – forecast future supply
from all sources with reference to other
companies
 Plan to modify or adjust organ. plan if future
supply is inadequate 19

20. HR Demand Forecast
 Demand forecasting is the process of
estimating the quantity and quality of
people required to meet future needs of
the organization.
 Forecasting Techniques
 Managerial judgments
 Ratio trends analysis
 Work study techniques (To fix length of time &
No of workers)
 Delphi techniques
 Regression analysis
20

21. 2. Ratio-trends analysis
 This technique involves studying past ratios, say, between the
number of workers and sales (n/s) in an organization and
forecasting future ratios, making some allowance for changes in the
organization or its method.
 Given sf nf=(np/sp)sf
21
1. Managerial judgement
 Used for small-scale and unorganized industries (without data
bank of manpower and job analysis
 In this all managers sit together, discuss and arrive at a figure
which would be the future demand for labor.
3. Work study techniques
 Suitable when volume of work is easily measurable
 Total production estimated, Man-hour required to
produce each unit of product calculated, then required
number of employees calculated with allowance for rest
and absenteeism

22. Delphi technique
22
 It solicits estimates of personnel needs from a group of
experts, usually managers (but no interaction among
experts ).
 Summaries and surveys are repeated until the experts
opinion begin to agree.
Regression analysis

23. JOB ANALYSIS
 Job may be defined as “collection of tasks,
duties and responsibilities which as a whole, are
regarded as a regular assignment to individual
employees.”
 Job Analysis is a formal and detailed study of
jobs. It refers a scientific and systematic
collecting and analyzing data relating a job.
 A job can be analyzed only after it has been
designed and someone already performing, it
hence Job analysis is performed up on ongoing
jobs.
23

24. Job analysis provides the following information
 Identify the job in terms of its title and code number
 The operations and the task involved in the job including
their timing, sequence, complexity and sequence
 Location, physical setting, hazards and discomforts,
supervision given and received
 Duties involved in the job along with frequency of
occurrence of each duty
 Materials, methods and equipment's used in performing
job
 How the job is performed i.e. nature of operation
( Cleaning, feeding etc)
 Relationship of the job with other jobs in the organization
 Personal attributes required for performing the job
( Physical strength, education, mental skills, experience etc)
24

25. Use of Job analysis
 It helps proper placement of employees
( Matching job requirement and personnel cases
( Misfits reduced )
 Helps to improve efficiency ( due to better
placement, suggests methods for improvement
 Helps in improving job design and work methods
 It provides bases for manpower planning,
recruitment and selection
 Helps in devising the training and development
programmes
 It facilitates job evaluation and performance
appraisal 25

26. Steps of Job analysis
1. Collection of background information-
linkage b/n jobs and organizational goal) (To get overall picture)
2. Selection of representative job to be
analyzed
3. Understand the existing design (Job desc.,
Job spec., flow chart , procedure manual etc)
4. Collection of new job analysis data-
(data on characteristics, qualification and behavior
required to do job effectively)
5. Developing job Description
6. Developing job Specification
26

27. Techniques of gathering Job info
 1. Personal observation
 2. questionnaires
 3. Maintenance of log records
 4. Conducting personal interviews
27

28. Job Description (The Job)
 A list of job’s duties, responsibilities,
reporting relationship, working conditions,
and supervisory responsibilities.
28

29. Job Specification (The Person)
 A list of job’s “human requirements” that is,
the requisite education, skills, personality
and so on.
29

30. Job Evaluation ( The Job)
 A job evaluation is a systematic way of
determining the value/worth of a job in
relation to other jobs in an organization.
 It tries to make a systematic comparison
between jobs to access their relative worth
for the purpose of establishing a rational
pay structure.
 Job evaluation-(the job )
 Performance appraisal –( The person)
30

31. METHODS OF J/E
Qualitative Method
1. Ranking or Job Comparison
2. Grading or Job Classification
Quantitative Method
1. Point Rating (JEG)
2. Factor Comparison
31

32. 1. RANKING METHOD
 Simplest form
 Each job as a whole is compared with
other and this comparison of jobs goes on
until all the jobs have been evaluated
and ranked.
 All jobs are ranked in the order of their
importance from the simplest to the
hardest or from the highest to the
lowest.
32

33. Techniques
1. Job description- prepared for each job and the
difference noticed
2. Paired comparisons- made
3. And Ranking made
 Advantage – Simple and oldest- Less time consuming
–
 Disadvantage – Doesn’t indicate degree of difference
– involves subjective judgment-need rater to have deep
knowledge of the job
33

34. 2. GRADING METHOD
 Also known as classification method
 A job grade is defined as a group of
different jobs of similar difficulty or
requiring similar skills to perform them.
 Job grades are determined on the basis of
information derived from job analysis.
 The grades or classes are created by
identifying some common denominator
such as skills, knowledge and
responsibilities.
34

35. 35

36. POINT RATING
 Jobs are broken down based on various
identifiable factors such as skill, effort, training,
knowledge, hazards, responsibility, etc.
Thereafter, points are allocated to each of these
factors.
 Weights are given to factors depending on their
importance to perform the job.
 The sum of points gives an index of the
relative significance of the jobs that are rated.
36

37. Techniques
1. Determine the job to be evaluated- few
representative jobs are selected from
each category
2. Select the factors – common to all jobs –
measurable
3. Define the factors – to have same
interpretation by different raters
4. Determine the degree-
37

38. 38

39. 4. FACTOR COMPARISON
 Instead of ranking complete jobs, each job
is ranked according to a series of factors.
These factors include mental effort, skill
needed, responsibility, working conditions,
etc.
 Pay will be assigned in this method by
comparing the weights of factors required
for each job.
 Wages are assigned to the job in
comparison to its ranking on each job factor.
39

40. 40

41. RECRUITMENT
 the process of searching for prospective
employees and stimulating them to apply
for jobs in the organisation
 It is the process of finding and attracting
capable applicants for employment. The
process begins when new recruits are
sought and ends when their
applications are submitted.
 The result is pool of applicants from
which new employees are selected.
41

42. Factors Governing recruitment
42

43. Sources of Recruitment
43

44. Recruitment methods
1. Direct Method
 SCOUTING –representatives of org. are sent universities or training institution to
stimulate new graduates to apply- campus interview
 Manned exhibits- sending recruiters to seminar and conventions
 Some organizations –use waiting list of candidates who have indicated their
interest in job in person or through telephone
2. Indirect Method
 Advertisement in news papers, on radio and television are
used to publicize vacancy ( Appropriate to reach out large
target)
3. Third party method
 Various agencies can be used
 Public employment exchange, management consulting
firms, professional societies,
44

45. SELECTION
 Selection is the process of differentiating
between applicants in order to identify those
with a greater likelihood of success in a job.
 It is the process of making “hire “ or “not
hire “ decision regarding each applicant
 The selection of a candidate with the right
combination of education, work experience,
attitude, and creativity will increase the
quality and stability of the workforce,
 It is a critical process in maintaining long
term health of the organization
45

46. Selection criteria
1. ability to perform the given task
2. The one who have that right attitude
(willingness ) to perform the job
3. they will make an adjustment to the
organizational culture and they
become good co-workers (Team
player ),
4. they will stay for a reasonable
period of time
46

47. SELECTION PROCESS
1. Receiving Applications
2. Screening of Application
 After the applications are received, the screening committee
prepared a list of the candidates to take selection test and/or to be
interviewed.
3. Selection Tests
 Employment tests are used to select persons for various jobs based on
ability, aptitude and personality .
 Used to cut the number when large applicants are there
4. Employment Interview
The number of candidates called for interview is normally five to
seven times the number of posts to the filled up.
47

48. SELECTION PROCESS
4. Background Investigation
 By checking the candidate's past employment, education,
personal reputation, Financial condition, police record, etc.
5. Medical Examination
 The pre-employment physical examination or medical test of a
candidate is an important step in the selection procedure.
6. Final Selection
 After a candidate has cleared all the hurdles in the
selection procedure, he is formally appointed by
issuing him an appointment letter or by concluding
with him a service agreement.
48

49. Basic Testing Concepts
1. Aptitude Tests: Aptitude means the potential which an individual has for
learning the skills required to do a job efficiently, Aptitude tests measure an
applicant's capacity and his potential of development.
2. Proficiency Tests : Proficiency tests are designed to measure the
skills already acquired by the individuals. They are also known as
performance, occupational or trade tests. ( 60 words per minute)
3. Interest Tests : Interest tests identify patterns of interest in those
areas in which the individual shows special concern, fascination and
involvement.
4. Personality Tests : Personality tests probe for the qualities of the
personality as a whole, 5 personality dimensions like this Sociability,
emotional stability, the agreeableness, carefulness and the openness
to experience.
5. Interview : Although application blank and employment tests provide
a lot of valuable information about the candidate, yet they do not
provide the complete set of information required.
49

50. Interviews
 Formal, in depth conversation conducted
to evaluate the applicant’s acceptability.
 Adapted to unskilled, skilled, managerial
and professional employees.
 Two-way exchange of information, the
interviewers learn about the applicant, and
the applicant learns about the organization
50

51. Objectives of Interview
 Helps obtain additional information from
applicant
 Facilitates giving general information to
applicant
 Help build image of the organization
51
Shortcomings of interviews
 Absence of reliability (Same for all )
 Lack of validity ( Question Vs work r/n)
 Biases

52. Types of Interview
 One to one Interview
Only two participants –
 Interviewer
 Candidate
 Sequential Interview
 Involves series of interviews
 Candidates moves from room to room
 Panel Interview
 Two or more interviewers
 Formal
52

53. Induction/Orientation
 Systematic and planned introduction of
employees to their jobs, their co-workers
and the organization.
 It is key for easy assimilation of the new
employee
About the company
About the department
About the superiors, sub-ordinates
 Absence of induction usually in big organization
mostly leads new workers to adjustment problem
53

54. Performance Appraisal (Evaluating the person)
 The systematic, periodic and an
impartial rating of an employee’s
excellence in the matters pertaining
to::-
His present job
His potential for a better job
54

55. Objectives of Performance appraisal
 Estimate gap between the actual and the
desired performance.
 To motivate employees to do better and more
work
 Feedback to the employees regarding their past
performance.
 To prove the justification of different rate of wage
based on employees abilities
 To reward more efficient workers
 To determine a policy for promotion and transfer
 To forecast the need for training
55

56. Process of PA
56

57. Methods of Performance Appraisal
57

58. A. TRADITIONAL METHODS (Past)
1. Straight Ranking Method
 The evaluator assigns relative ranks to all the employees
in the same work unit doing the same job from highest
to lowest on some overall criteria without analyzing
performance.
 In this “how” and “why” are not questioned nor
answered
58

59. 2. Graphic Rating scales
 simplest and most popular technique.
 it consists of several numerical scale represents a job
related performance criterion such as dependability,
output, attendance, attitude, co-operation.
 Each scale ranges from excellent to poor.
59

60. 3.Paired Comparisons Method
 Each employee is compared will all the
others in pairs one at a time.
 The number of times an employee is judged
better than the others determines his rank.
 Comparison is made on the basis of overall
performance.
 No. of comparisons is calculated by the
formula: N(N-1)/2
 This method is not applicable when the
group is large 60

61. 4. Forced Distribution Method
 In this technique, the rater is required to distribute his
rating in the form of a normal frequency distribution.
 The purpose is to eliminate the rater’s bias and follow
basis of central tendency.
61

62. 5. Checklist method
 A checklist is a list of statements that describe
characteristics and performance of employee on
the job.
 The performance of an employee is rated on the
basis of number of positive checks.
 There are three types of checklist.
1. 1.Simple Checklist
2. 2. Forced Choice Block
3. 3. Weighted Checklist
62

63. 63

64. 64

65. 6. Group Appraisal Method
 Under this method, a group of evaluators
assesses employees.
 This group consists of the immediate supervisor
of the employee, other supervisor having close
contact with employee’s work, head of the
department and a personnel expert.
 The group determines the standers of
performance for the job , measures actual
performance of an employee, analyses the
causes of poor performance and offers
suggestions for improvement in future.
65

66. 7. Confidential Report
 This is a traditional form of appraisal used in
most government organization.
 A confidential report is a report prepared by the
employee’s immediate superior.
 It cover the strengths and weaknesses, main
achievements and failure, personality and
behavior of the employee’.
 It is descriptive appraisal used for promotion
and transfers of employees.
66

67. B. Modern Methods
1. Assessment Centre Method
 An assessment center is a central location
where managers may come together to have
their participation in job-related exercises
evaluated by trained observers
 These employees work together on an assignment
similar to the one they would be handling when
promoted.
 This group evaluators evaluate all employees both
individually and collectively by using simulation
techniques like role playing, business games and in
basket exercises.
 The evaluators observe and evaluate employees as
they perform jobs. 67

68. 2.Human Resource Accounting Method
 Under this method performance is judged in
terms of costs and contribution of
employees.
 Costs of human resources consist of
expenditure on human resource planning,
recruitment, selection, induction, training,
compensation, etc.
 Contribution of human resources is the money
value of labor productivity or value added by
human resources
68

69. 3. BARS: Behaviorally anchored rating scales
 BARS are normally presented vertically with
scale points ranging from five to nine to rate
behavior
 Aims to combined the benefits of narratives,
critical incidents, and quantified ratings by
anchoring a quantified scales with specific
narrative as GOODS, MODERATES, and POOR
PERFORMANCE.
 BARS rate these behaviors for each employee ,
which indicates whether the behavior is
exceptional, excellent, fully competent, or
unsatisfactory. 69

70. 3.
3.Behaviorally-Anchored Rating Scale
Behaviorally-Anchored Rating Scale
(BARS) for Customer Service Skills
(BARS) for Customer Service Skills
70

71. 4.
4. 360 degree (Multisource Appraisal)
360 degree (Multisource Appraisal)
71
the feedback is collected from managers, peers,
subordinates, customers, team members etc

72. 5.Appraisal by Results or MBO
 First step: MBO emphasizes collectively set goals that
are tangible, verifiable, and measurable
 Second step: setting the performance standard for
the subordinates
 Third step: the actual level of goal attainment is
compared with the goals agreed upon
 Final step: involves establishing new goals and
possibly new strategies for goals not previously achieved
 MBO is useful with managerial personnel
and employees who have a wide range of
flexibility and self control in their jobs.
72

73. Problems of Performance Appraisal
 Halo effect- It is a tendency to rate employee consistently
high or low on the basis of overall impression- One trait of
employee influences rater’s appraisal on all other traits ( eg. rated
high just b/se working late evening
 Error of central tendency- assigning average
rating to all employees to avoid commitment or involvement
 Leniency & strictness-
 Personal prejudice- Just the rater dislikes an
employee ( Arise due to regional, religious belief or interpersonal
conflict )
 Stereotyping- forming mental picture of a person
on the basis of age, sex, religion, caste
 Spill over effect- when past performance affects
present assessment 73

74. Chapter 2-2
Human Resource Management
74
• Wage and salary adjustments

75. W&S A Meaning and Definition
 Wage : Paid to blue-collar workers- paid daily,
weekly or monthly- paid for the jobs which can
be measured in terms of money’s worth to some
extent (doing manual work)
 Salary : Paid to white collar workers-paid
monthly- paid to employees whose contribution
cannot be easily measured
 Compensation : is what employees receive
in exchange for their contribution to the
organization (Includes a). Pay or Guaranteed Pay b).
Incentives or Variable Pay c). Benefits.)
75

76. Objectives
 To establish fair and equal compensation
 To attract competent personnel
 To retain the present employees
 To control labor and administrative cost
 To improve motivation and morale of
employees
 To project good image for the company
76

77. Types of compensation and wages
Compensation
Base compensation : Payment made to
employees in the form of wage and salaries,
It is a fixed and non-incentive payment based
on the basis of time spent in the job
Supplementary compensation : Incentive
payment based on the actual performance of
employee
77

78. 78

79. 79

80. Wages
 Minimum wage : Compulsory wage paid to
employees irrespective of the financial status of the
organization. It should be calculated based on the
minimum food requirements, cloth requirements, rent
to live in a particular area, standard of a working class
family and fuel, lighting and other needs
 Fair wage : Wage above minimum and below living
wage. It is decided based on productivity of labor,
prevailing rates of wages, level of national income and
the capacity of employer to pay
 Living wage : It provides basic needs of life. It should
meet medical, education and retirement needs and it
is paid according to the efficiency of worker
80

81. Factors influencing wage and salary
Wage policy of the company
Job needs
Ability to pay
Cost of livings
Prevailing wage rates
Unions
State regulations
Demand and supply of labor
Economic conditions of the nation
81

82. Methods of wage payment
1. Time wage system :
The workers paid based on the time spend
on the work irrespective of the work done. It
may be based on hour, day, week or month
worked.
It is the oldest method of wage payment
 It is issued in following kind of orgns
 Quality is more important than quantity
 Measurement of work is not easy
 Work requires high degree of skill
 When efficiency of work can be measured only
by close supervision 82

83. Time wage system …
Merits
 It is simple to understand and easy to operate
 Workers are assured of guaranteed minimum wage
irrespective of output
 Suitable for beginners
 It is advocated by trade unions
Demerits
 It do not make any differentiation between efficient and
inefficient workers
 It does not have provision for offering incentives to efficient
workers
 Management should spend more on supervision
 The system is unfair as wage and productivity are not
correlated 83

84. 2.Piece rate system
 The workers are paid at a stipulated rate for per
unit of output. Payment is based on speed
 This method is applicable
 Quality of work is not important
 Work is of a repetitive nature
 There is sufficient demand for output to guarantee
continuous work
 Merits
 It provides encouragement for high productivity
 The workers will adopt better and more efficient
methods
 Idle time will be reduced to minimum
 The cost of supervision is less 84

85. Types of piece rate system
 a) Straight piece rate system : Paid
according to fixed amount per fixed units
produces irrespective of time taken
 b) Piece rate with guaranteed time rate:
Workers are paid minimum on the basis of
time rate plus paid for number of units
produced
 c) Differential piece rate system : The rate
per piece is increased as the output level
gets increased. The increase in rates may be
proportionate to the increases in output 85

86. 86