1.

Sources of recruitment
There are two broad sources of recruitment – internal and external. A brief description of each source
follows:
1. Internal Sources of Recruitment: Existing employees of an organization provide the internal
sources in the main. Whenever any vacancy arises, someone from within the organization is upgraded,
transferred, promoted or even demoted. Retrenched employees, retired employees, dependents
deceased employees may also constitute the internal sources. The major internal sources of
recruitment are as under.
a. Promotion and Transfers: The most important source of filling vacancies from within is through
transfers and promotions. A transfer is a lateral movement within the same grade, from one job to
another. They may lead to changes in duties and responsibilities, working conditions, etc. but not
necessarily salary. Promotion, on the other hand, involves movement of employees from a lower level
position to a higher level position accompanied by (usually) changes in authority, duties,
responsibilities, status and remuneration. Organizations generally prepare a central pool of persons
from which vacancies can be filled in. such persons are usually posted to various departments,
depending of internal requirements.
b. Job posting: Job posting is another way of hiring people from within. In job posting, the
organization publicizes job openings on bulletin boards, electronic media and similar outlets. One of
the important advantages of this method is that it offers a chance to highly qualifiedapplicants working
within the company to look for growth opportunities within the company without looking for external
opportunities.
c. Employee referrals: Employee referral means using personal contacts to locate job opportunities.
It is a recommendation from a current employee regarding a job applicant. The logic behind employee
referral is that “it takes one to know one”. Employees working in the organization, in this case, are
encouraged to recommend the names of their friends working in other organizations for a possible
vacancy in the near future. In fact, this has become a popular way of recruiting people in the highly
competitive IT industry now-a-days. Companies offer rewards also to employees whose
recommendations are accepted – after the routine screening and examining process is over and job
offers extended to the suggested candidates. As a goodwill gesture, companies also consider the names
recommended by unions from time to time.
2. External Sources of Recruitment: The sources of recruitment that are used to hire people from
outside the organization may be many but a few most important among them are discussed below:
a. Advertisements: When an organization desires to communicate to the public that it has a vacancy,
advertisement is one of the most popular methods used. However, the media of advertisement preferred
is often determined by the type of job.
As, of fact the higher the position in the organization, the more specialized the skills, or the shorter the
supply of the resource in the labor force, the more widely dispersed the advertisement is likely to be.
The search for a manager, for example, might include advertisement through internet, in national
dailies, specialized journals, etc. on the other hand, the advertisement for lower level jobs in usually
confined to the local dailies.
Many organizations prefer what is referred to as a blind advertisement in which identification of the
organizations is not disclosed. Respondents are usually asked to reply to a post office box number.
This is especially preferred when the position that the organization wishes to fill is expected to draw
an extraordinary number of applications. Using the blind ad relieves the organization from having to
respond to any individual who applies. Only those individuals the organization wishes to see are
notified; the remaining are not as if the application was never received. This method is appropriate
when (A) the organization intends to reach a large target group and (b) the organization wants a fairly
good number of potential candidates who are geographically dispersed to apply for the advertised
vacancies. Let’s briefly examine the wide variety of alternatives available to a company as far as ads
are concerned:
i. Internet ads: In the age of globalization prospective candidates for specialized jobs in large
organizations, especially MNCs may be attracted through internet ads. Such ads do have world wide
access to highly qualified people having internet connections.
ii. Newspaper ads: Ads in news papers may be published without much of a lead time. It has flexibility
in terms of information and can conveniently target a specific geographic location. On the negative
side, newspaper ads tend to attract only those who are actively seeking employment at that point of
time, while some of the best candidates who are well paid and challenged by their current jobs may
not be aware of such openings. As a result, the company may be bombarded with applications from a
large number of candidates who are marginally qualified for the jobs, adding to its administrative
burden.
iii. Television and radio ads: These ads are more likely to reach individuals who are not actively
seeking employment, they are more likely to stand out distinctly, they help the organization to target
the audience more selectively and they offer considerable scope for designing the message creatively.
However, these ads are expensive. Also, because the television or radio is simply seen or heard,
potential candidates may have a tough time remembering the details, making application difficult.
b. Employment agencies: There are three forms of employment agencies – public employment
agencies, private employment agencies, and management consulting firms.
i. Public employment agencies: Most public agencies tend to attract and list individuals who are
unskilled or have had minimum training this, of course, does not reflect on the agency’s competence.
Rather, it reflects the image of public agencies. Such agencies are perceived by prospective applicants
as having few high skilled jobs, and employers also tend to see such agencies as having few high skilled
applicants. Therefore public agencies tend to attract and place predominantly low skilled workers.
ii. Private Employment Agencies: How does a private agency, which has to charge for its services,
compete with state agencies that give their services almost free? Clearly, they must do something
different from what the public agencies do, or at least give that impressing.
The major difference between public and private employment agencies is their image. That is, private
agencies are believed to offer positions to applicants of a higher caliber. Private agencies also provide
a more complete line of services. They advertise the position, screen applicants against the criteria
specified by the employer, and usually provide a guarantee covering six months or a year as protection
to the employer should the applicant not perform satisfactorily.
The private employment agency’s fee can be totally observed by either the employer or the employee,
or it can be split. The alternative chosen usually depends on the demand – supply situation in the
community involved.
iii. Headhunters: The third agency source consists of head hunting management consulting or
executive search firms. Agencies of this type are actually specialized private employment agencies.
They specialize in middle-level and top-level executive placements. In addition to the level at which
they recruit, the features that distinguish executive search agencies from most private employment
agencies are their fees, their nationwide contacts, and the thoroughness of their investigations.
Executive search firms canvass their contacts and do preliminary screening. They seek out highly
effective executives who have the skills to do the job, can effectively adjust to the organization, and
most important are willing to consider new challenges and opportunities.
c. Unsolicited Applicants / Walk – ins: Companies generally receive unsolicited applications from
job seekers at various points of time. The number of such applications depends on economic condition,
image of the company and job seeker’s perception of the types of jobs that may be available, etc. such
applications are generally kept in a data bank and whenever suitable vacancy arises, the company
would intimate the candidate to apply through formal channel.
d. Temporary help Services: This can be a source of employees when individuals are needed on a
temporary basis. Temporary employees are particularly valuable in meeting short term fluctuations in
personnel needs. The firms that take resort to such type of recruiting source also enjoy the benefit of
avoiding the burden of excess employees.
e. Campus Recruitment: It is a method of recruiting by visiting and participating in university
campuses and their placement centers. Here the recruiters visit reputes education institutions with a
view to pick up job aspirants having requisite technical or professional skills. Job seekers are provided
information about the jobs and the recruiters, in turn, get a snapshot of job seekers through constant
interchange of information with respective institutions. A preliminary screening is done within the
campus and the shortlisted students are then subjected to the remainder of the selection process.
If campus recruiting is used, steps should be taken by the Human Resource Department to ensure that
the recruiters are knowledgeable about the jobs that are to be filled and are capable of employing
effective interviewing skills.
f. Professional Organization: Organization like the chambers of commerce and industries, engineer’s
institutions, management associations, etc. may act as external sources of recruitment. These lists to
members. It is also common practice to provide placement facilities at regional and national meetings
where individuals looking for employment and companies looking for employees can find each other.

2. Organizational Lifecycle
What is Organizational Lifecycle
Organization lifecycle is the way of describing the organizational development
over the time. The model describes the mutual development of revenue and
expenses during the cycle. The cycle consists of five phases Organizational lifecycle is
the way of describing the organizational development over time.
Like other biological and social organisms, the organization creates, develops and changes. It goes through the
growth, crises and eventually dies. There are many ways to describe the organizational development.
One of the most frequent models is the model of the enterprise lifecycle, which was published by Danny
Miller and Peter Friesen. The model describes the mutual development of revenue and expenses during the cycle.
The cycle consists of five phases (see figure):

 Establishment - There are only expenses, the company consumes the investment
 Growth - expenses exceed revenues, the company is in loss
 Stabilization - revenues exceed expenses, the company is profitable
 Crisis - incomes fall below the level of expenses, the company gets into loss
 Termination - the company can not handle the crisis, the loss is unbearable, business ends
The model is the result of long study of many businesses, but it is not applied generally. In the life of long-lived
enterprises (organizations) different phases take their turn . Many companies have several repeat cycles and even
after a long time may not get to the stage of termination, while many companies undergo only one cycle and then it
terminates. Long-term maintenance of the organization in a stable phase is the main task of managers at all levels.

3. Objectives of Compensation Management

The basic objective of compensation management can be briefly termed as meeting the needs of both
employees and the organisation. Since both these needs emerge from different sources, often, there is a conflict
between the two. This conflict can be understood by agency theory which explains relationship between
employees and employers. The theory suggests that employers and employees are two main stakeholders in a
business unit, the former assuming the role of principals and the latter assuming the role of agents.

Objectives of Compensation Management

The compensation paid to employees is agency consideration. Each party to agency tries to fix this consideration
in its own favor. The employers want to pay as little as possible to keep their costs low. Employees want to get
as high as possible. The compensation management tries to strike a balance between these two with following
specific objectives:
 1. Attracting and Retaining Personnel
From organisation’s point of view, the compensation management aims at attracting and retaining right
personnel in the organisation. In the Indian corporate scene, there is no dearth of personnel at operative levels
but the problems come at the managerial and technical levels particularly for growing companies. Not only they
require persons who are well qualified but they are also retained in the organisation. In the present day context,
managerial turnover is a big problem particularly in high knowledge-based organisations.

2. Motivating Personnel
Compensation management aims at motivating personnel for higher productivity. Monetary compensation has
its own limitations in motivating people for superior performance. Alfie Kohn (an American author and lecturer
who has explored a number of topics in education, parenting, and human behavior.) has gone to the extent of
arguing that corporate incentive plans not only fail to work as intended but also undermine the objectives they
intend to achieve. He argues that this is due to inadequate psychological assumptions on which reward systems
are based. His conclusions are as follows:

1. Rewards punish people-their use confirms that someone else is in control of the employee.
2. Rewards rupture relationships-they create competition where teamwork and collaboration are desired.
3. Rewards ignore reasons-they relieve managers from the urgent need to explore why an employee is effective
or ineffective.
4. Rewards discourage risk taking-employees tend to do exactly what is required to earn the reward, and not any
more.
5. Rewards undermine interest-they distract both manager and the employee from consideration of intrinsic
motivation.

Notwithstanding these arguments, compensation management can be designed to motivate people through
monetary compensation to some extent.

3. Optimizing Cost of Compensation

Compensation management aims at optimizing cost of compensation by establishing some kind of linkage
with performance and compensation. It is not necessary that higher level of wages and salaries will bring higher
performance automatically but depends on the kind of linkage that is established between performance and
wages and salaries. Compensation management tries to attempt at this.

4. Consistency in Compensation
Compensation management tries to achieve consistency-both internal and external-in compensating
employees. Internal consistency involves payment on the basis of criticality of jobs and employees’ performance
on jobs. Thus, higher compensation is attached to higher-level jobs. Similarly, higher compensation is attached
to higher performers in the same job. Level of jobs within an organisation is determined by job evaluation.
External consistency involves similar compensation for a job in all organisations. Though there are many factors
involved in the determination of wage and salary structure for a job in an organisation which may result into
some kind of disparity in the compensation of a particular job as compared to other organisations, compensation
management tries to reduce this disparity.
4. International Business Ethics
International business ethics emerged quite late globally compared to the business ethics that came up in
1970’s. It was only in late 1990’s that the international business ethics came to the fore especially so after
the economic developments that occurred on a global scale.

In 1990’s many businesses from the developing countries expanded their operations and became
multinational. The transactions between businesses and the governments increased as a result, which
gave rise to many practical issues. Culture and its relativity was one factor more prominent than the
others. Other ethical issues in the context of international business are generally dealt with the laws of the
land; although all of them fall within the ambit of international business ethics.

Globalisation diminished the barriers between countries on the globe and also called for
universalization of values for trade to occur smoothly. Universal values were perceived to control the
behaviour in the commercial space. This lead to ethical issues in the international business perspective,
those that were unknown till date.

Other theoretical issues arise from the diversity of business ethical traditions in various countries across
the globe. In addition, comparisons made on the basis of corruption rankings of a certain state or on the
basis of gross domestic product of a certain economy also lead to ethical issues in the international
arena.

Since religion brings in a wholly different perspective to the way we look upon things; the comparison of
ethical traditions from the perspective of the latter also gives birth to ethical problems. For example, trade
in Christian dominated countries is different from the trade in Islamic countries. Again depending upon
how strong or profound the impact of the religion is, business practices are influenced proportionally.

In the international business arena, ethical problems also arise out mere international business
transactions. Fair trade movement, transfer pricing, bioprospecting and biopiracy are examples of
transactions that fall within the ambit of international business ethics. Similarly issues like child
labor and cultural imperialism are controversial enough to call upon the attention of international business
ethics.

Yet another arena for strong requirement of ethics would be when multinationals bargain to take
advantage of international differences; For example when rich nations outsource their services to poor
and developing nations at cheaper cost. Western nations were up till recently outsourcing many of
services to third world nations where they could hire manpower for the cheapest prices. This led to a
severe competition between developing nations with each one offering cheaper labour than the other.

Dumping is yet another way by which large companies are trying to kill the domestic players. Foreign
players often sell goods and services at a cheaper price making it hard for the small players to survive the
competition. Consumer durables and FMCG are biggest examples of such practices. The bigger threat
here is the resulting monopoly which places the customer in a losing position. The international trade
commission began for its search of its anti dumping laws from the year 2009.

All these are ways in which business at the international level can lead to ethical dilemmas. In absence of
international business ethics it may become almost impossible to regulate business and create winning
situations for people in the market place.
 Components of Performance
5.

Management System
Any effective performance management system includes the following components:

1. Performance Planning: Performance planning is the first crucial component of any performance
management process which forms the basis of performance appraisals. Performance planning is
jointly done by the appraisee and also the reviewee in the beginning of a performance session.
During this period, the employees decide upon the targets and the key performance areas which
can be performed over a year within the performance budget., which is finalized after a mutual
agreement between the reporting officer and the employee.
2. Performance Appraisal and Reviewing: The appraisals are normally performed twice in a year
in an organization in the form of mid reviews and annual reviews which is held in the end of the
financial year. In this process, the appraisee first offers the self filled up ratings in the self
appraisal form and also describes his/her achievements over a period of time in quantifiable
terms. After the self appraisal, the final ratings are provided by the appraiser for the quantifiable
and measurable achievements of the employee being appraised. The entire process of review
seeks an active participation of both the employee and the appraiser for analyzing the causes of
loopholes in the performance and how it can be overcome. This has been discussed in the
performance feedback section.
3. Feedback on the Performance followed by personal counseling and performance
facilitation: Feedback and counseling is given a lot of importance in the performance
management process. This is the stage in which the employee acquires awareness from the
appraiser about the areas of improvements and also information on whether the employee is
contributing the expected levels of performance or not. The employee receives an open and a
very transparent feedback and along with this the training and development needs of the
employee is also identified. The appraiser adopts all the possible steps to ensure that the
employee meets the expected outcomes for an organization through effective personal
counseling and guidance, mentoring and representing the employee in training programmes
which develop the competencies and improve the overall productivity.
4. Rewarding good performance: This is a very vital component as it will determine the work
motivation of an employee. During this stage, an employee is publicly recognized for good
performance and is rewarded. This stage is very sensitive for an employee as this may have a
direct influence on the self esteem and achievement orientation. Any contributions duly
recognized by an organization helps an employee in coping up with the failures successfully and
satisfies the need for affection.
5. Performance Improvement Plans: In this stage, fresh set of goals are established for an
employee and new deadline is provided for accomplishing those objectives. The employee is
clearly communicated about the areas in which the employee is expected to improve and a
stipulated deadline is also assigned within which the employee must show this improvement. This
plan is jointly developed by the appraisee and the appraiser and is mutually approved.
6. Potential Appraisal: Potential appraisal forms a basis for both lateral and vertical movement of
employees. By implementing competency mapping and various assessment techniques, potential
appraisal is performed. Potential appraisal provides crucial inputs for succession planning and job
rotation.