SYLLABUS

PAPER – 1: HUMAN RESOURCE MANAGEMENT

Unit 1
Introduction Significance and Scope of Human Resources Management - Distinction between HRM and
personnel management, Functions of HRM, Role of HRM Managers - System Approach to HRM.

Unit 2
Human Resources Planning Preference Appraisal and Compensation: Need and importance of Human
Resource, Planning - Job Design and Job Evaluation, Merit rating, Promotion, Demotion and Transfer,
performance Appraisal - Designing of Effective Performance Appraisal System. Compensation to Employees -
Wage Payment Systems, Incentive wage Plans, Profit sharing, Bonus issues, Fringe Benefits.

Unit 3
Human Resource Problems: Discipline, Turnover, Absenteeism, go slow, gherao, work stoppage, Morale
Health and safety. Employee Discipline, Grievance and redressal.

Unit 4
Human Resources Development: HRD Mechanism, Process, Out comes, HRD functions in an organisation.

Unit 5
Work culture, team building, TQM, quality circles, effects of downsizing - managing downsizing - HRM in
multinational corporation - Human Resource accounting impact of globalization in HRM out sourcing ,
Introduction to facility management.

Books Recommended

1. Personnel & Human Resources Management Robert L Mathis

2. Managing Human Resources Wayne F Cascio
3. Personnel management & Human Resources C S Venkate Ratnam & B K Srivastava
4. Human Resources Management Biswanath Ghosh
5. Human Resources Management- An experimental approach H John Bemadis

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Unit 1

HRM - Human resource management

Definition
Human Resource Management is the planning, organising, directing and controlling of the procurement,
development, compensation, integration, maintenance and separation of human resources to the end that
individual, organisational, and social objectives are accomplished. - Edwin B. Flippo

Primary Functions of HRM

1. Human resource planning
2. Equal employment opportunity
3. Staffing (recruitment and selection)
4. Compensation and benefits
5. Employee and labor relations
6. Health, safety, and security
7. Human resource development

Secondary HRM Functions

1. Organization and job design
2. Performance management/ performance appraisal systems
3. Research and information systems

SCOPE OF HUMAN RESOURCE MANAGEMENT

Nature
Introduction

Prospects Procurement

HRM

Industrial
Remuneration
Relations

Maintenance Motivation

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Personnel Management Employee Welfare Industrial Relations
 Manpower planning  Working conditions and  Addressing grievances and
 Hiring (recruitment and amenities at workplace settling disputes
selection)  Safety services, health  Maintain peace and harmony
 Training and development services, welfare funds, social in the organization
 Induction and orientation security and medical services  Maintaining work relations
 Transfer  Safety officers
 Promotion  Eliminating workplace
 Compensation hazards,
 Layoff and retrenchment  Support by top management,
 Employee productivity  Job safety,
 Performance appraisal  Safeguarding machinery,
 Developing new skills  Cleanliness, proper
 Disbursement of wages ventilation and lighting,
 Incentives, allowances  Sanitation,
 Traveling policies and  Medical care,
procedures  Sickness benefits,
 Other related courses of employment injury benefits,
actions.  Maternity benefits,
 Unemployment benefits and
family benefits

Distinction between Personnel management and HRM

# Dimension PM HRM
1 Employment contract Careful dimension of written contract Aim to go beyond contract
2 Rules Importance of devising clear rules Impatience with rules
3 Guide to management action Procedures Business need
4 Behaviour referent Norms/ customs & practices Values/mission
5 Managerial task vis-à-vis labour Monitoring Nurturing
6 Key relations Labour Customer
7 Initiatives Piecemeal Integrated
8 Speed of decision Slow Fast
9 Management role Transactional Transformational
10 Communication Indirect Direct
11 Management skill Negotiation Facilitation
12 Selection Separate Integrated
13 Pay Job evaluation Performance related
14 Conditions Separately negotiated Harmonisation
15 Labour management Collective bargaining contracts Individual contracts
16 Job categories and grades Many Few
17 Job design Division of labour Team work
18 Conflict handling Temporary Climate & culture
19 Training & Development Controlled courses Learning Organization
20 Focus for attention Personnel procedures Cultural & structural strategies
21 Respect for employees Labour – a tool – expendable & People are assets & to be used
replaceable for benefit of organization
22 Shared interests Organization interest is uppermost Mutuality of interests
23 Evolution Precedes HRM Latest

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FEATURES OF HRM

 As part of Management Discipline: Draws heavily from management concept, principles, and
techniques
 As a Process: Planning, organizing, directing and controlling
 As a continuous process: Requires a constant alertness and awareness of human resources
 Directed towards Achievement of Objectives: Concerned with people in the organization both present
and potential
 Universal Existence: Relevant to all functional areas of business

Roles and responsibilities of HR manager

1. Counselor: Consultations to employees about marital, health, mental, physical and career problems.
2. Mediator: Playing the role of a peacemaker during disputes, conflicts between individuals and groups
and management.
3. Spokesman: To represent of the company because he has better overall picture of his company’s
operations.
4. Problem Solver: Solving problems of overall human resource management and long-term
organizational planning.
5. Change Agent: Introducing and implementing institutional changes and installing organizational
development programs
6. Humanitarian Role: Reminding moral and ethical obligations to employees
7. Management of Manpower Resources: Broadly concerned with leadership both in the group and
individual relationships and labor-management relations.

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Unit 2

HUMAN RESOURCE PLANNING

Definition

“HRP includes estimation of how many qualified people are necessary to carry out the assigned activities, how
many people will be available, and what, if anything, must be done to ensure personnel supply equals
personnel demand at the appropriate point in the future”

“HRP is a Process, by which an organization ensures that it has the right number and kind of people at the
right place, at the right time, capable of effectively and efficiently completing those tasks that will help the
organization achieve its overall objectives”

 Human Resource planning is process of striking the balance between human resource required and
acquired in an organization
 HRP is a process by which an organization determines how it should acquire the manpower needed
to achieve the organizational goals
 HRP help the organization have the right number and kind of people at the right place and right times
achieve the organizational goals

Compensation management

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JOB ANALYSIS
JOB: Job is a ‘group of tasks to be performed every day.

Definition
 “Job Analysis is a process of studying and collecting information relating to operations and
responsibilities of a specific job.” (Process of Collecting Information)
 “Job Analysis is a systematic exploration of activities within a job. It is a basic technical procedure that
is used to define duties and responsibilities and accountabilities of the job.” (Systematic Exploration
of Activities)

There are two aspects of job Analysis

1. Job description
2. Job specification

JOB DESCRIPTION JOB SPECIFICATION

A statement containing items such as A statement containing items such as
 Job title  Education
 Location  Experience
 Job summary  Training
 Duties  Judgment
 Machine, tools and equipment  Imitative
 Materials and forms used  Physical effort
 Supervision given /received  Physical skills
 Working condition  Responsibilities
 Communication skills
 Emotional charactertics
 Sensory demand

Use of Job Analysis Information

Job description and

Job Specification

Recruiting Salary Training

Performance
& & &
Appraisal
Selection Wages Develop

Career Health & Employee

Planning Safety Discipline

PERFORMANCE APPRAISAL

Definition:
 “It is a systematic evaluation of an individual with respect to performance on the job and individual’s
potential for development.”
 “It is formal, structured system of measuring, evaluating job related behaviors and outcomes to
discover reasons of performance and how to perform effectively in future so that employee,
organization and society all benefits.”

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PURPOSE OF PERFORMANCE APPRAISAL
 To identify employees for salary increase, promotion, transfer and lay-off or termination of services
 To determine training and development needs of the employee
 To motivate employee by providing feedback on their performance level
 To establish a basis for research and reference for personnel decision in future.

Performance Appraisal can been classified into two categories

1. Evaluative
 Compensation Decision
 Staffing Decision
 Evaluate Selection System
2. Development
 Performance Feedback
 Training and Development
 Feedback for Improvement

APPROACHES TO PERFORMANCE APPRAISAL

a) Casual Approach
It is unsystematic and often random appraisal, which mostly concentrated on quantitative and qualitative
measurement

b) Traditional Approach
This approach is used to evaluate
 Employee characteristics
 Employee contribution
All employee are appraised in the same manner using the same approach.
It is a highly systematic appraisal

c) Mutual Goal Setting Approach

 This is also called behavioral approach
 It is an improvement over the traditional approach
 It is popularly known as “Management by Objectives”

PROCESS OF PERFORMANCE APPRAISAL

 Establish performance standard
 Communicate performance expectation to employee
 Measures actual performance
 Compare actual performance with standard
 Discuss the appraisal with the employee
 Initiate corrective actions

METHODS OF PERFORMANCE APPRAISAL

Traditional methods / past orientation Modern methods / future orientation

 Ranking method  Management by Objectives
 Paired comparison  Behaviorally anchored rating scales
 Grading  Assessment centers
 Forced distribution method  360-degree appraisal
 Forced choice method  Cost accounting method
 Checklist method

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  Critical incident methods
 Graphic scale method
 Essay method
 Field review method
 Confidential method

PROMOTION

 Promotion is vertical movement of an employee within the organization

 Promotion refers to the upward movement of an employee from one job to another higher one, with
increase in salary, status and responsibilities
 Promotion may be temporary or permanent depending upon the needs of the organization
 Promotion provides an inducement and motivation to the employee and also remove feelings of
stagnation and frustration

TYPES OF PROMOTION

1. Horizontal Promotion: When an employee is shifted in the same category, it is called horizontal
promotion
2. Vertical Promotion: When an employee is promoted from a lower category to higher category
involving an increase in salary, status, authority and responsibilities
3. Dry Promotion: When promotion is made without increase in salary it is called ‘dry promotion’

BASIS OF PROMOTION

 Seniority i.e. length of services

 Merit i.e. performance
 Educational and technical qualification
 Potential for better performance
 Career and succession plan
 Vacancies based on organizational chart
 Motivational strategies like job enlargement
 Training

TRANSFER

 A transfer refers to lateral movement of employee within the same grade, from one job to another
 Transfer differ from promotion in the sense that the latter involves a change a job involving increase
in salary, authority, status and responsibility, while all these remain unchanged/stagnant in the case
of former. Also transfer are frequent and regular whereas promotions are infrequent, if not irregular
 The company may transfer the employee to the place where he can prove more useful and effective
 Transfer are used as an instrument for victimizing the employees by management

TYPES OF TRANSFER

 Production transfer: Such transfer are made when labour requirement in one division branch is
declining. The surplus employee from such division are transferred to those division branches where
there is shortage of employee

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  Remedial transfer: Such transfer are affected to correct the wrong selection and placement of
employee. A wrongly placed employee is transferred to more suitable job
 Replacement transfer: Replacement transfer are similar to production transfer in their inherent i.e.
to avoid layoffs. Replacement transfer are affected when labour requirement are declining
 Versatility transfer: These transfer are also known as ‘job rotation’. In such transfer employee are
made to move from one job to another to gain varied and broader experience of work.
 Shift transfer: These transfer are affected in the organizations where work progresses for 24 hours or
in shifts. Employee are transferred from one shift to another usually on the basis of mutual
understanding and convenience.
 Penalty transfer: Management may use transfer as an instrument to penalize employee involved in
undesirable activities in the organization. Employee transfer from one’s place of convenience to a
distant and remote area is considered as a penalty to the employee.

DEMOTION

 Demotion is just the opposite of promotion

 It is the downward movement of an employee in the organizational hierarchy with lower rank/status
and pay.
 Definition: ‘demotion is the assignment of an individual to a job of lower rank and pay usually involving
lower level of difficulty and responsibility”
 Demotion affects the status, pride, career and income of the employee
 It is often preliminary to dismissal
 It is used as a corrective measure in case of serious breaches of duty on the part of an employee

Causes of demotion
 Demotion may be caused by several factors which may be beyond an employee’s control
 Incompetence
 Adverse business conditions
 Disciplinary measures

Compensation

Definition
“Employee compensation refers to all forms of pay going to employees and arising from their employment.” -
Human Resource Management, Gary Dessler. The definition does not include non-financial benefits, but all
the direct and indirect financial compensations.

According to Thomas J. Bergmann (1988) compensation consists of four distinct components:

Compensation = Wage or Salary + Employee benefits + Non-recurring financial rewards + Non-pecuniary
rewards.

Compensation refers to a wide range of financial and non-financial rewards to employees for their services
rendered to the organization.

It is paid in the form of wages, salaries and employee benefits such as paid vacations, insurance maternity
leave, free travel facility, retirement benefits etc., Monetary payments are a direct form of compensating the
employees and have a great impact in motivating employees.

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Components of Compensation

Basic Wages/Salaries
Basic wages / salaries refer to the cash component of the wage structure based on which other elements of
compensation may be structured. It is normally a fixed amount which is subject to changes based on annual
increments or subject to periodical pay hikes.

Wages represent hourly rates of pay, and salary refers to the monthly rate of pay, irrespective of the number
of hours put in by the employee. Wages and salaries are subject to the annual increments. They differ from
employee to employee, and depend upon the nature of job, seniority, and merit.

Dearness Allowance
The payment of dearness allowance facilitates employees and workers to face the price increase or inflation
of prices of goods and services consumed by him. The onslaught of price increase has a major bearing on the
living conditions of the labour.
The increasing prices reduce the compensation to nothing and the money’s worth is coming down based on
the level of inflation. The payment of dearness allowance, which may be a fixed percentage on the basic wage,
enables the employees to face the increasing prices.

Incentives
Incentives are paid in addition to wages and salaries and are also called ‘payments by results’. Incentives
depend upon productivity, sales, profit, or cost reduction efforts.
There are:
1. Individual incentive schemes, and
2. Group incentive programmes.

Individual incentives are applicable to specific employee performance. Where a given task demands group
efforts for completion, incentives are paid to the group as a whole. The amount is later divided among group
members on an equitable basis.

Bonus
The bonus can be paid in different ways. It can be fixed percentage on the basic wage paid annually or in
proportion to the profitability. The Government also prescribes a minimum statutory bonus for all employees
and workers. There is also a bonus plan which compensates the managers and employees based on the sales
revenue or profit margin achieved. Bonus plans can also be based on piece wages but depends upon the
productivity of labour.

Non-Monetary Benefits
These benefits give psychological satisfaction to employees even when financial benefit is not available. Such
benefits are:
1. Recognition of merit through certificate, etc.
2. Offering challenging job responsibilities,
3. Promoting growth prospects,
4. Comfortable working conditions,
5. Competent supervision, and
6. Job sharing and flexi-time.

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Commissions
Commission to managers and employees may be based on the sales revenue or profits of the company. It is
always a fixed percentage on the target achieved. For taxation purposes, commission is again a taxable
component of compensation.

The payment of commission as a component of commission is practiced heavily on target based sales.
Depending upon the targets achieved, companies may pay a commission on a monthly or periodical basis.

Mixed Plans
Companies may also pay employees and others a combination of pay as well as commissions. This plan is called
combination or mixed plan. Apart from the salaries paid, the employees may be eligible for a fixed percentage
of commission upon achievement of fixed target of sales or profits or Performance objectives. Nowadays,
most of the corporate sector is following this practice. This is also termed as variable component of
compensation.

Piece Rate Wages

Piece rate wages are prevalent in the manufacturing wages. The laborers are paid wages for each of the
Quantity produced by them. The gross earnings of the labour would be equivalent to number of goods
produced by them. Piece rate wages improves productivity and is an absolute measurement of productivity
to wage structure. The fairness of compensation is totally based on the productivity and not by other
qualitative factors.

Fringe Benefits
Fringe benefits may be defined as wide range of benefits and services that employees receive as an integral
part of their total compensation package. They are based on critical job factors and performance. Fringe
benefits constitute indirect compensation as they are usually extended as a condition of employment and not
directly related to performance of concerned employee. Fringe benefits are supplements to regular wages
received by the workers at a cost of employers. They include benefits such as paid vacation, pension, health
and insurance plans, etc. Such benefits are computable in terms of money and the amount of benefit is
generally not predetermined. The purpose of fringe benefits is to retain efficient and capable people in the
organization over a long period. They foster loyalty and acts as a security base for the employees.

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Profit Sharing
Profit-sharing is regarded as a stepping stone to industrial democracy. Profit-sharing is an agreement by which
employees receive a share, fixed in advance of the profits. Profit-sharing usually involves the determination
of an organization’s profit at the end of the fiscal year and the distribution of a percentage of the profits to
the workers qualified to share in the earnings. The percentage to be shared by the workers is often
predetermined at the beginning of the work period and is often communicated to the workers so that they
have some knowledge of their potential gains. To enable the workers to participate in profit-sharing, they are
required to work for certain number of years and develop some seniority. The theory behind profit-sharing is
that management feels its workers will fulfill their responsibilities more diligently if they realize that their
efforts may result in higher profits, which will be returned to the workers through profit-sharing.

Types of Compensation - Base and Supplementary Compensation

Total compensation returns are more transactional. They include pay received directly as cash (like base,
merit, incentives, cost of living adjustments) and indirectly as benefits (like pensions, medical insurance,
programs to help balance work and life demands, brightly coloured uniforms). Programme to pay to people
can be designed in a wide variety of ways, and a single employer typically uses more than one.

Base Compensation Supplementary Compensation

Direct / Base Compensation

Direct compensation refers to monetary benefits offered and provided to employees in return of the services
they provide to the organization. The monetary benefits include basic salary, house rent allowance,
conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, Pf/Gratuity, etc.
They are given at a regular interval at a definite time.

Basic Salary
Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a
day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her
services

House Rent Allowance

Organizations either provide accommodations to its employees who are from different state or country or
they provide house rent allowances to its employees. This is done to provide them social security and motivate
them to work.

Conveyance
Organizations provide for cab facilities tto their employees. Few organizations also provide vehicles and petrol
allowances to their employees to motivate them

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Leave Travel Allowance
These allowances are provided to retain the best talent in the organization. The employees are given
allowances to visit any place they wish with their families. The allowances are scaled as per the position of
employee in the organization.

Medical Reimbursement
Organizations also look after the health conditions of their employees. The employees are provided with medi-
claims for them and their family members. These medi-claims include health-insurances and treatment bills
reimbursements.

Bonus
Bonus is paid to the employees during festive seasons to motivate them and provide them the social security.
The bonus amount usually amounts to one month’s salary of the employee.

Special Allowance
Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced interest
loans; insurance, club memberships, etc are provided to employees to provide them social security and
motivate them which improve the organizational productivity.

Indirect / Supplementary Compensation

Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of the
services provided by them to the organization. They include Leave Policy, Overtime Policy, Car policy,
Hospitalization, Insurance, Leave travel Assistance Limits, Retirement Benefits, Holiday Homes.

Leave Policy
It is the right of employee to get adequate number of leave while working with the organization. The
organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and maternity leaves,
statutory pay, etc.

Overtime Policy
Employees should be provided with the adequate allowances and facilities during their overtime, if they
happened to do so, such as transport facilities, overtime pay, etc.

Hospitalization
The employees should be provided allowances to get their regular check-ups, say at an interval of one year.
Even their dependents should be eligible for the medi-claims that provide them emotional and social security.
Indirect Compensation

Insurance
Organizations also provide for accidental insurance and life insurance for employees. This gives them the
emotional security and they feel themselves valued in the organization.

Leave Travel
The employees are provided with leaves and travel allowances to go for holiday with their families. Some
organizations arrange for a tour for the employees of the organization. This is usually done to make the
employees stress free.

Retirement Benefits
Organizations provide for pension plans and other benefits for their employees which benefits them after they
retire from the organization at the prescribed age.

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Holiday Homes
Organizations provide for holiday homes and guest house for their employees at different locations. These
holiday homes are usually located in hill station and other most wanted holiday spots. The organizations make
sure that the employees do not face any kind of difficulties during their stay in the guest house.

Flexible Timings
Organizations provide for flexible timings to the employees who cannot come to work during normal shifts
due to their personal problems and valid reasons.

Steps in Determination of Compensation

1. The Salary/Wage Survey

It is difficult to set pay rates if one don’t know what others paying, so salary survey of what others are paying
will play a big role in pricing jobs. Virtually every employer conducts at least an informal telephone, newspaper,
or internet salary survey.

2. Job Analysis
Job analysis is a systematic approach to defining the job role, description, requirements, responsibilities,
evaluation, etc. It helps in finding out required level of education, skills, knowledge, training, etc for the job
position. It also depicts the job worth i.e. measurable effectiveness of the job and contribution of job to the
organization. Thus, it effectively contributes to setting up the compensation package for the job position.

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 Job Description
Job description refers the requirements an organization looks for a particular job position. It states
the key skill requirements, the level of experience needed, level of education required, etc. It also
describes the roles and responsibilities attached with the job position. The roles and responsibilities
are key determinant factor in estimating the level of experience, education, skill, etc required for the
job. It also helps in benchmarking the performance standards.

Job Position
Job position refers to the designation of the job and employee in the organization. Job position forms
an important part of the compensation strategy as it determines the level of the job in the
organization. For example management level employees receive greater pay scale than non-
managerial employees. The non-monetary benefits offered to two different levels in the organization
also vary

Job Worth
Job Worth refers to estimating the job worthiness i.e. how much the job contributes to the
organization. It is also known as job evaluation. Job description is used to analyze the job worthiness.
It is also known as job evaluation. Roles and responsibilities helps in determining the outcome from
the job profile. Once it is determined that how much the job is worth, it becomes easy to define the
compensation strategy for the position

Job Evaluation
The relative value of every job is determined through job evaluation. The relative job value is then
converted into money value so s to fix. Wage Survey: Wage or salary surveys are conducted to find
out wage or salary levels prevailing in the region or industry for similar jobs. Other organizational
problems such as recruitment policy, fringe benefits, etc., are also considered.

3. Groups Similar Jobs into Pay Grades

Once the committee has used job evaluation to determine the relative worth of each job, it can turn to the
task of assigning pay rates to each job; however, it will usually want to first group jobs into pay grades. It could,
of course, just assign pay rates to each individual job. But for a larger employer, such a plan would be difficult
to administer, since there might be different pay rates for hundreds or even thousands of jobs. And even in
smaller orgnisation, there’s a tendency to try to simplify wage and salary structures as much as possible.
Therefore, the committee will probably group similar jobs into grades of pay purposes.

4. Developing Wage Structure

On the basis of foregoing steps an equitable wage structure is prepared. While determining such a structure
several points need to be considered;
a) Legislation elating to wages b) Payments equal to, more or less than prevailing wage rates c) Number and
width of pay grades d) Jobs to be placed in each pay grade e) Provision for merit increases f) Differentials
between pay and plans and g) Dealing with wages or salaries that are not line with the structure

5. Wage Administration Rules

Rules are required to determine the degree to which advance will be based on length of service rather than
merit, the frequency with which pay based on length of service rather than merit, the frequency with which
pay increments will be awarded, the rules that will govern promotions from one pay grade to another, and
the way control over wage/salary costs can be maintained. Once the rules are framed these should be
communicated to the employees.

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6. Employee Appraisal
In order to reward merit and performance, it is necessary to evaluate the performance of individual
employees. Some differentials in pay are maintained on the basis of employee’s performance. This is necessary
to provide incentive for hard work and superior performance is evaluated against predetermined standards
of performance.

Therefore, job analysis forms an integral part in the formulation of compensation strategy of an organization.
Organizations should conduct the job analysis in a systematic at regular intervals. Job analysis can be used for
setting up the compensation packages, for reviewing employees’ performance with the standard level of
performance, determining the training needs for employees who are lacking certain skills.

FACTORS AFFECTING THE FORMULATION OF SALARY AND WAGES

 Cost of living
 Prevailing wage rates
 Govt. Legislations
 Ability to pay
 Labour unions
 Attraction and retention of employee
 Productivity

METHODS OF WAGE PAYMENT

 Minimum wages
 Living wage
 Fair wage
 Payment by time
 Payment by result
a) Straight piece work
b) Differential piece work system
c) Balance method

Wage Theories

BENEFITS
Benefits means membership based non-financial rewards given to employees.

TYPES OF BENEFITS

Statutory benefits

 The factories act 1948

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  The mines act 1952
 The plantation labor act 1951
 The motor transport worker act 1961
 Employee’s state insurance act 1948
 Workmen compensation act 1923

Voluntary benefits

 Legally required payment: Old age pension, disability pension, unemployment insurance, worker’s
compensation
 Contingent and deferred benefits: Pension plan, group life insurance, maternity leaves
 Payment for time not worked : Vacation, holidays and voting pay allowance
 Paid rest periods: Waste-up time and lunch period
 Festival bonus

Unit 3: Human Resource Problems

Industrial Dispute Definition

“Industrial Dispute is any dispute or difference between the employees and employers or between employers
and workmen or between workmen and workmen, which is concerned with the employment or terms of
employment or with the conditions of labour of any person.” - Industrial Dispute Act, 1947

Industrial Dispute means a conflict or unrest or dispute or any sort of difference between employees and
employers which may relate with the employment or the terms of employment or working conditions.

For a dispute to become Industrial Dispute there must be a dispute difference between:
1. Employers and employees
2. Employers and workmen
3. Workmen and workmen

Forms of Industrial Dispute:

1. Strike: Strike is quitting work by a group of workers for getting their demands accepted by the employer.
It is a powerful tool used by the trade unions to pressurize the management to accept their demands.
Various types of strikes are
 Economic Strike: Strike in concern with economic reason like wages bonus or working conditions.
 Sympathetic Strike: Strike to support the other group of workers on strike within the organization
or for the sympathy to union workers on strike in other industries.
 General Strike: Strike of all the unions in a region or workers of a particular industry for the
common demands of the workers concerned.
 Sit down Strike: When workers stop doing the work but also do not leave the place of work. It is
also known as tool down or pen down strike
 Slow Down strike: When workers remain on their jobs but slow down the output of their work.
2. Lock Out: Lockout is the step taken by the employer to put pressure on workers. Employer close down the
workplace until the workers agree to continue the work on the terms and conditions as given by the
employer
3. Gherao: Gherao is the action taken by workers under which they restrict the employer to leave the work
premises or residence. The person concerned is put away in a ring made of human beings i.e. workers.

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 Gheraos are also being adopted by educational and others institutions. It is an illegal act according to the
Law.
4. Picketing: When workers are not allowed to report for the work by deputing some men at the factory
gates. If picketing does not involve any violence it is perfectly legal. It is done to bring into the notice of
public that there is dispute between workers and management.

Industrial unrest

Industrial unrest is caused by a clash between employers and employees. Generally, the causes of industrial
conflict fall into categories such as working conditions, wage demands, work practices, political disputes and
social concerns.

Different forms of unrest

Organized unrest: Collective in nature, involves groups of employees or trade unions, Open (or overt), obvious
to all that it is occurring, takes the form of:
 Strikes
 Lockouts
 Overtime bans, working to rule, restrictions on output
 Political action
 Go slow
 Sit-in

Unorganized unrest: Individual in nature, only involves single employees, Hidden (or covert), not obvious it is
occurring, and takes the form of –
 Absenteeism
 Labour turnover
 Low productivity
 Acts of indiscipline and sabotage
 Working without enthusiasm

Strikes

Industrial Disputes Act 1947, Section 2(q) defines a strike as, “a cessation of work by a body of persons
employed in any industry acting in combination, or a concerted refusal under a common understanding of a
number of persons who are or have been so employed to continue to work or to accept employment”

In this light strike postulates three main elements:

1. Plurality of workmen
2. Cessation of work or refusal to do work
3. Combined or concerted action

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Types of strikes

STRIKES

Primary Strike Others

Secondary
Strike

Go slow Sympathy General

Gherao Strikes Particular
Stay Away strike Political
Sit down stay-in strike Bandhs
Tool-down/Pen-down strike
Work to rule
Token or Protest strikes
Lightening or Cat-call strike
Picketing and Boycott

LABOUR TURNOVER

Employees who are not satisfied with their career in the present organization may seek suitable employment
in other organizations. Similarly, organization may also prefers candidates from external source, if the internal
candidates are not found suitable.

It is defined as the rate of change in the employee of an organization during a definite period. It measures the
extent to which old employee’s leaves and new employees enter into an organization

TYPES OF LABOUR TURNOVER

1. Accessions: Accession are additions of new candidates to the existing employee. It includes
employment of new candidates, re-employment of former employees, employees called back to work
after lay off etc
2. Separation: separation means termination of employment. They are also called employee turnover.
They include Voluntary quitting or resignation by employees when they are dissatisfied with the
present job and organization
 Voluntary quitting or resignations by employees
 Layoff or Lack of Work
 Disciplinary Lay-off or Discharge
 Retirement
 Deaths

ABSENTEEISM
Each employer expects employees to be present in work place as per timings or schedule fixed for the purpose.
Any deviation from the fixed time reporting entails loss to the organization. When an employee fails to report
for duty on time without prior intimation or approval, then the employee is marked as “absent”. Despite the
significance of their presence employees sometime fail to report at the work place during the scheduled time
which is known as absenteeism.

Definition:

“ The failure of a worker to report for work when he is scheduled to work”

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TYPES OF ABSENTEEISM

 Authorized absenteeism: If an employee absent himself from work by taking permission from his
superior and applying for leave, such absenteeism is called authorized absenteeism
 Unauthorized absenteeism: If an employee absent himself from work without informing or taking
permission and without applying for leave, such absenteeism is called unauthorized absenteeism
 Willful absenteeism: If an employee absent himself from duty knowingly, such absenteeism is called
willful absenteeism
 Absenteeism caused by circumstance beyond one’s control: If an employee absent himself from duty
owing to the circumstances beyond his control like involvement in accidents or sudden sickness, such
absenteeism is called absenteeism caused by circumstance beyond one’s control

CAUSES OF ABSENTEEISM

 In adaptation with the working condition

 Social and religious ceremonies
 Unsatisfactory housing
 Industrial weakness
 Unhealthy working condition
 Poor welfare facilities
 Alcoholism
 Indebtedness
 In adaptation with the job demand
 unsound leave facilities
 Low level of wages

Go slow: This is the kind of unrest which does not stop work altogether, but here the speed of the work being
done is reduced. This is a serious form of misconduct rather than a strike.

Gherao: a physical blockade of a target, either by encirclement intended to block the regress and ingress from
and to a particular office, workshop, factory or even residence or forcible occupation. The target may be a
place or a person or person, usually the managerial or supervisory staff of an industrial establishment.

The Gherao is resorted to by the workmen in order to achieve their object, not by special means, but by
violence. Such a “Gherao” invariably involves the commission of offences. The second kind of “Gherao” means
a virtual occupation of the target to be gheraoed resulting in the prevention of ingress by the management
itself.

EMPLOYEE DISCIPLINE

“Discipline is the force that prompts individuals or groups to observe rules, regulations, standards and
procedures deemed necessary for an organization.” - Richard D. Calhoon
Therefore discipline means securing consistent behaviour in accordance with the accepted norms of
behaviour. As discipline is essential in every aspect of life it is equally essential in industrial undertakings.

Nature of Discipline

According to Megginson, discipline involves the following three things.

1. Self-discipline - a person brings the discipline in himself with a determination to achieve the goals that
he has set for himself in life.

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 2. Orderly behaviors - a condition that must exist for an orderly behaviors in the organization.
3. Punishment - used to prevent indiscipline. When a worker goes astray in his conduct, he has to be
punished for the same and the recurrences of it must be prevented.

Discipline

 Positive Discipline - involves creation of an atmosphere in the organization whereby employees willingly
conform to the established rules and regulations. Positive discipline can be achieved through rewards and
effective leadership.
 Negative Discipline - penalties are used to force the workers to obey rules and regulations. In other words,
workers try to adhere to rules and regulations out of fear of warnings, penalties and other forms of
punishment. This approach to discipline is called negative or punitive approach.

Indiscipline:

Indiscipline means disorderliness, insubordination and not following the rules and regulation of an
organization

Causes of indiscipline

 Non-placement of the right person on the right job which is suitable for his qualification, experience
and training
 Undesirable behaviour of senior officials, who may have set a pattern of behaviour which they expect
their subordinates to follow
 Faculty evaluation of person and situation by executives leads to favoritism, which generates
undisciplined behaviour

Symptoms of general indiscipline

 Change in the normal behaviors

 Absenteeism
 Go slow
 Increased grievances
 Lack of concern for performance
 Disorderly behaviors
 Lack of concern for job
 Late coming etc.

DISCIPLINARY PROCEDURE

Definition:
Discipline refers to a condition or attitude, prevailing among the employees, with respect to rules and
regulations of an organization

DISCIPLINARY PROCEDURES

1. Issuing letters of charge to the employee calling him for explanation

2. Consideration of the explanation
3. Show-cause notice
4. Holding of a full-fledged enquiry
5. Considering the enquiry proceeding and findings and making final order of punishment
6. Follow up

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Types of punishment

 Oral warnings
 Written warnings
 Loss of privilege and fines
 Punitive suspensions
 Withholding of increments
 Demotion
 Termination

Sound Disciplinary System - (Red Hot Stove Rule)

Mc Gregor propounded the “red hot stove rule” which says that a sound and effective disciplinary system in
an organization should have the following characteristics-
 Immediate- Just as when you touch a red hot stove, the burn is immediate, similarly the penalty for
violation should be immediate/ immediate disciplinary action must be taken for violation of rules.
 Consistent- Just as a red hot stove burns everyone in same manner; likewise, there should be high
consistency in a sound disciplinary system.
 Impersonal- Just as a person is burned because he touches the red hot stove and not because of any
personal feelings, likewise, impersonality should be maintained by refraining from personal or
subjective feelings.
 Prior warning and notice- Just as an individual has a warning when he moves closer to the stove that
he would be burned on touching it, likewise, a sound disciplinary system should give advance warning
to the employees as to the implications of not conforming to the standards of behavior/code of
conduct in an organization.

In short, a sound disciplinary system presupposes-

1. Acquaintance/Knowledge of rules
2. Timely action
3. Fair and just action
4. Positive approach

Code of Discipline

The code of Discipline forms the Gandhian approach to industrial relations to bind employees and trade unions
to a moral agreement for promoting peace and harmony. It was an outcome of the efforts of Gulzari Lal Nanda,
the union Labour Minister in 1957 and 1958. It was formally adopted at the 16 th session of the Indian Labour
Conference (1958). The code was a unique formulation to voluntarily regulate labour-management relations.

Indian Labour Conference discussed three draft codes including:

1. Code of Conduct to regulate inter-union relations
2. Code of Discipline to regulate labour–management relations
3. Code of Efficiency and Welfare for laying down norms of productivity and labour welfare

The code of Discipline embodies four parts:

Part I: contains the duties and responsibilities of employers, workers and the government in maintaining
discipline in industry
Part II: enlists the common obligations of management and unions
Part III: deals with the obligations of management only, while
Part IV: relates to those of unions only

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GRIEVANCE AND REDRESSAL

“Grievance is a complaint of one or more workers in respect of wages, allowances, conditions of work &
interpretations of service stipulations covering such areas as overtime, leave, transfer, promotion, seniority,
job assignment & termination of service.” - International Labor Organization

Grievances are symptoms of conflicts in the enterprise so they should be handled very promptly and
efficiently.

While dealing with grievances of sub-ordinates, it is necessary to keep in mind the following points:
 A grievance may or may not be real.
 Grievance may arise out of not one cause but out of multifarious causes.
 Every individual does not give expression to his grievance.

Forms of Grievances

 Factual: When an employee is dissatisfied with his job, for genuine or factual reasons like a breach of
terms of employment or any other reasons that are attributable to the man arrangement.
 Imaginary: When an employee’s grievance or dissatisfaction is not because of any factual or valid
reason but because of wrong perception, wrong attitude or wrong information he has.
 Disguised: An employee may have dissatisfaction for that are unknown to himself. This may be
because of pressures or frustrations that an employee is feeling from other sources like his personal
behavior.

Causes of grievance

 ECONOMIC CAUSES: Wage fixation, overtime, incentive, allowances, increments etc are some of the
causes responsible for grievance.
 WORK ENVIRONMENT: Poor physical condition of workplace, stringent production norms, defective
tools & equipment, unfair practices etc. lead to grievances.
 SUPERVISION: Relates to the attitude of the supervisor towards the employee such as perceived
nation of bias, favoritism, regional feelings etc.
 WORK GROUP: Employee is unable to adjust with his colleagues, suffers from feelings of neglect etc.
 MISCELLANEOUS: issues relating to certain violations in respect of promotions, continuity of service,
transfer, disciplinary actions, medical facilities etc.

Classification of Grievances

1. Grievances resulting from Working Conditions

 Improper matching of the worker with the job
 Changes in schedules or procedures
 Non-availability of proper tools, machines and equipment for doing the job
 Unreasonably high production standards
 Poor working conditions
 Bad employer – employee relationship, etc.
2. Grievances resulting from Management Policy
 Wage payment and job rates
 Leave
 Overtime
 Seniority and Promotional
 Transfer

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  Disciplinary action
 Lack of employee development plan
 Lack of role clarity
3. Grievances resulting from Personal Maladjustment
 Over ambition.
 Excessive self-esteem or what we better known as ego.
 Impractical attitude to life etc.

Good Grievance Handling Procedure

Three key features of handling grievance are:

 Fairness
 Procedural steps
 Promptness

At present there are three legislations dealing with the grievances of employees working in industries.
 Industrial Employment Act - 1946, requires that every establishment employing 100 or more
workers should frame standing orders. These should contain, among other things, a provision for
redressal of grievances of workers against unfair treatment and wrongful actions by employers or
his agents.
 Factories Act - 1948, provides for the appointment of a welfare officer in every factory ordinarily
employing 500 or more workers. These welfare officers also look after complaints and grievances
of workers & will also look after proper implementation of existing labor legislation.
 Industrial Disputes Act – 1947, Individual disputes relating to discharge, dismissal or
retrenchment can be taken up for relief under this act. Act was amended in 1965. However, the
existing labor legislation is not being implemented properly by the industries. There is a lack of
fairness on the part of the employees. Welfare officers are also not taking their work seriously.
 In India, a Model grievance procedure was adopted by the Indian Labor conference in its 16th
session held in 1958.

Steps for Managing grievances

Flippo describes five steps for managing a grievance. These are following as:
1. Receiving and defining the nature of dissatisfaction: The supervisor should receive the grievance in a
way which itself is satisfying to the individual. It involves his leadership style. It has been that
employee-centered supervisors cause fewer grievances than production – centered supervisors.
2. Getting the facts: Efforts should be made to separate facts from the opinions and impressions. Facts
can be obtained easily if proper records are maintained by supervisors regarding specific grievances
and individual attendance, rating and suggestions.
3. Analyzing the facts and reaching a decision: The supervisor must analyze the facts carefully to reach
a specific decision, so that grievance can be solved out fruitfully.
4. Applying the answer: The supervisor has to effectively communicate the decisions to the individuals
even if they are adverse in nature. The answer to the aggrieved individuals must be based on
legitimate ground.
5. Follow-up: The following of the grievance should be made to determine as to whether or not clash of
interest has been resolved. In situation where follow up indicates that the case is not resolved
satisfactorily, the former four steps should be repeated. The frequent errors in processing of grievance
break the whole process. The management should attempt to avoid these errors.

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Grievance Machinery

Grievance machinery will be required to set up in each under takings to administer the grievance procedure.
For the purpose of constituting a fresh grievance machinery, workers in each department (and where a
department is too small, in a group of departments) and each shift, shall elect, from amongst themselves and
for a period of not less than one year at a time, departmental representatives and forward the list of persons
so selected to the management. Where the union in the undertaking is in a position to submit an agreed list
of names, recourse to election may not be necessary. Similar is the case, where work committees are
functioning satisfactorily, since the work committee member of a particular constituency shall act as the
departmental representative correspondingly, the management shall designate the persons for each
department who shall be approached at the first stage and the departmental heads for handling grievances at
the second stage. In the case of appeals against discharges or dismissal, the management shall designate the
authority to which appeals could be made.

Grievance Procedure

Grievance procedure is a formal communication between an employee and the management designed for the
settlement of a grievance. The grievance procedures differ from organization to organization.

1. Open door policy

2. Step-ladder policy

Open door policy: Under this policy, the aggrieved employee is free to meet the top executives of the
organization and get his grievances redressed. Such a policy works well only in small organizations. However,
in bigger organizations, top management executives are usually busy with other concerned matters of the
company. Moreover, it is believed that open door policy is suitable for executives; operational employees may
feel shy to go to top management.

Step ladder policy: Under this policy, the aggrieved employee has to follow a step by step procedure for
getting his grievance redressed. In this procedure, whenever an employee is confronted with a grievance, he
presents his problem to his immediate supervisor. If the employee is not satisfied with superior’s decision,
then he discusses his grievance with the departmental head. The departmental head discusses the problem
with joint grievance committees to find a solution. However, if the committee also fails to redress the
grievance, then it may be referred to chief executive. If the chief executive also fails to redress the grievance,
then such a grievance is referred to voluntary arbitration where the award of arbitrator is binding on both the
parties.

GRIEVANCE PROCEDURE IN INDIAN INDUSTRY

The 15th session of Indian Labor Conference held in 1957 emphasized the need of an established grievance
procedure for the country which would be acceptable to unions as well as to management. In the 16th session
of Indian Labor Conference, a model for grievance procedure was drawn up. This model helps in creation of
grievance machinery. According to it, workers’ representatives are to be elected for a department or their
union is to nominate them. Management has to specify the persons in each department who are to be
approached first and the departmental heads who are supposed to be approached in the second step.

While adaptations have to be made to meet special circumstances such as those obtaining in the Defence
Undertaking, Railways, Plantations and also small undertakings employing few workmen, the procedure
normally envisaged in the handling of grievances should be as follows:

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The Model Grievance Procedure specifies the details of all the steps that are to be followed while redressing
grievances. These steps are:

 STEP 1: In the first step the grievance is to be submitted to departmental representative, who is a
representative of management. He has to give his answer within 48 hours.
 STEP 2: If the departmental representative fails to provide a solution, the aggrieved employee can take
his grievance to head of the department, who has to give his decision within 3 days.
 STEP 3: If the aggrieved employee is not satisfied with the decision of departmental head, he can take
the grievance to Grievance Committee. The Grievance Committee makes its recommendations to the
manager within 7 days in the form of a report. The final decision of the management on the report of
Grievance Committee must be communicated to the aggrieved employee within three days of the
receipt of report. An appeal for revision of final decision can be made by the worker if he is not satisfied
with it. The management must communicate its decision to the worker within 7 days
 STEP 4: If the grievance still remains unsettled, the case may be referred to voluntary arbitration.

Negotiation and Collective Settlement.

The organization find it difficult to survive and grow in an environment of conflict and misunderstanding, it is
desirable that both the parties sit together to resolve their differences and conflicts through mutual
discussions and negotiations without the intervention of the third party. This process of resolving the
differences between union and the management in the absence of any third party may be called as collective
bargaining.

Collective Bargaining

 It is industrial democracy at work

 Collective bargaining is not a competitive process but it is essentially a complementary one.
 It is an art and an advanced form of human relation

Steps in collective bargaining

The collective bargaining process comprises of five core steps:

1. Prepare: This phase involves composition of a negotiation team. The negotiation team should consist
of representatives of both the parties with adequate knowledge and skills for negotiation. In this phase
both the employer’s representatives and the union examine their own situation in order to develop
the issues that they believe will be most important. The first thing to be done is to determine whether
there is actually any reason to negotiate at all. A correct understanding of the main issues to be
covered and intimate knowledge of operations, working conditions, production norms and other
relevant conditions is required.
2. Discuss: Here, the parties decide the ground rules that will guide the negotiations. A process well
begun is half done and this is no less true in case of collective bargaining. An environment of mutual
trust and understanding is also created so that the collective bargaining agreement would be reached.
3. Propose: This phase involves the initial opening statements and the possible options that exist to
resolve them. In a word, this phase could be described as ‘brainstorming’. The exchange of messages
takes place and opinion of both the parties is sought.
4. Bargain: negotiations are easy if a problem solving attitude is adopted. This stage comprises the time
when ‘what ifs’ and ‘supposals’ are set forth and the drafting of agreements take place.
5. Settlement: Once the parties are through with the bargaining process, a consensual agreement is
reached upon wherein both the parties agree to a common decision regarding the problem or the
issue. This stage is described as consisting of effective joint implementation of the agreement through
shared visions, strategic planning and negotiated change.

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MORALE

Definition:

“A mental condition or attitude of individuals and group, which determines their willingness to co-operate”

 Good morale is evidenced by employee enthusiasm, voluntary conformance with regulation and
orders and willingness to co-operate with others in the accomplishment of an organization’s
objectives
 Poor morale is evidenced by coldness, insubordination, a feeling of discouragement and dislike of the
job, company and associates

FACTORS AFFECTING MORALE

 The level of satisfaction with job standards

 The level of consideration the supervisor shows to his subordinates
 The work load and the work pressure level
 The treatment of individuals by the management
 The level of worker’s pride in the company and its activities
 The level of workers satisfaction with salaries
 Worker’s reaction to the formal communication network in organization
 Fundamental job satisfaction level of the workers
 Worker’s satisfaction with eh progress and opportunities for further progression
 The worker attitude towards fellow workers

MEASUREMENT OF MORALE

Employees are naturally unwilling to express their true attitude towards work and the management. So it is
difficult to measure the morale of the employee exactly. The following are some popular methods of morale
measurement

1. Observation: A keen observation of employee behaviour, talk, and signal should help the manager to
identify any change in the level of morale
2. Attitude survey: attitude survey are conducted mainly in two ways.
a. Interview method and
b. Questionnaire Method
3. Company records: certain reports from the personal department provides the information as to
labour turnover, rate of absenteeism, number of worker grievance

Warning signs of low morale

 High rate of absenteeism
 Lateness
 High labour turnover
 Strikes and damage
 Lack of pride in work
 Wastage and spoilage

Maintenance of morale (preventive measures or remedial measures)

 Job enrichment
 Modifying the work environment

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  Flexible working hours
 Job rotation
 Point individual prosperity in company prosperity
 Adaptation of “how shall – we do it” attitude

EMPLOYEE HEALTH AND SAFETY

Health implies absence of disease

Definition:
“A state of complete physical, mental and social well-being and not merely the absence of disease or illness
or infirmity”- WHO

There are two types of health

 Physical Health
 Mental Health

Three factors for mental health

 Mental breakdown
 Mental disturbance
 Mental illness

STATUTORY PROVISION CONCERNING HEALTH

The Factories Act, 1948 insists that the following provisions must be made in industrial establishment for
safeguard employee health

 Cleanliness
 Disposal of wastes and effluents
 Ventilation and temperature
 Dust and smoke
 Lighting
 Overcrowding
 Drinking water
 Spittoons
 First-aid appliance

SAFETY

Safety means freedom from the occurrence or risk of injury or loss.

Industrial safety refers to protection against accident occurring in the industrial establishment

Significance of industrial safety

 It saves cost: occurrence of an accident involves two types of cost. Direct and indirect cost
 Direct cost- compensation payable to the dependent of the victim employee and medical expenses
 Indirect cost – loss on account of down-time of operators, slowed down production rate of other
workers, spoiled materials, and damages to equipment

Page 28 of 41
STATUTORY PROVISION FOR INDUSTRIAL SAFETY IN INDIA

 Fencing of machinery (sec 21 of factories act 1948)

 Work on or near machinery in motion (sec 22)
 Employment of adolescents on dangerous machine (sec 23)
 Striking gear or device for cutting off power (sec 24)
 Self-acting machines (sec 25)
 Casting of new machinery (sec 26
 Hoists and lifts (sec 28)
 Lifting machines, tackles, chain and ropes (sec 29)
 Revolving machinery (sec 30)

Responsibilities of managers:
 Monitor health and safety of employees
 Coach employees to be safety conscious
 Investigate accidents
 Communicate about safety policy to employees

Responsibilities of supervisors/departmental heads:

• Provide technical training regarding prevention of accidents
• Coordinate health and safety programs
• Train employees on handling facilities an equipment’s
• Develop safety reporting systems
• Maintaining safe working conditions

Legislations governing Occupational Health & safety in India

1. Factories Act, 1948

2. Mines Act, 1952
3. Dock Workers Act (Safety, Health & Welfare), 1986

Occupational Health & Safety Management System

The Bureau of Indian Standards has formulated a standard for Occupational health and safety management
systems. This standard is known as IS 18001:2000 Occupational Health and Safety Management System. Any
OHS management system adopted by an organization should incorporate all the requirements specified in this
standard.

Organizations willing to adopt OH&S Management System have to obtain a license for the same. For this
purpose, they have to ensure that they are operating according to the IS 18001:2000 standard. The
organization has to apply at the nearest Regional Office of Bureau of Indian Standards in the prescribed
proforma along with a questionnaire and application fee

The application has to be signed by the Chief Executive Officer of the organization or any person who has been
assigned by the CEO for this purpose. Also, manual or the documentation of OHS management system is to be
submitted along with the application.

Once an application is received by the regional office of BIS, it is scrutinized for all the requirements. If the
application is complete, it is accepted, otherwise more information is sought from the applicant organization.
If the application is accepted, an adequacy audit takes place and a preliminary visit (pre-audit) is conducted
by an audit team. Immediately after this, initial certification audit takes place on the basis of which an audit

Page 29 of 41
report is prepared by the audit team. If the report comes out to be satisfactory, recommendations for the
award of certifications are made by the team and the certificate is granted to the organization by the
concerned authorities. However if the report does not meet all the requirements, the applicant organization
is asked to take corrective actions after which another audit is conducted.

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Unit 4 : Human resource development (HRD)

Human resource development (HRD) is a system of developing in a continuous and planned way the
competencies of individual employees, groups, team and the total organization to achieve objectives

Definition:

“HRD is a process of organizing and enhancing the physical, mental and emotional capacities of individuals for
productive work”

A set of systematic and planned activities designed by an organization to provide its members with the
necessary skills to meet current and future job demands.

Features of HRD

 Focus on Human resource

 Development at four level
 Continuous and planned process

HRD Functions
1. Training and development (T&D)
2. Organizational development
3. Career development

Training and Development (T&D)

 Training – improving the knowledge, skills and attitudes of employees for the short-term, particular
to a specific job or task – e.g.,
 Employee orientation
 Skills & technical training
 Coaching
 Counseling
 Development – preparing for future responsibilities, while increasing the capacity to perform at a
current job
 Management training
 Supervisor development

Organizational Development
 The process of improving an organization’s effectiveness and member’s well-being through the
application of behavioral science concepts
 Focuses on both macro- and micro-levels
 HRD plays the role of a change agent

Career Development
 Ongoing process by which individuals progress through series of changes until they achieve their
personal level of maximum achievement.
 Career planning
 Career management

Role HR Manager in HRD

 Integrates HRD with organizational goals and strategies
 Promotes HRD as a profit enhancer

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  Tailors HRD to corporate needs and budget
 Institutionalizes performance enhancement

PROCESS OF HRD

1. Existential process
2. Coping process
3. Empathic process
4. Building process
5. Collaborative process
6. Growth process

Relationship Between HRM and HRD

 Human resource management (HRM) encompasses many functions
 Human resource development (HRD) is just one of the functions within HRM

A Framework for the HRD Process

HRD efforts should use the following four phases (or stages): (A D Im E)
 Needs assessment
 Design
 Implementation
 Evaluation

Training & HRD Process Model - Werner & DeSimone (2006)

Needs Assessment Phase

 Establishing HRD priorities
 Defining specific training and objectives

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  Establishing evaluation criteria

Design Phase
 Selecting who delivers program
 Selecting and developing program content
 Scheduling the training program

Implementation Phase
 Implementing or delivering the program

Evaluation Phase
 Determining program effectiveness – e.g.,
o Keep or change providers?
o Offer it again?
o What are the true costs?
o Can we do it another way?

Linkage between HRD instruments, Processes, Outcomes and Organizational Effectiveness

This model has been developed by Prof. T.V Rao. It represents the inter-relationship between the following
four aspects of human resource development.
1. Human resources development mechanism or sub-systems or instruments.
2. Human resource development processes and human resource development climate variables.
3. Human resource development outcomes variables.
4. Organizational effectiveness.

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Unit 5

Culture
A common set of values, beliefs, attitudes, perceptions and accepted behaviors shared by individuals within
an organization.

Work Culture
Work culture relates to the perceptions, feelings and behavior of people. Culture is the man-made part of the
environment. It results in common pattern in people’s behavior.

Culture of an organization can be assessed on three counts - Tasks, People and Processes.
Indian Work culture is deeply affected by the British culture of work. Conducive work culture creates inner
desire - positive attitude to ensure that people in the organisation contribute their best.

Positive Work Culture

Promotes high morale, peak performance and high productivity. To bring about a change of work culture,
Managers must introspect, create and communicate the vision, elicit the desired response and empower
people.

Total Quality Management (TQM)

A set of principles and practices whose core ideas include understanding customer needs, doing things right
the first time, and striving for continuous improvement. A comprehensive, organization-wide effort to improve
the quality of products and services, applicable to all organizations.

The Deming cycle: Originally developed by Walter Shewart, but renamed in

1950s because Deming promoted it extensively.
• Plan – Study the current system; identifying problems; testing
theories of causes; and developing solutions.
• Do – Plan is implemented on a trial basis. Data collected and
documented.
• Check / Study – Determine whether the trial plan is working correctly
by evaluating the results.
• Act – Improvements are standardized and final plan is implemented.

QUALITY CIRCLE
It is small group of employees in the same work area or doing similar type of work who voluntarily meets
regularly for about an hour every week to identify, analyze and resolve work related problems not only to
improve quality, productivity and the total performance of the organization

History
• Started in 1962, Japan
• Developed by Kaoru Ishikawa at University of Tokyo.
• Movement in Japan is coordinated by Japanese Union of Scientists and Engineers (JUSE)
• Became immediately popular in Japan as well as USA.
• In U.S. it started in early 1970’s
• Aerospace manufacturer, Lockheed visited Japanese plants
• Lockheed Missiles and Space Division was the leader in implementing Quality circles in USA in 1973
(after their visit to Japan to study the same).
• In India Quality Circles is promoted by QCFI (Quality Circle Forum of India)

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Objectives of Quality Circle
 To develop, enhance and utilize human resource effectively
 To improve quality of product/service, productivity and reduce cost of production per unit of output
 To satisfy the worker’s psychological needs for self-urge, participation, recognition etc. with view to
motivating them
 To improve various supervisory skills like leadership, problem solving, inter personal and conflict
resolution
 To utilize individual imaginative, creative and innovation skills through participation, creating and
developing work interest, including problem solving techniques
 Achievement of these objectives effectively requires the use of certain techniques

Features of Quality Circle

 Voluntary groups: QC is a voluntary group of employees generally coming from the same work area.
There is no presence from anywhere on employee QC
 Small size : The size of the QC is generally small consisting of six to eight members
 Regular meeting: QC meeting are held once a week for about an hour or regular basis
 Independent agenda: Each QC has its own agenda with its won terms of reference
 Quality focused : As per the very nature and intent of QC, it focus exclusively on quality issues

Organizational Structure of Quality Circles

 Non-members: These are the persons who have to help in implementing the recommendation made
by the quality circle members
 Members: The members are the heart of the program me, and proper use of their untapped brain
power is the key to its success
 Leader/deputy leader: The quality circle leader is elected by the circle members
 Facilitator: facilitator is an important link between the quality circle leader and the steering committee
 Steering committee: It is an apex body at the highest level of the plant which would be responsible
for formulating objectives and for supplying the resources for the quality circle activities
 Top management
 Coordinating Agency

Benefits of Quality Circle

 Satisfaction of self esteem and esteem from others
 Improved job satisfaction
 Self-development in terms of skills, knowledge, sensitivity
 Satisfaction of social and psychological needs

Problems of quality circle

 Fitting them effectively in the existing cultural environment in the industry, rewarding, awarding and
motivating the quality circle members and facilitators
 Negative attitude
 Lack of ability
 Lack of management commitment
 Non implementation of suggestion

Process improvement tools - Seven QC Tools / Quality Circle Tools

1. Cause and Effect diagram / Ishikawa Diagram - shows hierarchies of causes contributing to a problem
2. Pareto Chart - analyses different causes by frequency to illustrate the vital cause
3. Scatter diagrams

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 4. Histograms
5. Check sheets
6. Run charts and Control charts
7. Flow charts

Downsizing

Definition:
Downsizing is the management procedure, which reduces the number of employees in a specific company.

Downsizing occurs when a company permanently reduces its workforce, reducing the number of employees
on the operating payroll.
 Corporate downsizing is often the result of poor economic conditions and/or the company’s need to
cut jobs in order to lower costs or maintain profitability.
 Downsizing may occur when one company merges with another, a product or service is cut, or the
economy falters.
 Downsizing also occurs when employers want to “streamline” a company – this refers to corporate
restructuring in order to increase profit and maximize efficiency.

Downsizing results in layoffs that are often followed by other restructuring changes, such as branch closings,
departmental consolidation, and other forms of cutting pay expenses. In some cases, employers are not fired,
but instead become part-time or temporary workers (to trim costs)

Some users distinguish downsizing from a layoff, with downsizing intended to be a permanent downscaling
and a layoff intended to be a temporary downscaling in which employees may later be rehired. Businesses
use several techniques in downsizing, including providing incentives to take early retirement and transfer to
subsidiary companies, but the most common technique is to simply terminate the employment of a certain
number of people.

Rightsizing is downsizing in the belief that an enterprise really should operate with fewer people. Dumbsizing
is downsizing that, in retrospect, failed to achieve the desired effect.

Managing the Downsizing Process

Although initial downsizing announcements should come from the top, and HR may need to insist that it does,
it's up to HR to keep employees in the loop.
 HR must explain the reasons and the anticipated effects of the restructuring, and keep them up to
date on progress.
 When the time comes to terminate, HR should insist the employees' immediate supervisors deliver
the news in person.
 Terminated employees should have time to tie up loose ends, say goodbye to coworkers, and
participate in company-sponsored career coaching or job training.

After Downsizing
Downsizing often causes poor morale, high levels of stress and even guilt among employees who retained
their jobs.
 HR should implement measures to instill confidence the company and its employees will ultimately
benefit from the changes.
 HR should also maintain contact with terminated employees it would like to rehire at a later date as
employees or as consultants.

Important things in Downsizing

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 • No one looks forward to downsizing.
• Make no mistake - downsizing is extremely difficult.
• It demands all of a management team's resources.

Main Advantages of Downsizing

• Decrease of the labor costs.
• Department reengineering.
• Expenses reduction.

Disadvantages of Downsizing
• Companies can lose critical knowledge they didn't know they had.
• Employees are feeling the stress of the enormous changes in the company.
• Corporate downsizing is bad for society as a whole.
• High labor cost (firing people).
• Decrease company morale.

Applying Downsizing
• There are many factors that involves the downsizing:
• How much notice they will be given.
• The amount of severance pay.
• How far the company will go to help the laid-off employee find another job.
• How to deal with the remaining employees.

Human Resource Accounting

Definition
“Human Resource Accounting is the process of identifying and measuring data about human resources and
communicating this information to interested parties.” - American Accounting Society Committee on HRA

 Human Resource Accounting is the process of assigning, budgeting, and reporting the cost of human
resources incurred in an organization, including wages and salaries and training expenses.
 Human Resource Accounting is the activity of knowing the cost invested for employees towards their
recruitment, training them, payment of salaries & other benefits paid and in return knowing their
contribution to organization towards its profitability.

Objectives of Hunan Resources Accounting

1. Improve management by analyzing investment in HR

2. Consider people as its asset
3. Attract and retain qualified people
4. Profile the organization in financial terms.

Cost of Hunan Resources

The cost of human resource otherwise called Historical cost of human resources is the investment in human
resources which has both Revenue (expense) and Capital (asset) components. This cost may be classified as
follows:

1. Acquisition Cost
2. Training (Development) Cost

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 3. Welfare Cost
4. Other Costs

Acquisition cost comprised the following costs:-

1. Recruitment Cost
2. Selection Cost
3. Placement Cost
4. Campus Interview Cost

Training (Development) cost includes the following:-

1. Formal Training Cost
2. On the Job Training Cost
3. Special Training
4. Development Programmes

Welfare Cost includes the following:-

1. Medical Expenditure
2. Canteen Expenditure
3. Specific and General Allowances
4. Children Welfare Expenses
5. Other Welfare Expenditure

Other Costs include the following:-

1. Safety Expenditure
2. Ex-gratia
3. Multi-trade incentives
4. Rewarding Suggestions

Approaches / Methods in HRA

a) Cost based approaches:

1. Historical Cost - Brumnet, Flamholtz and Pyle
2. Replacement Cost - Rensis Likert & Eric G. Flamholtz
3. Opportunity Cost - Heckiman and Jones
4. Standard Cost - David Watson

b) Monetary value based approaches:

1. The Lev and Schwartz Model - (Present value of future earnings method)
2. The Eric Flamholtz Model - (Reward Valuation method)
3. Morse Model - (Net Benefit Model)

c) Non- monetary value -based approaches:

1. Likert Model
2. The Flamholtz Model
3. Ogan Model - (Certainity Equivalent Net Benefit Model)
4. S.K. Chakraborthy Model - (Aggregate payment approach)

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Facilities management

Definition
An integrated approach to operating, maintaining, improving and adapting the buildings and infrastructure of
an organisation in order to create an environment that strongly supports the primary objectives of that
organisation’ (Barrett and Baldry, 2003)

‘Management of a vital asset – the organization’s facilities.’ (The International Facility Management
Association – IFMA)

Typical approach to facilities management

There are common approaches to facilities management, regardless of the size and location of the real estate,
although these may not necessarily result in common solutions. In some cases, real estate services are
outsourced (for example, contracted out) and in others retained in house, for good reason in each case. Some
organizations operate what might be described as a mixed economy, where certain services, even the same
ones, are outsourced as well as retained in house. There is no general rule, rather a need to define the thinking,
practice and procedures that will lead to best value for an organisation.

1. Outsourcing: the contracting out of the facilities management services required by an organisation to
external service providers.
2. In-house provision: supply of facilities management services within the client organisation - the in-
house team may or may not be an independent body.

Whichever course of action has been taken – retain in house or outsource – the primary concern is the basis
of the decision. It is not the outcome that needs to be looked at closely, but the efficacy of the decision-making
that leads to it. It is, for example, always necessary to stress the importance of a careful evaluation to
determine the merits of the case for outsourcing.

Core Competencies of Facility Management

The core competencies are:

1. Real Estate and Property Management - Real estate planning, acquisition and disposition
2. Finance & Business - Strategic plans, budgets, financial analyses, procurement
3. Operations and Maintenance - Building operations and maintenance, occupant services
4. Technology - Facility management technology, workplace management systems
5. Communication - Communication plans and processes for both internal and external stakeholders
6. Quality—Best practices, process improvements, audits and measurements
7. Human Factors - Healthy and safe environment, security, FM employee development
8. Leadership and Strategy - Strategic planning, organize staff and lead organization
9. Project Management - Foresight in management of all projects and related contracts
10. Environmental Stewardship and Sustainability - Sustainable management of built and natural
environments
11. Emergency Preparedness and Business Continuity - Emergency and risk management plans and
procedures

Globalization
The trend toward opening up foreign markets to international trade and investment

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Impact of Globalization
 “Anything, anytime, anywhere” markets
 Partnerships with foreign firms
 Lower trade and tariff barriers
 NAFTA, EU, APEC trade agreements
 WTO and GATT

Globalization’s Impact on HRM

Different geographies, cultures, laws, and business practices

Issues:
 Identifying capable managers and workers
 Developing foreign culture and work practice training programs.
 Adjusting compensation plans for overseas work

Human Resource Information System – HRIS

Definition
• “HRIS can be briefly defined as integrated systems used to gather, store and analyze information
regarding an organization’s human resources.” (Hedrickson, 2003, p.381).
• HRIS “One which is used to acquire, store, manipulate, analyze, retrieve and distribute information
about an organization’s human resources.” (Tannenbaum 1990)

Who uses HRIS?

• HR Professionals (such as HR rep, HR Manager, etc.)
• Functional Managers
• Support staff
• Lower Level Employees
• Middle Level Employees
• Upper Level Employees
• Executives & Directors

Basic HRIS Features / Modules:

1. Payroll module: automates the pay process by gathering data on employee time and attendance,
calculating various deductions and taxes, and generating periodic pay cheques and employee tax
reports.
2. Online Recruiting module: used to garner potential candidates for available positions within an
organization.
3. Time and Labor Management module: is designed to collate and analyze employee timekeeping
information for the purposes of organizational cost accounting.
4. Training Module/Learning Management System module: provides a system for organizations to
administer and track employee training and development efforts.
5. Benefits Administration Module: provides a system for organizations to administer and track
employee participation in benefits programs. These programs can range from programs such as health
insurance and pension schemes, stock option plans, and profit sharing.
6. HR Management Module: records basic demographic data of employee - training and development,
skills, and qualifications of each employee. Advanced HR management modules can also automate the
process of application for positions by capturing application data and entering it to a relevant
database.

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Benefits of HRIS
• Efficient and Effective use of Time
• Cost Efficiency / Cost Effectiveness
• Increases Accuracy
• Creates new opportunities for better analysis of the workforce.
• Streamline the activities within the HR department;

HRIS: Software - examples

 HRSOFT
 ORACLE- HRMS
 PEOPLESOFT
 SAP HR
 SPECTRUM HR

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