HRM Unit - 4 Notes

KV INSTITUTE OF MANAGEMENT AND INFORMATION STUDIES
BA7204 HUMAN RESOURCE MANAGEMENT UNIT IV
UNIT – IV SUSTAINING EMPLOYEE INTEREST

Compensation plan – Reward – Motivation – Theories of motivation – Career management –
Development of mentor – Protégé relationships.
Contents
4.1. Compensation Plan/Reward: ................................................................................................................ 2
4.2. Reward .............................................................................................................................................. 13
4.3. Motivation: ........................................................................................................................................ 18
4.4. Motivation Theories: .......................................................................................................................... 19
4.4.1.Early Theories:............................................................................................................................. 20
4.4.1.1Hierarchy of Need Theory (or) Maslow’s Theory: .................................................................. 20
4.4.1.2.Theory X (Mc.Gregor’s) ........................................................................................................ 20
4.4.1.3.Two – Factors Theory (or) Herzberg’s Theory (or) Motivation Hygiene Theory: ................... 22
4.4.2.Contemporary Theories of Motivation: ......................................................................................... 23
4.4.2.1.McClelland’s Theory of Needs .............................................................................................. 23
4.4.2.2.Cognitive Evaluation Theory: ................................................................................................ 24
4.4.2.3.Goal – Setting Theory: .......................................................................................................... 24
4.4.2.4.Self – Efficacy Theory:.......................................................................................................... 25
4.4.2.5.Reinforcement Theory: .......................................................................................................... 26
4.4.2.6.Expectancy Theory (or) Vrooms/Porter and Lawler : ............................................................. 26
4.4.2.7.Equity Theory: ...................................................................................................................... 26
4.5. Career management ........................................................................................................................... 30
4.5.1.Career planning': .......................................................................................................................... 32
4.5.2.Career development: .................................................................................................................... 35
4.6.Mentoring: .......................................................................................................................................... 37
4.7.Proteges Relationship: ........................................................................................................................ 38
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4.1. Compensation Plan/Reward:

A compensation plan is a list of compensation components that can be awarded to employees
belonging to a particular compensation group. An effective compensation plan is linked to and
promotes important, agreed upon goals. A typical compensation plan of an employee comprises of
following:
o Wage
o Incentives
o Employee benefits
o Non-Financial Compensation
Meaning and Definition of Wage:
A wage is the remuneration paid, for the services of labour in production, periodically to an
employee/ worker. "Wages" usually refer to the hourly rate paid to such groups as production and
maintenance employee ("blue-collar workers").
According to Benham, "Wages means the amount paid to the labour for his services to the
employer".
Classification of Wages:
1) Minimum Wage: Minimum wage is the one which provides not merely for bare sustenance of
life, but also the preservations of the efficiency of the worker. For this purpose, a minimum wage
must also provide for some measure of education, medical requirements and amenities. Minimum
wage may be tied by an agreement between the management and the worker, but is usually
determined through legislation. This is more in the unorganised sector where labour is unionised.
In the fixation of minimum wages, beside the needs of workers, other factors like ability of the
concern to pay, nature of job and so on, are also considered.
2) Fair Wage: Fair wage is something above the minimum wage. It can be understood in two
ways. In a narrow sense, wage is fair if it is equal to the rate prevailing in the same trade and in the
neighborhood for similar work. In a wider sense, it will be fair if it is equal to the predominant rate
for similar work throughout the country and for trader in general. Irrespective of the way in which
fair wage is understood; it can be fixed only by comparison with an accepted standard wage. Such
a standard can be determined with reference to those industries where labour is well organised and
has been able to bargain well with the employers.
According to The Indian National Trade Union Congress, "A fair wage is a step towards the
progressive realisation of a living wage". .
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3) Living Wage: Living wage is a step higher than fair wage. Living wage may be described as
one .which should enable the wage earner to provide for himself/herself and his/her family not
only the bare essentials of life like food, clothing and shelter but a measure of comfort including
education for children; protection against ill health; requirements of essential social needs; and/or
measures of insurance against the more important misfortunes including old age. A living wage
must be fixed considering the general economic conditions of the country. The concept of living
wage, therefore, varies from country to country. In the more advanced countries, living wage itself
forms the basis for the minimum wage. In India, minimum wage is fixed mainly for sweated
industries under the provisions of the Minimum Wages Act 1948.
4) Real Wage: The term real wages refers to wages that have been adjusted for inflation. This term
is used in contrast to nominal wages or unadjusted wages. Real wage means that the total "amount
of things that this can buy", is equal to real
Methods of Wage and Salary Payments:
1) Time Rate/Wage System: The time wage system is the oldest and simplest method of wage
payment. It is also known as day wage system. It is the system of wage payment on the basis of
time that a worker devotes to his work at the workplace. The period of time may be an hour, a day,
a week, a fortnight, or a month. However, under this system no account is made for the actual
amount of the work done by the workers.
2)Piece Rate/Wage System: Under the piece rate system, a worker is paid for the amount of
output, irrespective of the time taken. In this system, there is no guarantee of minimum wage, but a
fixed rate is paid for each unit of output. The system can naturally be adopted where the worker
repeats regularly a definite operation or produces the same type of unit constantly.
3)Balance or Debt System: Balance system is a combination of time and piece wage system. In
this system, a worker is really paid under the piece wage system. But if on any particular day his
wages fall below the time wage, he would be paid the time wage with the condition that if on the
subsequent days the wages as per piece wage exceed the time wage, the excess would be
recovered.
Incentives:
Meaning and Definition of Incentives:
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According to Burrack and Smith, "An incentive scheme is a plan or programmes to motivate
individual for good performance. An incentive is most frequently built on monetary rewards, but
may also include a variety of non-monetary rewards or prizes".
Types of Incentives
Incentives can be broadly classified under following categories:
1) Individual incentives,
2) Group incentives, and
3) Enterprise incentives.
Individual Incentive Plans:
According to L.G. Magginson, "Individual incentives are the extra compensation paid to an
individual for all production over a specified magnitude which stems from exercise of more than
normal skill, effort or concentration when accomplished 'in a predetermined way involving
standard tools, facilities and materials. In those assignments where there is no interrelation or we
can separate the work then individual incentives are preferred".
Types of Individual Incentive Plans:
I. Earnings Varying in Same Proportion as Output:
1. Straight Piece-Work: Straight piece-work method is the simplest, oldest and the most
commonly used method. Here, the rate per unit of output is fixed, and the total earnings of a
worker are arrived at by multiplying the total output (measured in terms of units) by the rate per
unit. Obviously, earnings of the worker directly depend upon his or her performance.
2. Standard Hour Plan/Systems: A standard hour plan is an incentive pay plan which establishes
a fixed unit of time for completion of a task or job. An employee receives the wage for the
standard unit of time for completion of the task without regard to the actual time needed. Under a
standard hour plan an employee would receive one hour's wage for replacing a muffler, regardless
of the actual time required. Such a plan requires accurate measurement of time necessary for each
job or task. It is also called 100 per cent gainsharing.
II. Earnings Varying Proportionately Less than Output:
1. Halsey Plan: This plan was introduced by F. A. Halsey. Under the Halsey Plan, standard time is
fixed for the completion of a job and the rate per hour is then determined. If the worker takes the
standard time or more to complete the job, he or she gets paid at the time-rate. In other words, time
wages are guaranteed even if the output of the worker is below standard. Where the work is done
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in less than the standard time, he or she gets paid for the actual time, at the time-rate plus a bonus
which is calculated "at" or "as" a specified percentage of the saved time. The percentage varies
from 30-70 per cent. The usual share is 50 per cent, the remaining going to the employer.
2. Rowan Premium Plan: It was introduced by D. Rowan in 1901. It is modification in the
Halsey's Plan. The premium is calculated on a percentage of wages for the time worked and not for
the time saved. This gives more bonuses to the workers.
3. Barth Variable Sharing Plan: It does not guarantee the time-rate. The worker's pay is
ascertained by multiplying the standard hour by the number of hours actually taken to do the job,
taking the square root of the product and multiplying it by the worker's hourly rate.
4. Bedaux Plan: Under this plan, every operation or job is expressed in terms of so many standard
minutes, which' are called 'Bedeaux Points' or "B's", each representing one minute through time
and motion study. Thus there are 60 B's in one hour. Each job has a standard number of B's. The
rate per hour is also determined. The worker receives, in addition to his or her hourly rate, a bonus
which under the original plan is equal to 75 per cent of the number of points earned, in excess of
60 per hour, multiplied by one-sixtieth of the worker's hourly rate. If a worker does not reach his or
her standard, he or she is paid at the time-rate
III. Earnings Varying Proportionately More than Output:
This category includes two methods:
I) High piece rate, and
2) High standard hour system.
Under the former, the earnings of the worker are in proportion to his or her output, as in straight
piece-work, but the increment in earnings for each unit of output above the standard is greater. For
example, for each one per cent increase in output above the standard, there may be a 4/3 times
increase in earnings as compared to one per cent increase in earnings under the straight piece-rate
system. The higher rates start applying after the standards have been reached. Similar logic applies
to the high standard hour system.
The main feature of these two schemes is that since direct labour costs per unit increase in for
levels of output above the standard, the worker also shares the earnings in overhead costs which
result from an increased output. The amount of this share depends on the increments in earnings
which are payable at different levels of output. If these increments were large enough and
increased progressively with output, the workers obviously could obtain all the savings in
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overhead costs. This is not, of course, the case where the increment in earnings remains the same
for each successive increase in output.
IV. Earnings Differing at Different Levels of Output:
This group includes several schemes. These systems can be best explained by describing how
earnings vary from minimum to maximum at different levels of output. Earnings for one part of the
range may vary proportionately less than output and for another part proportionately more, or more
usually in the same proportion as the output.
1. Taylor's Differential Piece-Rate System (Developed by F. W. Taylor in 1880): Under this
system, two piece rates are determined: a low piece rate for those who fail to attain the standard
and a high piece rate for those who attain the standard or are above the standard. The efficiency of
a worker may be determined as a percentage either (a) of the time allowed for a job to the actual
time taken, or (b) of the actual output to the standard output, within a specified time. Here,
differential to be applied is 80% of piece rate below standard and 120% above standard.
2. Merrick's Multiple Piece-Rate System: It is an improvement over Taylor's Differential Plan.
According to this plan, three piece rates for a job are fixed. None of these three piece rates are
fixed below the normal level.
3. Gantt Task and Bonus Plan: This plan has been devised by H. L. Gantt and is the only one that
pays a bonus percentage multiplied by the value of standard time. Under this system, fixed time
rates are guaranteed. Output standard and time standards are established for the performance of
each job. Workers completing the job within the standard time or in less time receive wages for the
standard time plus a bonus which ranges from 20 per cent to 50 per cent of the time allowed and
not time saved. When a worker fails to turn out the required quantity of a product, he simply gets
his time rate without any bonus.
Under this plan, there are also three stages of payment:
i) Below the standard performance, only the minimum guaranteed wage is to be paid;
ii) At the standard performance, minimum guaranteed wage + 20% of time-rate will De paid as a
bonus; and
iii) When the standard is exceeded, a higher piece-rate is paid but there is no bonus.
4. Emerson's Efficiency Plan: A standard time is set for each job, and the efficiency of each
worker is determined by dividing the time taken by standard time. Up to 67 per cent of efficiency,
the worker is paid by time rate. Thereafter, a graduated bonus, which amounts to a 20 per cent
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bonus at 100 per cent efficiency, is paid to the worker. Thereafter, an additional bonus of 1 per
cent is added for each additional 1 percent efficiency.
5. Accelerating Premium System: These are the systems which provide for a guaranteed
minimum wage for output below .standard, For low and average increases in output above the
standard, small increment in earnings are allowed. Increasingly large earnings are conceded for
above average output, the increment being different for each 1 % increase in output. Very
significant increases in earnings are given for really high output.
In this system, the production is pushed up higher and higher by discouraging low output and
rewarding at increasingly effective rate higher outputs. Such schemes are generally adopted when
much higher output than what are currently obtained are to be achieved.
Group Incentive Plans:
Group incentives are the incentive wage plans which motivate the group to produce more. Under
individual incentive plans, bonus is paid to the workers on the basis of individual performance and
the amount of bonus payable to a worker on the basis of individual performance and the amount of
bonus payable to a worker is not affected by the performance of another or other workers. But
there are certain situations where it is difficult to measure the output of an individual worker
conveniently or the performance of one worker is affected by the performance of other workers in
such situations, group incentive bonus schemes are introduced.
1. Priestman's Production Bonus Plan: In this plan, a group of experts set the standard
performance in terms of the number of units for the whole work to be carried out by a group within
a specific period. Then, the actual performance of the group is measured and this performance is
compared with the standard performance. When the actual performance exceeds the standard
performance, the group members are entitled to a bonus computed on the basis of the excess
production achieved by them. However, when the group's performance is below the standard
performance, they are paid on the basis, of time rate without any bonus.
2.Cost Efficiency Bonus Plan: Under this plan, the organisation first determines the standard cost
for the various elements of cost. These may be material cost, labour cost and overheads associated
with production. Of course, an organisation may also decide the standard cost for the total cost of
all these elements. Next, it measures the actual cost incurred by the group in accomplishing the
production goals or targets. Finally, the actual cost incurred by the group and the standard cost are
compared to determine the savings in the cost achieved by the group. As per the cost efficiency
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plan, a predetermined percentage of the savings is distributed in the form of bonus to the
employees.
3.Gainsharing Plan: Gainsharing matches an improvement (gain) in company performance to
some distribution (sharing) of the benefits with employees. Usually, gain sharing is applied to a
group or all. employees, rather than an individual. Gainsharing plans often are considered non-
traditional compensation approaches, since most people receive wages and salaries .. The interest
in non-traditional compensation stems from the growing challenges of increased competition.
Types of Gain sharing Plan
Gain sharing plans are of following types:
i).Scanlon Plan: The most famous production sharing plan is known as Scanlon Plan. The
Scanlon plan provides a financial reward to employees for savings in labour costs that result from
their suggestions. Employee-management committees evaluate these suggestions. Participants in
these plans calculate savings as a ratio of payroll costs to the sale value of what that payroll
produces. If the company is able to reduce payroll costs through increased operating efficiency, it
shares the savings with its employees.
ii) Rucker Plan: Rucker Plan is also known as Share-of-Production plan (SOP) or
normally covers just production workers but may be expanded to cover all employees. The
financial incentive of the Rucker Plan is based on the historic relationship between the total
earnings of hourly employees and the production value that employees create. The bonus is based
on an improvement in this relationship that employees are able to realise. Thus, for every 1 per
cent increase in production value that is achieved, workers receive a bonus of I per cent of their
total payroll costs.
iii) Improshare: This technique is derived from consultative style of management. Here
employees do not have scope for participation or involvement, but managers in the process of
improving production and efficiency consult them. Employees are offered bonus compensation if
that consultation process results in the organisation making profits.
4. Towne Plan: This method considers the savings in labour cost alone for determining the
rewards payable to the group. In the first step, the standard labour cost for the entire work is
determined in advance. Then the actual labour cost for that work is measured and compared with
the standard labour cost. Now, the saving in the labour cost is computed and a proportion of the
saving in monetary terms is distributed to the group members. However, a part of the saving is
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usually given to the supervisors as a recognition of their role in cost saving. Of course, the
organisation may get a share in the saving achieved in labour cost.
Enterprise Incentive Plans:
Enterprise incentive plans differ from individual and group incentive plans in that all
organisational members participate in the plan's compensation payout. Enterprise incentive plans
reward employees on the basis of the success of the organisation over an extended time period-
normally one year, but the period can be longer. It seeks to create a "culture of ownership" by
fostering a philosophy of cooperation and teamwork among all the organisational members.
Types of Enterprise Incentive Plans:
1.Profit-Sharing Plan: Profit-sharing refers to various incentive plar • .> introduced by businesses
that provide direct or indirect payments to employees that depend on company's profitability in
addition to employees' regular salary and bonuses. In publicly traded companies these plans
typically amount to allocation of shares to employees.
Methods of Profit-Sharing Plans:
1.Cash Payment Plan: A share of the' profits is distributed at regular inter·vals. If the interval
between each distribution is too long, the employees tend to overlook the relationship between
their efforts and the reward. The percentage to be distributed depends on the stability of the
company and the management's philosophy, primarily.
ii) Deferred Payment Plan: The employee's share of profits is held in trust for him, to be paid
either in instalments or as retirement benefits. If the employee is dismissed, the investment amount
reverts to him and in the event of his death; it is paid to the designated beneficiary. This plan
provides long-term security benefits and helps in "offsetting inflationary trends".
iii) Combination Payment Plan: It is a combination of the cash and deferred payment plan; it
enables the employer to get some immediate benefits and also to put away something for the
future. Employees also avoid high taxes.
iv) Stock Ownership Plan: As the name implies, the stock ownership plan enables employees to
acquire company stock often at concessi anal rates. Companies set limits to the amount of stock
that employees can buy, which is usually related to the wage or salary earned by the employees, or
it may be restricted above certain wage levels. There may be conditions with regard to the resale of
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stock also - such as agreeing to sell to the issuing company first until a stated period or until he is
no longer with the firm.
2.Stock Options: Stock options give the holder the right to purchase shares of stock in the future
at a pre-determined price. Regardless of the market price of the stock at the time the option is
exercised or redeemed, the' price will remain the same. If the market price of the stock at the time
it is redeemed is higher than the pre-determined price, the holder of the option makes money.
Holders of stock options are not obligated to exercise their options. If the market price declines
below the pre-determined price, the stock options will not be worth anything.
Types of Stock Options

There are two broad categories of stock options which are as follows:
1.Incentive Stock Options (ISOs): These are also known as qualified or statutory stock options
and must satisfy requirements set forth in Internal Revenue Code (IRC) Section 422 for
preferential tax treatment.
2.Non-Qualified Stock Options (NQSOs): These are also known as non-statutory stock options
and do not satisfy the requirements of the IRC for preferential tax. treatment.
3. Employee Stock Ownership Plan (ESOP): An ESOP is a defined contribution employee
benefit plan that allows employees to become owners of stock in the company they work for. It is
equity based deferred compensation plan. It is an alternative to selling the company to outside
investors or to another company is to sell the company to its employees. This can be done
thorough the creation of an Employee Stock Ownership Plan (ESOP) and the sale of the company
to it. ESOPs are a specialised version of a profit-sharing or stock-bonus plan that can be used for
corporate finance purposes with tax advantages.
Advantages of Incentives:
1.Motivation to Workers: The primary advantage of incentives is the inducement and motivation
of workers for higher . efficiency and greater output.
2.Increase in Productivity: There will be reduction in the total as well as unit cost of production,
through incentives. Productivity would increase resulting in greater number of units produced for
given inputs. This would bring down the total and unit cost of production.
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3.Attractive Proposition for Management: Incentive packages are a very attractive proposition
for management because they do not affect employer's contribution to the provident fund and other
employee-retirement benefits.
4.Increase in Earnings of Employees: Earnings of employees would be enhanced due to
incentives. There are instances where incentives earnings exceed two or three time the time-rated
wages or salaries. Increased earnings would enable the employeesto improve their standard of
living.
5.Other Advantages: Reduced supervision, better utilisation of equipment, reduced scrap,
reduced lost time, reduced absenteeism and turnover are some other advantages of incentive
payments.
Disadvantages of Incentives:
1. Leads to Increased Expenses: There is a tendency for the quality of products to deteriorate
unless steps are taken to ensure maintenance of quality through checking and inspection. This
involves added expenses.
2. Increases Danger of Accidents: There is evidence that some workers paid by results have
disregarded security regulations in order to achieve high output, thus, increasing the danger of
accidents. Some workers tend to overwork during the normal working day and sometimes keep on
working in their lunch hour. These practices would affect their health.
3.Leads to Higher Labour Costs: Workers tend, moreover, to regard their highest earnings as
normal and may, therefore, press for a considerable higher minimum wage when they are paid by
results than when they are paid by the hour. Payment by results may, therefore, lead to higher
labour costs in certain industries such as paper-making and coal mining.
4. Creates Feeling of Jealousy among Workers: Jealousy may arise among workers because
some are able to earn more than others. In the case of group-incentive schemes the workers who
are fast in their work may be dissatisfied with those who are slow. Where heavy work is involved,
older workers are likely to be criticised for being too slow.
5. Induces Fear in Workers: Difficulties may arise over the introduction of new machines or
methods. Workers may oppose such introduction for fear that new piece or bonus rates set, when
the job is restudied at intervals of time, may yield lower earnings; or when new machines or
methods are introduced; they may slacken their rate of work in order to avoid rising output to a
level which would make a restudy of the job necessary.
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6. Difficulty arises in Determining Standard Performance: Difficulty also arises in determining

the standard performance. Therefore, many organizations follow a safe route to fix the standards -
which is usually the average of past years performance but past performance may not be the ideal
basis for fixing production norms.
Employee Benefits:
Meaning and Definition of Employee Benefits:
According to Cock mar, "Fringe benefits are those benefits which are provided by an employer to
or for the benefit of an employee and which are not in the' form of wages, salaries and time-related
payments".
Employee benefits (also called fringe benefits, perquisites, or perks) are various non-wage
compensations provided to employees in addition to their normal wages or salaries. Where an
employee exchanges wages for some other form of benefit, this is generally referred to as a 'salary
sacrifice' arrangement. Employee benefits are available to all employees based on their
membership in the organisation.
Purposes of Employee Benefits:
1. Increased Job Satisfaction: Most organizations would also argue that money spent on benefits
has an impact on job satisfaction and subsequent turnover. That is, even if employees do not work
harder in response to better benefits, they are more likely to remain with a firm that provides better
benefits and are more satisfied with that firm.
2. Respond to External Forces: Various social, cultural, and political forces may facilitate the
introduction of new and broader benefits programmes. For example, increase in the number of
women in the workforce and the rising costs of healthcare have each affected benefits programmes
in recent times. Because of the growth in the numbers of female workers, more and more
companies offer on-site daycare, dual-parent leave for the birth of a child, and other benefits that
make it easier for people to work and have productive careers.
3. Attract Better Employees: Organisations 'are willing to spend more money on compensation in
order to attract better- qualified people and/or to convince employees to work harder.
4. Meet Employee Expectations: Employee expectations are a driving force in determining what
benefits a firm must offer. For example, an organisation is not legally required to offer any
vacation time. But because this benefit is so desirable and has become common, almost every
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person who accepts a new job expects that he or she will be given some vacation time. Indeed,
most people today would be unlikely to accept a permanent full-time job without this basic benefit.
5. Achieving Desired Unity: They improve unity among the employees as these benefits are
available to all the employees, irrespective of their work performance, They indeed eliminate and
prevent envious and other resentful feelings among the employees.
6. Improving Industrial Relations: They are efficient means to improve the industrial relations of
the organisation. The irritants relating to the basic wages and incentives can be removed through
employee benefits.
7. Concern for Employee Well-Being: Employee benefits are a sure way of expressing the
concern of the organisation to improve the health and safety of the employees. They make the
employees believe that their management really cares for them.
8. Reducing HR Cost: Since employee benefits 'are offered to all the employees, the cost of
benefits would be less. The cost of some benefits (like transportation and canteen) would come-
down drastically when they are offered to a large number of persons.
4.2. Reward
According to Miller and Steinberg, "A reward can be defined as any positively perceived physical,
economic or social consequence".
Essential Features of Reward
1) Availability: For rewards to reinforce desired performance, they must be available. Too little of
a desired reward is no reward at all. For example, pay increases are often highly desired but
unavailable. Moreover, pay increases that are below minimally accepted standards may actually
produce negative consequences, including theft, falsifying records, and the like.
2) Timeliness: A reward's motivating potential is reduced to the extent that it is separated in time
from the performance it is intended to reinforce. Thus, rewards should be given in a timely
manner.
3) Performance Related: Rewards should be closely linked with performances. The clearer the
link between performance and rewards, the better able rewards are to motivate desired behaviour.
4) Durability: Some rewards last longer than others. Intrinsic rewards, such as increased
autonomy, challenge, and accountability, tend to last longer than extrinsic rewards, such as pay
increases.
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5) Equity: Rewards must be perceived as equitable. Employees often make comparisons about
what rewards are available to them and others doing similar jobs. If performance differs then there
is some justification for rewards being different. Otherwise, employees experience inequity.
Employees may try to reason with the organisation for equitable rewards. Where these attempts
fail, the employee may adjust his performance to suit the rewards given. This way, employee is
able to bring in equity. This affects the overall performance.
6) Visibility: To promote a reward system, management must ensure that rewards are visible
throughout an organisation. Visible rewards, such as assignments to important committees or
promotion to a new job, send signals to employees that rewards are available, timely, and based on
performance.
7) Flexibility: Rewards must be flexible. To be an effective reward, it should be flexible both in
terms of the quantity, and the employees it is directed at. Flexibility means the organisation must
reward the employees as frequently as possible. When rewards are given frequently, they provide
much needed extrinsic motivation; however, this may diminish the value of the reward.
8) Cost Effective: Reward allocation involves cost. Care must be taken to understand the pay-offs.
Otherwise it would increase the financial burden. As far as possible rewards must be allocated at a
relatively low cost.
Types of Rewards:
1) Intrinsic versus Extrinsic Rewards: Work-related rewards can be divided into two basic
classes or types - intrinsic and extrinsic. Two critical attributes distinguish extrinsic from intrinsic
rewards. First, intrinsic rewards are personalized psychic experiences. They are generated entirely
within the subjective experience of those who receive them and cannot be physically manipulated
by others. Second, intrinsic rewards are immediately linked to engagement in the specific activities
with which they are associated, i.e., their distribution is immediate and direct, not contingent upon
the actions of others or delayed until some subsequent experiences are encountered. Thus, the link
between engaging in an activity and receiving any intrinsic rewards that may come from it is
created entirely by the characteristics of the activity and the actor who engages in it - it is not
contingent upon the operation of some external distribution system. Job enrichment, shorter work-
weeks, flex-time, job rotation are some intrinsic rewards.
Extrinsic rewards have the opposite characteristics. They are objective or material in character and
are therefore subject to manipulation and control by others. Their distribution is not fully under the
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control of the person who receives them and frequently is imperfectly linked to engagement in the
activities with which fuey are nominally associated. Money, promotions, and employee benefits
are some extrinsic rewards.
2) Financial versus Non-Financial Rewards: Financial rewards refer to monetary benefits
offered and provided to employees in return of the services they provide to the organisation. They
are most commonly given in the form of payincreases, bonuses, or increases in benefits, such as
pension or health care premiums. Such rewards can be divided into two categories: direct and
indirect compensation. Direct compensation is relatively straightforward and consists of increases
in hourly pay, increases in hours (for non-salaried employees), increases in salary, merit pay based
on performance, seniority pay based on time with an organisation, and bonuses based on the
achievement of individual, group, or organisational objectives. Indirect compensation includes
increases to benefits or the addition of benefits such as a dental plan. It can also include paid leave
in the form of vacation days, days-off for training, or longer time-off such as a sabbatical, as well
as paid leave for illness, caring for a child, or caring for an elderly parent.
Non-financial rewards/compensation consists of the satisfaction that a person receives from the job
itself or from the psychological and/or physical work environment in which the person works.
Non-financial compensations are of no actual financial value to the employee, but they provide
him with the stimulus to increase his work performance. Supplying employees with the best tools
possible to do their job is an example, such as providing a new high-end laptop or having an
excellent training facility for coaches at a university. A good office location, choice of furnishings,
or special parking place can all be non-financial rewards.
3)Performance versus Membership Rewards: As the name implies, performance-based rewards

are tied to the ability of an individual, team, group, or organisation to meet some previously
agreed-upon standard of performance. It is a method of remuneration that links pay progression to
an assessment of individual performance, usually measured against pre-agreed objectives. It offers
individuals financial rewards in the form of an increase in basic pay and/or cash bonuses, which
are linked to an assessment of their performance. Performance-based rewards are introduced
because it appears to be an effective motivator and conveys a clear message that high levels of
performance are expected and will be rewarded.
15
Membership-based rewards are allocated solely for being part of a group within an organisation.
These rewards commonly include annual cost-of-living increases to a base salary or support for an
equity policy. For example, if a park and recreation department was looking to encourage staff to
have master's degrees or obtain certification, they might offer pay incentives for having either or
both. Membership-based rewards are also often tied to length of time with an organisation. For
example, after a certain length of service with an organisation, employees may receive a certain
percentage increase to their payor be eligible for additional benefits. In a unionised environment,
many of these rewards are spelled out in a labour agreement.
Criteria for Rewards Distribution
1)Performance: It is logical to want rewards to reflect the performance of the employee. Yet, it is
not possible to do so many a times. The reason is that there are problems in measuring
performance. The first problem is to identify mutually acceptable criteria for defining
performance. The next problem lies in measuring performance by differentiating between quantity
and quality of performance.
2) Effort: Organisations are seldom open about whether they reward employees for effort
expended. However, it is widely believed that organisations do reward employees for efforts
expended. Effort is without doubt a major determinant in the reward allocation. In situations where
performance is generally bad, rewarding employees for effort expended may be advisable. This
helps to differentiate between employees. Differences- in reward allocation can be fairly justified.
3) Seniority: Seniority is determined by the length of time an employee has spent on the job. Even
today, it is an important factor in determining the allocation of rewards. In the government service
and traditional manufacturing organisations this is perhaps the most important criterion for reward
allocation. However, in newer organisations especially in the software industry seniority does not
play an important role in rewards allocation.
4) Skills Set: Yet another common practice is to allocate rewards based on the skills possessed by
the employee. Employees with higher skill sets are rewarded commensurately. Whether, the skill is
used or not is immaterial. Individuals who possess key skills set are better rewarded.
5)Job Complexity: The complexity of the job is also considered to decide rewards distribution.
Jobs that are highly repetitive and routine and do not require much effort expenditure, may attract
lesser rewards than those that are rather complex, or use sophisticated methods and require high
16
effort expenditure. Similarly, jobs that are hard to perform, require working under unpleasant
working conditions, or create undue stress or hardship, may attract higher rewards.
6)Discretionary Time: When jobs are completely programmed there is no scope for decision-
making. There is no discretionary time involved. These jobs involve less judgment. There are
hardly any risks. Therefore, lower rewards can be allocated. When employees need to make
decisions the discretionary time increases. Risks increase correspondingly. Therefore, rewards
must increase commensurately. Otherwise, the organisation may not be able to get employees to
accept such positions.
Significance of Rewards
1)Reward as Source of Organisational Effectiveness: Organisational effectiveness can be
obtained only from high- performing employees. High-performing employees can make other
resources perform highly. Reward is a proven and established means of stimulating employees to
perform exceedingly well.
2)Reward as Medium between Organisation and Employees: If there is any practice that brings
organisation and its employees together, it is reward. Therefore, successful management of reward
is important to both organisation and its employees. Reward has the capacity to perform the role of
a medium .:
3)Reward as Factor of Motivation: Reward is a dynamic instrument. It not only creates
opportunities for fulfilment of motivational needs, but also enhances the intensity of motivation.
This means, employee motivation doubles every time he/she is suitably rewarded. Enhanced
motivation leads to higher performance, which in turn leads to higher rewards.
4)Reward as Performance Guide: Reward itself can guide the organisation and its employees to
perform at their best. Reward encourages healthy competition and collaboration among
employeesto perform well, which leads to innovation in the pursuit of reward achievement.
5)Reward as Source of Differentiation: General performance profile of a typical organisation
consists of a marginal percentage of high performers and low performers, and' majority of average
performers. Performance of average employees can be enhanced through suitably rewarding high
performers and depriving reward from low-performing employees. This reward distinction not
only helps to manage different performers differently, but also facilitates average performers who
are generally fence sitters to jump into the bandwagon of high performers.
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6)Reward as Source of Employee Involvement: Employee involvement, participation and

empowerment studies sufficiently establish that performance excellence can come from employees
who are totally involved with organisation. This involvement can be obtained only by creating
opportunities for employees to involve themselves in organizational management. Reward is one
potential source that can be effectively tapped for creating these avenues of involvement.
7)Reward as Source of Innovation: Non-financial rewards generate a high degree of internal
drive in employees to excel. Zeal to perform excellently paves way for innovation. Rewards
possess an inherent capacity to pump actualization drive in human beings. Therefore, well-
designed and appropriately focused non-financial rewards provide right recognition to employees
and mature as a source of innovation.
8)Reward as Source of Competitiveness: Organizational competitiveness comes from sheer
performance capacity of organizations. This capacity can be sharply evident when organisations
encounter situations of crisis. Therefore, any organisation that intends to strengthen its
competitiveness must first focus on implementing a suitable reward system.
9)Reward as Source of Organisational Harmony: Reward that is managed well can be a great
source of organisational harmony, which is a prerequisite for great employee and organisational
performance.
4.3. Motivation:
Meaning: The process that account for an individuals intensity direction and persistence of effort
towards attaining a goal.
Elements of Motivation:
1. The Individuals:

Motivation is constant for every individuals whether he may be in the top or in bottom

Motivation may differ in age, sex, education, intelligence etc….

Difference determine the need of the individuals

Difference it determines the type of motivation whether it is financial or non-financial
2. Jobs:

Different jobs creates different motivation
18

Many people won’t like routine job because it creates dullness

Challenging job not liked by many people because of fear among them.
3. Work station:

The environment within which the people work create motivation

A type technologies creates the motivation

Leadership style and participation and decision making determines the motivation
Nature of Motivation:
1. Psychological Concept:

Motivation it leads to effort then effort leads to performance then performance leads to
reward then reward leads to satisfaction.

Motivation it leads with the psychological concept.

So even a person with extrationary ability cannot perform well until he is effectively
motivated.
Effective performance ═ Ability X Opportunity X Motivation
Motivation is total not a piece Meal:

Workers can’t be motivated in parts for successful motivation. So the manager should take
into account needs and ambition.
2. Motivation is determined by human needs:

Motivation is highly determine by the human needs.

Every individuals has different types of need. So it should be analysis and motivated
accordingly
3. Motivation may be Financial and non-financial:
4.4. Motivation Theories:

I. Early Theories:
1. Hierarchy of Need Theory
2. Theory X and Theory Y
3. Two-Factor Theory
II. Contemporary Theories of Motivation
1. McClelland’s Theory of Needs
19
2. Cognitive Evaluation Theory

3. Goal-Setting Theory
4. Self-efficiency Theory
5. Reinforcement Theory
6. Expectancy Theory
7. Equity Theory
4.4.1.Early Theories:
4.4.1.1Hierarchy of Need Theory (or) Maslow’s Theory:
He ranks the various needs in a defined order
Self-actualization Need
Esteem Need
Social Need
Safety Need
Physiological
Need
Demerits of Maslow’s Theory:


There is no indication that the satisfaction of one need and resultant increase in
productivity

By splitting the human need into different characteristic motivation is piece meal exercise
4.4.1.2.Theory X (Mc.Gregor’s)

Negative assumption is the pessimistic approach

Manager excludes workers from decision making
20

The assumption that employees dislike work are lazy, dislike responsibility and most be
coerced to perform
Negative Assumption:
1. Inherent dislike to work:
2. Lack of ambition and love for direction:

They are unambision people they won’t accept any responsibility due to fear

They will be accepting the responsibility due to fear of harmful consequence
arising from refusal

Most of the time prefer to being directed by the superiors
3. Lack of Creativity:

There is a lackness of creativity they won’t try to adopt any new method to solve
the problem they will be following the existing method even outdated.
4. Satisfaction of physiological and safety need are being the only goal
5. Close often coercive control a must:

Workers to be instructed controlled and closely supervised

Workers must work as ordered; they should not be allowed to be involved in
decision making.

There won’t be any encourage to make any suggestions.
Theory Y: (Mc.Gregor’s):

The assumption that employees like to work are creative, seek responsibility and can
exercise self-direction.

Positive attitudes and optimistic approach

There will be a active Co-operative between workers and management in order to
achieve the objective or goal.
Positive Assumption:
1. Work as natural as play:

Highly interested in working

Workers he will perform to the best of his ability
2. Self Control
3. Creativity: Self motivation
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4. Money not the only motivation: Motivation need at all level

5.Self-direction:

They won’t expect the management to provide right environment
4.4.1.3.Two – Factors Theory (or) Herzberg’s Theory (or) Motivation Hygiene Theory:
Man has two dimensions
o One aspect – Adam nature
o Second aspect – Abraham nature

Adam nature they has the animal characteristic and hygienic needs which are satisfied
through proper salary, proper working condition, supervision etc…

It is called as the extrinsic factors. A theory that relates intrinsic factors to job satisfaction
while associating extrinsic factors with dissatisfaction.

Abraham nature is a complex need and it is concerned with the psychological growth of the
individuals like achievement, extra responsibility etc…

It is called as the intrinsic factors.

Herzberg in his research ask to the workers to think of a time when they felt especially
good about their jobs and when they felt especially bad about their job

He asked them to describe the condition that lead to such feelings.

He find out which achievement on the job gave them good feeling and lack of achievement
does not cause any bad feelings

If the working conditions were good they did not produce any good feeling, but if they
were not good it leads to bad feelings

When a worker is satisfied with his achievement he contributes to the intrinsic factors and
takes all credit for it on the other hand when he is dissatisfied in his workers he blames the
extrinsic factor.

A factor leading to job satisfaction is entirely different from factor leads to job
dissatisfaction

Opposite of satisfaction No satisfaction and dissatisfaction no dissatisfaction

The manager should remove the factors leading to dissatisfaction it may ensure Pease but
not necessarily satisfaction.

Herzberg stress on intrinsic factor to ensure proper motivation.
Disadvantages:
22

When think proceeds smoothly workers take all the credit but if they not proceed
smoothly they blame the extrinsic factors.

Rating of job satisfaction or dissatisfaction is not always perfect.
 Satisfaction or dissatisfaction can’t be used as a absolute measure.
4.4.2.Contemporary Theories of Motivation:

4.4.2.1.McClelland’s Theory of Needs

According to David McClelland’s says that there are 3 majors’ needs

A theory stating that achievement, power and affiliation are three important needs
that help to explain motivation.
1. Achievement need:

The drive to excel to achieve in relation to a set of standards to strive to succeed.
Characteristic of Achievement Need:
1. Moderate Goals:

Achievement motivated people select moderately difficult but achievable
goals and they won’t work for the impossible goals.

They won’t afraid of risk

Indifference to reward:People with high achievement need not concern with
the reward of success

Satisfaction arise while solving the problem or achieving the goal

They won’t work for money but for the success
Feedback:

They need to reserve the authentic feedback about the performance
Task – Orientation:

They will be spending their time the ways and needs to achieve the goals.
2. Affiliation Need:

The desire for friendly and close interpersonal relationships
3. Power Need:

The need to make others behave in a way that they would not have behaved
otherwise
a. Positional Power:
23

A person securing the power in which he holds in the organization.
b. Personal power:

Power based on one’s own personality or behaviour

It is stronger than positional power

People can win others attention through the personal power
4.4.2.2.Cognitive Evaluation Theory:


A theory stating that allocation extrinsic rewards for behaviour that had been
previously intrinsically rewarding tend to decrease the overall level of motivation

What motivates people is situation
Factors determining the situation:
1. Individual Personality:

Individual suggest all people do not like the same thing.

Need pattern will be different and according to the need motivations occur.
2. Organizational Climate:

Organizational Climate it denote the interaction in the organization allowances
and working period etc…

Individual needs are modified by organization factors

There is a relationship between organizational climate and individual needs

Organizational Climate situation it motivate the person in different way.
3. Available Incentives:

A person can be provided through various types of incentives

Incentives can be provided through the internal and external factor.
a. Financial Incentives
b. Non – financial Incentives
4.4.2.3.Goal – Setting Theory:


The theory that specific and difficult goals, with feedback lead to higher
performance. E.g. Business School.
MBO: (Management by Objectives)

A program that encompasses specific goals, participative set, for an explicit time
period, with feedback on goal progress.
24
4.4.2.4.Self – Efficacy Theory:

The individuals belief that he or she is capable of performing a task.
Individuals has confidence
that given level of
performance will be
attained (self-efficacy)
Manager sets Individuals has

difficult higher
specific goal for job
or level of job or task
Task performance
Individuals sets higher

personal (self-set) goal
for their performance
4 ways of self-efficiency can be increased:
1. Enactive Mastery:
Gaining relevant experience with the task or job.
2. Vicarious Modeling:
Becoming more confident because you see someone else doing the task.
3. Verbal Persuasion:
Someone convinces you that you have the skills necessary to be successful
4. Arousal:
Arousal increase the self-efficacy
The person gets psyched up and performs better.
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4.4.2.5.Reinforcement Theory:
It is a goal – setting theory. It is an important influence on behaviour.
4.4.2.6.Expectancy Theory (or) Vrooms/Porter and Lawler :

This theory focus on 3 relationships
1. Effort – performance relationship: Amount of effort lead performance
2. Performance – reward relationship:
Individual believes that performance at a particular level will leads to the attainment of a desired
outcome
3. Rewards – personal goals relationship:
The degree to which organization rewards satisfy an individuals need
Individual Effort Individual performance Organization goal Personal goal

Employee need to answer in the affirmative if their motivation is to be
maximized.

If I give a maximum effort, will it be recognized in my performance appraisal?

If I get a good performance, will it lead to organizational rewards?

If I am rewarded, are the rewards ones that I find personally attractive?
Summary:
Effort Performance
Performance Rewards
Rewards Individual goal satisfication
4.4.2.7.Equity Theory:
 A theory that individuals compare their job inputs and outcomes with those of others and
then respond to eliminate any inequities.
 People are motivated to maintain the fair relationship between 2 factors (i.e.) Performance
and reward.
Assumptions:
Individuals make contribution (Input) for which they expect certain reward (Output)
Individual when he is not satisfied by comparing in order to rectify the inequity he will be
comparing himself with the others person
26
Types of Inputs and outcomes:

Input Outcome
Effort Reward (or) Pay
Ideas Benefits (or) Power
Training Personal development
Experience Security
Education Identification
27
Individuals makes a relationship with other person may be of 3 types

1. Over paid Inequity:
A person experience a superioty complex. It is over paid equity.
2. Under Paid Inequity:
Person perceives (i.e.) outcomes are lower compare to his input in relation with the others.
3. Equity:
Person perceives (i.e.) his outcome in relation to the input are equal to the others. A person
experience satisfaction.
They can reestablish equity:
1.Changing his Inputs: Person can change his inputs to match his outcome by lowering his input
when there is underpaid inequity.
2.Changing in Outcome: A person may adapt to change the outcome by forcing the person who
are responsible for decision making
3.Changing perception about input and outcomes: Measurement of inputs and outcome is
matters of perception a person of reestablish the equity by changing his perception
4.Changing Inputs and outcome of others: A person can right to reestablish equity by forcing
the other persons to change their inputs or output of other.
5.Changing the persons compared: Comparing to particular person’s inputs and outcome if there
is inequity person make change the person’s compare.
6.Leaving the situation: A person not able to reestablish equity he should try to change the
situation.
Implication: This theory is equal pay for equal work.
Career Stages:
A career includes many positions, stages and transitions just as a person's life does. Most of us
have gone or will go throughthe under mentioned five stages
1. Exploration Stage: This is the career stage that usually ends in one's mid-twenties as one
makes the transition from college to work. From an organisational standpoint, this stage has least
relevance as it takes place prior to employment. However, the organisation can still track the minds
of young people by offering internships to them or offering on-the- job training to bright students.
For the individual. this is the stage of self exploration seeking answers to various puzzling
questions about careers.
28
2. Establishment Stage: This is the career stage, where one begins the search for work and picks
up the first job. It includes the first experiences on the job, peer group evaluations, personal
tensions and anxieties that confront a person trying to make his mark. This period is characterised
by committing mistakes, learning from those mistakes and assuming increased responsibilities.
3. Mid-Career Stage: Mid-career is a stage that is typically reached between the age of 35 and 50.
At this point, one may continue to show improved performance, level off or begin to decline; one
is no longer viewed as a 'learner'. Mistakes committed, would be viewed seriously and may invite
penalties as well. If one is good enough, one may grow and turn out good results. If one does not
have the same fire in the belly when they started their career, the best thing would be to hold on to
what one has. Technically speaking, a plateau career stares. Plateau is a condition of stagnating in
one's current job. Since one is no longer ambitious and is more or less happy with what comes in
his way, the organisation can place him on jobs, which require experience and maturity.
4. Late Career Stage: This is the stage where one relaxes a bit and plays the part of an elder
statesperson. For those, who continue to grow through the mid-career stage, this is the time to
command respect from younger employees. One's varied experiences and judgment are greatly
valued and our word will carry weight; undoubtedly, one can teach others and share one's
experiences with others. For those who have stagnated or deteriorated during the previous stage,
the late career brings the reality that they are no longer required to run the race and its better to
redirect the energies to family, friends and hobbies.
5. Decline Stage: During this period, a person's attention may turn to retirement. The
achievements of a long career and the frustrations and anxieties that go along with that phase are
left behind. Regardless of whether one is leaving a glorified career or a dismal job, one has to
make adjustments and get along with people and things.
Career Anchors:
Career anchors are career motivators that make employees hold on to their jobs. They are strong
non-monetary factors, which affect work and career satisfaction and provide a way of
understanding these motivators of career decisions. Career anchors term was introduced by U.S.
organisational theon.it Edgar H. Schein.
29
4.5. Career management

Meaning/Definitions:
Career management can be defined as the process of preparing, implementing, and monitoring
employees' career path with a focus on the goals and need of the organisation. It calls for an
approach that explicit takes into account both organizational needs and employee interests. Career
management policies and practices are best based on an understanding of the stages through which
careers progress in organisations. Career planning and development are essential aspects of
managing one's career.
According to Greenhaus, "Career management has been defined as the process by which
individuals develop, implement and monitor career goals and strategies".
Need for Career Management:
1. Individual Perspective: From an individual's point-of-view, effective career management is
particularly important in light of the turbulent economic, technological, and cultural environments.
In rapidly changing and uncertain times, career success and satisfaction will most likely be
achieved by individuals who understand themselves, know how to detect changes in the
environment, create opportunities for themselves, and learn from their mistakes - all elements of
effective career management. In an era of downsizing, outsourcing, and changing corporate
structures, individuals who have insights into themselves and their options should be more able to
overcome obstacles to their career growth.
2. Organisational Perspective: Individuals who define career success in broad terms and who feel
the need to combine different parts of their lives into a satisfying lifestyle have a real need to
understand the nature of careers and to manage their careers actively. Organisations also have
incentives for understanding careers. In fact, an organisation's ability to manage its human
resources effectively depends on how well it understands its employees' career needs and helps
them to engage in effective career management.
Principles of Effective Career Management:
1. Consistency: Career management should present a coherent and consistent picture of the
organisation's career strategy.
2. Pro-Activity: Career management should be concerned both with maintaining current
capabilities and ensuring future flexibility by anticipating the future direction of the organisation.
30
3. Collaboration: Effective career management is based on partnership between the employer and
the employee.
4. Dynamism: Career management should be flexible enough to respond to changing
organisational and individual circumstances and needs.
Activities of Career Management:
1. Career Audits: Career audits of expectations and beliefs, as well s\tests/questionnaires/exercises
to promote 'self- insight’.
2. Career Counselling and Interviews: Career counselling in which information and knowledge
about their own career anchors and expectations may be required and career interviews, at which
individual and organisational expectations may be negotiated with one's line managers. Career
counselling takes care of various aspects like personal insight, support and even a better
understanding.
3. Job Shadowing and Mentoring: Where a more experienced person advises or guides the
development of a less experienced one. There is some tension here, however, between the formal
mentoring scheme and the spontaneity of informal mentoringrelationships, but the former need not
preclude the latter. The mentoring concept has been subject to close scrutiny in recent years with
attention not just to the impact of having mentors, but to the particular features of the mentoring
relationship that are most conductive to success
4. Executive Coaching: An interactive process designed to help individuals develop rapidly.
5. Job Rotation: In a career context, designed to expand skills and knowledge as well as motivate.
Campion et al: found that the developmental benefits outweighed the costs associated with the
time taken to master the new job (and the loss of expertise from the previous job). There is a need
for research, however, on what precisely are the 'developmental ingredients' of job rotation
schemes.
6. Cross- Training: A strategy for enhancing knowledge of the interpersonal activities of other
team members involving, in its purest form, temporarily taking on the role of others.
7. Systematic Management of Relocation and/or Job Transition: To ensure satisfactory
adjustment for the employee and hislher family.
8. Provision of a Variety of Contracts and Systems: Geared to individual needs (part-time, job-
share, career breaks, flexitime, cafeteria benefits, paternity leave, phased retirement, secondment,
and creche facilities).
31
9. Computer-Aided Career Management Information Systems: Comprising occupational

information (e.g., job, positions available) and career development information (i.e., for purposes
of interpretation of needs, interests, attitudes, and aspirations).
Importance of Career Management:
1. It Helps in Developing Good Management and Leadership Skills: Career management
increases chances of success as it teaches us a lot about where you are headed, what you need to
do, and what needs to be done to help others to understand point in an organisation.
2. It Helps to Gain Confidence: It helps in knowing where we are headed and what our next step
is going to be, are less likely to hesitate at any point in life.
3. It Opens Doors of Opportunity: It provides new thoughts and ideas, which open more doors
of opportunity because of career will stand-out from the crowd. In addition, if it offer services
and/or ideas, and your ideas change lives, will have a high chance of reaching-out to people and
meeting their needs.
4. It Gives Chance to Show Capability: It provides a chance to the individual to show his
capability and ability to complete tasks and have everything done before the stated down time.
4.5.1.Career planning':
Meaning and Definition of Career Planning:
Career planning is the systematic process by which one selects career goals and the path to these
goals. From the organisation's viewpoint, it means helping the employees to plan their career in
terms of their capacities within the context of organisation's needs
According to Schwind, Das and Wagar, "Career planning is the process of enhancing an
employee's future value".
Characteristics of Career Planning:
Participative Process: Career planning is a participative process and under it, job assignments are
based on merit alone. This helps to improve employee morale and productivity.
1. Involves Survey of Employee's Abilities and Attitudes: Career planning involves a survey of
employee's abilities and attitudes. It becomes possible, therefore, to group together people talking
on a similar wavelength and place them under supervisors who are responsive to that wavelength.
This results in more homogenous or cohesive work teams. The organisation can identify the
employee who can be promoted from within.
32
2. Developmental Process: Career planning is a process of developing human resources rather than
an event. It is not an end in itself but a means of managing people to obtain optimum results.
3. Continuous Process: Career planning is a continuous process due to an ever changing
environment.
4. Pervasive Process: Basically, career planning is an individual's responsibility. But it is the
responsibility of an organisation to provide guidance and counselling to its employees in planning
their careers and in developing and utilising their knowledge and skills. Goals of employees should
be integrated with the organisational goals.
Objectives of Career Planning:
1. To Attract and Retain Right Type of Persons: Career planning helps to retain hard-working and
talented employees. Workforce becomes more stable due to low employee turnover. The very fact
that the organisation provides opportunity for promotion and career progress increases the loyalty
of employees. This helps to reduce the cost of hiring new people. Moreover, a unique corporate
culture can develop and thrive, when people grow inside the organisation.
2. To Develop an Awareness of Each Employee's Uniqueness: Career planning maps out careers
of employees suitable to their ability, and their willingness to be trained and developed for higher
positions.
3. To Provide Guidance and Encourage Employees: Career planning provides guidance and
encourages employees to fulfil their potentials. It also identifies personal interests, abilities,
strengths and weaknesses and how they relate to careers.
4. To Anticipate Future Vacancies: Career planning anticipates the future vacancies that may arise
due to retirement, resignation, death, etc., at managerial level. Therefore, it provides a fairly
reliable guide for manpower forecasting. A forward career plan helps to avoid dislocation in
managerial positions.
5. To Facilitate Expansion and Growth of Enterprise: Career planning facilitates expansion and
growth of the enterprise. The employees, required to fill job vacancies in future, can be identified
and developed in time. Through systematic career planning, jobs enlargement can be introduced to
meet future needs arising from job design and technological changes. It also helps to achieve
higher productivity and organisational development.
33
6. To Utilise Managerial Talent Available at all Levels within the Organisation: Career planning
ensures better use of human resources through more satisfied and productive employees. It also
ensures that promising persons get experiences that will equip them to reach responsibility for
which they are able.
7. To Integrate Individual and Organisational Needs: The basic aim of career planning is
integration of individual and organisational needs. Career planning identifies positive
characteristics about employees, which can have harnessed for organisational development. It
helps in understanding of the relationship between personality and occupation all professional
goals and how they can be aligned to organisational mission and objectives.
8. To Improve Employee Morale and Motivation: Career planning improves employee morale and
motivation by matching skills to job requirements and by providing opportunities for promotion.
Process of Career Planning:
1. Identification of Individual Needs and Aspirations: When an individual joins an organisation
as an employee, he does it to satisfy his own needs and fulfil his aspirations. From the individual
side, generally, personalising process works with a much greater force. The personalising process
is defmed as the process through which an individual actualizes himself by making the
organisation as its agent. By actualising, here, means fulfilling the goals of life, that is, fulfilling
needs and aspirations which may be expressed in many forms, such as earning more money,
achieving status viewed highly by the society, challenging jobs, higher responsibility, career
progression, and so on. Career planning meant for an individual should aim at providing such a
satisfaction. Therefore, identification of these needs and aspirations may be taken as a starting
point from the view of an individual.
2. Identification of Organizational Needs and Opportunities: When individuals emphasise
personalising process, an organisation emphasises socialising process. Socialising process is that
by which an organisation makes individuals agents for achieving its own objectives. Thus, while
going through career planning process, the organisation is concerned with own needs and the
opportunities that it can provide to individual employees.
3. Assessment of Individual Strengths and Weaknesses: Before finalizing career plan for an
individual and placing him on career path, it is necessary to assess his strengths and weaknesses.
Every individual has certain strengths and weaknesses. Strength is a feature of an individual that
34
helps him in achieving his life's goals (in the context of work-life, career goals). A weakness is a
feature that produces hindrance in achieving life's goals. A paradox with the most people is that
their own aspirations do not match with their own strengths; often aspirations are over-emphasized
in relation to strengths.
4. Placement on Career Path: The next step of career planning process is to place an individual
on a chosen career path. Career path is the logical possible sequence of positions that could be held
by an individual based on how he performs in the organisation. Career path consists of two
elements: line and ladder. Line is the field of specialty in which an individual is placed like
production, marketing, finance, human resource, etc. Within each line, there are various positions
arranged in hierarchical order.
5. Review of Career Plans: Career plans, emerging out of career planning exercise, have long-
term orientation. A career plan is developed based on assumptions about how the environment
relevant to human resource management will behave in future. However, whatever the techniques
for forecasting HRM environment are used, such a forecast may not always match with the actual
environmental happenings. With the result, the career plans may be disturbed
4.5.2.Career development:
Meaning and Definition of Career Development:
Career development can be defined as the interaction of psychological, sociological, economic,
physical and chance factors that shape the sequence of jobs, occupations/professions or careers that
a person may engage in throughout a lifetime. Career development is a major aspect of human
development.
According to Pietrofesa and Splete, "Career development is an on-going process that occurs over
the life span; includes home, school, and community experiences".
Characteristics of Career Development:

1. Career development is an ongoing process.
2. By the career development one can develop and share transferability of skills and competencies.
3. Career development aligns individual goals with organizational goals for increased satisfaction
of employees.
4. By the help of career development employees can develop skills and competencies required to
fulfill present and future leadership roles within an organisation.
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5. Career development strengthens professionally work culture in the organizations.

Objectives of Career Development:
1. To Provide Information: It provides:
i) Up-to-date occupational information;
ii) World of work information;
iii) Various career opportunities available;
and iv) Follow-up information.
2. To Increase the Morale of Employees: It helps in increasing the morale of
employees by:
i) Developing a realistic attitude toward the dignity of all work and other workers;
ii) Helping individuals in coping with continued changes in the world of work; and
iii) Providing opportunity to become acquainted with a wide range of occupational and
educational opportunities.
3. To Make Optimal Utilization of Employees: It helps in the optimal utilization of employees
by increasing their potential for advancement and career change.
4. To Increase Self-Awareness among Employees: It helps employees in:
i) Understanding their unique abilities, interest, and aptitudes.
ii) Improving awareness regarding career, self-development, and career decision.
Importance of Career Development:
Helps in Developing Skills and Competencies of Employees
Develops Entrepreneurship Spirit
Facilitates the Acquisition of Requisites for Organizational Excellence
Develops and Creates Pool of Talented People
Develops a Talent Management System
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4.6.Mentoring:
Definition of Mentoring:
According to Collin, "Mentoring is a one-to-one relationship between a more experienced person
and an inexperienced person, until the latter reaches maturity".\
Process of Mentoring:
1. Needs Assessment: In the needs assessment (or measurement) stage the HR department in
consultation with line managers should research for finding out; whether mentoring is the right
solution in their organizational context, if it is so, then who requires mentoring, how many people
require this facility, should it be career mentoring or psycho-social mentoring, are there enough
seniors eligible and willing to take-up mentoring work and whether such seniors need training.
2. Programme Design: Once the needs are assessed, the HR department in consultation with line
functionaries and if necessary, by' availing services of outside consultants, should design the
programme. The basic objective of programme design is to conduct the mentoring programme in a
systematic and time-bound manner. Designing involves answering important questions like the
content, duration, timing, methodology, evaluation criteria, and cost involved. .
3. Training: Once the prospective participants are identified and programme is designed then the
identified participants (mentors, proteges, and supervisors) should be trained in mentoring
approach. The training may involve initially a couple of lectures by experts to convey the meaning
and significance of mentoring. But major part of the training should be driven by role-plays, case
discussions, self-scoring instruments, and reading assignments. The duration of such programmes
may vary between half-day to three-days. Ideally, a class room training approach should be used.
4. Pairing: After training the participants, the HR department in consultation with line
functionaries, may either decide who should mentor whom or allow the participants to choose the
mentor/protege of their own choice. In some cases participants may not be in a position to find the
mentor/protege on their own and in such cases, HR department has to sender assistance.
5. Facilitation: Facilitation essentially involves cooperation and support from the HR department
and reporting officers/supervisors in conducting the mentoring activities. For example, the
supervisor should allow. the protege to go and meet the mentor, allow the protege to carry-out the
assignments given by the mentor, and encourage him to experiment and perform with confidence.
37
6. Evaluation: Anything that is not measured cannot be improved and HRD programmes are not
an exception to this principle. Evaluation refers to measuring the effectiveness of mentoring
programme. Evaluation helps the organisation to understand the effectiveness of the programme
as against the costs involved
4.7.Proteges Relationship:
Proteges are 'individuals who receive guidance, coaching, and support from the mentor'. Proteges
are in their early career stages that require developing a sense of professional identity and role
modelling to help proteges advance through this stage. Normally, both the mentor and the
protege are employees of the same organisation. The protege contributes to the success of
mentoring by evincing interest in it, by successfully participating in the mentoring activities and
by benefiting himself through mastering workplace competencies, exhibiting high performance
beyond his- comfort zone and with the consequential reward and recognitions.
Development of Mentor-Protege Relationships:
1. Creation of a Safe Environment: Mentor's should provide an environment where protege
can feel free to be honest. The key to create such an environment is to openly acknowledge their
individual struggles. By disclosing something personal- even the failures - it takes the initial step
toward creating trust. Mentor's honesty and vulnerability will help his protege to open-up and
share.
2. Listen without Judgment: While sharing of mentor's own experiences is vital to the
mentoring relationship, he must also learn when to set his thoughts aside and focus on what his
protege has to say. The mentor should learn to listen without an agenda by resisting the
temptation to make a point, he should teach a lesson, or offer some caution. When he abandons
trying to come-up with all the answers, his protege will begin to feel heard and valued.
3. Focus on Learning: Mentor can gain knowledge from protege and the mentoring experience
by bringing a learning attitude to the relationship. He should let his protege know that he may not
have all the answers and that both can learn from each other. If the protege sees mentor as a
fellow learner, there-is a greater potential for a partnership. The mentor should find out what his
protege can teach him that he would like to learn. Or together, both mentor and protege should
investigate an area they would like to learn ~ore about.
38
4. Agreeing on Objectives not Approaches: A true mentoring mind-set focuses on the learning
objective, not the process. The role of a mentor is to open-up possibilities for his protege, not to
provide proven techniques for a given list of problems. It is important to adopt a style in which
the mentor offer options to his protege as a way to encourage him or her to try new approaches.
If a mentor tells his protege what to do or how to do it can deprive him or her of a valuable
learning opportunity.
5. Appreciation of Differences: Mentor and protege have entered the relationship with different
experiences and different points of view. The mentor should recognise those differences while
respecting their common needs and objectives. And remember, the differences between mentor
and protege, the more learning that occurs for both the mentor and protege.
39

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KV INSTITUTE OF MANAGEMENT AND INFORMATION STUDIES

BA7204 HUMAN RESOURCE MANAGEMENT UNIT IV

UNIT – IV SUSTAINING EMPLOYEE INTEREST

4.1. Compensation Plan/Reward:

Types of Stock Options

6. Difficulty arises in Determining Standard Performance: Difficulty also arises in determining

3)Performance versus Membership Rewards: As the name implies, performance-based rewards

6)Reward as Source of Employee Involvement: Employee involvement, participation and

4.4. Motivation Theories:

2. Cognitive Evaluation Theory

Demerits of Maslow’s Theory:

4. Money not the only motivation: Motivation need at all level

4.4.2.Contemporary Theories of Motivation:

4.4.2.2.Cognitive Evaluation Theory:

4.4.2.3.Goal – Setting Theory:

4.4.2.4.Self – Efficacy Theory:

Manager sets Individuals has

Individuals sets higher

4.4.2.6.Expectancy Theory (or) Vrooms/Porter and Lawler :

Types of Inputs and outcomes:

Individuals makes a relationship with other person may be of 3 types

4.5. Career management

9. Computer-Aided Career Management Information Systems: Comprising occupational

Characteristics of Career Development:

5. Career development strengthens professionally work culture in the organizations.

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