St. PETER’S UNIVERSITY
St. Peter’s Institute of Higher Education and Research(Declared Under Section 3 of the UGC Act, 1956) AVADI, CHENNAI – 600 054 TAMIL NADU
STUDY MATERIAL
M.B.A. PROGRAMME
(Code No. – 411) (Effective from 2009 – 2010)II SEMESTER
209MBT24
HUMAN RESOURCE MANAGEMENT
St. PETER’S INSTITUTE OF DISTANCE EDUCATION
Recognized by Distance Education Council and Joint Committee of UGC – AICTE - DEC, New Delhi. (Ref. F.No.DEC/SPU/CHN/TN/Recog/09/14 dated 02.04.2009 &
Author: VSP Rao
Copyright © 2011, VSP Rao
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Information contained in this book has been published by Excel Books Private Limited and has been obtained by its authors from sources believed to be reliable and are correct to the best of their knowledge. The University has edited the study material to suit the curriculum and distance education mode. However, the publisher/university and its author shall in no event be liable for any errors, omissions or damages arising out of use of this information and specifically disclaim any implied warranties or merchantability or fitness for any particular use.
St. Peter’s University has been recognized by the Distance Education Council, and Joint Committee of UGC-AICTE-DEC, for offering various programmes including B.Tech., D.Tech., MBA, MCA and other programmes in Humanities and Sciences through Distance Education mode.
The Methodology of Distance Education includes self-instructional study materials in print form, face-to-face counseling, practical classes, virtual classes in phased manner and end assessment.
The basic support for distance education students lies on the self instructional study materials. Keeping this in mind, the study materials under distance mode are prepared. The main features of the study materials are (1) learning objectives (2) self explanatory study materials unitwise (3) self tests (4) list of references for further studies. The material is prepared in simple English and graded in terms of technical content. It is built upon the pre-requisite knowledge.
Students are advised to study the materials several times and get benefited. The face-to-face session in the counseling centre will help them to clear their doubts and difficult concepts which they would have faced during the learning process.
Students should remember that self study and sustained motivation are the two important requirements for a successful learning under the distance education mode.
We wish the students to put forth their best efforts to become successful in their chosen field of learning.
Registrar St. Peter’s University
Page No.
Scheme of Examinations vi
Syllabus of Human Resource Management x
Model Question Paper xi
UNIT I: PERCEPTIVE IN HUMAN RESOURCE MANAGEMENT
Lesson 1 An Introduction to Human Resource Management 3
Lesson 2 Roles and Policies of HRM 15
UNIT II: THE CONCEPT OF BEST FIT EMPLOYEE
Lesson 3 Human Resource Planning 29
Lesson 4 Selection Process 40
Lesson 5 Recruitment 50
UNIT III: TRAINING AND EXECUTIVE DEVELOPMENT
Lesson 6 Training and Development Programs 63
Lesson 7 Executive Development and Knowledge Management 77
UNIT IV: SUSTAINING EMPLOYEE INTEREST
Lesson 8 Compensation 95
Lesson 9 Theories of Motivation 113
Lesson 10 Career Management 124
UNIT V: PERFORMANCE EVALUATION AND CONTROL PROCESS
Lesson 11 Performance Evaluation 139
Lesson 12 Implication of Job Change 165
Lesson 13 Industry Practices 174
Lesson 14 Control Process 182
I Semester
Code No. Course Title Credit Marks
Theory EA Total
109MBT11 Management Principles & Organisational Behaviour 3 100 100
109MBT12 Economic Analysis for Business Decisions 3 100 100
109MBT13 Statistics for Management 2 100 100
109MBT14 Applied Operation Research for Management 3 100 100
109MBT15 Financial and Management Accounting 3 100 100
109MBT16 Legal Environment of Business 2 100 100
109MBT17 Executive Communication 2 100 100
Total 18 700 700
II Semester
Code No. Course Title Credit Marks
Theory EA Total
209MBT21 Production & Operation Management 3 100 100
209MBT22 Financial Management Decisions 3 100 100
209MBT23 Marketing for Managers 2 100 100
209MBT24 Human Resource Management 2 100 100
209MBT25 Computer Applications and Management Information System
2 100 100
209MBT26 Total Quality Management 2 100 100
209MBT27 Applied Research Methods in Management 3 100 100
209MBP01 Computer Lab for Business Administration Record 1 90 10
100
Theory EA Total
309MBT01 International Business Management 3 100 100
309MBT02 Strategic Management 3 100 100
E1*** Electives I 2 100 100
E2*** Electives II 2 100 100
E3*** Electives III 2 100 100
E4*** Elective IV 2 100 100
E5*** Elective V 2 100 100
E6*** Elective VI 2 100 100
Total 18 800 800
*** Any one group of electives from Marketing, Finance, Human Resource Management and System is to be chosen.
IV Semester
Code No. Course Title Credit Marks
Theory EA Total
409MBT01 Marketing Research and Consumer Behaviour 6 100 100
409MBT02 Entrepreneurship Development 6 100 100
409MBP01 Project and Vivavoce * 6 100 100
Total 18 300 300
MARKETING – ELECTIVES
Code No. Course Title Credit Marks
Theory EA Total
309MBT03 Retail Management 2 100 100
309MBT04 Services Marketing 2 100 100
309MBT05 Advertising and Sales Promotion 2 100 100
309MBT06 International Marketing 2 100 100
309MBT07 Brand Management 2 100 100
309MBT08 Rural and Social Marketing 2 100 100
Total 12 600 600
FINANCE – ELECTIVES
Code No. Course Title Credit Marks
Theory EA Total
309MBT09 Security Analysis and Portfolio Management 2 100 100
309MBT10 Merchant Banking and Financial Services 2 100 100
309MBT11 International Trade Finance 2 100 100
309MBT12 Strategic Financial Management 2 100 100
309MBT13 Corporate Finance 2 100 100
309MBT14 Derivatives Management 2 100 100
Theory EA Total
309MBT15 Managerial Behaviour and Effectiveness 2 100 100
309MBT16 Organisational Change & Intervention Strategy 2 100 100
309MBT17 Industrial Relations and Labour Welfare 2 100 100
309MBT18 Labour Legislations 2 100 100
309MBT19 Strategic Human Management and Development 2 100 100 309MBT20 Corporate Governance & Corporate Social
Responsibility
2 100 100
Total 12 600 600
SYSTEM – ELECTIVES
Code No. Course Title Credit Marks
Theory EA Total
309MBT21 Software Development 2 100 100
309MBT22 Database Management Systems 2 100 100
309MBT23 Enterprise Resource Planning for Management 2 100 100
309MBT24 Software Project and Quality Management 2 100 100
309MBT25 Decision Support System 2 100 100
309MBT26 Information Technology for Management 2 100 100
Syllabus
UNIT I: PERCEPTIVE IN HUMAN RESOURCE MANAGEMENT
Evolution of human resource management - The importance of the human factor - Objectives of human resource management - Role of human resource manager - Human resource policies - Computer applications in human resource management.
UNIT II: THE CONCEPT OF BEST FIT EMPLOYEE
Importance of human resource planning - Forecasting human resource requirement – Internal and external sources. Selection process screening - Tests - Validation - Interview - Medical examination - Recruitment introduction - Importance - Practices - Socialization benefits.
UNIT III: TRAINING AND EXECUTIVE DEVELOPMENT
Types of training methods purpose benefits resistance - Executive development programmes - Common practices - Benefits - Self development - Knowledge management.
UNIT IV: SUSTAINING EMPLOYEE INTEREST
Compensation plan - Reward - Motivation - Theories of motivation - Career management - Development mentor - Protégé relationships.
UNIT V: PERFORMANCE EVALUATION AND CONTROL PROCESS
Method performance evaluation - Feedback - Industry practices - Promotion, demotion, transfer and separation - Implication of job change. The control process - Importance - Methods - Requirement of effective control systems grievances - Causes - Implications - Redressal methods.
TEXT BOOKS:
1. Decenzo and Robbins, Human Resource Management, Wilsey, 6th edition, 2001.
2. Biswajeet Pattanayak, Human Resource Management, Prentice Hall of India, 2001. 3. R. Krishnaveni, Human Resource Development, Excel Books, New Delhi, 1st edition.
4. VSP Rao, Human Resource Management, Excel Books, New Delhi, 2nd edition.
REFERENCES:
1. Human Resource Management, Eugene McKenna and Nic Beach, Pearson Education Limited, 2002. 2. Dessler Human Resource Management, Pearson Education Limited, 2002.
3. Mamoria C.B. and Mamoria S., Personnel Management, Himalaya Publishing Company, 1997. 4. Wayne Cascio, Managing Human Resource, McGraw Hill, 1998.
Second Semester
209MBT24 - HUMAN RESOURCE MANAGEMENT
(Regulations 2009)
Time: 3 Hours Maximum: 100 marks
Answer ALL the questions
PART – A (10 × 2 = 20 Marks)
1. Enumerate the Strategic, Administrative and Specialized roles of HRP Professionals. 2. Distinguish between Performance Appraisal and Potential Appraisal.
3. Explain Horn effect and Stereotyping in Performance Appraisal. 4. Briefly explain Vroom’s Expectancy Theory.
5. Briefly state what is Knowledge Management?
6. Distinguish between Job Specification and Job Evaluation.
7. What is Acceptance Error and Rejection Error in Selection and Performance. 8. Briefly explain MBO.
9. Briefly explain the concepts of Minimum wage, Fair wage and Living wage. 10. State at least four objectives of Workers’ Participation in Management.
PART – B (5 × 16 = 80 Marks)
11. (a) Discuss the Operative Functions of HR Managers. or
(b) Briefly Explain Computer Applications in Management.
12. (a) Discuss the Merits, Demerits and Steps involved in Job Classification or Grading Method. or
(b) Discuss the Merits, Demerits and Steps involved in Points Ranking System of Job Evaluation. 13. (a) Discuss the Merits and Demerits of Internal and External Sources of Recruitment.
or
(ii) Job Rotation Method of Development or
(b) Discuss Sensitivity, Laboratory or T-group Training, its objectives, usefulness and demerits. 15. (a) Briefly explain the following:
(i) Assessment Center and (ii) 360 Performance Appraisal
or (b) Briefly explain the following:
(i) Elements of a Good Wage Plan
1 An Introduction to Human Resource Management
UNIT I
Perceptive in Human Resource
Management
2
3 An Introduction to Human Resource Management
LESSON
1
AN INTRODUCTION TO HUMAN RESOURCE
MANAGEMENT
STRUCTURE
1.0 Objectives 1.1 Introduction
1.2 Meaning and Nature of HRM
1.3 Scope of HRM
1.4 Objectives of HRM 1.5 Importance of HRM 1.6 Systems Approach to HRM 1.7 HRM and Competitive Advantage 1.8 Strategic Human Resource Management 1.9 Traditional HR versus Strategic HR 1.10 Evolution of the Concept of HRM 1.11 Let us Sum up
1.12 Glossary
1.13 Suggested Readings 1.14 Questions
1.0 OBJECTIVES
After studying this lesson, you should be able to:
z Explain the evolution of human resource management z Discuss the objectives of human resource management z Explain the scope and importance of HRM
1.1 INTRODUCTION
To extract the best out of people, the organisation must provide a healthy work climate where they can exploit their talents fully while realizing goals assigned to them. They must have requisite skills to handle their jobs in a competent way. Above all, to get the best out of people, they must be managed well and this requires leadership. This is where human resource managers play a critical role in bridging gaps between employee expectations and organisational needs by adopting appropriate human resource strategies and practices.
4
Human Resource Management
1.2 MEANING AND NATURE OF HRM
Human Resource Management is a process of bringing people and organisations together so that the goals of each are met. It tries to secure the best from people by winning their wholehearted cooperation. In short, it may be defined as the art of procuring, developing and maintaining competent workforce to achieve the goals of an organisation in an effective and efficient manner.
Features of HRM
It has the following features:
z Pervasive force: HRM is pervasive in nature. It is present in all enterprises. It
permeates all levels of management in an organisation.
z Action oriented: HRM focuses attention on action, rather than on record keeping,
written procedures or rules. The problems of employees at work are solved through rational policies.
z Individually oriented: It tries to help employees develop their potential fully. It
encourages them to give their best to the organisation. It motivates employees through a systematic process of recruitment, selection, training and development coupled with fair wage policies.
z People oriented: HRM is all about people at work, both as individuals and groups.
It tries to put people on assigned jobs in order to produce good results. The resultant gains are used to reward people and motivate them toward further improvements in productivity.
z Future oriented: Effective HRM helps an organisation meet its goals in the future
by providing for competent and well-motivated employees.
z Development oriented: HRM intends to develop the full potential of employees.
The reward structure is tuned to the needs of employees. Training is offered to sharpen and improve their skills. Employees are rotated on various jobs so that they gain experience and exposure. Every attempt is made to use their talents fully in the service of organisational goals.
z Integrating mechanism: HRM tries to build and maintain cordial relations
between people working at various levels in the organisation. In short, it tries to integrate human assets in the best possible manner in the service of an organisation.
z Comprehensive function: HRM is, to some extent, concerned with any
organisational decision which has an impact on the workforce or the potential workforce. The term ‘workforce’ signifies people working at various levels, including workers, supervisors, middle and top managers. It is concerned with managing people at work. It covers all types of personnel. Personnel work may take different shapes and forms at each level in the organisational hierarchy but the basic objective of achieving organisational effectiveness through effective and efficient utilisation of human resources, remains the same. “It is basically a method of developing potentialities of employees so that they get maximum satisfaction out of their work and give their best efforts to the organisation”. (Pigors and Myers)
z Auxiliary service: HR departments exist to assist and advise the line or operating
managers to do their personnel work more effectively. HR manager is a specialist advisor. It is a staff function.
5 An Introduction to Human Resource Management
z Inter-disciplinary function: HRM is a multi-disciplinary activity, utilising
knowledge and inputs drawn from psychology, sociology, anthropology, economics, etc. To unravel the mystery surrounding the human brain, managers, need to understand and appreciate the contributions of all such ‘soft’ disciplines.
z Continuous function: According to Terry, HRM is not a one shot deal. It cannot
be practised only one hour each day or one day a week. It requires a constant alertness and awareness of human relations and their importance in every day operations.
1.3 SCOPE OF HRM
The scope of HRM is very wide. Research in behavioural sciences, new trends in managing knowledge workers and advances in the field of training have expanded the scope of HR function in recent years. The Indian Institute of Personnel Management has specified the scope of HRM thus:
z Personnel aspect: This is concerned with manpower planning, recruitment,
selection, placement, transfer, promotion, training and development, lay off and retrenchment, remuneration, incentives, productivity, etc.
z Welfare aspect: It deals with working conditions and amenities such as canteens,
creches, rest and lunch rooms, housing, transport, medical assistance, education, health and safety, recreation facilities, etc.
z Industrial relations aspect: This covers union-management relations, joint
consultation, collective bargaining, grievance and disciplinary procedures, settlement of disputes, etc.
1.4 OBJECTIVES OF HRM
The principal objectives of HRM may be listed thus:
z To help the organisation reach its goals: HR department, like other departments
in an organisation, exists to achieve the goals of the organisation first and if it does not meet this purpose, HR department (or for that matter any other unit) will wither and die.
z To employ the skills and abilities of the workforce efficiently: The primary
purpose of HRM is to make people’s strengths productive and to benefit customers, stockholders and employees.
z To provide the organisation with well-trained and well-motivated employees:
HRM requires that employees be motivated to exert their maximum efforts, that their performance be evaluated properly for results and that they be remunerated on the basis of their contributions to the organisation.
z To increase to the fullest the employee’s job satisfaction and self-actualisation:
It tries to prompt and stimulate every employee to realise his potential. To this end suitable programmes have to be designed aimed at improving the Quality of Work Life (QWL).
z To develop and maintain a quality of work life: It makes employment in the
organisation a desirable, personal and social, situation. Without improvement in the quality of work life, it is difficult to improve organisational performance.
z To communicate HR policies to all employees: It is the responsibility of HRM to
communicate in the fullest possible sense; tapping ideas, opinions and feelings of customers, non-customers, regulators and other external public as well as understanding the views of internal human resources.
6
Human Resource Management z To be ethically and socially responsive to the needs of society: HRM must ensure that organisations manage human resource in an ethical and socially responsible manner through ensuring compliance with legal and ethical standards.
Check Your Progress 1
Fill in the blanks:
1. ……… is a process of bringing people and organisations together so that the goals of each are met.
2. Training is offered to sharpen and ……… their skills.
3. ……… is concerned with manpower planning, recruitment, selection, placement, transfer, promotion, training and development, lay off and retrenchment, remuneration, incentives, productivity.
4. The primary purpose of HRM is to make people’s strengths productive and to benefit ……… and ………
1.5 IMPORTANCE OF HRM
People have always been central to organisations, but their strategic importance is growing in today's knowledge-based industries. An organisation’s success increasingly depends on the Knowledge, Skills and Abilities (KSAs) of employees, particularly as they help establish a set of core competencies that distinguish an organisation from its competitors. With appropriate HR policies and practices an organisation can hire, develop and utilise best brains in the marketplace, realise its professed goals and deliver results better than others.
Human Resource Management helps an organisation and its people to realise their respective goals thus:
z At the enterprise level:
Good human resource practices can help in attracting and retaining the best
people in the organisation. Planning alerts the company to the types of people. it will need in the short, medium and long run.
It helps in training people for challenging roles, developing right attitudes
towards the job and the company, promoting team spirit among employees and developing loyalty and commitment through appropriate reward schemes.
z At the individual level: Effective management of human resources helps
employees thus:
It promotes team work and team spirit among employees.
It offers excellent growth opportunities to people who have the potential to
rise.
It allows people to work with diligence and commitment.
z At the society level: Society, as a whole, is the major beneficiary of good human
resource practices.
Employment opportunities multiply.
Scarce talents are put to best use. Companies that pay and treat people well
7 An Introduction to Human Resource Management
z At the national level: Effective use of human resources helps in exploitation of
natural, physical and financial resources in a better way. People with right skills, proper attitudes and appropriate values help the nation to get ahead and compete with the best in the world leading to better standard of living and better employment.
Box 1.1: Importance of HRM
z attract and retain talent
z train people for challenging roles z develop skills and competencies z promote team spirit
z develop loyalty and commitment z increase productivity and profits z improve job satisfaction z enhance standard of living z generate employment opportunities
1.6 SYSTEMS APPROACH TO HRM
A system is a set of interrelated but separate elements or parts working toward a common goal. A university, for example, is made up of students, teachers, administrative and laboratory staff who relate to one another in an orderly manner. What one group does have serious implications for others? So, they have to be communicating with each other in order to achieve the overall goal of imparting education. The enterprise operations, similarly, must be viewed in terms of interacting and interdependent elements. The enterprises procure and transform inputs such as physical, financial and human resources into outputs such as products, services and satisfactions offered to people at large. To carry out its operations, each enterprise has certain departments known as subsystems such as production subsystem, finance subsystem, marketing subsystem, HR subsystem, etc. Each subsystem consists of a number of other subsystems. For example, the HR subsystem may have parts such as procurement, training, compensation, appraisal, rewards, etc. If we were to view HR subsystem as crucial to organisational performance, an organisation presents itself thus:
Figure 1.1: HRM as a Central Subsystem in an Enterprise
8
Human Resource Management The various internal subsystems, it should be noted here, of an organisation operate within the framework of external environment consisting of political, social, economic and technological forces operating within and outside a nation.
1.7 HRM AND COMPETITIVE ADVANTAGE
Competitive advantage refers to the ability of an organisation to formulate strategies to exploit rewarding opportunities, thereby maximizing its return on investment. Competitive advantage occurs if customers perceive that they receive value from their transaction with an organisation. This requires single-minded focus on customer needs and expectations. To achieve this, the organisation needs to tune its policies in line with changing customer's requirements. The second principle of competitive advantage derives from offering a product or service that your competitor cannot easily imitate or copy. An organisation should always try to be unique in its industry along dimensions that are widely valued by customers. For example Apple stresses its computers’ usability, Mercedes Benz stresses reliability and quality; Maruti emphasizes affordability of its lower-end car Maruti 800. In order to enjoy the competitive advantage, the firm should be a cost-leader, delivering value for money. It must have a committed and competent workforce. Workers are most productive if (i) they are loyal to the company, informed about its mission, strategic and current levels of success, (ii) involved in teams which collectively decide how things are to be done and (iii) are trusted to take the right decisions rather than be controlled at every stage by managers above them (Thompson). A good team of competent and committed employees will deliver the goals if they are involved in all important activities and are encouraged to develop goals that they are supposed to achieve. In recent years, a new line of thinking has emerged to support this view-known as Strategic Human Resources Management (SHRM).
Box 1.2: Competitive Advantage through People
Organisations have come to realise, over the years, that improving technology and cutting costs enhance performance only upto a point. To move beyond that point, the organisation's people are its most important resource. In the end, everything an organisation does depends on people. Low cost and high quality cars like Toyota and Saturns are not just a product of sophisticated automated machines. Instead, they are the result of committed employees all working hard to produce the best cars that they can at the lowest possible cost (Dessler). To get the best out of people, the organisation must offer a healthy work climate where they can use their knowledge, skills and abilities fully while realising organisational goals. This is where HR managers play a crucial role – that of bridging gaps between employee expectations and organisational requirements by adopting appropriate HR policies, strategies and practices. HRM, it is generally felt now, would often competitive advantage if:
z HR policies are jointly developed and implemented by HR and operating managers.
z HR puts focus on quality, customer service, employee involvement, teamwork and
productivity.
z HRM strategies and practices are in tune with employee expectations, customer needs and changing competitive requirements. To be effective, HR strategies must fit with overall organisational strategies, the environment in which the firm is operating, unique organisational characteristics and organisational capabilities. (G. Mejia et al.)
1.8 STRATEGIC HUMAN RESOURCE MANAGEMENT
SHRM is the pattern of planned human resource developments and activities intended to enable an organisation to achieve its goals (Wright and McMahan). This means accepting the HR function as a strategic partner in both the formulation of the company’s strategic, as well as in the implementation of those activities through HR activities. While formulating the strategic plan HR management can play a vital role, especially in identifying and analysing external threats and opportunities.
9 An Introduction to Human Resource Management (Environmental scanning) that may be crucial to the company's success. HR
management can also offer competitive intelligence (like new incentive plans being used by competitors, data regarding customer complaints etc.) that may be helpful while giving shape to strategic plans. HR function can also throw light on company's internal strengths and weaknesses. For example, IBM's decision to buy Lotus was probably prompted in part by IBM's conclusion that its own human resources were inadequate for the firm to reposition itself as an industry leader in networking systems (Dessler). Some firms even develop their strategies based on their own HR-based competitive advantage. Software Majors, Wipro, TCS have not slowed down their recruitment efforts during the lean periods, pinning hopes on their own exceptionally talented employee teams. In fact they have built their strategic and operating plans around outsourcing sourcing contracts from US, Europe, Japan and Germany-which would help them exploit the capabilities of their employees fully.
HR has a great role to play in the execution of strategies. For example, HDFC's competitive strategy is to differentiate itself from its competitors by offering superior customer service at attractive rates (searching the right property, finishing legal formalities, offering expert advice while negotiating the deal, competitive lending rates, fast processing of applications, offering other financial products of HDFC at concessional rates, door-to-door service as per customers’ choice etc. (HDFC's growth architecture, Business Today, Jan 6, 2001). Since the same basic services are offered by HDFC's competitors such as LIC Housing Finance GIC Housing Finance, banks and private sector, players like Dewan Housing Finance, Ganesh Housing, Live Well Home, Peerless Abassan etc. HDFC's workforce offers a crucial competitive advantage (highly committed, competent and customer-oriented workforce). HR can help strategy implementation in other ways. It can help the firm carry out restructuring and downsizing efforts without rubbing employees on the wrong side- say, through out placing employees, linking rewards to performance, reducing welfare costs, and retraining employees. HR can also initiate systematic efforts to enhance skill levels of employees so that the firm can compete on quality.
Globalisation, deregulation and technological innovation have – in recent times – created the need for rather, faster and more competitive organisations. Under the circumstances, employee behaviour and performance is often seen as the best bet to push competitors to a corner and enhance productivity and market share. HR practices build competitiveness because they allow for strategic implementation, create a capacity for change and instill strategic unity.
1.9 TRADITIONAL HR VERSUS STRATEGIC HR
SHRM realizes that people can make or break an organisation because all decisions made regarding finance, marketing operations or technologies are made by an organisation’s people. So it accords highest priority to managing people and tries to integrate all HR programmes and policies with the overall corporate strategy. It compels people at all levels to focus more on strategic issues rather than operational issues. More importantly, it believes that there is no best way to manage people in any given organisation. Even within a given industry, HR practices can vary extensively, from one organisation to another. Armed with such a flexible approach, SHRM tries to develop a consistent, aligned collecting of practices, programmes and policies to facilitate the achievement of the organisation's strategic objectives.
10
Human Resource Management
Figure 1.2: The Evolving Strategic Role of Human Resource Management
Strategic HR shifts attention, as against the traditional HR's focus on employee relations, to partnerships with internal and external groups. The focus on managing people is more systemic with an understanding of the myriad factors that impact employees and the organisation and how to manage multiple relationships to ensure satisfaction at all levels of the organisation, Strategic HR is transformational in nature, in that it helps the people and the organisation to adopt, learn and act quickly. “It will make sure that change initiatives that are focused on creating high performance teams, reducing cycle time for innovation, or implementing new technology are defined, developed and delivered in a timely way" (ULRICH, 1998). Strategic HR is proactive and considers various time frames in a flexible manner. Likewise it permits employees to process work and carry out job responsibilities in a free-flowing way. Rather than being enveloped by tight controls and excessive regulations, operations are controlled by whatever is necessary to succeed, and control systems are modified as needed to meet changing conditions. Job design is organic, specialisation is replaced by cross training and independent tasks are replaced by teams, encouraging autonomy at various levels. Above all, strategic HR believes that the organisation’s key assets are its people. It realises that an organisation can have competitive edge over its rivals if it is able to attract and retain knowledge workers who can optimally utilise and manage the organisation’s critical resources. In the final analysis people are the organisation’s only sustainable competitive advantage [Pfeffer, 1994]. While running the show, strategic HR, of course, argues that any individual in an organisation who has responsibility for people is an HR manager, regardless of the technical area in which he or she works. (See Table 1.1) Strategic HR offers three critical outcomes: increased performance enhanced customer and employee satisfaction and increased shareholder value. These outcomes are accomplished through effective management of staffing, retention and turnover processes, selection of employees that fit with both the organisational strategy and culture, cost-effective utilisation of employees through investment in identified human capital with the potential for higher return; integrated HR programmes and policies that clearly follow from corporate strategy; facilitation of change and adaptation through a flexible, more dynamic organisation; and tighter focus on customer needs, emerging markets and quality. (See Figure 1.3)
Table 1.1: Traditional HR versus Strategic HR
Point of distinction Traditional HR Strategic HR
Focus Employee Relations Partnerships with internal and external
customers Role of HR
Transactional change follower and respondent
Transformational change leader and initiator
Initiatives Slow, reactive, fragmented Fast, proactive and integrated
11 An Introduction to Human Resource Management
Time horizon Short-term Short, medium and long (as required)
Control Bureaucratic - roles, policies,
procedures Organic-flexible, whatever is necessary to succeed
Job design Tight division of labour;
independence, specialisation
Broad, flexible, cross-training teams
Key investments Capital, products People, knowledge
Accountability Cost centre Investment centre
Responsibility for HR Staff specialists Line managers
Source: Mello
Figure 1.3: A Model of Strategic Human Resource Management
1.10 EVOLUTION OF THE CONCEPT OF HRM
The early part of the century saw a concern for improved efficiency through careful design of work. During the middle part of the century emphasis shifted to the availability of managerial personnel and employee productivity. Recent decades have focused on the demand for technical personnel, responses to new legislation and governmental regulations, increased concern for the quality of working life, total quality management and a renewed emphasis on productivity. Let us look into these trends more closely by examining the transformation of personnel function from one stage to another in a chronological sequence:
Table 1.2
Concept What is it all about?
The Commodity concept Labour was regarded as a commodity to be bought and sold. Wages
were based on demand and supply. Government did very little to protect workers.
The Factor of Production
concept Labour is like any other factor of production, viz., money, materials, land, etc. Workers are like machine tools.
12
Human Resource Management The Goodwill concept Welfare measures like safety, first aid, lunch room, rest room will have a positive impact on workers’ productivity
The Paternalistic concept/
Paternalism Management must assume a fatherly and protective attitude towards employees. Paternalism does not mean merely providing benefits but it means satisfying various needs of the employees as parents meet the requirements of the children.
The Humanitarian concept To improve productivity, physical, social and psychological needs of workers must be met. As Mayo and others stated, money is less a factor in determining output, than group standards, group incentives and security. The organisation is a social system that has both economic and social dimensions.
The Human Resource concept Employees are the most valuable assets of an organisation. There should be a conscious effort to realise organisational goals by satisfying needs and aspirations of employees.
The Emerging concept Employees should be accepted as partners in the progress of a
company. They should have a feeling that the organisation is their own. To this end, managers must offer better quality of working life and offer opportunities to people to exploit their potential fully. The focus should be on Human Resource Development.
Check Your Progress 2
State whether the following statements are true or false:
1. An organisation’s success increasingly depends only on the knowledge but not on skills and abilities of employees.
2. Good human resource practices can help in attracting and retaining the best people in the organisation.
3. A system is a set of interrelated but separate elements or parts working toward a common goal.
4. HR function can also throw light on company's internal strengths and weaknesses.
5. Strategic HR believes that the organisation’s key assets are its people.
1.11 LET US SUM UP
People have always been central to organisations but their strategic importance is increasing in today's knowledge-based industries. HRM is responsible for the people dimension of the organisation. It is a pervasive force, action-oriented, individually-oriented, development-individually-oriented, future-focused, and integrative in nature and is a comprehensive function.
HRM mainly covers three broad areas: personnel aspect, welfare aspect, and industrial relations aspect. HRM aims at achieving organisational goals meet the expectations of employees; develop the knowledge, skills and abilities of employees, improve the quality of working life and manage human resources in an ethical and socially responsible manner.
From an organisational standpoint, good HR practices help in attracting and retaining talent, train people for challenging roles, develop their skills and competencies, increase productivity and profits and enhance standard of living. HR can be a source of competitive advantage, when the talents of people working in the company are valuable, rare; difficult to imitate and well organised to deliver efficient and effective results.
13 An Introduction to Human Resource Management
1.12 GLOSSARY
Management: The process of efficiently achieving the objectives of the organisation
with and through people.
HRM: A process of bringing people and organisations together so that the goals of
each one are met, effectively and efficiently.
Purpose of HRM: HRM seeks to improve the productive contributions of people to
the organisation in ways that are ethically and socially responsible.
Competitive Advantage: It allows a firm to gain an edge over rivals when competing.
It comes from a firm's ability to perform activities more distinctively and more effectively than rivals.
Strategic Human Resources Management: The linking of HRM with strategic goals
and objectives in order to improve business performance and develop organisational cultures that foster innovation and flexibility.
Check Your Progress: Answers
CYP 1
1. Human resource management 2. Improve 3. Personnel aspects 4. Stockholder; employees CYP 2 1. False 2. True 3. True 4. True 5. True
1.13 SUGGESTED READINGS
VSP Rao, Human Resource Management, Excel Books, New Delhi, 2005
P.L. Rao, Comprehensive Human Resource Management, Excel Books, New Delhi, 2004 D.K. Bhattacharyya, Human Resource Management, Excel Books, New Delhi, 2006 Robert L Mathis and John H. Jackson, Human Resource Management, Thomson, 2007 K. Aswathappa, Human Resource and Personnel Management, Tata McGraw Hill, 2007
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Human Resource Management
1.14 QUESTIONS
1. What skills and competencies do HR professionals need to add more value to the HR function? How might these competencies and skills change in the future? How can HR professionals ensure that they are creating value for their organisations? 2. Why is a competitive advantage based on heavy investment in human resources
more sustainable than investment in other types of assets?
3. Are people always an organisation’s most valuable asset? Why or why not? 4. Do pressures on cost containment work against effective management of people?
Why or why not?
5. To be a strategic business contributor, HR managers must enhance organisational performance, expand human capital, and be cost-effective. Discuss how HR professionals must balance the competing demands made on them.
6. How do you think the internet will change the way in which HR processes, such as hiring, compensating, evaluating, and benefits are performed?
15 Roles and Policies of HRM
LESSON
2
ROLES AND POLICIES OF HRM
STRUCTURE2.0 Objectives 2.1 Introduction
2.2 Roles of Human Resource Manager 2.2.1 Administrative Roles 2.2.2 Operational Roles 2.2.3 Strategic Roles 2.3 Human Resource Policies
2.3.1 Types of HR Policies 2.3.2 Advantages of HR Policies
2.3.3 Obstacles in Administering HR Policies 2.3.4 Characteristics of a Sound HR Policy 2.3.5 Coverage of HR Policies
2.3.6 Formulation of HR Policies
2.3.7 Evaluating the Impact of HR Policies
2.4 Computer Application in Human Resource Management 2.5 Let us Sum up
2.6 Glossary
2.7 Suggested Readings 2.8 Questions
2.0 OBJECTIVES
After studying this lesson, you should be able to: z Explain the roles of human resource manager z Describe the human resource policies
z Discuss the computer application in human resource management
2.1 INTRODUCTION
Human Resource Management is concerned with people at work and their relationships with each other. It may be defined as a set of programmes, functions and activities designed to maximize both personal and organisational goals. It ensures that the organisation attracts and hires qualified, imaginative and competent people. It involves the establishment of various policies to deal with employees and to retain them.
Different types of roles of HR manager are Administrative role, operational roles, and strategic roles.
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2.2 ROLES OF HUMAN RESOURCE MANAGER
Human Resource Managers, nowadays, wear many hats. They perform mainly three different types of roles, while meeting the requirement of employees and customers, namely administrative, operational and strategic.
2.2.1 Administrative Roles
The administrative roles of human resource management include policy formulation and implementation, housekeeping, records maintenance, welfare administration, legal compliance etc.
z Policy maker: The human resource manger helps management in the formation of
policies governing talent acquisition and retention, wage and salary administration, welfare activities, personnel records, working conditions etc. He also helps in interpreting personnel policies in an appropriate manner.
z Administrative expert: The administrative role of an HR manager is heavily
oriented to processing and record keeping. Maintaining employee files, and HR-related databases, processing employee benefit claims, answering queries regarding leave, transport and medical facilities, submitting required reports to regulatory agencies are examples of the administrative nature of HR management. These activities must be performed efficiently and effectively to meet changing requirements of employees, customers and the government.
z Advisor: It is said that personnel management is not a line responsibility but a
staff function. The HR manager performs his functions by advising, suggesting, counselling and helping the line managers in discharging their responsibilities relating to grievance redressal, conflict resolution, employee selection and training. Personnel advice includes preparation of reports, communication of guidelines for the interpretation and implementation of policies, providing information regarding labour laws etc.
z Housekeeper: The administrative roles of a personnel manager in managing the
show include recruiting, pre-employment testing, reference checking, employee surveys, time keeping, wage and salary administration, benefits and pension administration, wellness programmes, maintenance of records etc.
z Counsellor: The personnel manager discusses various problems of the employees
relating to work, career, their supervisors, colleagues, health, and family, financial, social, etc. and advises them on minimizing and overcoming problems, if any.
z Welfare officer: Personnel manager is expected to be the Welfare Officer of the
company. As a Welfare officer he provides and maintains (on behalf of the company) canteens, hospitals, crèches, educational institutes, clubs, libraries, conveyance facilities, co-operative credit societies and consumer stores. Under the Factories Act, Welfare officers are expected to take care of safety, health and welfare of employees. The HR managers are often asked to oversee if everything is in line with the company legislation and stipulation.
z Legal consultant: Personnel manager plays a role of grievance handling, settling
of disputes, handling disciplinary cases, doing collective bargaining, enabling the process of joint consultation, interpretation and implementation of various labour laws, contacting lawyers regarding court cases, filing suits in labour courts, industrial tribunals, civil courts and the like.
17 Roles and Policies of HRM In some organisations, the above administrative functions are being outsourced to
external providers in recent times, with a view to increasing efficiency as also cutting operational costs. Technology is being put to good use to automate many of the administrative tasks.
2.2.2 Operational Roles
These roles are tactical in nature and include recruiting, training and developing employees; coordinating HR activities with the actions of managers and supervisors throughout the organisation and resolving differences between employees.
z Recruiter: “Winning the war for talent” has become an important job of HR
managers in recent times in view of the growing competition for people possessing requisite knowledge, skills and experience. HR managers have to use their experience to good effect while laying down lucrative career paths to new recruits without, increasing the financial burden to the company.
z Trainer developer, motivator: Apart from talent acquisition, talent retention is
also important. To this end, HR managers have to find skill deficiencies from time to time, offer meaningful training opportunities, and bring out the latent potential of people through intrinsic and extrinsic rewards which are valued by employees.
z Coordinator/linking pin: The HR manager is often deputed to act as a linking pin
between various divisions/departments of an organisation. The whole exercise is meant to develop rapport with divisional heads, using PR and communication skills of HR executives to the maximum possible extent.
z Mediator: The personnel manager acts as a mediator in case of friction between
two employees, groups of employees, superiors and subordinates and employees and management with the sole objective of maintaining industrial harmony.
z Employee champion: HR managers have traditionally been viewed as ‘company
morale officers’ or employee advocates. Liberalisation, privatisation and globalisation pressures have changed the situation dramatically HR professionals have had to move closer to the hearts of employees in their own self interest. To deliver results they are now seriously preoccupied with:
Placing people on the right job.
Charting a suitable career path for each employee.
Rewarding creditable performance.
Resolving differences between employees and groups smoothly.
Adopting family-friendly policies.
Ensuring fair and equitable treatment to all people regardless of their background.
Striking a happy balance between the employee's personal/professional as also the larger organisational needs.
Representing workers’ issues, problems and concerns to the management in order to deliver effective results HR managers have to treat their employees as valuable assets. Such an approach helps to ensure that HR practices and principles are in sync with the organisation’s overall strategy. It forces the organisation to invest in its best employees and ensure that performance standards are not compromised.
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2.2.3 Strategic Roles
An organisation’s success increasingly depends on the knowledge, skills and abilities of its employees, particularly as they help establish a set of core competencies (activities that the firm performs especially well when compared to its competitors and through which the firm adds value to its goods and services over a long period of time, e.g. ONGC 's oil exploration capabilities and Dell's ability to deliver low cost, high-quality computers at an amazing speed) that distinguish an organisation from its competitors. When employees’ talents are valuable, rare, difficult to imitate and organised, a firm can achieve sustained competitive advantage through its people. The strategic role of HR management focuses attention on how to enable ordinary employees to turn out extraordinary performance, taking care of their ever-changing expectations. The key areas of attention in this era of global competition include effective management of key resources (employees, technology, work processes), while delivering cost effective, value-enhancing solutions.
Figure 2.1: Roles of HR Manager
z Change agent: Strategic HR as it is popularly called now aims at building the
organisation’s capacity to embrace and capitalize on change. It makes sure that change initiatives that are focused on creating high-performing teams, reducing cycle time for innovation, or implementing new technology are defined, developed and delivered in a timely manner. The HR manager in his new avtar would help employees translate the vision statements into a meaningful format (Ulrich, 1998). HR's role as a change agent is to replace resistance with resolve, planning with results and fear of change with excitement about its possibilities. HR helps an organisation identify the key success factors for change and assess the organisation’s strengths and weaknesses regarding each factor. It may not decide what changes the organisation is going to embrace, but it would certainly lead the process to make them explicit. In helping to bring about a new HR environment their needs to be clarity on issues like who is responsible for bringing about change? Why do it? What will it look when we are done? Who else needs to be involved? , How will it be measured? How will it be institutionalized? How will it be measured? How will it get initiated, developed and sustained?
z Strategic partner: HR’s role is not just to adapt its activities to the firm’s business
strategy, nor certainly to carry out fire-fighting operations like compensating employees. Instead, it must deliver strategic services cost effectively by building a competent, consumer-oriented work force. It must assume important roles in strategy formulation as well strategy implementation. To this end, it must identify
19 Roles and Policies of HRM external opportunities from time to time, develop HR based competitive
advantages and move in to close the gaps advantageously (like excellent training centre, design centre, automation centre etc. which could be used by others as well). While implementing strategies, HR should develop appropriate ways to restructure work processes smoothly. (Such as out placing affected employees.)
Check Your Progress 1
State whether the following statements are true or false.
1. The administrative roles of human resource management include recruiting and training.
2. The administrative role of an HR manager is heavily oriented to processing and record keeping.
3. Operational roles are tactical in nature and include policy formulation and implementation.
4. HR managers have traditionally been viewed as ‘company morale officers’ or employee advocates.
5. The strategic role of HR management focuses attention on how to enable ordinary employees to turn out extraordinary performance, taking care of their ever-changing expectations.
2.3 HUMAN RESOURCE POLICIES
HR policies guide action. They offer the general standards or parameters based on which decisions are reached. They serve as a road map for managers on a number of issues such as recruitment (the job for physically challenged only), selection (selection based on merit only), promotion (performance leads to promotion) and compensation. Important features of an effective personnel policy can be broadly outlined as:
z It is generally derived from the personnel objectives of an organisation.
z It summaries past experience in the form of useful guidelines that help managers to speed-up the decision making process. It helps managers as well as subordinates to dispose of repetitive problems in a consistent manner without getting into trouble. It serves as a standing plan that can be put to use repeatedly while solving problems of a recurring nature.
z As a guide to executive thinking it permits managers to transfer some of the recurring problems to subordinates. In a way, a personnel policy is an important management tool that facilitates some transfer of decision making to lower levels of organisation.
z It helps in achieving coordination of organisational members and help predict more accurately the actions and decisions of others.
Box 2.1: Tata Steel’s Personnel Policy
The personnel policy of Tata Steel, as contained in the Statement of Objectives, is given below. The company tries to take care of its employees:
z by a realistic and generous understanding and acceptance of their needs and rights and by having an enlightened awareness of the social problems of the industry;
z by providing adequate wages, good working conditions, job security, an effective machinery for redressal of grievances and suitable opportunities for promotion and self-development through in-company and external programmes;
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Human Resource Management
z by treating them as individuals, giving them a sense of self-respect and better understanding of their role in the organisation and satisfying their urge for self-expression through a closer association with the management;
z by creating a sense of belonging through human and purposeful activities as an integral part of human relations ensuring their willing cooperation and loyalty.
2.3.1 Types of HR Policies
These may be classified into several categories depending on their source (originated appealed and imposed), scope (general or specific) and form (within or implied). These may be stated thus:
z Originated policies: These are established by top management deliberately so as
to guide executive thinking at various levels.
z Appealed policies: These are formulated to meet the requirements of certain
peculiar situations which have not been covered by the earlier polices. Such requests usually came from subordinates who fail to handle the cases based on guidance offered by existing policies.
z Imposed polices: These are formed under pressure from external agencies such as
government, trade associations and unions.
z General policies: They reflect the basic philosophy and priorities of the top
management in formulating the broad plan for mapping out the organisation’s growth chart.
z Specific policies: These policies cover specific issues such as hiring, rewarding
and bargaining. Such policies, however, should be in line with the basic framework offered by the general policies.
z Written or implied policies: Implied policies are inferred from the behaviour of
members (such as dress code, gentle tone while talking to customers, not getting angry while at work etc.). Written policies, on the other hand, spell out managerial thinking on paper so that there is very little room for loose interpretation.
2.3.2 Advantages of HR Policies
Policies, as useful instructional devices, offer many advantages to the personnel working at various levels. These are:
z Delegation: They help managers operating at different levels to act with
confidence without the need for consulting superiors every time.
z Uniformity: They increase the chances of different people at different levels of the
organisation making similar choices, when independently facing similar situations. They make the actions of organisational members more consistent.
z Better control: As personnel policies specify the relationship shared between the
organisation, management and its employees, they allow members to work towards achievement of the objectives of the organisation without friction/conflict, paving the way for better control.
z Standards of efficiency: Policies can also serve as standards in the execution of
work. They enable the management to see if they have been translated into action by various groups in the organisation or not. In the light of actual performance, existing policies may be subjected to amendment/refinement.
z Confidence: Policies make the employees aware of where they stand in the
21 Roles and Policies of HRM recurring problems. They reduce chances of misinterpretation, misrepresentation
and friction.
z Speedy decisions: Policies can speed up decision making by providing a blanket
framework within which personnel decisions can be made. They summarize past experience.
z Coordinating devices: Personnel policies help in achieving coordination. If
organisational members are guided by the same policies, they can predict more accurately the actions and decisions of others. They ensure a steady course of action and prevent unwarranted deviations from planned operations.
In the absence of a policy, similar questions must be considered time after time. Lack of a policy means that the organisation has established no continuing position. Despite their usefulness, personnel policies are not always easy to formulate and implement. A number of hurdles come in the way.
2.3.3 Obstacles in Administering HR Policies
The factors which obstruct the implementation of personnel policies are:
z Many times managers are reluctant to follow policy guidelines, for they restrict the scope of managerial work and curtail executive freedom.
z Often conflicts erupt between implied and expressed policy statements especially on employment matters. For example, a policy of promoting employees on the basis of merit only (expressed) may be sabotaged by unscrupulous managers by promoting ‘yes men’ (implied).
z Personnel policies demand constant revision, modification and restructuring. However, they are characterized by considerable inertia. Once established, they persist and become unalterable. In the absence of review and appraisal, it would be difficult to break the cycle and effect a desirable policy change.
z Personnel policies are not easy to communicate. From the time policies are initiated to the time they are used, there is always the danger of falling into ‘generalities and pleasantries’.
z Since policies grant freedom to managers as to what is to be done in a particular situation, there is always the danger of some managers strictly adhering to the policy rhetoric and others deviating from the path excessively. A manager may be more liberal than was originally intended and vice versa. In general, ‘the extra margin’ of liberty may or may not prove to be an investment in the long run. In order to overcome these obstacles, it is necessary to understand the basics in policy formulation and revision. It would be pertinent to look into the essentials of a sound personnel policy at this stage.
2.3.4 Characteristics of a Sound HR Policy
While developing sound personnel policies, management should pay attention to the following:
z Related to objectives: Policies must be capable of relating objectives to functions,
physical factors and company personnel.
z Easy to understand: Policies should be stated in definite, positive, clear and
understandable language.
z Precise: Policies should be sufficiently comprehensive and prescribe limits and
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Human Resource Management z Stable as well as flexible: Personnel policies should be stable enough to assure people that there will not be drastic overnight changes. They should be flexible enough to keep the organisation in tune with the times.
z Based on facts: Personnel policies should be built on the basis of facts and sound
judgement and not on personal feelings or opportunistic decisions.
z Appropriate number: There should be as many personnel policies as necessary to
cover conditions that can be anticipated, but not so many that they become confusing or meaningless.
z Just, fair and equitable: Personnel policies should be just, fair and equitable to
internal as well as external groups. For example, a policy of recruitment from within may limit opportunities to bright candidates from outside; and a policy of ‘recruitment from outside only’ would limit promotional avenues to promising internal candidates. To ensure justice, it is necessary to pursue both the policies scrupulously and to apply them carefully.
z Reasonable: Personnel policies must be reasonable and capable of being
accomplished. To gain acceptance and commitment from employees, they should be ‘conditioned by the suggestions and reactions of those who will be affected by the policy’.
z Review: Periodic review of personnel policies is essential to keep in tune with
changing times and to avoid organisational complacency or managerial stagnation. For instance, if the current thinking is in favour of workers’ participation in management, the personnel policy should be suitably adjusted to accommodate the latest fad, accepted by many in the organisation.
Personnel policies, to be sound, should also have broad coverage in addition to satisfying the above conditions. Hence, it would be appropriate to discuss the coverage of personnel policies here.
2.3.5 Coverage of HR Policies
The coverage of HR policies has been classified on the basis of functions of HRM by Michael Armstrong and is outlined as:
1. Social responsibility
(a) Equity: Treating employees fairly and justly by adopting an even-handed approach.
(b) Consideration: Considering individual circumstances when decisions affect the employee’s prospects, seniority or self-respect.
(c) Quality of work life: increase the interest in the job and organisation by reducing monotony, increasing variety of responsibilities avoiding stress and strain.
2. Employment policies: Provision of equal employment opportunities involves – selecting the candidates based on job requirements and encouraging them to put in their 100%.
3. Promotion policies: Promotion policies should reconcile the demands of employees for growth and the organisation’s demands for fresh and much more promising talent. Promotion policy should be fair and just to all.
4. Development policies: Policies should cover the kind of employees to be trained, time span of training programmes, techniques, rewarding and awarding system, qualifications and experience of the trainer, encouraging the employees for self advancement, etc. These policies also cover areas like career planning and
23 Roles and Policies of HRM development, performance appraisal, organisational change and organisational
development.
5. Relations policies: Relations policies cover different aspects of human relations like: policies regarding motivation, morale, communication, leadership styles, grievance procedure, disciplinary procedure, employee counselling, etc. These policies also cover the areas of industrial relations like union recognition, union representation, collective bargaining, prevention and settlement of industrial disputes and participative management. In order to be effective they must be written on the basis of authentic information available from different sources.
2.3.6 Formulation of HR Policies
Policy formulation and implementation involves the following steps:
1. Identifying the need: Initially important areas of personnel management (recruitment, selection, training, compensation, bargaining) must have a policy formulation which is clearly spelt out. Additional policy guidelines can come at any stage depending on the recurrence of a ticklish issue at various levels. (Appealed policies).
2. Collecting data: Once priority areas are listed, steps should be taken to collect facts before formulating a policy. Various sources could be tapped for this purpose such as (i) company's records (ii) past practices (iii) survey of industry practices (iv) experience of personnel handling various issues (v) top management philosophy (vi) organisational culture (vii) employee aspirations and (viii) changing economic, social and legislative environment etc.
3. Specifying alternatives: Policy alternatives should emerge clearly after collecting relevant data from various sources. These have to be evaluated carefully in terms of their contribution to organisational objectives. It is always better to involve people at various levels, especially those who are going to use and live with such policies. Top management should put the stamp of approval only when every thing is above board and the stated policy clearly reflects organisational priorities. 4. Communicating the policy: To gain approval at various levels, the formulated
policy should be communicated through out the organisation. Policy manual, in-house journal and discussions with people at various levels may be used to reach out to employees quickly. Special coaching programmes can also inform people about the manner of application.
5. Evaluating the policy: Personnel policies, to be effective, must be re controlled regularly against certain established standards. Evaluation helps determine changes in existing policies. All the policies should be reviewed annually and some policies should be reviewed at specific times for example when there is collective bargaining or after strike/lock out, etc. Departmental policies may be reviewed through participation of all employees. Outside consultants or experts from other organisations may be engaged to review crucial policies.
Adequate care should be taken to review the policies in the following situations when: (a) Employees offer suggestions.
(b) Employees express grievances.
(c) Unsatisfactory reports about employee performance and behaviour.
(d) Company plans for change like expansion, diversification, and contraction, adoption of new technology and introduction of new methods. Personnel policies, to be effective, should have a favourable impact on the objectives and functions of HRM and help the parties concerned.
