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ASSIGNMENT DRIVE: SPRING 2014

SIKKIM MANIPAL UNIVERSITY-DDE
Master of Business Administration-MBA Semester III
MU0013- HR Audit -4 Credits
(Book ID: B1735)
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Q. No. 1. Define Human Resource Planning (HRP).Discuss the objectives of Human
Resource Planning.- Unit 1 10
Meaning of Human Resource Planning. 2
Explain the four main objectives of Human Resource Planning 8

Ans: -
Meaning of Human Resource Planning ; Human resource planning is the term used to
describe how companies ensure that their staff comprises the right person for doing
the job. It includes planning for staff retention, planning for candidate search, training
and skills analysis and much more.
It is the process of acquiring and utilising human resource in an organization. The main
objective is to ensure that an organisation has the right number of employees in the
right place at the right time

The four main objectives of Human Resource Planning;-
The main objectives of human resource planning are as follows:
1. To determine the number of employees to be employed: If an organisation has more
employees than actually required, then the workforce will consist of under utilised staff.
In contrast, if there are too few employees, the staff may be overstretched, making it
hard or impossible to meet production or service deadlines at the quality level expected.
You should ask the following questions for planning the right number of employees:
(a) How can output be improved through your understanding about the interrelation
between productivity, work organisation and technological development? What does
this mean for staff numbers?

(b) What techniques can be used to establish workforce requirements?

(c) Have more flexible work arrangements been considered?

(d) How is the staff to be acquired?

2. To retain highly skilled staff: In this competitive world it is very important for the
organisation to retain its skilled staff. Thus organisations should do the following:
(a) Monitor the extent of resignations.

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(b) Discover the reasons for it.

(c) Establish what it is costing the organisation.

(d) Compare loss rates with other similar organisations.

If the above points are not considered, the management will remain unaware of how
many good quality workers are being lost. This will cost the organisation not only in
terms of costs incurred for separation, recruitment and induction, and but also through
a loss of skilled workforce.

3. To manage an effective downsizing programme:
This is a very common issue for managers but yet the most difficult one. A downsizing
strategy reduces the workforce for improving profitability or reducing costs. For this,
you need to answer the following question:
How is the workforce to be cut effectively, without generating much hue and cry, while
at the same time protecting the long-term interests of the organiation?

4. To find out the procedure for recruiting managers for tomorrow:
Many senior managers are troubled by this issue. They have seen traditional career
paths disappear. They have had to bring in senior staff from elsewhere. But they
recognise that while this may have helped them deal with a short-term skills shortage, it
has not solved the longterm question of managerial supply: What sort, how many, and
where will they come from? To address these questions you need to understand:
(a) The present career development system (including patterns of promotion and
movement, of recruitment and wastage).

(b) The characteristics of those who currently occupy senior positions.

(c) The organisations future supply of talent.


Q. No. 2 What do you mean by Human Resource Audit? Discuss the purpose of HR Audit.
Explain the common approaches to HR Audit. 10
Definition of HR Audit 2
Describe the purpose of HR Audit 3
Explain the common approaches to HR Audit 5

Ans: - Definition of HR Audit; - According to Dr. Parimalendu Bandopadhyay, HR
audit means the systematic verification of job analysis and design, recruitment and
selection, orientation and placement, training and development, performance appraisal
and job evaluation, employee and executive remuneration, motivation and morale,
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participative management, communication, welfare and social security, safety and
health, industrial relations, trade unionism, and disputes and their resolution.

Purpose(s) of a HR Audit
The audit can serve any of the following purposes:
To clarify desired practices of HR work and roles within the organization (HR
department, line managers).
To establish a baseline for future improvement.
To evaluate current effectiveness.

To standardise practices across multiple sites within a division or company.
To assess current knowledge and skills required of HR practitioners.
To improve performance levels to key customers within the organisation.
For example, while many other PSUs stood losing on the profitability grounds, HR
auditing at Bharat Heavy Electricals Limited (BHEL) ensured that the company
remained a profit-making heavy engineering public sector company, and thus
maintained its reliability among the stakeholders.

Common approaches to HR audit
There are five common approaches for the purpose of evaluation of HR in any
organisation:

Comparative approach: In this approach, another division or company that has better
practices or results is chosen as the model. The audit team audits and compares the
audited firms results with the best practices of the model organisation. This approach is
commonly used to compare the results of specific activities or programmes. This
approach is often used to compare turnover, absence, salary data and staffing levels. It
helps detect areas where improvement is needed. It also makes sense to compare where
a procedure is being used for the first time.

Outside authority: In this approach, standards set by a consultant or taken from
published research findings serve as the benchmark for the audit team. The consultant
or research findings may help diagnose the cause of problems.

Statistical: This approach relies on performance measures drawn from the companys
existing information system. From existing records, the audit team generates statistical
standards against which activities and programmes are evaluated. With the
mathematical standards as a base, the team may uncover errors while they are still
minor. Often this approach is supplemented with comparative data from external
sources such as other firms, or industry association surveys. The information is usually
expressed in ratios or formulas that are easy to compute and use.

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Compliance approach: This approach reviews past practices to determine if actions
taken followed legal requirements and company policies and procedures.

Management By Objectives (MBO): In this management by objectives approach,
managers and specialists set objectives in their area of responsibility. Then they create
specific goals against which this performance can be measured. The audit team
researches actual performance and compares it with the previously set objectives. They
can then evaluate the trends in this area.


Q. No. 3 Suppose you have joined as an HR and you are asked to carry out the HR Audit
process in your organization. What are the methods you will consider while
implementing the HR Audit process? 10
Explain the methods involved in the HR Audit process
Ans: - Methods used in the HR Audit process are:

Interviews
In order to ascertain what the top management thinks about the future plans and
opportunities available for the company, the auditors conduct individual interviews
with the members of the top management. The top management can provide a
perspective for a good HR audit. To collect information about the effectiveness of the
Human Resource Development System, organisational culture, skills, styles, etc.,
auditors conduct group interviews with different level of managers. Interviews help the
auditors in a number of ways. Some of the benefits are:
It aids the auditors to capture the main concerns of the primary stakeholders.
It helps in getting detailed information which can be re-clarified.
It helps revalidate the inputs and strengthen observations, which makes the entire
audit very dynamic.
It helps in gaining first-hand access to and understanding of feelings and perceptions
of the people.

Observation
Observation method is often used by the auditors to observe various aspects of the
organisation. It helps them to evaluate the work place and work atmosphere. It also
helps them to judge the extent to which a congenial and a supportive human welfare
related climate exists in the organisation. Auditors mainly observe the physical facilities
and living conditions, meetings, discussions and other transactions, celebrations and
other events related to organisational life and culture, training and other HRD-related
facilities including the classroom, library, training centre, etc.

Group discussions
For companies having thousand of employees, it is not always possible to meet each
one individually to get feedback. In such circumstances, group discussions and
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workshops act as an effective mechanism to collect information about the effectiveness
of the current system. In order to evaluate various aspects of HRD and for a
participative diagnosis, various diagnostic workshops and group discussions can be
conducted in large organisations. It is preferable to have cross-functional representation
of employees in the same group or each function separately to keep a homogenous
group.

Workshops
These workshops give critical appraisal of policies and programmes as also initiate the
change process. Its a potential diagnostic tool and can provide lots of information on
HR processes and can help plan further intervention as OD (Organisation
Development) process.

Questionnaires
Auditors use comprehensive questionnaires to garner information about HRD systems,
processes, styles, and competencies. It helps in benchmarking of data.

Analysis of records and documents
In order to ascertain the strengths and weaknesses of the human resource system of the
organisation, the auditors scrutinise the published literature of the company like annual
report, performance appraisal forms, training documents, employees' records files
maintained by the HR department, inhouse journals and periodicals.

Analysis of secondary data:
Analysis of secondary data can give a lot of insight into the assets and liabilities of the
company. The analysis may relate to age profile of the workforce, stagnation in career
progression and analysis of training, etc.

HR audit report
HR audit as a diagnostic tool helps in improving the HR functions, systems,
competencies, culture, team, policies and practices. HR audit report provides insights
into the sources of the problem and appropriate strategies can be taken. HR audit
always keeps the business goals in focus.


Q. No. 4 Discuss the relationship between Human Resource Practices and Performance
of business 10
Explain the relationship between Human Resource Practices and Performance of
Business

Ans: - A study on relationship between Human Resource practices and performance of
business
The belief that Human Resource management and development practices have linkages
with organisational level outcomes has been the focus of the theoretical and conceptual
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work undertaken by Peters and Waterman (1982), Porter (1985), and Lawler (1986).
Recent empirical work has highlighted the connections between HR practices like
selection, performance appraisal, training, job design, promotions, information sharing,
attitude surveys, incentive system and employee participation, and organisation level
outcomes like employee turnover, productivity, and financial performance (Delaney et
al. 1989; Schuler, 1989; Ichniowski, 1990; Kleiner, 1990; Begin, 1991; MacDuffie and
Krafcik, 1992; Arthur, 1994; Pfeffer, 1994; Huselid, 1995; Ostroff, 1995). However, there
is no evidence of prior empirical work in the Indian context focusing on relationship
between HR practices and organisational level outcomes. It is in this context that the
present study was undertaken to explore the current existence and seek confirmation of
the relationship between HR practices and organisational performance.

The broad objective of this study was to arrive at an understanding about the adoption
of HR practices in Indian organisations, and also study the relationship between these
practices and organisational performance, both objective and perceived.
The study was undertaken with the following research questions:

1. How many, and how far, the selected HR practices have been implemented by the
organisations under study? Do they place different degrees of emphasis on these?

2. What is the impact of HR practices on the measures of organizational performance --
individually, together, and in interaction with each other?

3. What is the impact of HR practices on measures of perceived organisational
performance -- individually, together, and in interaction with each other?

4. What are the key HR practices which if earnestly implemented, are likely to increase
organisational performance as indicated by objective as well as perceived measures?
5. Do high performing organisations differ from low performing organisations in terms
of the strategic importance accorded to HR function as evidenced by the HR-business
strategy linkages and use of human resources information system, human resources
costing procedures, and human resources planning and forecasting techniques?

To answer the above questions, the present study was carried out through a mail
survey questionnaire method. The questionnaire used in the present study was an
adoption of the questionnaire developed by Huselid (1993). The universe for the study
was Business Today (BT) 500 organisations using the criterion of selecting only those
organisations which figuredconsecutively in the BT 500 list during the years 1995, 1996
and 1997. A sample of 359 organisations emerged, out of which finally, 84 organisations
responded with the filled-in questionnaire, and thus the overall response rate was
23.40%.

The major findings of the study were:
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1. The analysis of data shows that all the HR practices selected for the current study
have been adopted by the organisations though the proportion of employees in an
organisation covered by such practices is low. This means that application of HR
practices is often partial, not covering all categories of employees.

2. Both extensity and intensity measures of HR practices individually appear to be
related to objective and perceived organizational performance. This is evident by
explaining a significant variation in all the measures of the objective and perceived
organisational performance by individual HR practices. It indicates that relationships of
individual HR practices with all the measures of objective and perceived organizational
performance are statistically significant.

3. The result shows that extensity and intensity measures of all HR practices together do
not explain a significantly higher variation in the measures of objective and perceived
organisational performance as compared to the variation explained by individual HR
practices.



Q. No. 5 What are the benefits that the employer derives from Employee Referral Programmes?
Explain the different types of I nterview. 10
Explain the benefits of Employee Referral 4
Explain any six types of Interview 6

Ans; - The benefits of Employee Referral:- In their competition to identify and attract
outstanding employees, many companies many a time undermine their top recruiting
source, i.e., their own employees. While many companies have some form of Employee
Referral Programme (ERP) in their recruitment repertoires, the effectiveness of these
initiatives varies dramatically. Using employee referrals as part of a recruitment and
hiring process offers employers several distinct benefits.
Cost effectiveness: According to a recent survey conducted by the Society for
Human Resources Management, the cost to the company of an employee
referral averages approximately $1000 for an exempt employee and $500 for a
non-exempt hire.
High quality candidates: Employees naturally know their companys culture,
and are likely to present candidates that they believe will fit in.
Improved morale: Employees understand that their opinion is valued, and
appreciate the opportunity to contribute to the success of the company.
Speed of hire: Employees begin the process of selling the company to the
candidate even before the interview, and candidates referred are generally
ready to make a move. As a result, the company spends less time selling itself
and the position, and has more time available to handle other pressing issues.

Other methods of internal recruitment include intranets, staff notice boards,
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in-house magazines/newsletters, internal notices, meetings, etc.

Types of Interview:
Telephonic Interview: Telephonic interviews give the company a chance to get a feel of
the candidates skill-sets, interests, desired compensation, etc., and see if there is a
match between their needs and the candidates strengths. If there is enough common
ground, then the phone interviews are almost always followed-up by an in-person
interview.
Phone interviews are generally conducted in two steps.
The first step is with a recruiter in Human Resources.
The second step is a technical interview, usually with one of the people you would be
working with.
Technical phone interviews are usually conducted for people living outside the
geographical region. This is done because the company wants to have some level of
confidence in the technical abilities of the candidate before they decide to spend the
money on him to fly in for an in-person interview.

1. Direct interview: It is brief and straightforward, face-to-face questionanswer session
between the interviewer and the interviewee. No indepth analysis of the candidates
ability skills is made. Inference regarding the characteristics or attitudes of the
candidate can be drawn in such interviews. But if carefully planned, some of the
limitations can be avoided.

2. Indirect interview: In this type of interview, no direct questions are asked to the
candidate, he is encouraged to express his views about any topics and also how he rates
the enterprise and the job applied by him. The interviewer in such cases should be a
patient listener and should not disrupt the thoughts of the candidate.

3. Patterned interview: In this type of interview, a set of standard questions is framed in
advance. Ideal answers are also framed in advance. Then the answers given by the
candidate are compared with the already prepared pattern.

4. Stress interview: In this interview, the candidate is analysed on the basis of how he
reacts to a situation under considerable stress and strain. The candidate should not get
irritated or get angry; he should be cool and confident in his answers.


Q. No. 6 Write a short note on the following:
a)Flanholtz model(Rewards evaluation model)
b) Pekin Ogan model
Concept and steps involved in Flanholtz model 5
Concept and steps involved in Pekin Ogan model 5


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Ans: - FlanhoItz model (Rewards evaluation model)
The rewards evaluation model was suggested by FlanhoItz. It identifies the major
variables that determine an individuals value to an organisation, or in other words, his
expected reliable value.

Rewards evaluation model is certainly an improvement over the model suggested by
Lev and Schwarts. But when examined on operational capacity, this model falls short of
a practical value in as much as those probabilities will have to be determined for each
individual occupying various service states, and these probabilities will have to be
determined for all employees for different periods on an individual basis.

The rewards evaluation model suggests a five-step approach for assessing the value of
an individual to the organisation. These steps are discussed as under:

Step 1: Forecasting the period the employee will remain in the organisation, i.e., his
expected service life;

Step 2: Identifying the services states, i.e., the roles that the employee might occupy
including, of course, the time at which he will leave the organisation;

Step 3: Estimating the value derived by the organisation when a person occupies a
particular position for a specified time period;

Step 4: Estimation of the probability of occupying each possible mutually exclusive state
at specified future times; and

Step 5: Discounting the value at a predetermined rate to get the present value of human
resources.
Further, it will be an enormously expensive method to predict careermovements of exit
probabilities on an individual basis. Moreover, data developed on the basis will
involve large variance which will reduce usefulness of the model.


Pekin Ogan model (Certainty equivalent net benefit model)

The Pekin Ogan model suggested by Pekin Ogan (1976) is, in fact, an extension of the
net benefit approach of Morse. This approach presents a new concept of determination
of certainty equivalent net benefits stream for each employee in an organisation.

In this model, the value of human resources is determined by taking into consideration
the certainty with which the net benefits in future will accrue to the enterprise.
The method involves the following steps:
(a) Each employees net benefit (as determined under the previous approach) which is a
function of the employees expected benefits and total costs.
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(b) A certainty factor which is comprised of the employees probability of continued
employment and probability of survival.

(c) The certainty equivalent benefits will be calculated by multiplying the certainty
factor with the net benefits from all employees. This will be the value of human
resources of the enterprise.
Needless to say, Ogans model is certainly an improvement over other models
presented earlier in this unit. It takes the cost generated by the employees for the
organisation, which the other models have ignored.

The major shortcoming of the model is that it can be applied only in those
organisations where costs and benefits of employees can be traced with fair objectivity.