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CHAPTER 4
HUMAN RESOURCE PLANNING

Lecture Overview
Human Resource Planning

Importance of HRP
Factors Affecting HRP
The Planning Process
Forecasting Techniques
HR Plan Implementation
Downsizing Plan
Managerial Succession Planning
Requisite for HRP
• Human Resource Planning
“HRP is process of forecasting firm's future demand

and supply of the right type of people in the right
numbers”
(P.75)
 HRM department should initiate the recruitment and selection

process after HRP
IMPORTANCE OF HRP
Importance of HRP can be highlighted by following

points
1. Future Personnel Needs
• Planning helps to determine future personnel

needs
• Surplus or shortage in staff is due to poor human
resource planning
• Public sector organizations facing problem of
over staffing
• Public sector organizations offering voluntary
retirement scheme (VRS)
IMPORTANCE OF HRP
2. PART OF STRATEGIC PLANNING

• All activities of HRM like HRP, hiring, remuneration, training
must be matched with strategic management
• HRP can facilitate strategic planning at two ends
• At the start, it provides information for strategy formulation like

kind of skills, and numbers of people available to organization to
pursue organization strategy
• At the end, it assist in making resource allocation decisions,

creating structure, process and determine human resource need
IMPORTANCE OF HRP
3 Creating Highly Talented Personnel
• Now a days organizations need knowledge workers

and professionals for intellectual jobs
• Technical and knowledge worker most often switch
their job creating workforce shortages
• Adoption of new technology creates demand for

technical and trained workers at the same time
resulting into excess of non technical staff
• Management succession planning helps to decide who

will replace/substitute the chief executive/top
management?
IMPORTANCE OF HRP
• 4. International Growth Strategies
• Global expansion strategy relies on HRP. From

where to recruit employees (foreign, local, or
reassignment) to fill key jobs
• HRP integrate HR plan with organization external &

internal situations (cultural consideration, labor and
employment laws)
• HR department often need to fill key jobs with

expatriates, therefore, need to motivate, train, and
compensate them.
IMPORTANCE OF HRP
• 5. Foundation for Personnel Functions
• HRP provides essential information in development

and implementation of personnel functions like
recruitment, selection, transfer, postings,
promotions, layoff, compensation, and training
IMPORTANCE OF HRP
• 6. Increasing Investment in Human Resources
• Investment perspective of human resource highlights the need

of proper HRP
• Human Resources Planning help to make right investment

decision in company's human resources
IMPORTANCE OF HRP
7. Resistance to Change and Move
• Employee resist to change and move
• HRP assists to plan well ahead employees'

transfer/posting and movement from one place to
other in smooth way
• Dedication, commitment and loyalty of employees
can be assured
IMPORTANCE OF HRP
8. Unite the Perspective of Line and Staff Managers
• HRP identify and harmonize the purpose of HR staff

and line managers
• For HRP, HR staff require input from Line manager
as unit managers knows better the human resource
need of their department
• Effective communication between line and HR
managers critical for successful HRP
OTHER BENEFITS
• Top management has a better view of influence and

impact of business decisions on HR dimensions
• HR cost can be lessen if human resource needs are
known before time
• Enough time available to locate talent from market
• Inclusion of women and minorities
• Training and Development plans can be made well
before time
FACTORS AFFECTING HRP
1 Type and strategy of an organization

2 Organizational growth cycle and planning
3 Environmental uncertainties
4 Time horizon
5 Type and quality of forecasting information
6 Nature of job being filled
7 Outsourcing
FACTORS EFFECTING HRP
1 Type and strategy of an organization

• Global expansion strategy mean hiring of employees
whereas mergers and acquisition strategy means
downsizing/layoff
• The decision whether to be proactive or reactive in
HRP
2 Organizational Growth Cycle
• Small organization at the start of business may not
have HRP
• In growth stage focus is on recruitment
• In declining phase HRP is reactive in nature and focus
is on retirement, and layoff
3 Environmental Uncertainties
Degree of uncertainty determines focus and time
span of HRP
4 Time Horizon
Short term and long term personnel plans depend
upon level of uncertainty
5 Quality of Information
HRIS and Job analysis information need to be in
place that provide accurate and timely data for
HRP
6 Nature of Jobs being filled

Job vacancies exist due to retirement, separation,
job hoping, promotion, and growth
Managerial and technical positions are difficult to fill
in
Sufficient lead time is required to hire suitable
candidates of vacant position
7 Outsourcing
Sub contracting or outsourcing critical business
activities limits new hiring in this case HRP is not
much required
THE PLANNING PROCESS
Environmental scanning
Corporate objectives
and policies
HR needs HR supply
HR Programs
Forecast Forecast
HRP Implementation
Surplus Control and evaluation Shortages

Restricted hiring Of programs Recruitment
Reduced hours
VRS, layoff etc
Source: Aswathappa, 2008, p.82
Summary
Human Resource Planning

Importance of HRP
Factors Affecting HRP
10/10/12
CHAPTER 4
Lecture Overview

Downsizing Plan
Requisite for HRP
and policies
HR needs HR supply
HR Programs
Forecast Forecast
HRP Implementation

Reduced hours
VRS, layoff etc
Analysis of external forces like socio-economic changes,
demographic changes, technological changes, government
policies, political situation
Organizational objectives and policies

Organizational objectives determine objectives of HR plan
1. Are vacancies to be filled through promotions?
2. How to implement downsizing plan?
3. How to ensure availability of adaptive and flexible work
environment
HR Demand Forecast
• The process of estimating organization's quantity and quality
of future workforce
• In manufacturing concern estimated sale volume converted
into production plan that gives idea of working hours/number
of workers
• HR demand forecast must consider both internal (budget
constraints, production level, new products and services,
employment policy etc.) and external factors (local and global
competition, economy, political and legal conditions etc.)
HR demand forecast help to
1) quantify the jobs required to produce number of goods or
offering service 2) identify desirable staff mix 3) determine
appropriate level of staff in each department 4) prevent
shortages 5) monitor compliance
Managerial Judgments
• Managers brainstorm and decide the future demand
• In bottom up approach line managers submit their future
demands
• In top down approach top management decides company's
and departments future workforce demand
Ratio Trend Analysis

• Quick and easy way to forecast demand
• Past ratio between sales volume and number of workers are
reviewed to determine future demands
Regression Analysis
• Statistical analysis technique that depicts the relationship
between sales volume and workforce size
Workforce Study Techniques

• Calculation of amount of labour required by determining
length of operations and units of production
Planned output for next year 20,000 unit
Standard hours per unit 5
Planned hours for the year 100,000
Productive hours per man 2,000
(allowing normal overtime, absenteeism and idle time)
Number of direct labour required 50
Delphi Technique
• Experts estimated HR needs
• The responses are summarized and then send again to experts
for further processing
• The process continues till consensus reach or opinion begins
to match
New Venture Analysis
• Useful for new business ventures
• Estimating HR needs based on analysis of existing companies
in same business
• For example: Company starting coal mine operation can
predict future personnel needs by analyzing the workforce
demand of companies operating in industry
HR SUPPLY FORECAST
• After demand forecast, next step is to consider the availability and

ability to procure the required number of workers/employees
• In supply forecast availability of kind and number of workers from
both inside and outside sources are measured
• In benefits of supply forecast are
• 1) prevent shortages of employees 2) assess existing staffing level

3) clarify staff mixes for future 4) quantify the positions and people
available in future
• HR audit keep records of employee skills and abilities

• HR audit of non management staff are called skill inventories and
those of managerial staff is called management inventories
HR SUPPLY FORECAST
• Skill inventories provide information about non managers

and used for making transfer and promotion decisions
• The seven categories of information included in skill
inventories are
1) Personal data: Age, gender, marital status
2) Skills: Education level, job experience, training
3) Special Qualification: Professional bodies membership, achievements
4) Salary and Job history: various job held, past and present pay
5) Company date: retirement date and seniority
6) Capacity of individual: health status, scores on psychological, physical
test, and IQ test
7) Special preference of individual: geographic location, type of job
MANAGEMENT INVENTORIES
• The information on management inventories include following details
• Work history
• Strength
• Weakness
• Promotion potential
• Career goals
• Personal data
• Number and type of employee supervised
• Total budget managed
• Previous management duties

INTERNAL SUPPLY
• Techniques generally used for forecast internal supply
– Inflows and outflows

current personnel level – outflows + inflows = internal supply
– Turn over rate

turnover = total number of separations during one year x 100
average number of employees during the year
– Conditions of work and absenteeism

– Assessment of change in work conditions such as normal weekly hours,
retirement policy, overtime policy, holidays, policy for employment of part
time workers, and shifts provides fair assessment of internal supply
– Absenteeism when person supposed to work but does not report for duty
– absenteeism= number of persons- days lost x 100
average number of persons x number of working days
INTERNAL SUPPLY
Productivity level
• Change in productivity level affect the number of workers
required for per unit production
For example: Average sales per person is 50,000 thousands unit in a year.
The productivity level increase at 10 percent per year.
Next year we are estimating sales target of 500,000 units.
We need 91 employees next instead of 100 since the per person
productivity for next year is 55,000
Movement among jobs

Some jobs provide supply for other jobs such as stenographer may be
fit for position of Secretary
INTERNAL SUPPLY
Estimation of Internal Supply of Computer Programmer

Sources of No. of Current Personnel Sources of No. of
Inflows People level Outflows People
Transfer 12 Resignations 13
Promotions 10 Discharges 2
Current Personnel Demotions 4
level 250
Retirements 10
Promotions 13
Total inflow 22 Total outflow 42
250-42+22=230
Adopted from Aswathappa, 2008, p. 92
EXTERNAL SUPPLY
• External sources important for several reasons such

as
1. New blood and new experience will be available
2. Organization needs to replenish lost personnel
3. Organization growth and diversification

HR PROGRAMING
After forecasting personnel demand and supply, the

two must be reconciled or balanced in order to fill
vacancies by the right people at the right
HR PLAN IMPLEMENTATION
• Converting HR plan into actions

• A series of actions are taken as HR plan
implementation such as recruitment, promotion,
placement, training and development, retention plan,
downsizing plan, and succession plan
Strategic HR Initiatives
Strategies for Managing Strategies for Managing Surplus

Shortages
Recruitment of new employees Freeze hiring
Offer incentive to postpone Don not replace leaving staff
retirement
Rehire retiree/part time staff Reduce work hours
Attempt to reduce turnover Leave of absence
Work current staff overtime Across the board cut in pays
Subcontract work layoffs
Hire temporary employees Reduce outsource work
Redesign jobs (BPR) Switch to variable pay plan

RECRUITMENT, SLECTION AND PLACEMENT

• After the job vacancies are known effort must be made to
identify sources search for suitable candidates
• The selection program should be professionally designated

and special care must be taken to ensure complain ace with
policies of government
• Hiring new employees would be unwise if there is likely

hood of the demand picking quickly and than return to a
lower
Training and Development

• The training and development should cover the number of
trainees required
• Training and development is necessary for existing staff
• Identification of resources personal for conducting

development program
• Frequency of training and development and budget allocation

for such program
Retraining and Redeployment

• New skills are to be imparted to existing staff when
technology changes
• When a product line is discontinued its employees are to

be retrained or redeveloped to other where they could be
gainfully employed
Retention Plan
• Retention plan covers action which would help, reduce
avoidable separation of employees
• Important actions can be done
– Compensation plan: increasing pay level, Improving pay

structure
– Performance appraisal: asses performance periodically
– Employees leaving in search of green pastures: Provide

better career development opportunities
– Employees Leaving because of conflict: manage conflict
– Induction crises: right person for right job

DOWNSIZING PLAN
• In case of surplus, downsizing is necessary

• Downsizing plan should indicate
1 Who is to be made redundant and where and when?
2 Plan for redevelopment or retraining?
3 Steps to be taken to help redundant employees to find
new jobs
4 Policy for declaring and making redundancy payments
5 Program for consulting with union or staff association
and informing those effected
Source: Aswathappa,2008, p.96

MANAGERIAL SUCCESSION PLANNING
• Managerial succession plan include training programs at series

of job assignment leading to top positions
• A typical succession planning involve following activities
1 Audit of existing executive, projection of likely future supply

from internal and external sources
2 Accelerated promotion
3 Performance related training and development prepare

individuals for future roles as well as current responsibilities
REQUISITS FOR SUCCESSFUL HRP
Requisites for successful HRP
1 HRP must be recognized as integral part of corporate

planning
2 Backing of top management for HRP is absolutely

essential
3 HRP responsibilities should be centralized
4 Personal record must be complete ,up to date and

available
5 The time horizon of the plan must be long enough to

permit any remedial action
6 Data collection and analysis techniques and plan needs

to constantly revised and improved

CHAPTER 4
Lecture Overview

Downsizing Plan
Requisite for HRP
and policies
HR needs HR supply
HR Programs
Forecast Forecast
HRP Implementation

Reduced hours
VRS, layoff etc
Analysis of external forces like socio-economic changes,
demographic changes, technological changes, government
policies, political situation
Organizational objectives and policies

Organizational objectives determine objectives of HR plan
1. Are vacancies to be filled through promotions?
2. How to implement downsizing plan?
3. How to ensure availability of adaptive and flexible work environment
HR Demand Forecast
• The process of estimating organization's quantity and quality
of future workforce
• In manufacturing concern estimated sale volume converted
into production plan that gives idea of working hours/number
of workers
• HR demand forecast must consider both internal (budget
constraints, production level, new products and services,
employment policy etc.) and external factors (local and global
competition, economy, political and legal conditions etc.)
HR demand forecast help to

1) quantify the jobs required to produce number of goods or
offering service 2) identify desirable staff mix 3) determine
appropriate level of staff in each department 4) prevent
shortages 5) monitor compliance
Managerial Judgments
• Managers brainstorm and decide the future demand
• In bottom up approach line managers submit their future
demands
• In top down approach top management decides company's
and departments future workforce demand
Ratio Trend Analysis

• Quick and easy way to forecast demand
• Past ratio between sales volume and number of workers are
reviewed to determine future demands
Regression Analysis
• Statistical analysis technique that depicts the relationship
between sales volume and workforce size
Workforce Study Techniques

• Calculation of amount of labour required by
determining length of operations and units of
production
Planned output for next year 20,000 unit
Standard hours per unit 5
Planned hours for the year 100,000
Productive hours per man 2,000
(allowing normal overtime, absenteeism and idle time)
Number of direct labour required 50
Delphi Technique
• Experts estimated HR needs
• The responses are summarized and then send again to
experts for further processing
• The process continues till consensus reach or opinion
begins to match
New Venture Analysis
• Useful for new business ventures
• Estimating HR needs based on analysis of existing
companies in same business
• For example: Company starting coal mine operation can
predict future personnel needs by analyzing the workforce
demand of companies operating in industry
HR SUPPLY FORECAST
• After demand forecast, next step is to consider the availability and ability to
procure the required number of workers/employees
• In supply forecast availability of kind and number of workers from both
inside and outside sources are measured
• In benefits of supply forecast are
• 1) prevent shortages of employees 2) assess existing staffing level 3) clarify

staff mixes for future 4) quantify the positions and people available in future
• HR audit keep records of employee skills and abilities

• HR audit of non management staff are called skill inventories and those of
managerial staff is called management inventories
HR SUPPLY FORECAST
•Skill inventories provide information about non managers

and used for making transfer and promotion decisions
•The seven categories of information included in skill
inventories are
1) Personal data: Age, gender, marital status
2) Skills: Education level, job experience, training
3) Special Qualification: Professional bodies membership, achievements
4) Salary and Job history: various job held, past and present pay
5) Company date: retirement date and seniority
6) Capacity of individual: health status, scores on psychological, physical
test, and IQ test
7) Special preference of individual: geographic location, type of job
MANAGEMENT INVENTORIES
• The information on management inventories include following details
• Work history
• Strength
• Weakness
• Promotion potential
• Career goals
• Personal data
• Number and type of employee supervised
• Total budget managed
• Previous management duties

INTERNAL SUPPLY
• Techniques generally used for forecast internal supply
– Inflows and outflows

current personnel level – outflows + inflows = internal supply
– Turn over rate
turnover = total number of separations during one year x 100

average number of employees during the year
– Conditions of work and absenteeism
– Assessment of change in work conditions such as normal weekly hours, retirement
policy, overtime policy, holidays, policy for employment of part time workers, and
shifts provides fair assessment of internal supply
– Absenteeism when person supposed to work but does not report for duty
– absenteeism= number of persons- days lost x 100
average number of persons x number of working days
INTERNAL SUPPLY
Productivity level
• Change in productivity level affect the number of workers
required for per unit production
For example: Average sales per person is 50,000 thousands unit in a year.
The productivity level increase at 10 percent per year.
Next year we are estimating sales target of 500,000 units.
We need 91 employees next instead of 100 since the per person
productivity for next year is 55,000
Movement among jobs

Some jobs provide supply for other jobs such as stenographer may
be fit for position of Secretary
INTERNAL SUPPLY
Estimation of Internal Supply of Computer Programmer

Sources of No. of Current Personnel Sources of No. of
Inflows People level Outflows People
Transfer 12 Resignations 13
Promotions 10 Discharges 2
Current Personnel Demotions 4

level 250
Retirements 10
Promotions 13
Total inflow 22 Total outflow 42
250-42+22=230
EXTERNAL SUPPLY
• External sources important for several reasons such as

1. New blood and new experience will be available
2. Organization needs to replenish lost personnel
3. Organization growth and diversification

HR PROGRAMING
After forecasting personnel demand and supply, the two

must be reconciled or balanced in order to fill vacancies by the
right people at the right
• Converting HR plan into actions

• A series of actions are taken as HR plan implementation such
as recruitment, promotion, placement, training and
development, retention plan, downsizing plan, and
succession plan
Strategic HR Initiatives
Strategies for Managing Strategies for Managing Surplus

Shortages
Recruitment of new employees Freeze hiring
Offer incentive to postpone Don not replace leaving staff
retirement
Rehire retiree/part time staff Reduce work hours
Attempt to reduce turnover Leave of absence
Work current staff overtime Across the board cut in pays
Subcontract work layoffs
Hire temporary employees Reduce outsource work
Redesign jobs (BPR) Switch to variable pay plan
RECRUITMENT, SLECTION AND PLACEMENT

• After the job vacancies are known effort must be made to identify
sources search for suitable candidates
• The selection program should be professionally designated and

special care must be taken to ensure complain ace with policies of
government
• Hiring new employees would be unwise if there is likely hood of the

demand picking quickly and than return to a lower

• The training and development should cover the number of trainees
required
• Training and development is necessary for existing staff
• Identification of resources personal for conducting development

program
• Frequency of training and development and budget allocation for such

program
Retraining and Redeployment

• New skills are to be imparted to existing staff when technology
changes
• When a product line is discontinued its employees are to be

retrained or redeveloped to other where they could be gainfully
employed
Retention Plan
• Retention plan covers action which would help, reduce avoidable
separation of employees
• Important actions can be done
– Compensation plan: increasing pay level, Improving pay structure
– Performance appraisal: asses performance periodically
– Employees leaving in search of green pastures: Provide better career

development opportunities
– Employees Leaving because of conflict: manage conflict
– Induction crises: right person for right job

DOWNSIZING PLAN
• In case of surplus, downsizing is necessary

• Downsizing plan should indicate
1 Who is to be made redundant and where and when?
2 Plan for redevelopment or retraining?
3 Steps to be taken to help redundant employees to find new jobs
4 Policy for declaring and making redundancy payments
5 Program for consulting with union or staff association and
informing those effected

MANAGERIAL SUCCESSION PLANNING
• Managerial succession plan include training programs at series of job

assignment leading to top positions
• A typical succession planning involve following activities
1 Audit of existing executive, projection of likely future supply from

internal and external sources
2 Accelerated promotion
3 Performance related training and development prepare individuals for

future roles as well as current responsibilities
Requisites for successful HRP
1 HRP must be recognized as integral part of corporate planning
2 Backing of top management for HRP is absolutely essential
3 HRP responsibilities should be centralized
4 Personal record must be complete ,up to date and available

5 The time horizon of the plan must be long enough to permit

any remedial action
6 Data collection and analysis techniques and plan needs to

constantly revised and improved

SUMMARY

Downsizing Plan
Requisite for HRP
Chapter 23
Trade Unions
Recap of Previous Lecture
• Nature of IR
• Need for good relationship between management and workers
• Approaches to Industrial Relations

• Role of HR department
• Stakes of parties
• Proactive strategy to IR
Lecture Overview
• Nature of Trade Unions
• Why employees join unions
• Factors leading to unionization

• Union tactics
• Tactics to remain union free

Trade Unions
“Unions are volunteer organizations of workers or employers
formed to promote and protect the interests through collective
actions”
(p, 549)
Definition of Unions include
1. Combination of workers or employers

2. Could be permanent or temporary
3. Regulate relationships among workers, workers and
employers or among employers
Strategic Choices before managers

1. Allow unions or remain union free
2. If want to remain union free then what to do?
3. If allow unions what type of relationships want?
4. Tactics to negotiate with unions
Why Employees Join Unions
1. To protect against exploitation
2. Dissatisfaction (psychological contract)
3. Lack of power
4. Union Instrumentality
Factors Leading to Unionization
Personality, interests, and

preferences
Expectations that work will fulfill

personality, interests, and
preferences i) employment
contract ii) psychological contract
Influence of
Satisfaction Work situation management
Dissatisfaction with work situations Attempt to

resolve situation
independently
Union instrumentality
Unionization
Adopted from: Aswathappa. Human Resource Management, Text and Cases, 2008, p. 552
Strategic Choices for Unions
1. Bread and Butter vs Political objectives
2. Adversarial vs Cooperative Role
3. Traditional issues vs New Services
Union Tactics
1. Organizing drive
2. Strike
3. Political patronage
4. Blackmail
Tactics to Remain Union Free
Effective first line Open Effective personnel

supervisors communication research
Effective personnel Union Healthy and safe work

planning and selection free environment
Effective training and Effective Effective employer and

development remuneration employee relationship
HR practices and Unions
HR practices negate the existence of unions because of following

reasons
• HR seeks employee relationships on individual basis (Pay and

performance)
• HR attempts for socialization of workforce means harmony

amongst workers and between management and workers,
emphasize authority of management
• Training programs attempts to bring loyalty and pro

management attitude
• Team based work environment
• Merit based selection and promotion

Summary

• Union tactics

Chapter 24
Resolving Disputes
Industrial Relations
• IR covers
1) Collective •bargaining
IR covers
1) Collective bargaining
2) Role of management, unions and government
2)
Role of management, unions and
3) Mechanism ofgovernment
resolving disputes
3) and
4) Grievances Mechanism of resolving
disciplinary disputes
policy and practices
4) Grievances and disciplinary policy and
5) Labour legislation
practices
Lecture Overview
• Collective Bargaining
• Methods of Settling Disputes
• Grievance Handling Procedure
• Steps in Disciplinary Proceedings

Settlement of Disputes
Collective Arbitration
bargaining
Conciliation
Code of discipline Dispute
settlement
Adjudication
Grievance
procedure
Preparing for Collective Bargaining Process
negotiation
Bargaining
issues
Negotiating
YES Overcoming Environment

Negotiation breakdowns
breakdown
NO
Reaching the
agreement
Ratifying the
agreement
Administration
of agreement
Collective Bargaining
Collective bargaining a method of settling disputes
Legislative process: in a sense that it establish rules and norms

(term and condition) under which both management and labour
will work over a period of time
Executive process: Management and union officials share the

responsibility to enforce rule
Judicial Process: In every collective agreement there is grievance

handling procedure to settle any likely dispute regarding
implementation of agreement
Code of Discipline
Define duties and responsibilities of workers and employer. The

objectives of codes are
• Employer and employees respect and recognize each other’s

rights
• Settlement of disputes by negotiation, arbitration and

conciliation
• Eliminate coercion, intimidation and violation
• Avoid work stoppages
• Facilitate growth of unions
• Maintain discipline
Grievance Procedure
• Grievance is state of dissatisfaction of employees
• Method of settling disputes
• All agreement contains grievance procedure
• Conditions that can create grievance
1. Violation of terms and conditions

2. Violation of law
3. Violation of company rules
4. Change in work conditions or terms
5. Violation of health and safety standards
Arbitration
• Neutral third party listen to both parties, analyze bargaining

situation and then make recommendations that are
obligatory/binding on bothbargaining
1) Collective parties
Conciliation 2) Role of management, unions and

government
• Mediator persuades and facilitate both parties to discuss the
3) Mechanism of resolving disputes
issue and reach to the agreement
• Conciliator helps both parties to understand demands of each
practices
other, explain position of each party, offer workable solutions
or helps in finding solutions
Adjudication
• Labour court or tribunal settles the disputes
• Conciliator refers to recommend the government to send the

case to courts. Once court decides the case it is obligatory on
both parties
• IR covers
IR covers
2)
resolving disputes
3) and
practices
Summary
• Nature of Disputes
• Causes of Disputes

Labour Laws In Pakistan
Lecture Overview
• Labour Legislations
• Contract Appointment
• Working Hours and Conditions
• Leaves and Holidays
• Children Employment
• Labour Disputes
• Equal Employment Practices in Pakistan

Labour Laws
• The Constitution of Pakistan
• Part II: Fundamental Rights and Principles of Policy
• Article 11 of the Constitution prohibits all forms of slavery,

forced labour and child labour
• Article 17 provides for a fundamental right to exercise the

freedom of association and the right to form unions
• Article 18 give the right to its citizens to enter upon any lawful
profession or occupation and to conduct any lawful trade or
business
• Article 25 address the right to equality before the law and

prohibition of discrimination on the grounds of sex alone
Labour Laws
• Article 37(e) makes provision for securing just and humane

conditions of work, ensuring that children and women are not
employed in vocations unsuited to their age or sex, and for
maternity benefits for women in employment.
• Labour Legislation
• Industrial and Commercial Employment (Standing Orders)

Ordinance was enacted in 1968 addressing the relationship
between employer and employee and the contract of
employment.
• The Ordinance applies to all industrial and commercial

establishments throughout the country employing 20 or more
workers
• Every employer in an industrial or commercial establishment is

required to issue a formal appointment letter at the time of
employment (containing nature of job, tenure of appointment,
pay and allowances, working hours, terms and conditions of
appointment)
Labour Laws
• Termination of appointment must be communicated in writing.

under Section 46 of the Industrial Relations Ordinance 2002,
aggrieved employee may proceed him or herself or through
labour union with in three months
• Labour courts examines and intervene a case of violation of

principle of nature of justice and unjust action of employer
• The Factories Act, which governs the conditions of work of

industrial labour, applies to factories, employing ten or more
workers
• Under the Factories Act, 1934 no adult employee, defined as a

worker who has completed his or her 18th year of age, can be
required or permitted to work in any establishment in excess of
nine hours a day and 48 hours a week
• Section 8 of the West Pakistan Shops and Establishments

Ordinance, 1969, restricts weekly work hours at 48 hours
Labour Laws
• Section 22-B of the Mines Act, 1923 restrict weekly hours at 48
hours or 8 hours each day, with the limitation of spread-over 12
hours and interval for rest for one hour every six hours. Section
22-C further limits the spread-over to 8 hours for work done
below ground level.
• The Factory Act enforce that no worker shall be required to

work continuously for more than six hours
• According to the Factories Act, 1934, every worker who has

completed a period of twelve months of continuous service in a
factory shall be allowed holidays for fourteen consecutive
days. If he fails to avail whole leaves the part of un availed
leave will be carried forward in next year
• The Maternity Benefit Ordinance, 1958 stipulates that upon the

completion of four months employment or qualifying period, a
worker may have up to six weeks parental and postnatal leave
with pay
Labour Laws
• The Factories Act, 1934 provides that every worker is entitled to

10 days casual leave with full pay and further 16 days sick or
medical leave on half pay.
Labour Laws
• Under section 49 of the Factories Act, workers are entitled to
enjoy gazetted holidays
• If worker is required to work on holiday he or she will be

allowed substitute holiday on full pay
• The Maternity Benefit Ordinance, 1958 prohibits the dismissal

of the woman during her maternity leave
• Mines Maternity Benefit Act, 1941 is applicable to women

employed in the mines in Pakistan
Labour Laws
• Article 11(3) of Constitution of Pakistan prohibits the
employment of children below the age of fourteen years in any
factory, mine or other hazardous employment. Make it
obligatory to provide safe and human working conditions
• The Factory Act provides that no child or adolescent is allowed

to work in a factory between 7 p.m. and 6 a.m
• Further laws emphasize on cleanliness, drainage, ventilation,

and hygiene of work place . Provision of drinking water. All
passages, stairs, entrance and exits points must be open and
properly lighted to ensure safety
• Article 38 of the Constitution speaks achieving equality in the

form of securing the well-being of the people, irrespective of
sex, caste, or race
• The Employment of Children Rules, 1995

Labour Laws
• The Payment of Wages Act, 1936 regulates payment of certain
classes of industrial workers. The act enforce payment of
wages with in seven days if number of employees workers are
less than 1000 in other case with in ten days of completion of
wage period
• Article 24 of Industrial Relations Ordinance, 2002 make it

compulsory to form Joints Works Council for representation of
workers in enterprise in establishment having fifty persons or
more
• The Joint Works Council deals with issues of settlement of

differences through bilateral negotiations, promoting
conditions of safety and health for the workers, encouraging
vocational training within the establishment, taking measures
for facilitating good and harmonious working conditions in the
establishment, provision of educational facilities for children of
workers
• Freedom of Association: Article 17 of the Constitution of

Pakistan allow every citizen the right to form associations or
unions
Labour Laws
• Registration of trade union is to be made under the Industrial
Relations Ordinance
Labour Disputes
• Under Article 46 of the IRO 2002, a worker can bring his or her
grievance to the notice of employer in writing with in one
month of cause of such grievance and employer with in fifteen
days has to communicate the decision in writing to employee
• If worker is dissatisfied with the decision or employer fail to

communicate the decision in writing, employee can take the
case to labour court with in two months
Labour Courts
• under section 44 of the IRO 2002, Provincial government can
establish as many labour courts as it consider necessary. of
the Ordinance
Labour Laws
• Collective Bargainng Agent and Agreement
Industrial Relations Ordinance have provision for appointment of

collective bargaining agent that is elected by secret ballot
CBA entitle to undertake collective bargaining with employers
CBA formulate collective agreements
Agreement may contains matters such as facilities for unions,

dispute resolution process including grievance handling and
disciplinary cases, settle terms and conditions of employment,
wages, working hours, pension and retirement schemes, layoff,
leave, level of job performance etc.
Agreement become source of law and used to settle disputes so it

must be drafted carefully
Labour Laws
• Collective Labour Disputes
Under the IRO 2002, if an employer or a Collective Bargaining

Agent finds that an industrial dispute has arisen or is likely to
arise, they may communicate their views in writing to the other
party. Upon receipt of the communication, the other party has
fifteen days (or more if agreed) to try and settle the dispute by
bilateral negotiations.
Conciliation
If the parties do not manage to reach a settlement, the employer or

the CBA may, within fifteen further days, serve a notice of
conciliation on the other party, with a copy to the Conciliator and
to the Labour Court.
If the dispute is settled before the Conciliator, or a tripartite Board

of Conciliators, a report is sent to the Provincial or Federal
Government, with the memorandum of settlement.
Labour Laws
• Collective Labour Disputes
If the conciliation fails, the Conciliator tries to persuade the parties

to refer their dispute to an arbitrator. If they agree, the parties
make a join request in writing to the arbitrator they have agreed
upon.
The arbitrator gives his or her award within a period of 30 days or

a period agreed upon by the parties. The award of the arbitrator is
final and valid for a period not exceeding two years.
Labour Laws
Proceedings of strikes and lock-outs
If dispute settlement proceedings before the Conciliator fail and
no settlement is reached, and if the parties have not agreed to
refer their dispute to an arbitrator, the workers retain the right
under section 31 of the Industrial Relations Ordinance 2002, to go
on strike providing due notice to their employer within seven
days, and the employer has the right declare a lock-out after the
delay of notice of conciliation has expired. The party raising a
dispute retains the option, at any time, either before or after the
commencement of a strike or lockout, to make an application to
the Labour Court for adjudication of the dispute.
Where a strike or lock-out lasts for more than fifteen days, if it

relates to a dispute which the Commission is competent to
adjudicate and determine, the Federal and/or the Provincial
Government may, by order in writing, prohibit the strike or lock-
out at any time before the expiry of thirty days, provided that the
continuance of such a strike or lock-out causes serious hardship
to the community or is prejudicial to the national interest.
Labour Laws
If
Under section 32 of the IRO 2002, if a strike or lockout occurs
within the public utility services sector the Federal Government
and the Provincial Government may, by order in writing, also
prohibit its occurrence at any time before or after the
commencement of the strike or lockout.
No party to an industrial dispute may go on strike or declare a

lockout during the course of conciliation or arbitration
proceedings, or while proceedings are pending before the Labour
Court.
A strike or lockout is declared illegal if it is commenced without

giving notice of conciliation to the other party of the dispute, or if
it is commenced or continued in a manner other than that
provided by the IRO 2002
In case of an illegal strike or lockout, an Officer from the Labour

Department may make a report to the Labour Court, and require
the employer or CBA or the registered trade union concerned, to
appear before the Court. The Court may, within 10 days, order the
strike or lockout to be stopped.
Labour Laws
If
In case of contravention of the order of the Court by the employer,
and if the Court is satisfied that the pursuance of the lock-out is
causing serious hardship to the community or is prejudicial to the
national interest, it may order the attachment of the factory and
the appointment of an official receiver, who will exercise the
powers of management and may do all such acts as are necessary
for conducting business.
In case of contravention of the order of the Court by the workers,

the Labour Court may pass orders of dismissal against the
striking workers, or cancel the registration of the trade union that
committed such contravention.
Reference
The lecture slides are based on text from website
http://www.labourunity.org/labourlaws.htm
Equal Employment Practices in Pakistan
Overview
• Labour Laws

The Constitution of Pakistan
Industrial Relations Ordinance 2002
Factories Act, 1934

Mines Act, 1923
Maternity Benefit Ordinance, 1958
Equal Employment Opportunity
“Equal Employment Opportunity (EEO) prohibits discrimination
against anyone on any pretext”
“EEO speaks of the equality of every human being (irrespective of

gender, religion, caste, ethnicity, color, age, physical disability etc)
while considering a candidate before, during and after
employment”
Source: Syed, J. (2003) 'Equal employment practices', Pakistan and Gulf Economist,
Issue No. 39, Sep 29 - Oct 05, pp. 34-37.
Affirmative Action: These are conscious efforts to compensate

past unfair and bias practices in organization
Laws in Pakistan make it obligatory on employer to follow equal

employment practices and do not discriminate in employment on
any pretext
Article 27 of Constitution of Pakistan, prohibit discrimination
based on sex in “Services of Pakistan”
further “make it obligatory to take steps to ensure full
participation of women in all spheres of national life“
According to Articles 34 and 38a, it is responsibility of state to

work for wellbeing of the people of Pakistan by raising their
standard of lives and taking steps to prevent concentration of
wealth in few hands and exercise of equal right between employer
and employee
Pakistan is signatory of international agreements and conventions
• ILO Discrimination (Employment and Occupation) Convention,

1958 (No. 111) (ratified on 24/1/1961)
• ILO Equal Remuneration Convention, 1951 (No. 100) (ratified on

11/10/2001)
• UN Convention on the Elimination of All Forms of

Discrimination Against Women, 1979 (ratified on 12/3/1996)
• ILO Vocational Rehabilitation and Employment (Disabled

Persons) Convention, 1983 (No. 159) (ratified on
• 25/10/1994)
• ILO Underground Work (Women) Convention, 1935 (No. 45)

• On 30 April 2000, the Federal government announced Labor

Welfare Package for Workers making it obligatory for the
organizations to offer gender equality and affirmative action. In
summary, it permits:
• Equal remuneration for men and women for work of equal value
through appropriate legislation.
• Enhancement of maternity benefits for female mine workers.
• Safeguards against sexual harassment through appropriate

actions
• Recruitment of female labor inspectors for enforcement of

labor laws on female workers.
• Increase in percentage of reserved seats of workers and

peasants at Union Councils, Tehsil Councils and District
Councils in the Devolution of Power Plan.
• Extension of coverage of laws to agriculture and other informal

sectors of economy
• In 2002, Federal government announced labour policy which

empowered labour courts to reinstate illegally dismissed
workers and allow compensation
• Labour policy emphasize on bilateralism
• It also defines contractual labours in accordance with

international standards of temporary jobs and protect their
rights
• The labour policy also ban child and bonded labour and
pledges equal opportunity
• To improve recruitment conditions in Pakistan, the government

has made legislation like
• National Policy and Plan of Action for Elimination of Child

Labor (2000)
• National Policy and Plan of Action for the Abolition of Bonded

Labor (2001)
• Endorsement of ILO Conventions 100 and 182.
• Federal and Provincial governments have also made

legislations about the provision of 2% quota for special
(disabled) people in the employment. This was enacted by the
Disabled Persons (Employment and Rehabilitation)
Ordinance 1981.
Disabled Persons:
Disabled Persons (Employment and Rehabilitation) Ordinance
1981 allot 1 percent quota to disabled
In 2002, Ministry of Social Welfare and Special Education ask

Cabinet Division for 2 percent quota of disabled persons in all
Ministries
• In Pakistan despite labour laws making obligatory to practice

equal employment opportunity in employment, employers take
cover under “circumstances and acceptability”
• Women are even not consider for selection and interview on

several grounds (they can not stay in office late, they quit their
jobs after marriage, they give more time to their children, they
can not move from one place to other)
• In Public sector delaying tactics of writing ACRs deprived

eligible employees from timely promotion thus violating EEO
• Costly and time consuming efforts are also hurdles for

discriminated workers to pursue their cases under prevailing
law
• Lack of education and information also preclude labour to

claim their legal right given under laws
• HR and line managers are not educated and aware of EEO laws
• In Pakistan most of the jobs are filled through references and

relationships
• Ethnicity, regional belonging and alumni also play role in

selection
• In terms of working conditions, women are also victims of

sexual harassment
• No separate or adequate facilities for women
• Lack of facilities for disabled persons

Summary
• Labour Legislations
• Contract Appointment
• Working Hours and Conditions
• Leaves and Holidays
• Children Employment
• Labour Disputes

The slides on Equal Employment Practices are
based on text from
Syed, J. (2003) 'Equal Employment Practices',

Pakistan and Gulf Economist, Issue No. 39, Sep
29 - Oct 05, pp. 34-37.
Chapter 28
International Human Resource Management

Lecture Overview
• International HRM
• Difference between IHRM and Domestic HRM
• Basic steps in IHRM
• Key Issues in International Labour Relations

• Globalization has significantly influence HRM practices and
policies
• All HRM functions need international orientation
• MNC operating internationally need to be more focused to

attract, motivate and transfer workforce globally
• The process of procuring, allocating, motivating, training &

development, and compensating and utilizing human
resources in international business is called international
human resource management
• IHRM covers six main functions of domestic HRM such as

HR planning, recruiting, training and development,
performance management, compensation and labour
relations
• The three countries categories of IHRM are country where

headquarter is based, country where subsidiary is located,
and country from where workforce and finances come
• The three types of workers in international business are
host country, parent country and third country nationals
• IHRM differs from domestic HRM on following points
1. More HR activities
2. Broader perspective
3. More involvement in employees’ personal lives
4. Greater workforce diversity
5. Change in Emphasis
6. More risk
7. More external influences

1) More HR activities
• IHRM has boarder scope in deal with employment related

issues.
• For example: International taxation, host country

regulations, home country regulations, international
orientation of relocating and training of employees, and
administrative and compensation issues of expatriates, and
language translation services
• Each HR functions has different scope and issues in IHRM
HR Planning
• Difficulty in implementation of HR policy and procedure in

host country
• Difficulty in aligning business strategy with HR strategy
• Providing career development opportunities to international

managers
Hiring
• Matching person and organizational fit (cultural match)
• Selection of expatriates
• Managing expatriates failures
• Managing repatriation process

• Language training
• Cultural training
• Training of expatriates and managers
Compensation
• Deciding compensation of expatriates
• Deciding compensation of parent, host, and third country

nationals
Performance Management
• Implementation of performance evaluation system in host

country
• Physical distance, time difference, and reporting cost
• Raters to evaluate subsidiary performance

Who should deal industrial relations issues in subsidiary?
What is attitude and policy of parent company toward unions

in subsidiary?
What should be tactics to deal with unions in subsidiary?
2) Need for Broader Perspective
In dealing with compensation issues, HR manager in

headquarter need to consider different pay systems for parent,
host, and third country nationals, paying in different
currencies, and change in relative value of currency
In deciding fringe benefits, HR managers face difficulty, in

most countries providing health insurance is compulsory,
whereas definition of dependent varies from country to
country, in some countries dependent means multiple
spouses, children, parents, grandparents
3) More involvement in employees’ personal lives
In IHRM there is more involvement of HR department in

dealing with their personal issues for better selection, training,
relocation and effective management of global workforce
HRM department need to ascertain that managers selected for

foreign assignment understand housing, health care, and
remuneration package
HRM need to have more information about manager family,

schooling of their children, emotional and physical health of
their spouse and children etc.
‘International Human Resource Services’ section provide

services to managers like handling investment, banking, home
rental, house arrangements, home visits, and repatriation
issues
Unlike domestic HRM in International HRM, HR manager needs

to understand more about their personal lives and provide
support in relocation for foreign assignment even assistance
to children left behind
4) Greater Work force Diversity
IHRM requires more emphasis on management of global and
diversified work force
Different work ethics, motivation level, cultural compatibility,

managing team work are main issues that IHRM to handle
5) Change in Emphasis
Emphasis has changed from idea of repatriation and
dependence on third country nationals towards development
of local managers
As more trained local managers are available, the issue of

training and development of local managers come to highlight
Designing programs and policies to provide development

opportunities to local managers by placing them in
headquarter
6) Risk Exposure
MNCs operating in different countries need to assess the law

and order situation and advise or provide support to their
expatriates or third countries employees
HR department may also need to have emergency evacuation

program for their employees working in highly risk areas
Poor selection decision may result into huge loss as in case of

expatriate may not perform well and recalled
If MNC’s policies and practices are hostile to unions, political

party or in violation of host country regulations, company can
be asked to win up operations or government may seize
physical and financial assets
7) External Influence
MNCs operating in host country face more external influence

as opposed to local company
Federal and local government, political figures, political and

social groups exert great pressure on foreign company
Subsidiary manager need to know local way of doing

business, dealing with different ministries, political parties,
and labour unions
Growing interest in IHRM
There are number of reasons for growing interest in IHRM
Thanks to globalization, more and more entry of multinational

corporations means greater mobilization of human resources
In international business human resources performance is

more critical for success
The cost of underperformance in international assignment is

very high both in financial and image terms
The international expansion mainly depend on availability and

utilization of competent human resources
Finally, implementation of strategies is more crucial than

developing, and implementation is dependent upon culture
that is developed by HR policies and practices
Managing International HR Activities
HR Planning
Recruitment and
Organizational Effectiveness
Selection
Training and
Development
Performance
Management
Remuneration
Repatriation
Employee Relations
Multicultural
Management
Adopted from: Aswathappa. Human Resource Management, Text and Cases, 2008, p. 664. 333
HR Planning
• HR planning in international business is more complex and

crucial
• HRP procedures are difficult to implement in different

countries. Cultural differences in view of planning
• Identification of top management
• Identification of critical competencies for future managers
• Providing developmental opportunities
• Tracking and supporting in pursuing international career

path
• Aligning business strategy with HRP and vice-versa

(European and Asian strategy)
Recruitment and Selection
• Main issue in international hiring is not to select competent

employee but candidate who could mix with culture of
organization
Ethnocentric Approach
• All key management positions are held by parent country
nationals
• This is good strategy at early stage of new start

up/operations in host country
Polycentric Approach
• Subsidiary is headed by host country nationals and parent
country nationals are at the top positions in headquarter
• Some countries have made regulation or exert pressure to

hire host country nationals for top position in subsidiary
Geocentric Approach
In this staffing approach best people are selected to fill vacant

positions irrespective of their nationality
Staffing approach Advantages Disadvantages
Parent Country • Familiarity with • Difficulty in adjustment:
Nationals headquarters goals and foreign language, different
objectives culture and political and socio
• More organizational economic system
control and coordination • Cost of training,
• Competent managers are remuneration and family
giving expatriate benefits
opportunity • Host countries nationals feel
• Specific skills and demotivated when they see
experience no further progress
• PCN can impose
unnecessarily HQ culture and
style
• Family adjustment issues
Host Country • Familiarity with country’s • Communication problems
Nationals culture, political system and with home country
business practices management
• Low cost of hiring and • Little change of host
remuneration country nationals to get
• Promotional opportunities for international assignments
locals hence motivated and and experience
committed • Difficulty in inculcating HQ
• No language barrier management philosophy,
• Continuity of management culture, and best practices
Third Country • Low salary package as • Host country may not like
Nationals compared to PCN to hire TCN
• They are truly international • TCNs may not return to
managers their country
• May be more aware of host • Host country may be
country culture, political and sensitive or have hostile
economic system, language attitude toward TCN
hence easily and quickly • Resistance from subsidiary
adjust employees
Source: Aswathappa. Human Resource Management, Text and Cases, 2008, p. 667 333
Chapter 28

Lecture Overview
• Basic steps/activities in IHRM

HR Planning
Recruitment and
Selection
Training and
Development
Performance
Management
Remuneration
Repatriation
Employee Relations
Multicultural
Management
Factors Influencing PCN and HCN Choice
Dimensions Factors
Parent Country Cultural distance between HQ and subsidiary, size
Characteristics of operation, research intensity
Industry Characteristics Financial institution, need for control, need to
customize
Subsidiary Age, acquired or strategic role of subsidiary,
Characteristics performance, ownership
Host Country Variables Educational levels, political risk, cost of hiring
Expatriates
Expatriates are those employees who work abroad (away from
their home country) for a specific time period with a planned
return to third country or home country
Expatriates Assignment life cycle Reassignment
Crises and abroad
adjustment
Need for Departure
expatriates
Post arrival
training
Repatriation
Pre assignment or and
Selection adjustment
training
process
Crises and
failure
Reasons of Expatriate Failure

US Firms Japanese Firms
Spouse adjustment problem Inability to cope with
international responsibilities
Inability of managers to adjust Difficulties with environment
Other family reasons Personal and emotional
problems
Personal and emotional Lack of technical competence
maturity of managers
Inability to cope with Spouse adjustment problem
Expatriate Adjustment Process
Cultural Shock Cycle

High
Mood
Low
Months in new culture
Expatriate Selection Decision
Individual Situation
Technical Ability Country-cultural requirements
Cross cultural suitability MNC requirements
Family requirements Language
The common objectives of training and development in MNCs

are
• Bridging cultural gap between subsidiary and HQ
• Orientation challenges are different in HQ and subsidiary
• Building united corporate culture
• Training and development activity IHRM most of the time

focus on training of candidate likely to be posted abroad
• Expatriates are giving training to reduce likelihood of failure

in foreign assignment. The main components of training of
expatriate are cross cultural, language and practical
training, and management development programs
1) Cross Cultural Training:
• Expatriate receives pre-departure training on host country

culture to make it easy for him/her to adjust to new culture
• Expatriate often receives training on repatriation to avoid

cross cultural shock
Merits Demerits
More chances of success in May not remove cultural biases
foreign assignment
Provides comprehensive global Recipient may not take it
perspective serious
Sense of confidence May not make real difference
in business
Reduces cultural shock Can not prepare manager to
face all real life problem
In IHRM performance management tend to focus on evaluation

of performance and continuous improvement of individual,
subsidiary and corporate performance against pre set targets
and objectives
Steps in Performance Management of Expatriate
Linkage to organizational strategy
Setting individual performance goals
Identifying variable impacting performance
Appraising the performance
Providing regular feedback
Providing opportunities for development
Linking results with rewards
Expatriate’s Compensation
The objectives of expatriate compensation
1. Attract employees for international assignment
2. Facilitate the movement
3. Be cost effective
4. Provide consistent relationship between HQ employees

and foreign subsidiary
Problems with expatriate compensation
1. Gap between pay of parent, host and third country

nationals
2. The pay variation considering the expatriate's family
3. Issues relating to entry of expatriate back to parent

country
MNC Internal MNC external

environment environment
• Goal orientation • Parent nationality
• Capacity to pay • Local culture
• Internal workforce • Host and home
country government
composition
role
• Subsidiary role • Industry type
Staffing Option • Competitor's strategy
Compensation
strategy
Source: Aswathappa. Human Resource Management, Text and Cases, 2008, p. 6773
Base Salary
• Different meaning from domestic employment
• Primary component of package of allowances (foreign

assignment premium, house allowance, and cost of living
allowance)
• Payment in home country and host country currency
Benefits Issues
• Whether expatriate subscribe to home country benefits (if
there is tax exemption)
• Whether home or host country is responsible for social

security benefits
• Whether the benefits should be according to host or home

country requirements
• Whether home country benefits be available to local

citizens
Allowances
• Cost of living allowance, provide same standard of living as
expatriate was enjoying in home country
• Covers expenses like relocation, housing, hardship, and

education
• Spouse assistance (protect or compensate loss in case of

spouse lost income due to relocation)
• Offer support to find spouse job or placement in subsidiary

Incentives
• Incentive is once time lump-sum payment apart from
regular salary
• Tax equalization: MNC based on home country tax
obligation withhold or deduct amount from expatriate salary
and pay all taxes in host country
• Tax protection: Employee pays up to the taxes he would

pay on remuneration in his home country and entitled to
retain extra in case tax deduction is less in foreign
assignment
Tax Consideration
• Tax equalization: MNC based on home country tax

obligation withhold or deduct amount from expatriate salary
and pay all taxes in host country
• Tax protection: Employee pays taxes he would pay on

remuneration in his home country and entitled to retain
extra in case tax deduction is less in foreign assignment
Tailoring the package
Balance sheet approach

• Equate purchasing power of expatriate in host country with
home country
Going rate approach

• Expatriate compensation is linked with host country on
going rate
Lump-sum method
• Giving lump-sum amount and expatriate has option to
spend in a way he likes
Regional approach
• In which MNC decide compensation system for particular
region (Europe, South Asia, Middle east)
Repatriation
Bringing expatriate back to home country after completion of
assignment or due to other reasons (failure to perform,
adjustment problems, family problems)
Re-entry shock or reverse culture shock
Benefits of returnees
• Exposure to global culture and local culture
• Part of global network
• Understand operations of HQs and subsidiary (overseas

operations)
• Transfer technology, business knowledge back to home

country
• Provide coordination and communication support

Benefits from returnees
• Exposure to global culture and local culture
• Part of global network
• Understand operations of HQs and subsidiary (overseas

operations)
• Transfer technology, business knowledge back to home

country
• Provide coordination and communication support
• Personal and professional growth (global and broader

vision)
Repatriation Process
Preparation
Physical
relocation
Repatriation
Process
Transition
Re-adjustment
Repatriation
Challenges of Re-entry
Individual Perspective
• Personal Perspective: Face reverse cultural shock
schooling, social network, loss of income, lower social
status
• Professional disappointment: No use of his expertise and
skills gained during foreign assignment, less authority,
autonomy, and importance
• Often limited promotion opportunities and career choices

means removed from mainstream corporate advancement
Organizational Perspective
• Retaining the expatriate after repatriation

in subsidiary?

Multiculturalism
Culture is customs, beliefs, values and norms that guide

behavior and pass from one generation to other
Multiculturalism when people from different cultures interact

regularly
IHR managers should have cross cultural competence
Should have strong personal identity, knowledge of different

cultures, communicate effectively in language of given culture
group
Hofstede Cultural dimensions: Power distance, uncertainty

avoidance, Individualism, and masculinity
Summary
• Basic steps/activities in IHRM

eHR
Evaluating HR Effectiveness
Chapter 29
The e-HR
Lecture Overview
• Nature of e-HRM
• Implication of e-HRM
• e-Recruitment
• e-Selection
• e-Performance Management
• e-Compensation
• e-Learning
Nature of e-HR
• Use of internet and related technology to perform HR functions
is called e-HR
• e-HR can provide more accurate and timely data for decision
making in recruitment, promotion, training and development,
performance appraisal, compensation management,
termination, and administrative matters
HRM Practices Implications of e-HR

Job analysis and Employees in geographically dispersed locations can
work design work together in virtual teams using video, email, and
internet
Recruiting Post job opening online, candidate can apply for jobs
online
Selection Online simulations, including test, videos, and email,
can measure candidates’ abilities to deal with real life
business challenges
Training Online learning can bring training to employees
anywhere anytime
Compensation and Employees can review salary and bonus details and
benefits seek information about and enroll in benefit plans
Source: Aswathappa. Human Resource Management, Text and Cases, 2008, p. 691p. 333
e-HR Activities
e-Recruitment
• Also called online recruiting
• Benefits of e-recruitment are reduced cost, wide reach,

decreased cycle time, and less burden on administrative work
• Few disadvantages of e-recruitment are misuse of confidential

data by companies, potential candidate may be unwilling to
apply due to privacy issues, candidate does not have internet
access
e-HR Activities
e-Recruitment
• Guidelines for e-recruitment
1. Company with good reputation can attract more candidates
2. Should not be used as only source
3. Website should be user-friendly
4. Develop online screening system
5. Provide adequate information about company and job
6. Protect privacy of data
7. Take care of language and legal requirements

e-HR Activities
e-Selection
Web based testing, interview and job offering

(R) informs (C) that
did not qualify
e-selection process flowchart
Fail
Candidate (C) enter (C) Reads instructions TA give
resume and takes test disqualified
result to (C) Fail
Pass
Recruiter (R) screen (C) Takes second round
resumes of test
Pass Fail Hiring
(R) calls/emails (C) TA give (C) result
manager
and schedules test feedback and inform (R).
conduct
(R) then call (C) for
interview
interview
Test administrator Pass
(TA) conduct test (R) Schedule interview
with hiring manager (R) give job
offer to (C)
Source: Aswathappa. Human Resource Management, Text and Cases, 2008, p.2. 333
e-HR Activities
e-Performance Management
• Technology facilitates measuring performance of employees
• Make easy writing performance evaluation report and giving

performance feedback
• Softwares are available that make task of performance

appraisal more easy, spot poor performers, identify
competency gaps, and determine pay related to performance
• e-Compensation
• Use of internet and stand alone software to gather, store,
analyze and distribute compensation information
e-HR Activities
e-Learning
• Use of internet and intranet for training
• Large number of employees can be given training irrespective

of geographical location and at anywhere any time
e-learning advantages e-learning disadvantages

Trainee can proceed on their own Not all trainees may be ready for e-
time learning
Allow consistency in the delivery of Not all trainees have expertise and
training access to internet/computer
Incorporated built in guidance and Not appropriate for all types of
help for trainee to use when require training (for example leadership and
cultural change)
Relatively easy for trainer to update Requires cost and time to build e-
contents learning system
Can be used to enhances instructor No evidence for greater learning
led training
Summary
Nature of e-HRM
Implication of e-HRM
e-Recruitment
e-Selection
e-Performance Management
e-Compensation
e-Learning
Chapter 26
Evaluating HRM Effectiveness

Lecture Overview
• Nature of HR evaluation
• Need for HR evaluation
• HR evaluation framework
• Approaches to Evaluation
Nature of HR Evaluation
It is procedure to calculate value addition of HR practices to the
organization
Reasons to evaluate HR practices
• Promotion of HR functions through bottom line impact on cost

cutting measures and turnover
• Promoting change
• Highlighting key HR practices
• Evaluating performance of HR functions
• Contribution of HR department in realizing organizational

objectives
Evaluation Framework
Individual employee
performance
indicators
• Absenteeism Organizational
HRM performance
• Accidents
• Separation indicators
• Policies
• Principles • Motivation
• Commitment • Costs
• Practices • Quality
• Systems • Morale
• Productivity
• Market share
• Profits
• ROI
Group performance
indicators
• Interpersonal
relations
• processes
Approaches to HR Evaluation
Audit
Benchmarking
HRM evaluation Analytical

approaches
Balanced
scorecard
Qualitative
1) Audit Approach
HR audit evaluate overall effectiveness of HR functions like

financial audit
Benefits of HR audit
• Provide verifiable data on HR functions
• Clarifies HR functions responsibilities and duties
• Identifies HR problems
• Reduce HR costs
• Review and improve HRIS
• Improve status of HR functions

1) Audit Approach
Human Resource
Functions Comparison
Managerial Outside
compliance authority Human Evaluation
statistical Resource Report
Research
Employee
satisfaction compliance
Common areas of HR research

MBO • Wage survey
Corporate • Effectiveness of recruitment sources
strategy • Effectiveness of training efforts
• Survey of supervisor effectiveness
• Job analysis
• Job satisfaction survey
• Survey of employee needs
• Attitude survey toward reward
• Accident frequency
Adopted from: Aswathappa. Human Resource Management, Text and Cases, 2008, p. 628 333
2) Analytical Approach
• It focus on cost benefit analysis therefore also called utility
analysis
• Evaluation is more focus on economic terms and quantification

of results
• It is difficult to conduct
3) Qualitative Indices
• Behavioral indicators like employee loyalty, interpersonal skills,

teamwork, organizational commitment, attitudes, and morale
assist to evaluate HR effectiveness
4) Balance Score Card
• Developed by Kaplan and Norton in 1993
• Tool to evaluate strategies and control
• The name originate with the efforts to balance financial

measures/objectives with non financial measures/objectives
• BSC contains four dimensions financial performance, customer

service, internal business processes, and ability to learn and
grow
• HR evaluation focus on all four dimensions to measure and

evaluate the performance of HR department/manager not only
HR aspect like employee satisfaction and performance
5) Benchmarking
• Following “best practices” or standards in industry
• Benchmarking help managers to learn from best practices of

successful organization
• It also identify the gaps where HR need to focus or put more

emphasizes
• Xerox learn from L.L. Bean order fulfillment process and reduce
warehouse cost by 10 percent. GE adopted best management
practices
Prepare report Implement action
Identify HR practices
plans
for benchmark
Establish core team Analyze the data
Select benchmarking Collect the data

partners
Benchmark process
Adopted from: Aswathappa. Human Resource Management, Text and Cases, 2008, p. 631 333
Summary
Nature of HR evaluation
Need for HR evaluation
HR evaluation framework
Approaches to Evaluation
Thank You
HRM Policies and Practices
Course Code: MGT450
Dr. Saqib Yousaf

Introduction to Course
• Nature and Scope of HRM
• Challenges in HRM
• An Investment Perspective of HRM
• Human Resource Planning
• Job Analysis and Job Design
• Recruitment and Selection
• Inducting and Placing New Hires
• Performance Appraisal
• Compensation Management (components of remuneration,

incentives, benefits and services, fringe benefits, perquisites,
top executives remuneration)
Introduction to Course
• Health and Safe Environment
• Managing Separations and Rightsizing
• Industrial Relations
• Trade Unions
• Resolving Disputes
• Labour Laws in Pakistan
• International Human Resource Management
• Evaluating HR effectiveness
Grading System
• Assignment 10 MARKS
• Quizzes 10 MARKS
• Graded Discussion 05 MARKS
• Sessionals (I and II) 25 MARKS
• Final Exam 50 MARKS
• TOTAL 100 MARKS

Lecture Overview
HRM Definition
Scope of HRM
Difference between HRM and PM
Functions of HRM Human Resource Management

Department
HRM Functions and Objectives

Reading Material
Gary Dessler : Human Resource Management
Publisher National Book Foundation

CHAPTER 1
UNDERSTANDING THE NATURE AND SCOPE

OF HRM
Lecture Overview
•What is HRM?
•HRM Activities
•Scope of HRM
•Difference between HRM and PM
•HRM Objectives and Functions

HUMAN RESOURCE MANAGEMENT (HRM)
HRM defined as
“HRM is management function concerned with hiring , motivating and

maintaining people in an organization. It focuses on people in
organization”
(Aswathappa, 2008, p.5)

HRM: Peoples Dimensions In Organizations
• HRM: the application of management functions and principles

related to employees
• HRM functions applicable every where (not for profit and profit
driven organizations)
• Employees decisions are integrated
• Employee decision brings effectiveness/efficiency in

organization
• HRM includes all major activities in professional life of a worker
• All activities from employee entry to managing performance

and training until he or she leaves
HRM Activities
• HR Planning
• Job Analysis and Design
• Recruitment and Selection
• Training and Development
• Remuneration
• Welfare
• Safe and Healthy Work Environment
• Industrial relations
SCOPE OF HRM
1. Introduction to HRM
2. Employee Hiring
3. Employee Remuneration
4. Employee Motivation
5. Employee Maintenance
6. Industrial Relations
7. Prospects of HRM
Scope Of HRM
Introduction
Prospects of
HRM Employee
of
Hiring
HRM
Employee
Career Remuneration
Development HRM
Employee
Employee Motivation
IR Maintenance

The Semantics
• There two terms
1. PM (Personnel Management )
2. HRM (Human Resource Management )
• PM and HRM are different in scope and orientation
• HRM is broad concept
• PM and HRD (Human Resource Development) are part of HRM

Differences Between HRM and PM
Dimensions PM HRM
1.Employment contract Care full delineation of Aim to go behind contract
written contracts
2.Rules Importance of devising clear Can do outlook, impatience
rules with rule
3.Guide to management Procedures Business need
action
4.Behaviour referent Norms ,customs and practices Values and mission
5.Managerial task vis-à-vis Monitoring Nurturing
labor
6.Speed of decision Slow Fast
7.Management role Transactional Transformational leadership
8.Communication Indirect Direct
9. Prized management skills Negotiation Facilitation
10.Selection Separate ,marginal task Integrated, key task

11.Labour management Collective barraging contracts Individual contracts
12.Job categories and grade Many Few
13.Job design Division of labour Team work

14.Conflict handling Reach temporary truce Manage climate and culture
Differences Between HRM and PM
Dimensions PM HRM
15.Respect for employees Labour is used as tool which Peoples are used as assets to
is spendable and replaceable be used for the benefit of
organization
16.Shared interest Interest of organizations are Mutuality of interest

uppermost
17.Evolution Precedes HRM Latest in evolution of
subjects
18.Locus of control External Internal
19.Oganization principles Mechanistic Organic
Top down Bottom-up
centralized Decentralized
20.Key relations Labour Management Customers

21.Initiatives Piecemeal Integrated
22.Pay Job evaluation Performance related
23.Training and development Controlled accessed to Learning companies
courses

• The main objective of HRM is to ensure the availability of willing

and competent force to an organization
• There are other objective of HRM too
1. Societal objectives
2. Functional objectives
3. Organizational objectives
4. Personal objectives
HRM FUNCTIONS AND OBJECTIVES
Societal Objectives
Organizational
Objectives
Functional
Objectives
Personal
Objectives

1 Societal objectives
• Societal objectives of HRM make sure that the organization is

socially and ethically responsible
• Minimizing negative impact of societal demands on

organizations
• For example: EOE laws forces organizations to be ethical in

recruitment, to minimize the discrimination against hiring
based on ethnicity, race, and religion etc.
2 Organizational objectives
• To determine the role of HRM in organizational effectiveness
• Its purpose is to assist/serve organization
• HR department also serve other departments

3 Functional objectives
• To maintain department contribution in organizational

effectiveness
• HR department services must fit into the organizational

needs
4 Personal objectives
• To assist employees in achieving their personal/individual goals
• Maximum contribution to organization
• Personal objectives are achieved when employees are satisfied,

motivated and retained
• Satisfied employees excellent services excellent

organizational performance
HRM Objectives Supporting Functions

Societal Objectives Legal compliance
Benefits
Union-Management relationship
Organizational Objectives Human Resource Planning
Employee Relations
Performance Appraisal
Placement
Functional Objectives Performance Appraisal
Placement
Personal Objectives Compensation
Placement
Organization Of HR Department
Two issues
• HR department placement in overall setup
• Composition of HR department
Structure of HR
• Structure of organization depend on whether organization

is small or large
• In small organization there is no need to have separate
department to deals with activities relating to people
• Many small organizations even do not have personnel
managers
• Outsourcing to firms specializing in managing accounts,
pensions, funds and health & care
• Earlier, in personnel department employee with little knowledge

and competencies were placed
• The responsibility was to arrange tours, picnics, and

retirement/farewell parties
• Now focus has changed, HR department has key place in

overall organizations
• Contrary to small-sized company, In large scale organization

there is big department heading by Manager/Director
• HR in Small Scale Unit
Owner
Production Marketing Accounts Office

Manager Managers Manager Manager
Personnel
Assistant

• HRM in large scale organization
Chairman
Director Director Director Director

Production Finance R&D HRM
Deputy Deputy Deputy

Director Director Director
Recruitment Training Promotions

Composition Of HR and Personnel Department
Director HRM
Manager
Director Manager Manager Manager
Personnel
HRM HRD IR Administration
HR
Hiring Complaints Compensation PR Canteen
Planning
Source: Aswathappa, 2008, p.12 Welfare Transport Legal

Outsourcing HR Activities
Outsourcing or Subcontracting: Transfer activities to
specialist organizations
Reasons
• Restructuring
• Downsizing
• Growth in business
• Decline in business
Benefits
• Cost efficiency
• Access to expertise
Summary
•What is HRM?
•HRM Activities
•Scope of HRM
•Difference between HRM and PM
•HRM Objectives and Functions

CHAPTER 1
UNDERSTANDING THE NATURE AND SCOPE

OF HRM
Lecture Overview
Organization of HR Department
HR Policy
Secrets of Best Employers
Human Capital Management
Jobs and Career in HRM

HUMAN RESOURCE MANAGEMENT (HRM)
HRM defined as
“HRM is management function concerned with hiring , motivating and

maintaining people in an organization. It focuses on people in
organization”
(Aswathappa, 2008, p.5)

HRM: Peoples Dimensions In Organizations
• HRM: the application of management functions and principles

related to employees
• HRM functions applicable every where (not for profit and profit
driven organizations)
• Employees decisions are integrated
• Employee decision brings effectiveness/efficiency in

organization
• HRM includes all major activities in professional life of a worker
• All activities from employee entry to managing performance

and training until he or she leaves
Two issues
• HR department placement in overall setup
• Composition of HR department
Structure of HR
• Structure of organization depend on whether organization

is small or large
• In small organization there is no need to have separate
department to deals with activities relating to people
• Many small organizations even do not have personnel
managers
• Outsourcing to firms specializing in managing accounts,
pensions, funds and health & care
• Earlier, in personnel department employee with little knowledge

and competencies were placed
• The responsibility was to arrange tours, picnics, and

retirement/farewell parties
• Now focus has changed, HR department has key place in

overall organizations
• Contrary to small-sized company, In large scale organization

there is big department heading by Manager/Director
• HR in Small Scale Unit
Owner
Production Marketing Accounts Office

Manager Managers Manager Manager
Personnel
Assistant

• HRM in large scale organization
Chairman
Director Director Director Director

Production Finance R&D HRM
Deputy Deputy Deputy

Director Director Director
Recruitment Training Promotions

Composition Of HR and Personnel Department
Director HRM
Manager
Director Manager Manager Manager
Personnel
HRM HRD IR Administration
HR
Hiring Complaints Compensation PR Canteen
Planning
Source: Aswathappa, 2008, p.12 Welfare Transport Legal

Outsourcing HR Activities
Outsourcing or Subcontracting: Transfer activities to
specialist organizations
Reasons
•Restructuring
•Downsizing
•Growth in business
•Decline in business
Benefits
•Cost efficiency
•Access to expertise
HR POLICIES AND PRACTICES
• A policy is plan of action
• HR policies need to ensure consistency and

uniformity in treating people (guideline to course of
action)
• It motivates employees and build loyalty
• Benchmark to evaluate performance

HR POLICY DOCUMENT
1 HR Philosophy How management/organization views

human resource and what value it
associates to the employee development.
2 Employment Manpower planning, recruitment,

Policy probation, promotion, transfer,
termination, retirement policy etc.
Work scheduling, overtime, duty hours,
holidays.
3 Compensation Pay, benefits, leaves, contributory

provident fund, gratuity, GP fund,
retirement plans, medical facility, social
security, house rent/hiring facility etc.
4 Performance Performance appraisal procedure,

evaluation & methods, and guidelines for training and
Employee development of employees.
training
HR POLICY DOCUMENT
5 Community Social /Community activities, Corporate

Relationships Social Responsibility, Relationship with
project stakeholders.
6 Legal and Ethical Code of conduct, work ethics, norms, values,

Issues information disclosure policy, privacy of
personal record and official
communications, equal employment
opportunity policy, outside work policy etc.
7 Occupational Smoke free work place, workplace facilities

Health and Safety (ergonomics), Health and safety policy and
guidelines
8 Disciplinary Procedure for initiating disciplinary

Actions proceedings, opportunity of fair trail and
hearing, right of appeal, grievance handling
procedure, code of conduct.
Task
• Browse websites of different organizations and

analyze their HR policy documents. Review critically
differences and similarities in these policy manuals
SECRETES OF BEST EMPLOYERS
• Effected and committed leadership
• Management of talent
• Spotting and attracting talent
• Setting high goals
• Coaching and training
• Effective appraisal and reward system
• Building skills for future
• Building growth into every job

HUMAN CAPITAL MANAGEMENT(HCM)
HRM is replaced by HCM
• HRM is job of one department where as HCM

responsibility of every employee
• HCM attempts to measures cause and effect

relationship between different programs and policies
• Identify and develop future opportunities for

employees (matching expectations with skills)
• Continuously acquiring new skills
• Still challenges ahead

JOBS AND CAREER IN HRM
• Generally three positions of HR
• HR Specialist
• HR Manager
• HR Executive
• HR Specialist
• Entry level position
• HR specialist included in roles like interviewer ,

compensation analyst, and trainer
• HR specialist provide HR services
• Specialist does every thing for example orientation program,

interview applicant, negotiation for contract and wage
structure
•
• HR Manager
• HR manager administrate and coordinate activities, programs, and

policies
• Top ranking person in HR department
• Expected to have knowledge of all areas of HRM
• Advise and oversee HR line managers (to make sure

implementation of HR policies)
• Translate organizational strategy into HR policies

• HR Executive
• Top level HR executive (Vice President/DG)
• Responsibilities
• To link HR corporate strategy with HRM
• Considering HR limitations/opportunities
• Establishing HR Policies
Summary
Organization of HR Department
HR Policy
Secrets of Best Employers
Human Capital Management
Jobs and Career in HRM

CHALLENGES IN HUMAN RESOURCE
MANAGEMENT
Mello, J. A. (2001): Strategic Human Resource Management,

Cengage Learning, India Edition.
Lecture Overview
Impact of Technology
Workforce Dynamics and Demographic

Changes
Diversity Management
FACTORS EFFECTING SHRM
• Major factors affecting strategic HRM are
• Technological Advancement
• Demographics and Diversity
• Globalization
IMPACT OF TECHNOLOGY
• An organizations technology is the process by which inputs from an

organization environment are transformed into outputs
• It includes tools ,machinery ,equipments ,work procedure and

employee knowledge and skill
• Advancement in technology and workforce critical to sustain

competitive advantage
• With the introduction and implementation of new technology, skills

and knowledge of employees are also changing
Impact of Technology
Source: Mello, J. A. Strategic Human Resource Management, 2011, P. 45.

ISSUES FOR INTEGRATING NEW TECHNOLOGIES

HR ISSUES AND CHALLENGES RELATED TO
TECHNOLGY
• Related to technology there are three areas of concern for HR
1. Telecommunication
2. Work place monitoring and Surveillance
3. e-HR
TECHNOLGY
Telecommunication
• Allow employees to work from home
• Popular in both small and large-sized organizations
• Agreement between employees and supervisors
• Management system provide discretion and flexibility in doing job
• In USA, tremendous growth in number of employees working from

home
– In 1990, 3.4 million workers
– Beginning of 2000, 19.6 million workers

TECHNOLGY
Telecommunication
 Decrease in Pollution, saving on fuel cost
 Savings on relocation plan
 Flexibility in hiring
 Reduce real estate costs, higher in urban areas
 Research reveals increase in productivity

TECHNOLGY
• Telecommunication
• Issues affecting success of telecommuting programs
– Performance measurement and monitoring
– Deciding which employees will be offered
– Equipment expense
– Managers are uncomfortable

TECHNOLGY
• Employee Surveillance and Monitoring
• Internet technologies have resulted into increased productivity
• Issues originating regarding use of internet for personal activities
• Number of organizations are using electronic monitoring and

surveillance system to track activities of their employees
TECHNOLGY
• It is estimated that more than 80% of large employers using

monitoring and surveillance technology
– Internet usage
– E-mails
– Computer files
– Voice-mail
– Telephone usage
• In general employees have very limited privacy rights

TECHNOLGY
• Increasing work demand, difficult to draw line between work and

personal life
• Monitoring system raise concerns for privacy of employees
• Decrease moral and loyalty as well
• Electronic Communications Privacy Act (ECPA) deals with privacy

issues in electronic communication at workplace
• a) Business Purpose Exception
• b) Consent exception
TECHNOLGY
e-HR
• Advancement of technology has helped HR to deliver

transactional services online.
• Allow to focus more on strategic issues
• Payroll (online transfer)
• Employee benefits
• Scheduling
• Recruiting
• Training
• Career development
TECHNOLGY
• Ethical behavior
• Recent series of corporate bankruptcies, scandals and business
meltdowns has reinvigorated the discussion and debate about ethical
behavior in organization
• There are numerous dimensions of the employment relationship where
ethical decision need to be made by management

WORK FORCE DEMOGRAPHICS AND DIVERSITY
• Generational Diversity
• Positive aspects of older workers
– As productive or more productive than younger workers
– Have more organizational loyalty than younger workers
– Possess broader industry knowledge & professional networks
– Self sufficiency
• Negative aspects of older workers
– Perceived resistance to change by older workers.
– Increased health-care costs for senior workers
– Blocking advancement opportunities for younger workers
– Higher wage & salary costs for senior workers

WORK FORCE DEMOGRAPHICS AND DIVERSITY
• Generation “X” (mid 1960 to late 1970s)
– Have life-long exposure to technology & constant change
– Seek self-control, independence, personal growth,

creativity
– Not focused on job security or long-term employment
• Generation “Y”: “Baby Boom Echo” (born after 1979)
– High comfort level with technology
– Global & tolerant outlook on life (role of media)
– Highly entrepreneurial
– Less employer loyalty, work from home, project work

NEW EMPLOYEE/WORKPLACE DYNAMICS
• Emphasis on management of professionals
– Establishment of separate career tracks
• Technical/Professional, Managerial /Administrative
– Use of project teams as tool to deal with technical reporting of

technical professionals
• Young Generation: Less employee loyalty, more loyal to self
– Staying with employers for shorter periods; demanding more

meaningful work & involvement in organizational decisions
(need effective retention strategies)
NEW EMPLOYEE/WORKPLACE DYNAMICS
• Increased personal & family dynamics effects
– More single-parent families, dual-career couples, &

benefits for partners
• Increased nontraditional work relationships
– Part-time, consulting, & temporary employment,

flexibility
– Outsourcing & entrepreneurial opportunities

INDIVIDUAL DIMENSIONS OF DIVERSITY

MANAGING WORKPLACE DIVERSITY
• Understanding & appreciating diversity
– Critical to target ethnic & minority groups
– Having diverse workforce in organization
– Make ensure that hiring & promotion decisions are unbiased by

person differences
• Diversity management programs or initiatives
– Must be integrated with organization’s mission & objectives
– Identify diversity benefits to organization
– Appropriate diversity programs contingent on organization, its

people, mission & culture.
– Decide which diversity aspects to include and which to exclude

STRATEGIC MANAGEMENT OF DIVERSITY
• 1 Determine why diversity is important
2 Articulate how diversity relates to mission & strategic objectives
• 3 Define diversity & determine how inclusive its efforts will be
• 4 Make a decision as to whether special efforts should be extended

to attract diverse workforce
• 5 Assess how existing employees, customers, & other

constituencies feel about diversity
• 6 Determine specific types of diversity initiatives that will be

undertaken

FIVE CHALLENGES TO VIRTUAL TEAM SUCCESS
• Virtual teams:
– Groups of people who work interdependently with shared

purpose across space, time, & organization boundaries using
technology to communicate & collaborate
• Types of virtual teams
– Global virtual teams
– Teams assigned to accomplish specific projects
– Cross-functional teams
• Challenge: Recognize obstacles confronting teams that are both

cross-functional & virtual
Summary
1 Impact of Technology
i) Telecommunication
ii) Workplace Monitoring
iii) eHR
2 Workforce Demographic Changes and

Workplace Dynamics
3 Diversity Management Initiatives

AN INVESTMENT PERSPECTIVE OF HUMAN
RESOURCE MANAGEMENT

Lecture Overview
 Employee as Asset
 The Value of Employees
 Investment Perspective
 HR Value Chain
 Measuring Human Capital
 Mercer Human Capital Model
 Factor Influencing Investment Perspective

RESOURCE MANAGEMENT
• Employees as “Assets”
– Decision made by employees critical for success of organization.
– Competitive advantage does not come from innovative product,

efficient and superior services, marketing strategy, financial
management or state-of-the-art technology.
– Having appropriate system for attracting, motivating, and

managing human resources determines competitive advantage of
any organization.
RESOURCE MANAGEMENT
• Employees something of value and worth
– Strategic view of HR consider employees as “asset "and develop

appropriate programs to invest on this important asset
– Successful and most competitive organizations realize that

employees have value like other resources
– Strategic view assist to plan investment on acquisition and

management of human resources considering possible risk and
return
ADOPTING AN INVESTMENT PERSPECTIVE
• Human Resources can not be duplicated
• Investment perspective of human resource believe that physical

assets such as production facilities, products and services, process,
and technology can be imitated by competitors while unique
combination of human resource capabilities can not be duplicated
• Thoughts process, decision making process, and ability to analyze

complex data and environment are owned by individual employees
• If organization's main strategic objective is innovation: must consider

human resource as investment.
SOURCES OF EMPLOYEE VALUE
The value of employees come from their
1 Technical Knowledge (market, customers, process, and

environment)
2 Ability to Learn and Grow (openness to new ideas, acquisition of

knowledge and skills)
3 Decision Making Capabilities
4 Motivation
5 Commitment
6 Team work (Interpersonal skills, leadership skills)

ADOPTING AN INVESTMENT PERSPECTIVE
• Considering the risk and return on possible expenditures related to

acquisition and development of human assets allows an organization
to consider how current expenditures can best be allocated to meet
long term performance goal. (p. 5)
• Example: New Training Program:

• Cost of training in terms of money as well as opportunity cost (time
away from job)
• Benefits: Increased performance, loyalty and motivation
• Benefit – Cost = Decision for New Training Program
• Risk: Highly Skilled and Trained manpower have market value
•
HR Value Chain
• Causal link between HR practices and an organizations

market value
Employee Organizational Financial Market based

outcomes outcomes Outcomes
outcomes
•Expenses
•Attitudes Productivity •Revenues
•
•Behavior
•Quality •Profitability Stock price
•
Source: Mello (2001, p.8)

Organizational Resources/Assets
Easy to Financial Equity
Measure Investments/Securities
Accounts Receivables
Physical Plant
Land
Equipment
Raw Materials
Market Goodwill
Branding
Customer Loyalty
Product Line
Distribution Networks
Patents, Trademark
Operational Management Practices
Structure of Work
Technology
Human Knowledge
Skills
Work
habits/Motivation/Personality
Difficult to Personal Relationship
Measure Education
Source: Mello (2001, p.7)

MEASURING HUMAN CAPITAL
• HR practitioners striving to develop metric to measure the value of HR

relative to market value and profit
• 90% of Fortune 500 organizations in USA, Canada, and Europe

evaluate their HR practices on three metric
1. Employee retention and turnover
2. Corporate moral and employee satisfaction
3. HR expenses as a percentage of operational expenses
This approach fails to conceptualize the HR contribution in share holder

value and profit
• The staffing metrics focus and treat employee as expense

rather than asset
• Accounting valuation method focus on current and past value

of assets whereas human capital asset value lies in its ability to
face and react to challenges coming ahead
• The challenge is to develop financial metrics for value added

human capital investments initiatives for senior managers
• Another important metric for measuring human performance

was developed by Mercer
• Mercer Model Six Steps
Mercer model identify the process of measuring human performance and

documenting value created by specific initiatives that create bottom
line effect
1 Identify a specific business problem that HR can impact
2 Calculate the actual cost of the problem to the organization
3 Chose the HR solutions that addresses all or part of the problem
4 Calculate the cost of the solution
5 six to 24 months after implementation, calculate the value of the

improvement for organizations
6 Calculate the specific return on investment (ROI) metrics
Mello, 2001, p.9.

ADAPTING AN INVESTMENT PERSPECTIVE
• Measuring Human Assets /capital at Dow chemical
– Down capital has been a leader in forging the frontiers of

measuring human capital
– Down has developed a reliable measure to help calculate employee

current and anticipated future contribution for the financial goals
of business
– A projected being test is EHCR “expected human capital return”
– EHCR involve calculation of breakeven point of investment above

salary and additional salary such as recruiting and training
expenses.
ADAPTING AN INVESTMENT PERSPECTIVE
Measuring Human Assets /capital at Dow chemical
– It evolves calculation of the “value created” in an employee based

on project he worked on
– It evolves skills and knowledge of each employee relative to net

present value of the specific project
– It help managers to match employee talent with specific project

needs, identify employee development opportunity, and creating
more efficient and effective means for project staffing
– Its in the pilot stage with validation studies in progress

FACTORS INFLUENCING HOW “INVESTMENT
ORIENTED” AN ORGANIZATION IS
Five factors that determine organization's investment

orientation
Management utilitarianism
value
Nature of
employee skills
Attitude towards Ability of

the Risk outsourcing
Management Value
• What value management places on value of its human resource

relative to other capital assets like brand names ,distribution channel,
facilities, plant, equipment and tools etc.
• Senior management values and actions decide organization

investment in assets
The extent to which organization is investment oriented on human asset

can be known through these questions
1 Does the organization see its people as being central to its mission
strategy ?
Management Value
2 Does the both company wide and with in individual business units
support the value of human assets and their role in achieving
goals?
3 Does the management philosophy of the organization encourage
the development of any strategy to prevent the depreciation of
human assets ,are they considered replicable and amortizable as
physical assets?
• Attitude Towards Risk
• Universal principal higher a risk higher a return

• In general, investment on human resource is very very risky
• Physical assets are property of company whereas employees
are not owned by it
• If organization view investment on human resource necessary
for realizing strategic objectives they often develop strategy to
have ownership of employee services such as long term
employment, long term benefits, opportunities for personal and
professional development
Nature of Employee Skills
• Employee skills that are specific and can not be applied to

other organization are less risky
• Customized software knowledge(UBL using Unisoft)
• Marketable skills applicable and demand in other organizations
• Need to apply retention strategy (ESOP)

Utilitarianism Approach
– Cost Benefit Analysis(investment from utility perspective)
– In this approach all costs and benefits are tried to quantify
– For example: Development of Performance appraisal system
calculated based on direct cost and time spent on this initiative
– Generally investment on human resources and output are difficult
to quantify
– Its very difficult to access level of services required to prevent
customers from moving to competitors/or maintain their loyalty.
Any additional service has no impact on financial performance
– Impact of employee moral program difficult to quanitfy, therefore,
organization reluctant to make investment
Ability To Outsource
• Cost effective outsourcing facility is available
• An investment oriented company make decision on investment

based on sustainable competitive advantage
• Whether outsourcing provide more saving,effeciency, and

access to expertise
Conclusion
• Organization invest in resources where they will have higher and

visible return like investment in marketing, advertising, product
development ,physical expansions and mergers/acquisitions.
• For example: McDonald put little emphasis on employee development

and more focus on product development, advertisement, expansion.
• An investment perspective approach is often avoided as employee

may not remain with the organization for longer time period
• Most organizations measure performance on short term criteria
• Investment on human resource/asset is long term

CONCLUSION
• Organization need to develop effective strategy. Employee stock

ownership program
• Employee stock ownership is beneficial for employee commitment and

stay with organization
• When organization gains competitive advantage through its

employees when they invest on this important resource than very
difficult for competitors.
• Investment on human asset is long term and risky but obviously it is

source of competitive advantage
THE EVOLVING STRATEGIC ROLE OF HUMAN RESOURCE
MANAGEMENT

Lecture Overview
•Strategic HRM
•Model of SHRM
•Changing Role of HR Professional
•Ulrich Model
•Lengnick Hall and Lengnick Hall Model
•Society for Human Resource Management Competencies
•Lepak and Snell Employment Model
•Traditional Versus Strategic HR
•Strategic HRM and Organizational Learning

Lecture Overview
• Barriers to SHRM
• Outcome of SHRM
THE EVOLVING STRATAGICROLE OF HUMAN RESOURCE
MANAGEMENT
Strategic Human Resource Management

• “Involves development of consistent, aligned collection of
practices, programs, & policies to facilitate achievement of
strategic objectives” (Mello, 2011, p. 156)
• Mindset & practices away from “personnel management” &

focusing on strategic issues instead of operational issues
• HR programs and policies are made and integrated in

perspective of mission, objectives, and strategy
• Writing down HR strategy facilitates involvement & convincing

senior executives & other employees
MODEL OF STRATEGIC HR MANAGEMENT
Source: Mello, 2011

CHANGING ROLES OF HR PROFESSIONALS
Ulrich Model
Mello, 2011, p. 157

CHANGING ROLES ASSUMED OF HR PROFESSIONAL
 Strategic perspective focus more on strategic

contribution of employees than performing traditional
HR functions
 What HR delivers not important what it does
1 Strategic Partner
 Partner in strategy development
 Identify areas where change is needed to execute strategy
2 Administrative Expert
 In past focus remain on traditional roles, rule making and
policy development
 Need to reinvent new way to perform such traditional
activities. For example: Benefit and compensation system,
career development Plans
3 Employee Champion
 Responsible to make sure that employees are committed

and motivated
 Assist line managers to identify the causes of low morale
and employee motivation techniques
 Advocate of employees
4 Change Agent
 Assist build organization capability to identify and capitalize

on future opportunities
 To ensure that change initiative are well define, understand,
and delivered
 Overcome resistance to change (change in culture)
Strategic perspective focus more on strategic contribution

of employees than performing traditional HR functions
What HR delivers not important what it does
1 Strategic Partner
 Partner in strategy development

 Identify areas where change is needed to execute strategy
2 Administrative Expert
 In past focus remain on traditional roles, rule making and

policy development
 Need to reinvent new way to perform such traditional
activities. For example: Benefit and compensation system,
Career development Plans
HR ROLES IN KNOWLEDGE-BASED ECONOMY
• Lengnick Hall and Lengnick Hall Model
1 Human Capital Steward
– Create environment where employee work with commitment
2 Knowledge Facilitator
– Knowledge sharing culture
– Employee share information, teach and learn from colleagues
– Rewarding knowledge share behavior
3 Relationship Builder
– Building Team work, Cross functional teams
4 Rapid development Specialist
– Organizational culture and HR system that are flexible enough to adapt to

change
SHRM CRITICAL COMPETENCIES
• Society for Human Resource Management (SHRM) and Global

Consulting Alliance Model
– Strategic Contribution - Strategy development and implementation
– Business Knowledge - understanding organization functions
– Personal Credibility – Values in programs & policies
– HR Delivery - serving employee through effective & efficient

programs
– HR Technology - using technology to improve organization’s

people management strategy
LEPAK & SNELL’S EMPLOYMENT MODELS
Considering Employment Perspective
Source: Mello, 2001, p 160

TRADITIONAL HR VERSUS STRATEGIC HR
Strategic HR As Organizational Learning
• How HR management systems can contribute to development of

organizational knowledge
– To attract & select individuals with knowledge
– Internal labor contribute to the development of firm specific

knowledge and learning
– Cross-functional & inter-organizational teams can be utilized

Strategic HR As Organizational Learning
• HR systems can support & enhance knowledge sharing and

development by
– Apprenticeship & mentoring
– Cross-functional teams
– Stimulate & reward information sharing
– Provide free access to information
– Job rotations
Knowledge Institutionalization
• Walsh & Ungson’s five ‘storage bins’ in which organizational memory

can reside
– Individuals (assumptions, beliefs, & cause maps)
– Culture (stories, myths, & symbols)
– Transformations (work design, processes, & routines)
– Structure (organizational design)
– Ecology (physical structure & information systems)
• Institutionalized knowledge tends to be firm specific, socially complex,

& causally ambiguous
UNDERSTANDING HRM-PERFORMANCE LINKAGES
• Systems view considers overall configuration and aggregation of HRM

practices
• Strategic perspective aim to create “fit” between HRM practices &

organization’s competitive strategy
• HRM practices are associated with organizational performance &

competitive advantage
• Content
– Set of practices adopted
– Ideally driven by strategic goals & values
– No single most appropriate set of practices for particular

strategic objective
– Different sets of practices

Process
To create unambiguous situations and messages about appropriate

employee behavior
HRM systems should have:
– Distinctiveness
– Consistency
– Consensus
Understanding HRM-Performance Linkages
• Distinctiveness
– Visibility
• Degree to which practices are readily observable
– Understandability
• Lack of ambiguity & ease of comprehension of practice content
– Legitimacy of authority
• Leads individuals to confirm to performance expectations as

formally sanctioned behaviors
– Relevance
• Situation is defined that individuals see it as relevant to

important goal
• Consistency
– Instrumentality
• Unambiguous perceived cause-effect relationship between

system’s desired content-focused behaviors & associated
employee consequences
– Validity
• HRM practices must display consistency between what they

expect to do & what they actually do
• Consensus
– Agreement
– Fairness
• Composite of employees’ perceptions of whether practices

adhere to dimensions of justice
Organization Culture Questionnaire
– How is performance defined, measured & rewarded?
– How are information & resources allocated & managed?
– What is operational philosophy of organization with regard to risk-

taking, leadership, & concern for overall results?
– Does organization regard human resources as costs or assets?

INTERPRETING RESULTS & FORMULATING STRATEGIES
• Tendency to try to identify an “ideal” culture
• Not clear than any one culture will be effective for all organizations
• Strategy consists of interrelated functional components that must be

carefully integrated to form an effective whole:
– Selection & staffing
– Organizational & human resource development
– Rewards
Problems and Challenges of SHRM
• Performance appraisal and compensation based on current

performance
• HR managers lack of ability to understand challenges and

opportunities in other functional areas
• Top management fail to realize the overall contribution HR can

make in overall organization strategy (HR is routine and
inflexible job)
• Functional managers do not view themselves as HR manager

(concerned with technical aspects of job)
• Fail to quantify HR cost and benefits (Team building)
• Strategic HR need drastic changes in way of doing job,
practices, and culture etc (people tendency to resist to change)
Outcome of Strategic HR
Increased performance Customer and Employee Satisfaction

Enhanced Share Value
• Management of Staffing, retention, and turnover through

selection of employees
• Investment perspective of human asset and cost effective
utilization
• Integrated HR policies and practices based on cooperate
strategy
• Facilitation of change
• Focus on customer needs and quality
Mello, 2011, p.167
Chapter 5
ANALYZING WORK AND DESIGNING JOBS

Lecture Overview
- Nature of Job Analysis
- Job Analysis Process
- Job description and job specification
- Job Design
- Factors Affecting Job Design
- Job Design Approaches

Nature of Job Analysis
- Job: Job is bundle of related tasks
- Work: Synonymous of job and defined as “physical and

mental activity that is carried out at a particular place and
time, according to the instructions, in return for money”
- Monetary reward is mandatory for performing of task to

be said work in business organization context
- Psychological perspective is concerned with employee

behavior
- Sociological perspective is concerned with structural

and contextual factors affecting individual's
experience at work (such as leadership, communication
system, power and politics, group dynamics etc)
- The nature of work and how job is organized affect other

human resource functions/activities
Job Analysis
- Job Analysis is the process of collecting data and
information about a job and result of job analysis is job
description and job specification
Job Analysis
Job Description Job Specification

Job title Statement of individual
Qualification necessary to
Location do job
Job Summary Education
Duties Experience
Reporting Training
Authority Initiative
Machines and tools Physical abilities
Materials used Psychological abilities
Supervision/Subordinate Communication skills
Working conditions Responsibilities
Hazards Sensory demands
Adopted from : Aswathappa, 2008, p. 106

The Process of Job Analysis
Strategic choices
Gather Information Benefits/Uses of Job Description

And Job Specification
Personnel planning
Performance appraisal
Process Information Hiring
Training and development
Job evaluation
Compensation
Health and safety
Job Description Employee discipline
Work scheduling
Career planning
Job Specification
Source: Aswathappa, 2008, p. 107

1 Strategic Choices: The decision organization is required
to make in job analysis
I) The level of employee involvement

– Too much involvement result into bias information
– Too little affect quality of information
ii) The level of detail of job analysis

– If job analysis is base for all HR decisions then
detailed
– If objective is to identify general duties and clarify

rules and responsibilities of job holder then less
detailed
iii) Past, present or future oriented job analysis

– Traditional job analysis tend to focus on how job was
carried out in past and being done at present
– If technological changes or sudden shifts in

environment expect to change the job then future
oriented approach is best
iv) Timing and Frequency

– New organization
– New job created
– Job is changed
– New remuneration plan
– Job incumbent feel inequities
v) Sources and tools for gathering job data

– Job holder
– Job expert
– Supervisor
– Job analyst
2 Information Gathering
- Type of data to be collected
- Method to be used (observation, questionnaire,

interviews, diary method, check list)
- Who should collect job data (job analyst, supervisor,

job holder)
3 Information Processing
- Job description
- Job Specification
Job Design
- Job Design: “Organization of tasks, duties and

responsibilities into a unit of work to achieve certain
objectives”
i) The specification of individual tasks
ii) The methods to be used to perform task
iii) The combination of tasks into specific jobs to be

assigned to individual
- The job design should balance organizational

needs/requirements and individual needs of job holder
Job Design
- Work Specialization and Division of Labour: The degree to
which the tasks are subdivided in separate jobs
- Earlier job design revolve around to simplify the task or

breaking whole job or tasks into specific tasks to be
performed by individual
- In early 19th century Henry Ford is credited with

manufacturing automobiles on assembly line
(Division of Labour)
- Advantages: Increase productivity, more trained, increased

quality, shorter production time, less supervision, easy
hiring
- Disadvantages: Employee dissatisfaction, wastage of

organizational resources (salary budget), boredom, less
flexibility and freedom, under utilization of skills
- Well designed job essential for attracting qualified and

motivated individual and retaining them.
Factors Affecting Job Design
Feedback
Organizational
Factors
Environmental Productivity and

Job Design
Factors Satisfying jobs
Behavioural
Factors

1 Organizational Factors
i) Characteristics of Tasks: Organizing a number of tasks in a job or

group of jobs,
Complexity of job (number of variety of tasks to be
performed, range and scope of decision, difficulty in predicting
outcomes)
Task Elements
a) planning (course of action, timing, and resources)
b) executing (carrying out the plan)
c) controlling (monitoring and taking corrective action)
- Integrated job contains all three elements of each task

involved in a job
ii) Work Flow: The nature of product and service determine flow of
work (for example: in automobile manufacturing)
Iii) Ergonomics: Designing jobs in such way that it facilitates worker

to perform work and balance/fit between the physical abilities and
characteristics of individual and tools/equipments
iv) Work Practices: set way or predetermined way of performing work
2) Environmental Factors:
I) Employee Abilities and Availability: who will actually do work

(balance between abilities and availability of person who will
perform work)
ii) Social and Cultural Factors: Job design meet expectation of

individual and society
3 Behavioural Element: Deal with human needs and to satisfy them

Person inspired by higher level need like to work for job having
following characteristics
3 Behavioural Element: Deal with human needs and to satisfy them
Person inspired by higher level need like to work for job having
following characteristics
I) Feedback: Meaningful feedback on performance
ii) Autonomy: Authority to make decisions on task and take

responsibility of what is done. It increases self actualization and
self esteem needs
Iii) Use of Abilities: Job should be designed in such way that it take
use of individual abilities
iv) Variety of tasks

Job Design Approaches
high
Job enrichment
Job enlargement
Impact
Job engineering
Job rotation
low
low complexity high

- Job Rotation: Moving employee from one job to other to add

variety and reduce boredom. After some time employee move to
other at same level
Disadvantages: Disturb work, training cost, de-motivate ambitious

and motivated employee
- Job Engineering: focus on tasks to be performed, workflows

among employees, methods to be used, layout of workplace,
interdependencies among tools and employee
Example: Specialization of labour,
- Job Enlargement: Adding to some extent similar tasks to be

performed in a single job (example: auto mechanic change oil,
changing transmission fluid)
I) Task variety ii) Meaningful work modules iii) Ability utilization iv)
Worker pace control v) Performance feedback
- Job Enrichment: Adding more motivators to make job more

exciting and challenging
Giving employee more freedom, autonomy, and control over their job
Characteristics of Enriched Jobs
Direct Feedback
Personal Client
Accountability relationship
Enriched jobs Learning

Authority
Control over Scheduling of

resources Unique work
Experience
- Job Enrichment:
More responsibility and autonomy (vertical enrichement0
Adding variety of tasks (horizontal enrichment)
Feedback Knowledge of results

Outcome
Satisfaction
Motivation
Self control Performance
Autonomy Low absenteeism
Self esteem
Low turnover
Job involvement
Significance,
Meaningfulness
identity,
achievement
Skill development
- Job Enrichment
Issues to Think
- Enriched is relative term
- Enriched job creates Snow Ball effect
- Assumes that worker like responsibility
- Jon enrichment may have negative short term effect
- Job enrichment may become static

Summary
- Nature of Job Analysis
- Job Analysis Process
- Job description and job specification
- Job Design
- Factors Affecting Job Design
- Job Design Approaches

Chapter 6
RECRUITING HUMAN RESOURCES

Lecture Overview
- Recruitment
- Purpose of Recruitment
- Factors Influencing Recruitment
- Recruitment Process
- Source of Recruitment
- Yield Ratio
- Realistic Job Preview

Recruitment
- Recruitment is defined as “the process of searching for and

obtaining applicant for jobs, from among whom the right
people can be selected” (p. 144)
- Theoretically recruitment process ends when job applications

have been received
- In practice it goes further to screening applications to filter

those applicants who are not eligible for or suitable for job
- The term recruitment is often described or understood as

complete process of employee hiring
- Recruitment and selection are two different processes

Purpose of Recruitment
- Increase pool of potential job candidates
- Increase success rate of the selection process
- Make ensure the right people is selected against vacant

position (minimizing probability of leaving organization in
case of selection of wrong or misfit candidate)
- Meeting legal and social obligation of workforce composition
- Identify and encouraging potential candidates/job applicants
- Evaluating the effectiveness of available sources and

techniques of recruitment
Factors Influencing Recruitment
Internal Forces
External Forces
Recruitment policy
Supply and demand
HRP
Unemployment rate
Recruitment Size of the firm
Labour market
Cost
Political-legal
Growth and expansion
Image

Recruitment Process
Personnel Job Employee

Planning Analysis Requisition
screening
Searching
Recruitment
Job Vacancies Message Applicant Potential
Planning
Media Pool hires
Strategy
Development
Where Applicant
How Population Evaluation
When and controlling

Recruitment Process
1 Recruitment Planning
- Number of applicants
- Types of Applicants
2 Strategy Development
- Make or Buy Decision
- Technological Sophistication
- Where to look (international, national, regional,

local market)
- How to look (method and sources)
- When to look (Time lapsed data (TLD) average

time elapsed with key decision points in
recruitment)
Sources of Recruitment
Method and Sources of Recruitment

Internal Sources External Sources
Present Employees Advertisement

Employee Exchanges
Employee Referrals Campus Recruitment
Walk-ins write-ins
Former Employees Contractors
Displaced Persons
Previous Applicants Radio and Television
Competitors
E-Recruiting
Recruiting Agencies
Source of Recruitment
1 Internal Recruitment
- Present Employees (Promotion and transfer)

Advantages
- Builds morale
- Encourages competent employees
- Good selection
- Cheaper way
- Familiar with organization
Disadvantages
- Outside competent candidates
- Inbreeding
- Employee Referrals
Advantages
- Low cost
- Employee know job requirements and person
Disadvantages
- Organizational Politics
1 Internal Recruitment
- Former Employees (Performance is known, aware

with organizational culture)
- Previous Applicants (best when to fill in job quickly,

cost effective)
2 External Recruitment
- Advertisement: The most popular method
- Blind ad (no identification of company)
- AIDA (attention, interest, desire, action)
Content of Job Advertisement

I) job content ii) working conditions
iii) location of job iv) compensation
v) job specification vi) to whom apply
Internal Sources
Advantages Disadvantages
Less costly Candidates current work may be
affected

Better knowledge of skills and Old concept of doing
performance
Morale and Commitment Organizational politics
Awareness of culture Morale problem for employee not
promoted
External Sources
External Sources
New skills and new experience Costly and time consuming
Compliance with laws Right candidate rejected (false
positive error) wrong candidate
selected (false negative error)
Scope for resentment and jealousy Person and organization misfit
reduced
Yield Ratio
Job Acceptance
20
Job Offer 3:2

30
4:3
Invited for interview
40
5:1
Invited for test
200
10:1
Initial contacts 2000

Recruitment Process
Evaluation and Controlling
- Recruitment process is very expensive and crucial
- Salaries of recruiters
- Time spent on preparing job analysis data
- cost of overtime and outsourcing during vacancies

unfilled
- Cost of recruiting
Evaluation of Recruitment Process
- Number of suitable candidates
- Number of application received
- Performance and retention of selected candidate
- Cost of process and time lapsed
- image projected
Traditional and Realistic Job Preview
Traditional Procedures Realistic Procedures
Set job expectations high Set job expectations realistically
Job may or may not be attractive

Job is viewed as attractive
Depending on person needs
High rate of job offer/acceptance Some accept some reject
Work experience does not Work experience match

Match with expectation expectation
Dissatisfaction, thought for High job survival, satisfied

quit job

Summary
- Recruitment
- Purpose of Recruitment
- Factors Influencing Recruitment
- Recruitment Process
- Source of Recruitment
- Yield Ratio
- Realistic Job Preview

Chapter 7
SELECTING HUMAN RESOURCES

Lecture Overview
- Selection
- Selection Process
- Employment Test
- Interview
- Errors of Selection Process
- Evaluation of Selection Process

Selection
- Selection is defined as “the process of differentiating between
applicants in order to identify and hire those with a greater
likelihood of success in a job” (p. 170)
Or
- “Selection is the process of picking individuals (out of the

pool of job applicants) with requisite qualification and
competence to fill jobs in the organization.”
Difference between recruitment & selection
- In recruitment potential job applicants are attracted and

encouraged to apply for vacant position whereas selection
focuses on identifying the candidate suitable for the job from
pool of job applicants and hire to fill in vacant position
- Recruitment and selection are two different processes but

often inviting job applications and selecting candidate is
called hiring or recruitment process.
Selection As a Source of Competitive Edge
- Organizational performance depends on individual
performance
- Individual performance depends upon competent and willing

candidate
- Wrong or misfit candidate is de-motivated and unwilling or not

competent to work effectively
- Recruitment and selection is very expensive process and cost

of hiring wrong candidate is even more damaging to
organization
False Negative (Error) True Positive (High Hit)
Success
True Negative (Low hit) False Positive (Error)

Failure
Failure Predicted Success Predicted

Advantages of Centralized Hiring
- Larger pool of applicant can be attracted to apply for job as

applicants have to submit/apply to HR department
- Operating managers focus on their functional duties
- Better hiring as specialists are handling hiring process
- Compliance with employment rules and regulations

Selection Process
Application screening
Rejected Applicants Selection Tests
Interview
Reference and Background check
Selection Decision
Physical Examination
Job Offer
Employment Contract
Evaluation
Adopted from: Aswathappa, 2008, p. 173

Employment Test
- Employment Test: Used to test job applicant's ability, aptitude,
personality
- Reliability: The test result should be consistent in scoring

For example: The intelligence test administered to
test the IQ level of potential job candidate and he
scores 110 . If the test is conducted after some time
the person should score close to previous score.
- Validity: The instrument measures what it suppose to

measure.
For example: If the test is designed to predict the
success of candidate on job then he should perform
his job well if succeeded in the test. Valid test will
differentiate who will perform well and who is not
able to perform work.
Employment Test
S.No. Employment Test Example
1 General Knowledge To judge general knowledge regarding geography, politics,
religion etc.
2 IQ Test Intelligent quotient test to estimate how quickly candidate
processes complex problems
3 Personality Test To judge type of personality like extrovert, introvert,
innovative etc. MBTI is most common and acceptable
personality test that uses 8 personality dimensions to elicit
16 personality types
4 English Proficiency Test To judge English proficiency level
For example: What is the meaning of the word exultantly?
5 Technical/Mechanical Asking questions regarding mechanical and technical aspect
Proficiency Test of job to judge expertise in handling tools, machines, and
equipments
6 Cognitive Ability Test To judge intellectual and mental capabilities of candidates
7 Reasoning Test To judge reasoning capabilities of candidates. Situation is
given with certain preconditions to find right answer
8 Quantitative Ability To judge quantitative skills like processing of numbers
For example: Divide 8 by 0.5 then multiple by 0.3
9 Physical Ability Test Physical ability of candidates is judged by giving candidates

physical tasks to complete in given time frame. Example:
Rope climbing, obstacles.
Employment Test
Big Five Personality Dimensions

Personality Dimensions Characteristics of person
Sociability Gregarious, energetic,
assertive, talkative
Agreeableness Trusting, cooperative,
considerate, tactful
Conscientiousness Dependable, responsible,
persistent, achievement
oriented
Emotional stability Stable, secure, confident,
brave
Intellectual openness Imaginative, intellectual,
curious
Adopted from: Mello, 2001, p. 346

Selection Process
- Interview is most common method applies to make selection
decision
- Interview is formal way of communication with potential

employee to judge his/her suitability for the post
- Drawback:
- Absence of Reliability
- Validity issue
- Subjectivity
i) one to one ii) sequential iii) panel

Types of Interview
Type Questions Application
Structured Predetermined and fixed Valid results
number of questions asked
for all applicants
Semi structured Set predetermined set of In depth analysis of
question and questions personality and explore
arises during interview interest and preferences of
candidates and good
comparison can be made
among candidates
Unstructured Without any predetermined Useful to explore details
set of questions about candidate
Situational Questions are asked based Good to explore behavior
on given situation and reasoning of candidate
in given situation
Stress full A harsh, emotional, and Useful when candidate is
tough questions are asked being considered to hire for
with the intention to disturb tough and stressful job
or put candidate in stress

Guidelines to Interviewers
Do's Dont's
Plan the interview Start the interview without
preparation
Build informal relationship Directly start asking difficult
questions
Encourage candidate to talk as Jump to conclusion very early
much
Probe where necessary Allow the candidate to take over
session
Find out interest and Talking too much
preferences of candidate and
their strength and weaknesses
and behaviors
Take control and direct the Start interview with prior
interview session perception
Errors In Interview
Hallo Error
Wrong Judgment and Selection

Interview Errors Similarity Error
Contrast Error
First Impression Error
Biases
Evaluation of Selection Process
i Analysis of the 1 Have the selection policies been well
Program developed?
2 Do the wages, fringe benefits, and perks are
appropriate to attract and retain competent
employee?
ii How well selection policies and programs are well communicated to all
stakeholder?
iii How well 1 Has Proper training been given to staff
implementation of dealing with selection process?
program is? 2 Are policy manual developed and used?
iv Feedback 1 What perception/image has been created?
2 Have hired and rejected candidates been
asked about the process?
3 How many person actually reject the offer
because of poor compensation work
environment?
v Analysis of the results 1 What is the performance of hired employees?
2 What is ratio between those who applied and
selected?
3 What is contribution of different tools that
were used in making selection decision and
how the prediction made in each tool relate with
job success?
Lecture Overview
- Selection
- Selection Process
- Employment Test
- Interview
- Errors of Selection Process
- Evaluation of Selection Process

Chapter 8
Inducting and Placing New Hires

Lecture Overview
- Orientation
- Orientation Programs
- Formal Orientation Program
- Topics of Employee Orientation
- Placement
Orientation
- Induction: “Induction or orientation is designed to

provide new employee with the information he or she needs to
function comfortably and effectively in the organization” (p. 191)
- information about work
- introduction firm's history, objectives, products and

services, operations, as well as how job fits to overall objective of
organization and its place
- Detailed information about work ethics, rules, policies,

and benefits
Purpose: The purpose of orientation is to relax new hire, introduce

them to colleagues and function, create favorable impression of
job and company, to make him/her adjust to new work
environment
Orientation Programme
Formal Informal
Individual Collective
Serial Disjunctive
Investiture Divestiture

Formal Orientation Programme
Organizational
Issues
HR Representative Employee
benefits
Introduction
Special Anxiety To placement

reduction seminar
Specific Job
Supervisor Location
And duties
Adopted from: Aswathappa, 2008, p. 194

Topics of Employee Orientation Programme
Organizational Issues
History of employer Probationary period
Organizations of company Products and services
Names and titles of key executives Production process overview
Employee's title and department Company policies and rules
Layout of physical facilities Disciplinary Proceedings
Employee handbook
Health and safety procedures
Employee Benefits
Pay scale and pay days Insurance benefits
Vacation and holidays Retirement programme
Rest breaks Services/facilities offered to
Training and education benefit employees
Counseling Rehabilitation programme
Topics of Employee Orientation Programme
Introduction
To supervisor To coworkers
To trainers To employee counselor
Job Duties
Job location Overview of job
Job tasks Job objectives
Job safety requirements Relationship to other jobs
Source: Aswathappa, 2008, Pp. 194-195

Placement
- After hiring and completion of orientation programme he
or she is placed in job
- Allocation of assignments matching individual

personality with job demands
- The number of the jobs and number of selected

candidates determine placement decisions
- Employee work independent of others or dependent is

based on type and context of job
i) independent ii) sequential iii) pool
Independent Job: Field sale office
Sequential Job: Activity or tasks of one worker dependent on work

activities of others: Example: Assembly line
Pooled Job: The work of all workers are highly interdependent

(team work, project teams)
Assessment Classification Model
Collect details about the employee
Construct profile
Match subgroup profile with

individual profile
Match job family profile with
subgroup profile
Assign individual job family
Assign individual specific job after further

assessment
Source: Aswathappa, 2008, Pp. 200

Placement Orientation
selection
Personnel Job Employee
Planning Analysis Requisition
screening
Searching
Recruitment
Job Vacancies Message Applicant Potential
Planning
Media Pool hires
Strategy
Development
Where Applicant
How Population Evaluation
When and controlling

Summary
- Orientation
- Orientation Programs
- Formal Orientation Program
- Topics of Employee Orientation
- Placement
Chapter 9
TRAINING, DEVELOPMENT AND CAREER

MANAGEMENT
Lecture Overview
- Training and Development
- Training and Education
- Inputs in Training
- Benefits of Employee Training
- Training Process
- Need of Training (Performance Gap Model)
- Steps in Training Program
- Training Methods
- Reason of Ineffective Training
- Career Development
Nature of Training and Development
- In general “training and development reffer to the
imparting of specific skills, abilities, and knowledge
to employee”
(p. 206)
- In more detail “ training and development is any

attempt to improve current or future employee
performance by increasing an employee's ability to
perform through learning usually by changing the
employee's attitude or increasing his or her skills and
knowledge. The need for training and development is
determined by the employee's performance
deficiency”
Training and development need = standard performance -Actual performance

Distinction between Training and
Education
- Training is process of imparting skills and practical
knowledge
- Education is theoretical learning given in classroom
- Development activity aims to give learning

opportunities that result in growth of employees
Training Education
Application Theoretical orientation
Job experience Classroom learning
Specific tasks General concepts
Narrow perspective Broad perspective
Source: Aswathappa, Human Resource Management, Text and Cases, 2008, p. 207
Inputs in Training
- Skills: Worker should have Skills to operate machinery and
other tools.
- Managers should have interpersonal skills
- Education: Teach theoretical knowledge, concepts to develop

a sense of judgment and reasoning
- Education is important for top executives and managers
- Development: More focus on knowledge. For example

knowledge about management principles, business
environment, and techniques
- Any training and development program must have following

components
- How to create sense of commitment and motivation

Inputs in Training
- How to make them result oriented
- How to make themselves aware of needs of others and

themselves
- How to create sense of leadership and power to influence and

lead others
- Ethics: HR manager takes responsibility of unethical practices

by other functional managers or workers
- HR manager need to highlight the ethical dimensions of their

decisions and practices and emphasize on value of ethical
behavior
- Ethical orientation is important
1 Ethical is personal lives and business dealings
2 Credibility in public depends of values and ethical behavior
3 Value create credibility with employees

Inputs in Training
4 Better decision making depends on values
5 Ethics related to higher profit
6 Laws and Rules don't always protect society but ethical

behavior and concern ensure welfare and protection of society
Attitudinal Changes: Feelings and beliefs towards others
- Affect on satisfaction, motivation and job commitment
- Attitude is difficult to change but requisite for high job

commitment and satisfaction
Benefits of Employee Training
For Organization
- Linked to higher profit
- Morale of workforce is increased
- Created corporate image
- Increased working relationships
- Aids in preparing work guidelines
- Increase understanding and implementation of organizational

policy
- Identify future needs in all organizational areas
- More effective problem solving skills and decision making
- Prepare for promotion with in the organization
- Develop leadership skills, motivation, commitment and loyalty
- Reduce cost in different areas like production, administration,

and HR
Benefits of Employee Training
For Organization
- Better labour-management relationship

- Help to improve organizational communication
- Help to initiate and implement change management program
- Help to handle conflicts
For Employees
- Self development and self confidence

- Make individual able to handle stress, and conflicts
- Increase motivation, job satisfaction, loyalty
- Improved skills and knowledge to perform their work
- Bring positive attitudinal change
- Prepare to learn and grow to take future responsibilities
- Interpersonal skills
- Make them prepare to take new initiatives
- Help to achieve personal goals
The Training Process
Need Assessment
a) Organization support
b) Organizational Analysis
c) Task and KSA analysis
d) Person Analysis
Development of Training Validity

Instructional Objectives criteria
Transfer Validity
Selection and design

of instructional Intraorganizational
program validity
Interorganizational
Training validity
Use of evaluation
Source: Aswathappa, 2008, p. 216 models
Performance Gap
Performance Gap
Is it worth fixing
Reward/Punishment Inadequate Obstacles in

KSA deficiency
in congruence feedback system
Choose
Change Provide proper
appropriate Remove obstacles
contingencies feedback
remedy
Job Aid
Transfer or
Training Practice Change the job
termination
Training Process
Need Assessment
- Diagnosis current problems and future needs
- Individual (performance gap, change in technology,

transfer, and Group Level (change in organizations'
strategy, new product line, new technology, low moral
and motivation)
- Training need identify the training objectives to be

achieved at the end of training program
Group or Organizational Analysis Individual Analysis
- Organizational
Need Assessment
goals and Methods Performance Appraisal
objectives
Efficiency indices Interview
Exit Interviews Questionnaire
Quality Circles Attitude Survey
Customer Survey Training Progress
Training Process
- Organizational Analysis
- Analyze the short term and long term goals/objectives of the

organization and trend that may affect these goals and
objectives in future
- Task and KSA Analysis
- What tasks are performed at each job?
- What KSAs are required to carry on these tasks?

Training Process
- Person Analysis
- Focus on individual competencies
- What KSA they already have?
- What KSA they need to have?
- Who need training?
- Developing Instructional Objectives

- It focuses on deciding the input for training program and
criteria to measure the success or effectiveness of training
program
For example: After training sale officer will be able to
welcome/receive customer with smile
He will be able to increase sales target by 20 %
Steps in Training Program
What methods and

Who are the trainees? Who are the trainers?
techniques?
Where to conduct the What principles of What should be the

program? learning? Level of training?
Chapter 9
TRAINING, DEVELOPMENT AND CAREER

MANAGEMENT
Lecture Overview
- Training Process
- Training Methods
What methods and

techniques?

Training Methods
Training Orienting Special skills Safety Creative Sales,

Method new training education technical and administrativ
employees, professional e and
introducing education managerial
innovation education
On the job
Orientation Yes - - - -
training
Job Instruction Yes Yes - - -
training
Apprentice Yes Yes - - -
training
Internship - Yes - Yes Yes
Job rotation Yes - - - Yes
Coaching - Yes Yes Yes Yes
Training Methods
Training Orienting new Special skills Safety Creative Sales,
Method employees, training education technical and administrative
introducing profession and
innovation eduction managerial
education
Off the job

Lecture Yes Yes Yes Yes Yes
Films Yes Yes Yes Yes Yes
Conference Yes - Yes Yes Yes
Case Study - - - - Yes
Role Playing - - - Yes -
Simulation Yes Yes Yes Yes -
Programmed Yes Yes Yes Yes -
Instructions
Laboratory Yes - Yes Yes -
Training
Relative Effectiveness of Training Method
Training Knowledge Changing Problem Interpersonal Participant Knowledge
Method acquisition Attitude Solving Skills acceptance retention
skills
Case study 2 4 1 4 2 2
Conference 3 3 4 3 1 5
Business 6 5 2 5 3 6
games
Lecture 9 6 9 8 8 8
Programed 1 7 6 7 7 1
Instructions
Role Playing 7 2 3 2 4 4
Television 5 9 8 9 9 9
lecture
Films 4 6 7 6 5 7
Rank 1 is highest relative effectiveness
Training Process
- Level of Learning:
a) Acquire fundamental knowledge
b) Skill development
c) Operational Proficiency : Advancement in skills and
obtaining experience of doing thing with excellence
- Learning Principles:
- Employee motivation
- Recognition of individual differences
- Practice opportunities
- Reinforcement
- Knowledge of results
- Schedule of learning
- Meaning and material
- Transfer of learning
- Goals
Training Process
- Conduct of Training
a) At the job
b) in training room available on site
c) outside in university, hotel or conference center
- Implementation of Training Program

- Deciding the location and arranging other facilities
- Scheduling of training program
- Conducting the training
- Monitoring the trainee progress
- Evaluation of the Program

- Training objectives have been achieved or not
- To ascertain that change in behavior and skills are due
to training or because of other reasons
- Cost effectiveness of training program
- Credibility of training program is enhanced when it is
proved that performance linked with training
Training Process
- Principle of Evaluation
- Evaluation specialist must have clarity about
objectives and goals of training
- Evaluation must be continuous
- Evaluation must be specific
- Evaluation must provide means to trainer to appraise
themselves of their method and practices
- Realistic target dates for each phase of evaluation
process
- Criteria for Evaluation

Training Validity: Did the trainees learn from training
Transfer Validity: What learnt in the training has been
transferred on job
Intraorganizational Validity:
Interorganizational Validity: Can training program be
replicated successfully in other organizations
Training Process
Measures
Level Four Levels of Training Evaluation
Accidents Quality
Productivity
Cost
Result Is the organization Morale
is better because of Profits
training? Turnover
Are trainees behaving
differently in the job after Performance, appraisal
Behavior training? Are they using by supervisor, peer,
knowledge and skills subordinate, customers
learned in the training?
To what extent the trainees Written Tests,
Learning have greater knowledge of Performance tests
skills after the training
program?
Did the trainees like the
program, trainer, facilities, Questionnaires
Reaction timing? Did they think that
training was usefull? What
improvement they suggest?
Reasons of Ineffective Training
- Lack of management support
- Spending on training is not enough
- Large scale job switching of trained staff
- Improper design and development of training programs
- Training needs assessment exercise was not conducted

Career Development
Career is defined as “progress or general course of action of a
person in some profession or in a organization”
(p. 231)
“Career includes the specific jobs that a person performs, the

kind of responsibilities and activities that comprise jobs,
movements and transition between jobs, and in individual's
overall assessment of and feelings of satisfaction with these
companies of his or her career”
(p. 231)
Career Development
Career planning is defined as “a process whereby an
individual sets career goals and identifies the means to
achieve them”
(p. 232)
- When organization helps to plan career of individual it

becomes organizational career planning
Organizational Career Planning “is the planned succession of

jobs worked out by organization to develop its employees”
(p. 232)
Career Development is defined as “a formal approach used by

organization to ensure that people with proper qualification
and experiences are available when needed”
(p. 232)
Career Development
Career Development Initiatives
Career Planning Workshops: Workshops to guide employees

and help to identify their strengths and weaknesses, career
opportunities, means and steps to achieve personal goals, and
self assessment of values, abilities, interests, goals and
personal development plan
Career Counseling: In one to one session with career

counselor with employees to discuss their performance,
career goals, capabilities, interests.
Mentoring: Mentor (supervisor) coaches and advises

employee (subordinate) to motivate and encourage them to
improve their performance
It is also tool to increase job involvement and satisfaction of
mentor
Sabbaticals: Leave granted to employee to increase their

learning
Career Development
Personal Development plans: Employee set long term

personal development plans such as development needs and
means and action plan to achieve them in written form. These
personal development plans can be discussed with supervisor
to assist them in guiding and achieving them
Career Workbooks: Questions and exercises that identify the

strengths weaknesses of employee, career opportunities, and
requisite steps to achieve them
Work book contains organization policy, available career

options in organization, organization structure
Career Plateau: The chance of career growth is blocked or no

possibility of future growth in the organization.
Summary
- Training Process
- Training Methods
Chapter 10
Appraising and Managing Performance

Lecture Overview
• Relationship between Performance Appraisal and Job

Evaluation
• Objectives of Performance Appraisal
• Multi Purposes of Performance Appraisal
• Performance Appraisal and Competitive Advantage
• Process of Performance Appraisal
• Performance Appraisal Methods
• Goal Based Performance Appraisal
• 360 Degree Performance Appraisal

• Training Process
• Phases in Training Process
• Steps in Training Program
• Training Methods
• Training and HRD

Training Process
Need Assessment
a) Organization support
b) Organizational Analysis
c) Task and KSA analysis
d) Person Analysis
Development of Training Validity

Instructional Objectives criteria
Transfer Validity
Selection and design

of instructional Intraorganizational
program validity
Interorganizational
Training validity
Use of evaluation
Source: Aswathappa, 2008, p. 216 models
Training Process
Phase 1 Phase 2
Training Need Training Design
Phase 4 Phase 3
Training Training
Evaluation Implementation
What methods and

techniques?

Training Methods
Training Orienting Special skills Safety Creative Sales,

Method new training education technical and administrativ
employees, professional e and
introducing education managerial
innovation education
On the job
Orientation Yes - - - -
training
Job Instruction Yes Yes - - -
training
Apprentice Yes Yes - - -
training
Internship - Yes - Yes Yes
Job rotation Yes - - - Yes
Coaching - Yes Yes Yes Yes
Training Methods
Training Orienting new Special skills Safety Creative Sales,
Method employees, training education technical and administrative
introducing professional and
innovation education managerial
education
Off the job

Vestibule Yes Yes - - -
Lecture Yes Yes Yes Yes Yes
Films Yes Yes Yes Yes Yes
Conference Yes - Yes Yes Yes
Case Study - - - - Yes
Role Playing - - - Yes -
Simulation Yes Yes Yes Yes -
Programmed Yes Yes Yes Yes -
Instructions
Laboratory - - Yes Yes -

Training
Training Process
Level Measures
Four Levels of Training Evaluation
Accidents, Quality
Productivity
Cost
Result Is the organization Morale
is better because of Profits
training? Turnover
Are trainees behaving
differently in the job after Performance, appraisal
Behavior training? Are they using by supervisor, peer,
knowledge and skills subordinate, customers
learned in the training?
To what extent the trainees Written Tests,
Learning have greater knowledge of Performance tests
skills after the training
program?
Did the trainees like the
program, trainer, facilities, Questionnaires
Reaction timing? Did they think that
training was useful? What
improvement they suggest?
Training Process
1 Training Need Organizational 1 How training will assist to
Assessment Analysis achieve organization goals?
2 What cost is expected and what
is benefit to the organization?
Task Analysis 1 What are job responsibilities and

duties?
2 What knowledge and skills are
required to increase work
performance?
Person Analysis 1 What is trainee's skill and
knowledge level?
2 Which learning style trainees
prefer?
Training Process
2 Training Instructional 1 Based on TNA, learning
Design Objectives/strategy objectives are set (desired skills
and knowledge and attitude
change)
2 This includes detailed plan
regarding methods, material,
resources and training
objectives etc.
Trainee Readiness 1 Assessment of trainee's
background knowledge and
skills to determine level of
readiness to absorb new
learning
2 Knowledge of level of trainee
to develop contents/strategy of
training program
3 Categorizing and grouping
trainees according to their
capacity to learn
4 To enforce and motivate
trainee's desire to learn new
knowledge and skills
Training Process
2 Training Design Learning 1. Setting training goals and objectives
Principle 2. Meaningful presentation
3. Social learning theory focusing on
learning based on modeling and visual
aids
4. Appreciate differences in learning
style; some learn quickly in group
discussion while some prefer to work
alone on problems
5. Practice and Practice (Exercises/work
on solutions)
6. Feedback on progress
7. Time duration (continuous or
distributed)
3 Training Material and Posters and Charts
Implementation Equipment Whiteboard/Projector
Trainee's 1. Contains Information on Training
Manual Content
Trainer's Contains information given in trainee's
Manual manual and instruction on how to deliver
Facilities 1. computer/furniture/training room
Trainer 1. Who will deliver the training?

2. Trainer's qualification, experience,
expertise and background
Training Process
4 Training Reactive 1. Did the trainees find the training

Evaluation interesting (Questionnaires)?
Immediate feedback response on
training
Learning 1. Did the trainees have made

advancement in knowledge and skills
(written test)?
Behavior 1. Is trainee behaving in different way
after receiving training (performance
appraisal)
Results 1. Is organization/unit performing
better (Quality/Productivity/Cost/
Profit/Morale/Work
environment/team work
Source: Blanchard, P. & Thacker, J: Effective Training, Systems, Strategies, and Practices
(3rd Edition, 2007)
Definition of HRD
“A set of systematic and planned activities designed by an

organization to provide its members with the necessary skills
to meet current and future job demands”
Werner and DeSimone (2006)

Relationship Between HRM and HRD
• Human Resource Management (HRM) covers

many functions
• Human resource development (HRD) is just one

of the functions within HRM
HRD Functions
• Training and development (T&D)
• Organizational development
Training and Development (T&D)
• Training – improving the knowledge, skills and
attitudes of employees for the short-term, particular to
a specific job or task
• Development – preparing for future responsibilities,
while increasing the capacity to perform at a current
job
Organizational Development
• The process of improving an organization’s
effectiveness and member’s well-being through the
application of behavioral science concepts
Career Development
• Ongoing process by which individuals progress
through series of changes until they achieve their
personal level of maximum achievement
Werner and DeSimone (2006)
• Performance appraisal is to evaluate the performance of an
employee to determine whether he is performing his given task
and duties well or to monitor whether he has given his best
effort and performance on given job
• Performance appraisal is an assessment of individual

performance, the performance is measured against such
factors as job knowledge, quality, quantity of output, initiative,
leadership, abilities, supervision, cooperation, judgment,
analytical skills, problem solving skills, etc.
(P. 239)
• The other similar terms often used for performance appraisal
are performance rating, employee performance review,
employee assessment, personal appraisal, employee
evaluation, or performance evaluation
Performance Performance
Job Analysis
Standards Appraisal
Describe the job relevant

Describe work and Translate job requirements
strengths and
professional requirement into levels of acceptable
weaknesses of
of a job or unacceptable performance
each individual
Relationship of Performance Appraisal and Job Analysis
Objectives of Performance Appraisal
• Make promotion decisions based performance
• To confirm services of employee on probation
• To identify training and development needs of employees
• To decide compensation
• To inform employees of their performance and give them

feedback and guidance to improve performance
• Performance appraisal helps to know the effectiveness of other

HR functions such as recruitment and selection, training, and
promotion etc.
Multi Purposes of Performance Appraisal
Administrative Developmental
Set selection criteria Identification of individual training
needs
Promotion Performance feedback
Retention or termination Determining job assignment and
transfer
Identification of poor performers Identification of strengths and
weaknesses of employee
Compensation Recognize and appreciate
individual performance
Evaluate training effectiveness Goal setting and evaluation
Adopted from: Aswathappa, Human Resource Management, Text and Cases, 2008, p. 240
Performance Appraisal and Competitive Advantage
Improving
performance
Making correct
Consistency decisions
between strategy
and behavior
Competitive
advantage
Minimizing
Ensuring legal
dissatisfaction
compliance
and turnover
Adopted from: Aswathappa, Human Resource Management, Text and Cases, 2008, p. 240
Process of Performance Appraisal
Objectives of performance
Adopted from: Aswathappa, Human Resource Management,

Text and Cases, 2008, p. 241
appraisal
Establish job expectations
Design appraisal program
Appraise performance
Performance interview
|Management
Performance
Archival appraisal data
Use appraisal data

Performance Appraisal Process
3 Designing Appraisal Program

What methods? Formal vs informal When to evaluate?
Whom to evaluate? Appraisal How to solve?

Design
Who are the raters? What What to evaluate?

problems/errors?
Designing Appraisal Program
1 Formal vs Informal
• Formal appraisal normally occur at specific time (six

month or one year)
• Informal regular when supervisor feels need
2 Whom to Evaluate
• Individual or team performance
3 Who Should be the rater?
a) Immediate supervisor
b) Subordinates
c) Peers
d) Clients
e) Self appraisal
4 Performance Appraisal Errors
S. Performance Appraisal Description
No. Error
1 Leniency Error Extreme rating either on high or
low side
2 Similarity Error Bias appraisal because of personal
affiliation
3 Recency Error Recent behavior evaluation instead
of entire performance appraisal
period
4 Contrast Error Rating in comparison to other
members
5 Central Tendency Error Average rating for all employees
6 Spill-Over Effect Past performance or standing
dominate recent evaluation
7 Hallo Error One characteristic or aspect of
performance dominate entire
performance appraisal rating
8 Perceptual Error The previous held believe of
perception influence appraisal
5 Solving Rater’s Error
Training and Practice
6 What to evaluate
a) Traits
b) Behaviors
c) Results/Goals
Other dimensions
a) Quality
b) Quantity
c) Timeliness
d) Cost effectiveness
e) Independent working
f) Interpersonal and cohesiveness effect
7 When to Evaluate?
To decide the appraisal period (three months, six months or

year)
8) Methods of Performance Appraisal
No. Appraisal Method Description

1 Rating Scale •Typical numerical rating ranging
from poor to excellent of job
related performance criteria such
as initiative, honesty, attendance,
cooperation etc.
•The rater rate each statement and
then sum up numbers.
2 Check List •The rater has to tick Yes or No
against the statements defining
personality characteristics. Then
HR department calculate the
numbers of only Yes statement
Performance Appraisal Methods
3 Forced Distribution •Compel raters to evaluate performance and
Method distribute ratees on all points given in rating
scale
•For example: Excellent 20 %, Good 20 %,
Average 15 Below average 25 % and
Unsatisfactory performance 20 %
4 Critical Incident •All critical behaviors that contributed to job
Technique success are recorded by supervisor. These
behaviors actually differentiate between
effective an ineffective employee
Behaviorally Anchored •Also called behavioral expectation scale. It
Rating contains descriptive statements of behavior from
least to most effective
Performance Test •With few jobs for evaluation performance test to
check the knowledge and skills of employee can
be conducted
Cost Accounting Method •Performance is evaluated on monetary benefits
employee has given to organization. Cost
benefit analysis of employee
Ranked Method •Supervisor rate his subordinates on ranking

Comparative •Supervisor rate his subordinates on
Evaluation Method ranking from best to worst
a) Ranking Method: The rater rank
employees from best to worst
b) Paired Comparison: Each employee is
compared and ranked with every employee
in a group or team
N (N-1)/2
MBO •The goals/outcomes are established for
each employee and then performance is
evaluated based on attainment of these
goals
Appraisal Method Advantages Disadvantages
Rating Scale •Easy to use, time effective, •Biases of raters
and low cost
•All types of job can evaluated
•No training required to raters
Check List •Easy to administer •Use of personality indicators
•No specific training required to •Less flexibility to assign
raters relative ratings
Forced Distribution •Avoid leniency error •What if organization is

Method performing well and all
employees contributing
outstandingly
Critical Incident •Evaluation is based on •In general negative incidents
Technique behaviors that actually are more highlighted
contribute to effective job
performance
•Recency error can be
overcome
•Chance of learning for
subordinate is greater
Behaviorally •Actual observable job behavior •Problems of rating scale
Anchored Rating •BARS is tailor made
Appraisal Method Advantages Disadvantages
Performance Test •Test can be validated •Test potential instead of
actual performance
Cost Accounting •Useful to make •Difficult to establish profit
Method training/investment decision contribution
on employee
Comparative •Comparative ranking based •Recency, Hallo or
Evaluation Method on performance perceptual biases
•Can be used to decide
merit based pay and
promotion
MBO •Not fit for assembly line •Employee may not set
workers challenging and high goals if
•Good for management jobs achievement of goals is
•Increase employee basis for reward
involvement and motivation •Set short term goals
GOAL-BASED APPRAISAL SYSTEM
Supervisor sets
Organizational goals for
goals subordinate
Agreed goals
and objectives
Department or
Unit goals
Subordinate
proposes goals and
Objectives
Mid Term Review

(Readjustment in
Annual goals if internal
Review or external factor
changes)
Adopted from: Snell, Bohlander & Vohra: Human Resource Management. A South Asian
Perspective, (2010, p.337)
360 Degree Performance Appraisal
Supervisor
Client
Peers
360 Degree
Performance
Team
Appraisal
Self Members
Subordinate
360 Degree Performance Appraisal
1 More comprehensive 1 More Complex
2 Quality of information is better 2 Conflicting opinion
3 Compliments TQM perspective 3 Requires extensive training to

by soliciting external and internal implement
customers
4 Grouping may make it ineffective
4 Less bias/prejudice
5 increase employee self

development
Source: Snell, Bohlander & Vohra: Human Resource Management. A South

Asian Perspective, (2010, p. 324)
Process of Performance Appraisal
4 Appraise the Performance

• Measure the performance what he does or what he does
not do
• It should also include potential of employee in addition to

his actual performance
• From different job different performance criteria should

be used
5 Performance Management
Feedback on performance must be used purposefully
1) Performance Interview
• Performance appraisal outcome should be discussed and
shared with employee
• Three goals of performance interview
a) change behavior of poor performers b) maintain
behavior of employee who perform well c) appreciate
superior performers
6 Archiving Performance Data

Keep record of performance data for future
7 Use of Performance Data

Use performance data to streamline HR activities and
make employee related decisions
Key Message: Performance Appraisal System should be

designed with care and organizational goals must linked with
personal goals
Performance appraisal must be shared with employees to

identify their strength and weaknesses and tell them where
they need improvement and how to improve the performance
HR decisions must consider performance appraisal

information
Summary
• Relationship between Performance Appraisal and Job

Evaluation
• Objectives of Performance Appraisal
• Multi Purposes of Performance Appraisal
• Performance Appraisal and Competitive Advantage
• Process of Performance Appraisal
• Performance Appraisal Methods
• Goal Based Performance Appraisal
• 360 Degree Performance Appraisal

COMPENSATION MANAGEMENT
Session Overview
Benefits of Proper Compensation
Consequences of Inadequate Compensation
Concepts of Wages
Components of Remuneration
Theories of Remuneration
Factors Influencing Remuneration
Remuneration Model
Challenges of Remuneration
Skill based and Job based Pay

Session Overview
Incentive Payments
Prerequisites of Effective Incentive System
Types of Incentive System
Group Incentive Plans
Incentives for Indirect Workers
Nature of Benefits and Services
Benefits as Incentive
Types of Employee Benefits and Services
Principles of Fringes
Session Overview
Significant Benefits and Service Programs
Common Benefits in Pakistan
Advantages and Disadvantages of Long Term Benefits
Administration of Fringe Benefits
Remunerating Top Executives
Components of Executive Remuneration
Issues in Executive Remuneration

Chapter 11
MANAGING BASIC REMUNERATION

Compensation policy aims to attract talented employees and motivate

them to put their efforts and commitment to work that increase job
satisfaction work performance
Benefits of Proper Compensation Administration

1 2 3 4 5
Attracts talent Motivates Rewards Reduces Manages
Employees Performance Turnover Compensation
Budget
Consequences of Pay Dissatisfaction
performance
Desire for
more pay strikes
absenteeism
grievances
turnover
Search for
new job
Psychological
withdrawal
Job
Pay Lower dissatisfaction
dissatisfaction attractiveness Poor health
of job
absenteeism
Visits to the
doctors
Concepts of Wages
1 Minimum Wage
2 Fair Wage
3 Living Wage
4 Team based Pay
5 Remunerating Professionals
6 Contract Employees
7 Expatriates and Executives

Benefits include both financial and non financial
• Wages and Salary
• Incentives
• Fringe Benefits
• Perquisites
• Non Monetary Benefits

Remuneration
Financial Non Financial
Wages and Incentives Fringe Perquisites Job content

Salary benefits
Individual Company Challenging
Hourly plans CPF car job
wages and Group plans Gratuity Club responsibilities
monthly Medical membership Supervision
rates salary etc. Furnished Growth
house prospects
Stock option Working
schemes conditions
etc. Etc.
Feedback to employee
Employee set Performance is Employee consider

expectations and rewarded equity of reward and
goals performance
Employee sets new goals and expectations

based on experience
Reinforcement Theory
Behavior rewarded Positive Experience Behavior is repeated

Equity Theory
• Adam’s equity theory emphasizes to have equity in pay
structure of employee
• If employee feel that their efforts are well rewarded they

will put more efforts and will be satisfied with their job
• In case of inequity feeling they will be de moralized and

dissatisfied resulting into low productivity
Individual Motivation
equity
Internal Perception of Commitment

equity fairness
External
Performance
equity
Agency Theory
• In the organizations employer and employees are two main

stakeholders
• Employer act as principals and employees assume the role of

agent
• The remuneration of employee is agency cost
• Principal tries to agency cost and agent expect to have more

agency cost
• The principal (Employer) should try to choose remunerating

schemes that align its own interest with expectation of agents
(employees)
• Behavior oriented (merit based pay)
• Outcome oriented (profit sharing, commission)

Internal Factors External Factors
Organization Strategy Economy
Employee Society
Job Evaluation Labour Market
Performance Appraisal Cost of Living
Labor Unions
Legislation
Business Market Remuneration Blend of

Strategy Position Strategy Remuneration
Invest to grow Merging or Encourage High cash and
grow rapidly innovation and incentives for
entrepreneurship performance.
Modest benefits
Manage earning Normal growth Reward Average
Protect Markets to maturity management skills incentives with
average cash on
unit and
individual
performance.
Standard benefits
Harvest earnings Maturity or Focus on cost Below average
invest decline control cash with few
somewhere else incentives that
too tied with cost
control efforts.
Standard benefits
Remuneration Model
Job description
Job evaluation
Job hierarchy
Pay survey Pay levels
Pricing Jobs Pay grades
Skill based pay Monetary and non Salary Reviews

monetary rewards
Employee Remuneration Pay Secrecy

participation
Below market or Comparable worth Eliticism or

above market pay Egalitarianism
Skill Based and Job Based Pay
Factors Skill based Job based

Pay structure Based on ability to Based on job
perform performance
Employer’s focus Employee carriers Job carries wages.
wages, Employee Employee linked to
linked to skills job
Employee focus Skill acquisition for Job promotion for
more pay better pay
Procedures required Skills assessment, Job content
Value skills assessment, Value
jobs
Advantages Flexibility, Reduced Pay based on value
workforce of job and work
performed
Disadvantages Cost controls Inflexibility
Source: Aswathappa. Human Resource Management, Text and Cases, 2008, p. 301.
Summary
•Benefits of Proper Compensation
•Consequences of Inadequate
Compensation
•Concepts of Wages
•Components of Remuneration
•Theories of Remuneration
•Factors Influencing Remuneration
•Remuneration Model
•Challenges of Remuneration
COMPENSATION MANAGEMENT
Review of Previous Lecture
Consequences of Inadequate Compensation
Concepts of Wages
Remuneration Model
Skill based and Job based Pay

Consequences of Pay Dissatisfaction
performance
Desire for
more pay strikes
absenteeism
grievances
turnover
Search for
new job
Psychological
withdrawal
Job
Pay Lower dissatisfaction
dissatisfaction attractiveness Poor health
of job
absenteeism
Visits to the
doctors
Remuneration
Financial Non Financial
Wages and Incentives Fringe Perquisites Job content

Salary benefits
Individual Company Challenging
Hourly plans CPF car job
wages and Group plans Gratuity Club responsibilities
monthly Medical membership Supervision
rates salary etc. Furnished Growth
house prospects
Stock option Working
schemes conditions
etc. Etc.
Remuneration Model
Job description
Job evaluation
Job hierarchy
Pay survey Pay levels
Pricing Jobs Pay grades
Skill based pay Monetary and non Salary Reviews

monetary rewards
Employee Remuneration Pay Secrecy

participation
Below market or Comparable worth Eliticism or

above market pay Egalitarianism
Lecture Overview
Incentive Payments and Employee Benefits

Lecture Overview
Significant Benefits and Service Programs
Common Benefits in Pakistan
Advantages and Disadvantages of Long Term Benefits
Administration of Fringe Benefits
Remunerating Top Executives
Components of Executive Remuneration
Issues in Executive Remuneration

Chapter 12
INCENTIVES AND PERFORMANCE BASED

PAYMENTS
Incentive Payments
• Incentives payments are monetary benefits paid to

employee in recognition of his or her outstanding
performance
• Also called variation rewards or payment by results
• Unlike wages incentives varies from to time to time and

from individual to individual
Motivation Reduced Better utilization

absenteeism and of equipment and
turnover competencies
Higher Profits Reduced Increased

production cost Productivity
Prerequisites for Effective Incentive System
1 Employee’s cooperation and participation
2 Realistic standards and necessary tools and facilities
3 Indirect workers like supervisor, helpers and store keepers etc.

should also be given benefit of incentive system
4 Commitment of top management
5 Careful Planning (well prepared and implemented)
6 There should be clear link between output and reward
7 Setting and reviewing specific objectives and incentives of each

employee periodically
8 Easy to understand and calculate

Types of Incentive Schemes
1 Incomes Varying in proportion to output
a) Straight piece work Method: Per unit rate is fixed and total
earnings is calculated by multiplying to total unit of output and rate
of per unit
1 Incomes Varying in proportion to output
b) Standard hour system: Standard time for completion of job is

fixed in terms of hours. A worker is paid on the basis of his time
rate
2 Earnings Varying Proportionality less than output
a) Hasley Plan: Bonus is paid to worker on time savings. The bonus

will be half of time saved multiply by rate per hour
b) Rowan Plan: bonus paid to worker is equal to the proportion of

the time saved to the standard time
c) Bedaux Scheme: Standard time for job is fixed. Each minute of

the standard time is called a point or B. Each job has standard
number of Bs. The worker receives bonus which is equal to ¾ of
the number of points earned.
3 Earnings differing at different level of out put
a) Taylor’s Differential Piece Rate System: An efficient worker

(whose out put exceeds standard out) is paid 120 percent of the
piece rate contrary to this inefficient worker receives only 80
percent of the piece
b) Merrick Differential Piece Rate System: Standard piece rate is

given to worker up to 83 percent of the standard output, at which a
bonus of 10 percent of the time rate is payable, with a further 10
percent bonus on reaching the standard output.
c) Gantt Task System: Worker is guaranteed his time rate for out
put below the standard. When standard output is reached which is
set at high level, worker is entitled to bonus of 20 percent of the
time wages. For the out put above the standard out put high piece
rates are paid.
Group Incentive Plans
1 Advantages
• Better cooperation among team members
• Less supervision
• Reduce absenteeism
2 Disadvantages
• An efficient worker may suffer from inefficiencies of team

members
• Rivalry among the workers
Incentives for Indirect workers
• Difficult to measure the output of indirect workers like security

staff, maintenance staff, and canteen employees
• Merit rating: Rewarding employees on other qualities in

addition to output
Chapter 13
MANAGING EMPLOYEE BENEFITS AND SERVICES

Employee Benefits
Employee Benefits: Any other benefits that employee receive in
addition to direct compensation. These are not related directly to
performance
Often words used are benefits and services, fringe benefits and
hidden payroll
Benefit and Services: The direct cost of benefits can be calculated

like pension and medical facility, however the cost of services are
difficult to calculate like company newspaper, car parking facility,
and club membership
Employee Benefits
Reasons for Employee Benefits:
•The direct compensation is taxable
•Employer can purchase health insurance facility as group rate
•Reflect corporate social responsible behavior of employer
•Employee prefer to work for companies who offer fringe benefits
•Housing schemes and medical/disability insurance, pension

reduce burden on public expenditure for providing such facility
•Employees feel relax, less fatigue, socially secure, loyal to

organization and motivated
Employee Benefits
Types of Employee Benefits

Old age, disability, and health Pension plans
insurance
Maternity leave Sick leave

Medical leave Child care leave
Children tuition fee Vacations
Holidays Travel allowance
Company car Moving expenses
Meal allowances Discount on product and services
Child care facilities Loan facility

Employee Benefits
Treats Knick Knacks Awards Office

Free lunches Desk accessories Trophies Environment
Coffee breaks Company Certificates Redecoration
Picnics watches Letter of Flexible hours
Dinners Diaries/Planners appreciation Furniture
Birthday treats Wallets Assistant
T-shirts/Ties
Social Tokens On the job

Acknowledgement Movie tickets More
Informal recognition Vacation trips responsibility
Recognition at Coupon Special
official party redeemable at assignments
Membership of stores Training
clubs Early time offs
Use of company Anniversary or
facilities for personal birthday presents
events
Principles of Fringe Benefit
•The benefits must fulfill the real needs of employees
•The benefits must be in interest and welfare of employees
•The benefits must be planned and cost effective
•The interest and demands of employees must be incorporated in

benefits
•The employees must be taught and educated to used these

benefits in fair way
Principles of Fringe Benefit
•The benefits must fulfill the real needs of employees
•The benefits must be in interest and welfare of employees
•The benefits must be planned and cost effective
•The interest and demands of employees must be incorporated in

benefits
•The employees must be taught and educated to used these

benefits in fair way
Administration of Fringe Benefit
Establish objectives of benefits
Assess environment factors
Assess competitiveness
Communicate benefits
Control benefit cost evaluation

Common Employee Benefits Applicable in
Pakistan
Common Employee Benefits Applicable in Pakistan
Medical Insurance
Example: Indoor and outdoor medical facilities
Hiring Facilities
Example: Payment for rented house or self hiring
Paid Leaves
Example: Facility to avail leave with pay
Cost of Living Allowance
Example: Adjustment of salary based on inflation
CPF/GPF
Example: Deduction from employee’s salary and part of it
is contributed form employer
Benevolent Fund
Example: Financial assistance to employees in case of
special events (death/marriage of children)
Retirement Programs
Example: Gratuity
Pension
Example: Monthly payment to employee after retirement
calculated based on last pay drawn
Employee Old Age Benefit

Example:
Institution (EOBI)
Long Term Benefits
Employee remain associated for Cost to organization
longer time period with
organization (low turnover)
Organization Loyalty Employees are less motivated if
long term benefits associated
with permanent employment
Job satisfaction Employee do not feel to work hard
as in case of short term reward
Chapter 14
REMUNERATING TOP BRASS

Components of Top Executives Remuneration
No Components Description
1 Salary Salary is based on job evaluation and
capabilities of top executives
2 Bonus Extra salary or lump-sum amount normally at
the end of year based on corporate earning or
any other criteria/success
3 Commission Percentage of corporate profit
4 Long term incentives Option to purchase stock at fixed price
5 Perquisites Major part of executive income. Provident
fund, gratuity, special parking, well furnished
house, car with driver and fuel, membership in
clubs, utility bills, servants etc.
Issues in Executives Remuneration
No Justification
1 They are very important in organization and key decision maker
2 They are more knowledgeable
3 They are in short supply
4 Difficult to attract and even more difficult to retain
5 They must be motivated to work with dedication and
commitment
6 Expectations and desires of people have gone up
7 Social prestige and respect in society
8 To eliminate corruption
Chapter 19
Managing Betterment Work

Lecture Overview
• Nature of Welfare
• Merits and Demerits of Welfare
• Types of Welfare Activities
• Approaches to Labour Welfare
• Administration of Welfare Program

Nature of Welfare
•Organization should do something for welfare of workers and
public
•Welfare of employees lead to better work
•Welfare includes physical, moral, mental and emotional well

being of employees
•Welfare of employees (doing well) is responsibility of employer,

government and labour unions
•ILO define welfare as “providing such services, facilities, and

amenities as may be established in or in the vicinity of
undertakings to enable the persons employed in them to perform
their work in healthy, congenial surroundings and to provide them
with amenities conducive to good health and high moral”
Source: Aswathappa. 2008, p. 456
•Counteracting negative effects of production systems on worker,

family, and social life
•Providing opportunities for good life/quality life to worker and his

or her family
Merits and Demerits of Welfare
Arguments in Favour
•In industrial economies labour is protecting social and economic
factors therefore, his actions and interaction with industrial
framework influence industrial development
•Necessary to motivate and retain employees (Hygiene factors)
•Help to minimize social problems like involvement of person in

negative/evil activities
•Welfare efforts promote positive image of company
Argument Against
•Why to provide welfare services to employees if it is the duty of
state means duplication of activities and resources
•Off the job and personal affairs should not be dealt by employer.
If person has to use such facilities for very short period in on the
job (for example: building sports complex)
•They are not motivating factors and if welfare facilities are

provided it is taken as granted
Types of Welfare Activities
Welfare inside the workplace
• Conditions of work environment 4) Worker’s health services
• Safety and cleanliness •Dispensary, ambulance, medical
• Whitewash premises and entrance examination, health education
• Temperature, humidity, ventilation,
lighting, elimination of toxic materials 5) Women and Child Welfare
• Comforts and convenience at work •Maternity aid, child care, women’s
• Distribution work hours and provision general education, separate facilities for
of rest breaks women
• Safety measures for employees like
maintenance of machines, dress, 6) Worker’s recreation
helmet, and first aid •Indoor games
• Notice boards, posters and effective
communication measures 7) Employment Follow-up
•Counseling, feedback on workers
• Conveniences adjustment and identification of problems
• Rest rooms, bathrooms, dustbins 8) Economic Services
• Drinking water, canteen services •Loans, financial grants, unemployment
• Reading rooms, library insurance, health insurance, transport
services, provident fund, gratuity,
3) Labour management participation pension, occupational injury insurance,
Committees on food, work, safety. family assistance
Consultation in welfare activities
Worker's arbitration
Types of Welfare Activities
Welfare outside the workplace
• Housing, bachelor quarters, family residence
• Roads, lighting, parks, playground
• Schools, nursery
• Markets
• Transport
• Telegraph and telephone
• Health and medical services
• Recreation: games, clubs, cultural programs, festival celebration
• Community leadership development: counseling of elders, community services
for children, youth and women
Adopted from: Aswathappa. Human Resource Management, Text and Cases, 2008, Pp.
459-460 p. 333
Statutory Provision: Mandated by act and law
Non Statutory Benefits: Volunteer benefits like loan facilities, education of

children, fair price shops etc.
Approaches to Labour Welfare
Social theory Religion theory Philanthropic

theory
Policing theory Labour welfare Paternalistic

theory
Functional theory Placating theory Public Relations

theory
Source: Aswathappa. Human Resource Management, Text and Cases, 2008, P. 465 p. 333
Approaches to Welfare
The motives, attitudes, and beliefs that derive the organization to

provide welfare services to labour are called labour welfare
approaches
Policing Theory:
The state through legislation force industrial owner to provide
welfare facilities to labour
Religion Theory:
a)The investment perspective held belief that today investment is
tomorrow profit (today’s deed will have tomorrow fruit)
b)Present disabilities are result of past misdeeds. So person
should do good today to compensate past sins
Philanthropic Theory:
Love for human beings.
Paternalistic Theory:
The industrialist own property and profit for his use as trust and
should therefore use these resources for benefits for workers who
contribute towards profit as they lack resources to take care of
needs of their children and themselves. It is moral duty to provide
welfare services to labour
Approaches to Welfare
Placating Theory:
Workers should be pleased and put them at peace by providing
welfare facilities.
Public Relation Theory:

Welfare activities are mean to create positive and good impression
of company in the eyes of workers, suppliers, customers, and
public
Functional Theory:
Also called efficiency theory. Welfare facilities are necessary to
make worker more productive and efficient.
Social Theory:
Industrial organizations have social obligation to do good for
society and its workers.
Administration of Welfare Program
Welfare Policy
Yes or No
Objectives, Approach, Range,
Timeliness
Organization
Welfare Officer
Line Manager
Human Resource Manager
Evaluation
Trend Analysis
Opinion
Source: Aswathappa. Human Resource Management, Text and Cases, 2008, P. 467
Summary
• Nature of Welfare
• Merits and Demerits of Welfare
• Types of Welfare Activities
• Approaches to Labour Welfare
• Administration of Welfare Program

Chapter 20
A Safe and Healthy Environment

Lecture Overview
• Employee Safety
• Principles of Safety Program
• Implementation of Safety Program
• Health
• Work Stress
• Burnout
Employee Safety
• Thousands of employees every day suffer occupational injuries
and in most serious cases loose their lives in industrial
accidents
• Employee safety concerns with why these occupational

accidents occurs, how to minimize these accidents, and what
should be the strategy of organization to face this serious
challenge?
• Safety: Refers to protection of workers from risk and danger of

accidents or to minimize accident rate or absence of these
accidents in industrial work.
• An accident is action and reaction of unplanned and

uncontrolled events due to any subject, object, person,
substance, radiation that result into personal injury
Types of Accidents
Minor Accidents: That result into temporary injury internal or

external like wounds, cuts, burn, scratch, fracture etc. and does
not cause temporary or permanent disability immediately or after
certain period of time
Major Accidents: That results into death, and permanent disability

of worker preventing him or her from further work
Need for Safety
Cost Saving
Increased Need for Safety Legal

Productivity
Moral
Safety Programs
• Safety program aim to minimize accidents and reduce loss and
damage to person and property
Principles of Safety Program
1 Identification and elimination of potential danger of hazards and

analysis of root causes to prevent it from happening
2 Proper safety education and training on regular basis
3 The effective program must aim to reduce potential hazards and

take remedy actions
4 Systems for reporting of accidents and detailed analysis of root

causes of the accident
5 Regular safety checks and inspections
6 Provision of safety equipment in workable condition
7 Emphasis on supervisors and workers to take extra care of

safety measures
Accidents
Case
Result of work or Not result of work or

work condition work condition
Death Illness Injury
Medical Loss of Restriction of Transfer to None of

treatment consciousness work motion other job these
Must be
recorded Not to be
recorded
Source: Garry Dessler: Human Resource Management , 2008, p.540

Safety Programs
Principles of Safety Program
8 Supervisors and managers controlling working area must be

made responsible and accountable for carelessness and safety
performance in case of hazards
Safety Programs
Implementation of Safety Programs
Strategic Development of Organization for

choices safety policy safety
Evaluation and Implementation Analysis of

effectiveness accident causes
Adopted from: Aswathappa. Human Resource Management, Text and Cases, 2008, Pp. 479 p. 333
Safety Programs
1 Strategic Choices
• Level of protection
• Formal or informal
• Proactive or Reactive
• Safety as marketing tools
2 Safety Policy
• Setting objectives
• Guidelines
• Responsibility and authority
• Safety of workers and public
• Involvement of management and workers
• Legal compliance
• Safety first speed later
Safety Programs
3 Organization for Safety
• Safety committee
• Safety specialist
• Risk Management
4 Causes and Remedies
• Human failure
• Machine failure
• Inadequate inspection
• Malfunctioning or lack of safety equipment

Safety Programs
Unsafe act of person Unsafe physical and mechanical

conditions
Operating without proper Unsafe designed tools and machines
maintenance or paying attention to
warning
Working at unsafe speed Sharp edge tools, noisy machines,
slippery floor, old machines
Using unsafe equipment or unsafe Unsafe arrangements of machines,
use of equipment blocked exits, poor housekeeping
Unsafe loading, mixing Improper lighting, ventilation
Unsafe position or posture Unsafe clothes, no helmet and mask,
high heels
Working on dangerous or moving Unsafe processes, chemical,
equipment electrical, and nuclear
Distracting, talking
Not using protective devices
98% Preventable 2% Unpreventable

Adopted from: Aswathappa. Human Resource Management, Text and Cases, 2008, p. 481p. 333
Safety Programs
4 Causes and Remedies
• Accident Rates
• Severity Rate
• Frequency Rate
• Remedies
• Training in Safety
• Physical and Mechanical Conditions
• Role of Unions and Management
• Safety Posters
• Safety Week and Awards

Safety Programs
5 Implementing the Policy
• Procedures for reporting of accidents, hazards, first aid and fire

precautions
• Instructing workers
• Adequate space and facilities for machine rooms
• Maintenance of machines and timely inspections
• Checking new machines
• Safety inspections
• Protective tools and rule to use it

Safety Programs
6 Program Evaluation
i) Organic Method
To evaluate how well safety program is designed and
implemented
• Safety Inspection
• Safety Audit
• Comparison
ii) Systematic Method
• It is mainly concerned with the outcome
• Incident ratio, frequency rate, and severity ratio, safety cost

Chapter 21
Managing Separations and Rightsizing

•Employee Safety
•Principles of Safety Program
•Implementation of Safety Program
•Health
•Work Stress
•Burnout
Lecture Overview
• Types of separations
• Principles of Transfers
• Principles of Promotions
Separation
• Leaving of organization by employee is called separation
• Reasons: Voluntarily or Involuntarily

Reasons of
Separation
Voluntary Involuntary
• Quits • Discharges
• Retirement • Layoffs
Guidelines to Manage Downsizing • Retrenchment
• Decision to who stays and who leaves • VRS
• Delay and pay hikes • Rightsizing
• Freeze hiring (restructuring)
• Restrict overtime
• Retrain or redeploy employees
• Engage part time employees Adopted from: Aswathappa. Human Resource Management,
• Switch to job sharing Text and Cases, 2008, Pp. 516-52133
• Across the board pay cuts
• Early retirement schemes
• Keep morale of working employees
Managing Separations
• Functional: Organizations are more leaner, reduce
hierarchy, more communication, reduce
compensation cost
• Dysfunctional: Disturb employees and their morale,

training cost
Performance Difficult Replacement Easy Replacement
High Highly dysfunctional turnover Dysfunctional turnover
Retain/invest in employees Retain/invest in
Develop backups employees
Average Dysfunctional turnover Dysfunctional turnover
Retain/provide performance if high replacement
incentives cost
Develop backups Retain provide
performance incentives
Low Short term dysfunctional/long Functional turnover
term functional Improve performance
Improve performance otherwise otherwise terminate
terminate
Develop backups
Transfers
Change in job (change in place) horizontal or lateral movement
Reasons of Transfer:
1) Shortage/surplus of employees in one department
2) Conflict (incompatibility) between supervisor or co workers
3) To correct initial misplacement decisions
4) Change in interests and capabilities of individual
5) Productivity of employee has declined due to monotony of job
6) The employee health or age may inhibit him to work effectively

in present job
7) Family issues (spouse job)
8) Keeping employee motivated and develop knowledge level of

employee
Principles of Transfers
1) The frequency and period of transfer should be decided and
communicate to employees
2) Authority to make transfer must be clear
3) The criteria for transfer must be well documented
4) The area of transfer must be clear
5) The effect on pay and seniority must be clearly defined
6) Permanent or temporary transfer
7) The performance evaluation of employee must be made before

transfer
8) The job descriptions and specification must be considered

before transferring employee
9) Performance evaluation of transferee (after transfer) must be

made with in reasonable time frame
10) Transfer must be made in organizational or public interest

Types of Transfer
Three broad categories
1) Enhance training and development
2) Adjustment to volume of work
3) Correct poor placement
Types of Transfers
1) Production Transfer
2) Replacement Transfer
3) Versatility Transfer
4) Shifts Transfer
5) Remedial Transfer
Promotions
• Upward or vertical movement of employees
• Promotion results into more pay, prestige, responsibilities, and

position with in organization
Purpose of Promotion
1) Motivate employees
2) Attract and retain talented people
3) Recognize and reward efforts and efficiency
4) Increase effectiveness and efficiency of employee
5) Fill up higher posts form within the organization
6) Build loyalty and morale
7) To provide career development path
Principles of Promotions
1) HRM must clearly established policy whether to promote from

with in to fill higher vacant position or from recruitment of
external candidate
2) Basis of promotion (seniority or performance)
3) Promotions against vacant positions or non vacant positions

(time bound)
4) Frequent promotions are not good practice
5) Promotions decision must be made based on job analysis and

performance appraisal
6) Clear promotion policy and communication to employees
7) Promotion based on competence must be advertised on notice

board
Promotions
Seniority based promotions Performance based promotions
Merits
1) Easy to administer 1) Performance is rewarded
2) Less subjectivity 2) Competent employees get
3) Labour unions are happy motivated and retained
4) Experience is taken into account 3) Productivity increases
5) Subordinates feel relax
6) Loyalty is rewarded
Demerits
1) Competence is ignored 1) Senior employee get frustrated
2) Seniority issues 2) Favoritism and subjectivity
3) Young and competent 3) Loyalty and service length are
employees feel aggrieved and not considered
frustration 4) Union leaders oppose and
4) Poor performer may get retaliate
promoted
Summary
Chapter 22
Separation
• Leaving of organization by employee is called separation
• Reasons: Voluntarily or Involuntarily

Reasons of
Separation
Voluntary Involuntary
• Quits • Discharges
• Retirement • Layoffs
Guidelines to Manage Downsizing • Retrenchment
• Decision to who stays and who leaves • VRS
• Delay and pay hikes • Rightsizing
• Freeze hiring (restructuring)
• Restrict overtime
• Retrain or redeploy employees
• Engage part time employees Adopted from: Aswathappa. Human Resource Management,
• Switch to job sharing Text and Cases, 2008, Pp. 516-52133
• Across the board pay cuts
• Early retirement schemes
• Keep morale of working employees
Lecture Overview
• Nature of IR
Nature of IR
Industrial Relations: “Concerned with the relationship between

management and workers and role of regulatory mechanism to
resolve disputes between employer and workers”
“IR is concerned with the system, rules and procedures used by

unions and employers to determine the reward for effort and other
conditions of employment to protect the interests of the employed
and their employers, and to regulate ways in which employers
treat their employees”
(p. 534)
Nature of IR
• IR covers
4) Grievances and disciplinary policy and practices
6) Industrial relation training

Importance of IR
• Moral dimension
• IR protect right of managers
• Handling disciplinary proceedings
• Fairness in practices and working relations

Approaches To IR
Unitary approach
Pluralistic approach Industrial Relations
Marxist approach
Approaches To IR
Unitary Approach
• Based on mutual cooperation, individual treatment, shared

goals and team work
• Everyone gains when there is common interest and goals and

promotion of harmony
• Conflict is destructive and unnecessary
• Direct negotiations with employees
• No need to involve government, and unions to resolve conflict

Approaches To IR
Pluralistic Approach
• There is competing interests, management’s role is to act as

mediator amongst competing interests groups
• Trade unions are representative of employee interests
• Concessions and compromised between management and

unions
• Conflict between management and union is good for productive

work environment and innovation
• Unions balance interest of employees and employer
• Government interferes in form of regulations to protect the

right of society and employees
• Crux: Conflict is inevitable and needs to be contained with in

the social mechanism of conciliation, collective bargaining, and
arbitration
Approaches To IR
Marxist Approach
• Conflict is inevitable but it is because of capitalist society
• Conflict is not because of competing interests of employees

and management but division with in society between people
who own resources and people who offer labour
• Industrial conflict is because of social and political unrest
• Trade unions are forum to react to capitalism exploitation and

bring social revolution
• Trade unions make employees (labour) position more strong in

capitalistic society
• All strikes are legitimate, fair and political
• Regard state interventions through legislation is to protect the

owners
Parties to IR
Employers
Employees
Employer-
Employees Employers
employee relations
Association Associations
Government Courts and

Tribunal
IR Strategy
1) Reactive Strategy
Resolve conflict when it arises and reach to uncontrollable level
2) Proactive Strategy
Follow forward looking and well planned strategy to deal with IR
Four main components of proactive IR strategy
i) Communication
ii) Relationships
iii) Competence
iv) Discipline and Conflict
Factors Affecting Employee Relationship Strategy
Internal Factors
1. The attitude of management to unions and employees

2. The attitude of employees and unions to management
3. The attitude of employees to unions
4. The strength of unions
5. The extent to which agreed and effective procedures and rules
exist within company to resolve disputes and handle disciplinary
matters
6. The competence of managers to deal with employees issues
External
1. Strength and effectiveness of employers’ associations
2. The pay and employment situations at local and national level
3. The legal framework in which IR operates
Role of HR Department in IR
• Motivated and competent workforce is responsibility of HR
• Through effective recruitment, work conditions, job designs, safety

and health environment, training and compensation HR department
satisfies employee and organization needs
• Through these efforts it contributes to quality of life of workers
• Workers with better quality of life less likely to resist, involve in

disputes and go on strikes
Summary
• Nature of IR

Chapter 23
Trade Unions
Lecture Overview

• Union tactics

Trade Unions
“Unions are volunteer organizations of workers or employers
formed to promote and protect the interests through collective
actions”
(p, 549)
Definition of Unions include
1. Combination of workers or employers

2. Could be permanent or temporary
3. Regulate relationships among workers, workers and
employers or among employers
Strategic Choices before managers

1. Allow unions or remain union free
2. If want to remain union free then what to do?
3. If allow unions what type of relationships want?
4. Tactics to negotiate with unions
Why Employees Join Unions
1. To protect against exploitation
2. Dissatisfaction (psychological contract)
3. Lack of power
4. Union Instrumentality
Factors Leading to Unionization
Personality, interests, and

preferences
Expectations that work will fulfill

personality, interests, and
preferences i) employment
contract ii) psychological contract
Influence of
Satisfaction Work situation management
Dissatisfaction with work situations Attempt to

resolve situation
independently
Union instrumentality
Unionization
Strategic Choices for Unions
1. Bread and Butter vs Political objectives
2. Adversarial vs Cooperative Role
3. Traditional issues vs New Services
Union Tactics
1. Organizing drive
2. Strike
3. Political patronage
4. Blackmail
Tactics to Remain Union Free
Effective first line Open Effective personnel

supervisors communication research
Effective personnel Union Healthy and safe work

planning and selection free environment
Effective training and Effective Effective employer and

development remuneration employee relationship
HR practices and Unions
HR practices negate the existence of unions because of following

reasons
• HR seeks employee relationships on individual basis (Pay and

performance)
• HR attempts for socialization of workforce means harmony

amongst workers and between management and workers,
emphasize authority of management
• Training programs attempts to bring loyalty and pro

management attitude
• Team based work environment
• Merit based selection and promotion

Chapter 24
Resolving Disputes
Recap
• Trade Unions
• Union tactics

Lecture Overview

Disputes
In academic sense dispute is “any conflict between employees

and employers, between employers and employers and between
employees and employees”
(p. 569)
In practical, dispute is conflict between employees and employers

Causes of Disputes
1) Wage Demands
• Wage demand never met because of inflation and high living
cost
2) Union Rivalry
• Inter-union rivalries
• Selection of collective bargaining agents
3) Political Interference
• Labour unions are politicized
4) Unfair labour practices

• Management unwilling to listen to demands of workers
• Management Unwilling to recognize unions
• Management gives not enough delegation of authority to
negotiate with union representatives
• In negotiations management representative take side of owners
• Management feel discretionary power to deal with employee
related issues
• Threating workers to join unions
bargaining
Conciliation
settlement
Adjudication
Grievance
procedure
1) Collective Bargaining
• Labour union negotiate with management representatives to
settle work rules, wages, labour contracts, work conditions,
and disputes
• The word collective is used because union as representative of

employees act as agent to bargain and deal with management
• From management side paid professionals, board of directors,

or selected management representatives negotiate with
employees’ union on behalf of organization or stakeholders
Approaches to collective bargaining
1) Process of social change

• Collective bargaining is process of bringing balance of power
between employees and employers
• In broader sense, it is technique to exert pressure on power full

and resource full group for the right of deprived people their
welfare, benefits, and security
2) Peace treaty
• Collective bargaining is peace treaty
• Peace is temporary in a sense that never both sides are

satisfied with the peace agreement in long run and looking for
opportunities to break the treaty and come up with unmet
demands
3) Industrial Jurisprudence
• Collective bargaining is a method to ensure that employer

deals with employees according to rules
• Collective bargaining is tool to protect the right of employees

and interest of employers with in the scope of prevailing law
• Collective bargaining give employees to participate and

influence in decisions that impact their work and working
conditions
Benefits of Collective Bargaining
1. It helps to protect the right of both parties
2. Uniform and acceptable conditions of work
3. Settle disputes
4. Establish rules and norm to deal with disputes
5. Democratic principle to settle industrial disputes

Strategic Choices for Collective Bargaining
1. When to start negotiations. Before expiry of wage contract or

after it?
2. Anticipate probable strike and maintain inventory to cope up

demands during strike period?
3. Which issue to discuss or handle first?
4. Managers must decide the members who will participate in

negotiation process from organization side?
5. Which issue can cause problems?
6. What to give and take from negotiation process?

negotiation
Bargaining
issues
Negotiating

breakdown
NO
Reaching the
agreement
Ratifying the
agreement
Administration
of agreement
Environment
Environmental factors that can influence bargaining process or

context in which bargaining process occurs
For example: Bargaining Structure: One union negotiating with

single company or single company negotiating with several
unions or several unions dealing with several companies
Type of relationship: Relationship that exists between union and

company. Cooperative or hostile
Issue: Issues to be handled

Preparing for Negotiation
a) From Management side
• Determining objectives
• Offers to make
• Understanding employees grievances and issues from their

point of view
• Deciding acceptable and unacceptable points
• Selecting best team for negotiation

Preparing for Negotiation
a) From Union side
• Understanding nature and importance of issue
• Analyzing attitude of management towards different issues by

looking at previous negotiations
• Understanding company financial position
• Understanding desires of employees

Identifying Bargaining Issues
1. Wage related issue
2. Supplementary economic benefits
3. Institutional issues
4. Administrative issues
Negotiating
• Each side present issues and demands
• Negotiation is art, need bargaining and communication skills
• If negotiation breaks tactics to restart negotiation
1. Third party intervention like arbitration
2. Union tactics like strikes and boycotts
3. Management tactics like lockout, bribing, splitting the union,

and using political influence
Dos of Negotiations
1. Negotiate in private
2. Let both sides win
3. Start with easy issues
4. Remove deadlocks by offering, showing flexibility,

emphasizing mutual benefits
5. Do offer less and receive more
6. Deal with spirit of the deal

Don’ts of Negotiations
1. Don not give best offer first
2. Do not reach to the agreement too quickly
3. Do not break the communication channel (let union members

to go to top management directly)
4. Do not say No directly

Settlement and Contract Agreement
• Both parties sit back and think for point agreed informally
• Both parties disclose agreed points to the stakeholders of their

side and take opinion
• Draft contract carefully leaving no ambiguity
• Deal with spirit of the deal

Administration of Contract/Agreement
• Agreement must be implemented in real spirit
• Communicate and analyze implementation clause by clause
• Stick adherence to provisions and clauses may sometime

invoke conflict (more important is spirit of the deal)
• Allow provisions for unexpected situations
• Line managers and HR managers can give important feedback

on implementation of contract
Lecture Overview

Chapter 24
Resolving Disputes
• IR covers
IR covers
2)
resolving disputes
3) and
practices
Lecture Overview

bargaining
Conciliation
settlement
Adjudication
Grievance
procedure
negotiation
Bargaining
issues
Negotiating

breakdown
NO
Reaching the
agreement
Ratifying the
agreement
Administration
of agreement
Collective bargaining a method of settling disputes
Legislative process: in a sense that it establish rules and norms

(term and condition) under which both management and labour
will work over a period of time
Executive process: Management and union officials share the

responsibility to enforce rule
Judicial Process: In every collective agreement there is grievance

handling procedure to settle any likely dispute regarding
implementation of agreement
Code of Discipline
Define duties and responsibilities of workers and employer. The

objectives of codes are
• Employer and employees respect and recognize each other’s

rights
• Settlement of disputes by negotiation, arbitration and

conciliation
• Eliminate coercion, intimidation and violation
• Avoid work stoppages
• Facilitate growth of unions
• Maintain discipline
Grievance Procedure
• Grievance is state of dissatisfaction of employees
• Method of settling disputes
• All agreement contains grievance procedure
• Conditions that can create grievance
1. Violation of terms and conditions

2. Violation of law
3. Violation of company rules
4. Change in work conditions or terms
5. Violation of health and safety standards
Arbitration
• Neutral third party listen to both parties, analyze bargaining

situation and then make recommendations that are
obligatory/binding on bothbargaining
1) Collective parties
Conciliation 2) Role of management, unions and

government
• Mediator persuades and facilitate both parties to discuss the
issue and reach to the agreement
• Conciliator helps both parties to understand demands of each
practices
other, explain position of each party, offer workable solutions
or helps in finding solutions
Adjudication
• Labour court or tribunal settles the disputes
• Conciliator refers to recommend the government to send the

case to courts. Once court decides the case it is obligatory on
both parties
• IR covers
IR covers
2)
resolving disputes
3) and
practices
Summary

Chapter 28

Recap of Previous Lectures
• Industrial Relations
• Resolving Disputes
• Collective Bargaining Process
• Labour Laws in Pakistan

Lecture Overview

• Globalization has significantly influence HRM practices and
policies
• All HRM functions need international orientation
• MNC operating internationally need to be more focused to

attract, motivate and transfer workforce globally
• The process of procuring, allocating, motivating, training &

development, and compensating and utilizing human
resources in international business is called international
human resource management
• IHRM covers six main functions of domestic HRM such as

HR planning, recruiting, training and development,
performance management, compensation and labour
relations
• The three countries categories of IHRM are country where

headquarter is based, country where subsidiary is located,
and country from where workforce and finances come
• The three types of workers in international business are
host country, parent country and third country nationals
• IHRM differs from domestic HRM on following points
1. More HR activities
2. Broader perspective
3. More involvement in employees’ personal lives
4. Greater workforce diversity
5. Change in Emphasis
6. More risk
7. More external influences

1) More HR activities
• IHRM has boarder scope in dealing with employment

related issues.
• For example: International taxation, host country

regulations, home country regulations, international
orientation of relocating and training of employees, and
administrative and compensation issues of expatriates, and
language translation services
• Each HR functions has different scope and issues in IHRM
HR Planning
• Difficulty in implementation of HR policy and procedure in

host country
• Difficulty in aligning business strategy with HR strategy
• Providing career development opportunities to international

managers
Hiring
• Matching person and organizational fit (cultural match)
• Selection of expatriates
• Managing expatriates failures
• Managing repatriation process

• Language training
• Cultural training
• Training of expatriates and managers
Compensation
• Deciding compensation of expatriates
• Deciding compensation of parent, host, and third country

nationals
• Implementation of performance evaluation system in host

country
• Physical distance, time difference, and reporting cost
• Raters to evaluate subsidiary performance


in subsidiary?
2) Need for Broader Perspective
In dealing with compensation issues, HR manager in

headquarter need to consider different pay systems for parent,
host, and third country nationals, paying in different
currencies, and change in relative value of currency
In deciding fringe benefits, HR managers face difficulty, in

most countries providing health insurance is compulsory,
whereas definition of dependent varies from country to
country, in some countries dependent means multiple
spouses, children, parents, grandparents
3) More involvement in employees’ personal lives
In IHRM, there is more involvement of HR department in

dealing with their personal issues for better selection, training,
relocation and effective management of global workforce
HRM department need to ascertain that managers selected for

foreign assignment understand housing, health care, and
remuneration package
HRM need to have more information about manager family,

schooling of their children, emotional and physical health of
their spouse and children etc.
‘International Human Resource Services’ section provide

services to managers like handling investment, banking, home
rental, house arrangements, home visits, and repatriation
issues
Unlike domestic HRM in International HRM, HR manager needs

to understand more about their personal lives and provide
support in relocation for foreign assignment even assistance
to children left behind
4) Greater Work force Diversity
IHRM requires more emphasis on management of global and
diversified work force
Different work ethics, motivation level, cultural compatibility,

managing team work are main issues that IHRM to handle
5) Change in Emphasis
Emphasis has changed from idea of repatriation and
dependence on third country nationals towards development
of local managers
As more trained local managers are available, the issue of

training and development of local managers come to highlight
Designing programs and policies to provide development

opportunities to local managers by placing them in
headquarter
6) Risk Exposure
MNCs operating in different countries need to assess the law

and order situation and advise or provide support to their
expatriates or third countries employees
HR department may also need to have emergency evacuation

program for their employees working in highly risk areas
Poor selection decision may result into huge loss as in case of

expatriate may not perform well and recalled
If MNC’s policies and practices are hostile to unions, political

party or in violation of host country regulations, company can
be asked to wind up operations or government may seize
physical and financial assets
7) External Influence
MNCs operating in host country face more external influence

as opposed to local company
Federal and local government, political figures, political and

social groups exert great pressure on foreign company
Subsidiary manager need to know local way of doing

business, dealing with different ministries, political parties,
social groups and labour unions
Growing interest in IHRM
There are number of reasons for growing interest in IHRM
Thanks to globalization, more and more entry of multinational

corporations means greater mobilization of human resources
In international business human resources performance is

more critical for success
The cost of underperformance in international assignment is

very high both in financial and image terms
The international expansion mainly depend on availability and

utilization of competent human resources
Finally, implementation of strategies is more crucial than

developing, and implementation is dependent upon culture
that is developed by HR policies and practices
HR Planning
Recruitment and
Selection
Training and
Development
Performance
Management
Remuneration
Repatriation
Employee Relations
Multicultural
Management
HR Planning
• HR planning in international business is more complex and

crucial
• HRP procedures are difficult to implement in different

countries. Cultural differences in view of planning
• Identification of top management
• Identification of critical competencies for future managers
• Providing developmental opportunities
• Tracking and supporting in pursuing international career

path
• Aligning business strategy with HRP and vice-versa

(European and Asian strategy)
Recruitment and Selection
• Main issue in international hiring is not to select competent

employee but candidate who could mix with culture of
organization
Ethnocentric Approach
• All key management positions are held by parent country
nationals
• This is good strategy at early stage of new start

up/operations in host country
Polycentric Approach
• Subsidiary is headed by host country nationals and parent
country nationals are at the top positions in headquarter
• Some countries have made regulation or exert pressure to

hire host country nationals for top position in subsidiary
Geocentric Approach
In this staffing approach best people are selected to fill vacant

positions irrespective of their nationality
Parent Country • Familiarity with • Difficulty in adjustment:
Nationals headquarters goals and foreign language, different
objectives culture and political and socio
• More organizational economic system
control and coordination • Cost of training,
• Competent managers are remuneration and family
giving expatriate benefits
opportunity • Host countries nationals feel
• Specific skills and demotivated when they see
experience no further progress
• PCN can impose
unnecessarily HQ culture and
style
• Family adjustment issues
Host Country • Familiarity with country’s • Communication problems
Nationals culture, political system and with home country
business practices management
• Low cost of hiring and • Little chance of host
remuneration country nationals to get
• Promotional opportunities for international assignments
locals hence motivated and and experience
committed • Difficulty in inculcating HQ
• No language barrier management philosophy,
• Continuity of management culture, and best practices
Third Country • Low salary package as • Host country may not like
Nationals compared to PCN to hire TCN
• They are truly international • TCNs may not return to
managers their country
• May be more aware of host • Host country may be
country culture, political and sensitive or have hostile
economic system, language attitude toward TCN
hence easily and quickly • Resistance from subsidiary
adjust employees
Summary

Summary

Factors Influencing PCN and HCN Choice
Dimensions Factors
Parent Country Cultural distance between HQ and subsidiary, size
Characteristics of operation, research intensity
Industry Characteristics Financial institution, need for control, need to
customize
Subsidiary Age, acquired or strategic role of subsidiary,
Characteristics performance, ownership
Host Country Variables Educational levels, political risk, cost of hiring
Problems of Expatriates
Expatriates are those employees who work abroad (away from
their home country) for a specific time period with a planned
return to third country or home country
Expatriates Assignment life cycle Reassignment
Crises and aboard
adjustment
Need for Departure
expatriates
Post arrival
training
Repatriation
Pre assignment or and
Selection adjustment
training
process
Crises and
failure
Reasons of Expatriate Failure

US Firms Japanese Firms
Spouse adjustment problem Inability to cope with
Inability of managers to adjust Difficulties with environment
Other family reasons Personal and emotional
problems
Personal and emotional Lack of technical competence
maturity of managers
Inability to cope with Spouse adjustment problem
Expatriate Adjustment Process
Cultural Shock Cycle

High
Mood
Low
Months in new culture
Expatriate Selection Decision
Individual Situation
Technical Ability Country-cultural requirements
Cross cultural suitability MNC requirements
Family requirements Language
The common objectives of training and development in MNCs

are
• Bridging cultural gap between subsidiary and HQ

• Orientation challenges are different in HQ and subsidiary
• Building united corporate culture
• Training and development activity IHRM most of the time

focus on training of candidate likely to be posted abroad
• Expatriates are giving training to reduce likelihood of failure

in foreign assignment. The main components of training of
expatriate are cross cultural, language and practical
training, and management development programs
1) Cross Cultural Training:
• Expatriate receives pre-departure training on host country

culture to make it easy for him/her to adjust to new culture
• Expatriate often receives training on repatriation to avoid

cross cultural shock
Merits Demerits
More chances of success in May not remove cultural biases
foreign assignment
Provides comprehensive global Recipient may not take it
perspective serious
Sense of confidence May not make real difference
in business
Reduces cultural shock Can not prepare manager to
face all real life problem
In IHRM performance management tend to focus on evaluation

of performance and continuous improvement of individual,
subsidiary and corporate performance against pre set targets
and objectives
Steps in Performance Management of Expatriate
Linkage to organizational strategy
Setting individual performance goals
Identifying variable impacting performance
Appraising the performance
Providing regular feedback
Providing opportunities for development
Linking results with rewards
CONTEXT OF HRM
Aswathappa, K. (2008): Human Resource Management,

Text and Cases, 5th Edition, McGraw Hill Company, India
Lecture Overview
 Factors that affect HR practices and Policies
 Internal and External Forces
 HR has key role in environmental scanning
 Environmental scanning is critical to devise

policy and strategy direction in right way
 Futuristic approach
CONTEXT OF HRM
• The environment in which HR Professionals
need to work
Strategy Political
/Leadership
Organization Legal
Culture
Management Economics
Philosophy
Unions Technology
Professional bodies
National Culture
EXTERNAL FORCES
• 1 Political and Legal
• Three constitutes of political environment
• The legislature
• Executive
• Judiciary
EXTERNAL FORCES
• Political and Legal
• The Legislature
– It means parliament ,national assembly, provincial
assembly and senate
• The Executive
– Popularly known as government, who implement rules
and regulations (bureaucracy, federal, provincial, and
district government)
• The Judiciary
– the main function of judiciary is to make sure that
legislature and executives are working in accordance
with constitution/law and in public interest
EXTERNAL FORCES
• Political and Legal Forces impact on HR
• Labor Laws, EEO
• For Example: term and conditions of employment,

• wages and working conditions,discrimination in
employment based on race, gender, religion etc.
EXTERNAL FORCES
Economic
• Economic factors which affects HR functions
Economic growth Competitors
• Industrial Labour (laws, preference) Customers
• National population
• Per Capita income
• Suppliers (employment agencies, institutes)

EXTERNAL FORCES
Economic Factors Suppliers
Those who provide Human Resources to the organization
Employment Agencies
Educational Institutes
Training Institutes
Consulting Firms
Competitors
EXTERNAL FORCES
• Globalization has significant influence on HR polices and

functions
• HR Functions are being performed in global perspective
• Employee hiring
• Training
• Motivation
• Compensation
• Retaining
TECHNOLOGICAL
Five ways in which technology can effect HR functions
1. More intellectual jobs
2. Virtual teams
3. Jobs becoming more challenging and rewarding
4. More interaction
5. Employees are more knowledgeable

CULTURAL FORCES`
• Culture influence the HR functions
• Culture make personality of people who become member of

organization
• Sub cultures with in Culture
• People from different cultural background, work in organization

that make another distinct culture
CULTURAL FORCES
• Attitude towards work and belief (for example: destiny is fixed)
• Time Orientation (past, present and future)
• For example: American Society (present, retain employees as far as

useful for organization. Japanese (futuristic, hire employee for long
term)
• Work ethics (moral values): hard work and commitment. Need for
achievement take higher responsibility
• Preferences or confinement to specific occupation and regions

(Muslim may not prefer to work in Europe, Family business (comfort
zone)
INTERNAL FORCES
Strategy (long term growth or short term profit)
• Task (job itself have effect on employee motivation, job

enrichment)
• Leadership (define HR policies and practices)
• Unions (WAPDA, PTCL)
• Organizational culture (represent by its people, work believes,

norms, work ethics, history) for example GM believes in
product innovation
• Professional bodies (PEC, PMDC) define code of ethics,

accreditation
KNOWING THE ENVIRONMENT
• The environment often provides a glimpse of information
• What to accept or reject is mostly based on three concepts
• 1 Enacted Environment: (organization creates its own

environment, define its environment based on external
environment to react)
• Disadvantages: Narrower perspective (US automaker ignore

Japanese companies)
• Advantages: Proactive approach

• Domain and Domain Consensus
• Deciding domain and scope of the organization
• Range of product to offer, geographical region,

services, target population (this makes task easy)
• Lack of Domain consensus create conflict

Task Environment
• It identifies the technology to be employed and

strategies to be followed
• Immediate outside environment
• For example: Growth vs Retrenchment Strategy

SCANNING THE ENVIRONMENT
• Trends and projections of factors that might affect the

organization
• Scanning help to give filter information
• HR department provides feedback for policy making
• HR department responsible to scan the environment

relating to human resources and labor market
issues
• Role of Boundary Spanning linking organization with

environment
Summary
 Factors that affect HR practices and Policies
 Internal and External Forces
 HR has key role in environmental scanning
 Environmental scanning is critical to devise

policy and strategy direction in right way
 Futuristic approach
Chapter 20
A Safe and Healthy Environment

Lecture Overview
• Employee Safety
• Health
• Work Stress
• Burnout
Health
• The wellbeing of employee is depend on physical and mental
health
i) Physical Health
• Poor health means reduce productivity, more absenteeism and
more cost on health services
ii) Mental Health

• Work pressure and tension
iii) Noise Control

• Noise can be minimized but very difficult to eliminate
• Industrial age causing noise problems
• Continuous exposure to noise result into impaired hearing
• Noise exposure may also cause heartburn, fatigue, change in
blood circulation, and hormonal problems
Control Methods
a) At the source ii) absorption iii) through enclosure
Work Stress
iv) Work Stress: Stress can be defined as “the response of
individual to disturbing factors and consequences of this
reaction”
Stressors are physical and psychological demands that cause

stress
Positive Stress: Also called eustress is positive motivator
Negative Stress: Condition or situation that cause physical,

emotional and psychological damage
Stress is combination of constraints, demands, and uncertainties
How much stress individual takes depend on

i) Perception of the situation ii) Past experience iii) social support
iv) Personality/Individual differences
Burnout: It is closely associated with stress. It is defined as “total

depletion of physical and mental resources caused by excessive
striving to reach an unrealistic work-related goals” (Dessler, p. 667)
Individual Level Work Stress
Personality Behavioral
Role overload Satisfaction
Role conflict Performance
Role ambiguity Absenteeism
Task characteristics Turnover
Stress Accidents
Substance abuse
Group Level
Managerial behavior
Lack of cohesiveness Cognitive
Intragroup conflict Poor decision making
Status incongruence Lack of concentration
Sexual harassment Forgetfulness
Workplace violence
Organizational Level Moderating Variable

Climate Perception
Management styles Past experience Physiological
Organizational design Social support Diseases
Organizational life cycle Individual differences Burnout
Extra organizational
level
Family
Economy
Lack of mobility
Quality of life
Work Stress
Stress Burnout
The person feel fatigue The individual encounters
chronic exhaustion
The person is anxious The individual is hypertensive
The person is dissatisfied with The person is bored
the job
The person's job commitment Job commitment is nil
has declined
The person feels moody The person feel impatient,
unwilling to talk to other
The person feels guilty The person encounters mental
depression
The person is having difficulty in Forgetfulness is frequent
concentrating. Forget things
The individual face physical The person is psychologically
health problems upset
Adopted from: Aswathappa. Human Resource Management, Text and Cases, 2008, Pp. 50233
Burnout Model
Emotional
exhaustion
Personal, job and Attitudinal and

organizational behavioral
stressors symptoms of
burnout
Depersonalization
Feeling a lack of
personal
accomplishment
Stress Management
Signs of Stress
Physical Emotional Mental Relational Spiritual Behavioral
Appetite Bad temper Lacking Isolation Feeling of pacing
change humour emptiness
Headache Anxiety Dull senses Defensive Apathy Swearing
Fatigue Nightmares Lethargy Intolerance Inability to Substance

forgive abuse
Insomnia Irritability Boredom Resentment Cynicism Nail biting
Indigestion Depression Indecisiveness Loneliness Loss of Slumped

direction posture
Cold Frustration Forgetfulness Nagging Doubt Restlessness
Wight change Over Poor Low desire Need to prove Risk aversion
sensitivity concentration self
Teeth grinding Mood swing Personality Aggression Negative Eating
changes outlook disorders
Tension Fearfulness Stuck in past Abuse Gloom Headaches
Stress Management
1 Individual Strategies
a) Biofeedback
b) Muscle relaxation
c) Mediation
d) Cognitive restructuring
e) Time management
Stress Management
2 Organizational Strategies Programs for Employee perception and
outcomes of stress
• Team building
Programs for Work Stressors • Behavior modification
• Improvements in physical work conditions • Career counseling
• Job redesign • Time management workshops
• Reducing workload and changing deadlines • Workshops on burnout
• Structural reorganization Organizational • Training in relaxing techniques
• Change in work schedule, recreational leave strategies • Physical fitness programs
• Management by objectives
• Employee participation
• Workshops on role clarity and conflict
Outcomes of stress
Work stressors Physiological
• Workload Emotional
• Job conditions Employee Behavioral
• Role conflict and perceptions/stress
ambiguity experience
• Aggressive behavior
• Conflict between
work and other roles
Adopted from: Aswathappa. Human Resource Management, Text and Cases, 2008, Pp. 505-50633
Summary
• Employee Safety
• Health
• Work Stress
• Burnout

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CHAPTER 4

HUMAN RESOURCE PLANNING

Human Resource Planning

• Human Resource Planning

“HRP is process of forecasting firm's future demand

 HRM department should initiate the recruitment and selection

Importance of HRP can be highlighted by following

1. Future Personnel Needs

• Planning helps to determine future personnel

2. PART OF STRATEGIC PLANNING

• HRP can facilitate strategic planning at two ends

• At the start, it provides information for strategy formulation like

• At the end, it assist in making resource allocation decisions,

• Now a days organizations need knowledge workers

• Adoption of new technology creates demand for

• Management succession planning helps to decide who

• Global expansion strategy relies on HRP. From

• HRP integrate HR plan with organization external &

• HR department often need to fill key jobs with

• 5. Foundation for Personnel Functions

• HRP provides essential information in development

• 6. Increasing Investment in Human Resources

• Investment perspective of human resource highlights the need

• Human Resources Planning help to make right investment

7. Resistance to Change and Move

• Employee resist to change and move

• HRP assists to plan well ahead employees'

8. Unite the Perspective of Line and Staff Managers

• HRP identify and harmonize the purpose of HR staff

• Top management has a better view of influence and

1 Type and strategy of an organization

1 Type and strategy of an organization

6 Nature of Jobs being filled

Surplus Control and evaluation Shortages

Human Resource Planning

The Planning Process

Surplus Control and evaluation Shortages

Organizational objectives and policies

Ratio Trend Analysis

Workforce Study Techniques

• After demand forecast, next step is to consider the availability and

• In benefits of supply forecast are

• 1) prevent shortages of employees 2) assess existing staffing level

• HR audit keep records of employee skills and abilities

• Skill inventories provide information about non managers

• Number and type of employee supervised

• Total budget managed

• Previous management duties

• Techniques generally used for forecast internal supply

– Inflows and outflows

– Turn over rate

– Conditions of work and absenteeism

Movement among jobs

Estimation of Internal Supply of Computer Programmer

• External sources important for several reasons such

2. Organization needs to replenish lost personnel

3. Organization growth and diversification

After forecasting personnel demand and supply, the

• Converting HR plan into actions

Strategies for Managing Strategies for Managing Surplus

Adopted from Aswathappa, 2008, p. 95

RECRUITMENT, SLECTION AND PLACEMENT

• The selection program should be professionally designated