Category: Management Notes

Lucknow University BBA Notes / Management Notes

HRM Practices: Change in perspective

indiafreenotesby indiafreenotes0

The Normative Perspective

The normative perspective of human resource management bases itself on the concepts of “hard HRM” and “soft HRM,” on which the foundations of human resource management rest.

The concept of “Hard HRM” is the basis for the traditional approach toward human resource management. This concept traces its origins to the Harvard model that links workforce management to organizational strategy. Hard HRM stresses the linkage of functional areas such as manpower planning, job analysis, recruitment, compensation and benefits, performance evaluations, contract negotiations, and labor legislations to corporate strategy. This enforces organization interests over the employees’ conflicting ambitions and interests. It views the workforce as passive resources that the organization can use and dispose at will.

Soft HRM is synonymous with the Michigan model of human resources and is the bedrock of the modern approach to strategic human resource management. This model considers human capital as “assets” rather than “resources” and lays stress on organizational development, conflict management, leadership development, organizational culture, and relationship building as a means of increasing trust and ensuring performance through collaboration. This approach works under the assumption that what is good for the organization is also good for the employee.

The Critical Perspective of Human Resource Management

The critical perspective of human resource management is a reaction against the normative perception. This highlights some inherent contradictions within the normative perspective.

This perspective espouses a gap between rhetoric, as organizations claim to follow soft HRM policies when they actually enforce hard HRM. A study by Hope-Hailey et al. (1997) finds that while most organizations claim employees to be their most important assets and make many commitments for their welfare and development, in reality employers enforce a hard HRM-based strategic control, and the interests of the organization always take priority over the individual employee.

The Behavioral Perspective of Human Resource Management

The behavioral perspective of human resource management has its roots in the contingency theory that considers employee behavior as the mediator between strategy and organizational performance. This theory holds that the purpose of human resource intervention is to control employee attitudes and behaviors to suit the various strategies adopted to attain the desired performance. This perspective thus bases itself on the role behavior of employees instead of their skills, knowledge, and abilities.

For instance, an organization aiming to innovate will require a workforce that demonstrates a high degree of innovative behavior such as long-term focus, cooperation, concern for quality, creativity, propensity for risk taking, and similar qualities. The role of human resource management in such a context is to inculcate and reinforce such behavioral patterns in the workforce.

The Systems Perspective of Human Resource Management

The systems perspective describes an organization in terms of input, throughput, and output, with all these systems involved in transactions with a surrounding environment. The organized activities of employees constitute the input, the transformation of energies within the system at throughput, and the resulting product or service the output. A negative feedback loop provides communications on discrepancies.

The role of human resource management in the systems perspective is

  1. Competence management to ensure that the workforce has the required competencies such as skills and ability to provide the input needed by the organization.
  2. Behavior management through performance evaluation, pay systems, and other methods to ensure job satisfaction, so that employees work according to the organizational strategy, ultimately boosting productivity.
  3. Setting up mechanisms to buffer the technological core from the environment in closed systems.
  4. Facilitating interactions with the environment in open systems.

Agency or Transaction Cost Perspective of Human Resource Management

Among the different perspectives of human resource management is the agency or transaction cost perspective, which holds the view that the strong natural inclination of people working in groups is to reduce their performance and rely on the efforts of others in the group. When one person delegates responsibility to another person, conflicts of interests invariably arise.

The major role of human resource management in such a context is to promote alternative ways of controlling behavior to reduce the effects of such conflicts and minimize the cost to the organization. The two major approaches include

  1. Monitoring employee behavior and preventing shrink of work by establishing effective control systems and improving productivity.
  2. Providing employees with incentives such as rewards, motivation, and job satisfaction to increase their individual performance.

The human resource department needs to adopt the approach that minimizes transaction cost to the organization.

Lucknow University BBA Notes / Management Notes

Principles of Wage and Salary Administration

indiafreenotesby indiafreenotes0

The main objective of wage and salary administration is to establish and maintain an equitable wage and salary system. This is so because only a properly developed compensation system enables an employer to attract, obtain, retain and motivate people of required calibre and qualification in his/her organisation. These objectives can be seen in more orderly manner from the point of view of the organisation, its individual employees and collectively. There are outlined and discussed subsequently:

Organisational Objectives:

The compensation system should be duly aligned with the organisational need and should also be flexible enough to modification in response to change.

Accordingly, the objectives of system should be to:

  1. Enable an organisation to have the quantity and quality of staff it requires.
  2. Retain the employees in the organisation.
  3. Motivate employees for good performance for further improvement in performance.
  4. Maintain equity and fairness in compensation for similar jobs.
  5. Achieve flexibility in the system to accommodate organisational changes as and when these take place.
  6. Make the system cost-effective.

Individual Objectives:

From individual employee’s point of view, the compensation system should have the following objectives:

  1. Ensures a fair compensation.
  2. Provides compensation according to employee’s worth.
  3. Avoids the chances of favouritism from creeping in when wage rates are assigned.
  4. Enhances employee morale and motivation.

Collective Objectives:

These objectives include:

  1. Compensation in ahead of inflation.
  2. Matching with market rates.
  3. Increase in compensation reflecting increase in the prosperity of the company.
  4. Compensation system free from management discretion.

Beach has listed the five objectives of wage and salary administration:

  1. To recruit persons for a firm
  2. To control pay-rolls
  3. To satisfy people, reduce the incidence of turnover, grievances, and frictions.
  4. To motivate people to perform better
  5. To maintain a good public image.

Principles of wage and salary administration:

The main principles that govern wage and salary fixation are three:

  1. External Equity
  2. Internal Equity
  3. Individual Worth.

1. External Equity:

This principle acknowledges that factors/variables external to organisation influence levels of compensation in an organisation. These variables are such as demand and supply of labour, the market rate, etc. If these variables are not kept into consideration while fixing wage and salary levels, these may be insufficient to attract and retain employees in the organisation. The principles of external equity ensure that jobs are fairly compensated in comparison to similar jobs in the labour market.

2. Internal Equity:

Organisations have various jobs which are relative in value term. In other words, the values of various jobs in an organisation are comparative. Within your own Department, pay levels of the teachers (Professor, Reader, and Lecturer) are different as per the perceived or real differences between the values of jobs they perform.

This relative worth of jobs is ascertained by job evaluation. Thus, an ideal compensation system should establish and maintain appropriate differentials based on relative values of jobs. In other words, the compensation system should ensure that more difficult jobs should be paid more.

3. Individual Worth:

According to this principle, an individual should be paid as per his/her performance. Thus, the compensation system, as far as possible, enables the individual to be rewarded according to his contribution to organisation.

Alternatively speaking, this principle ensures that each individual’s pay is fair in comparison to others doing the same/similar jobs, i.e., ‘equal pay for equal work’. In sum and substance, a sound compensation system should encompass factors like adequacy of wages, social balance, supply and demand, fair comparison, equal pay for equal work and work measurement.

Management Notes

Quality Circle Meaning, Features and Objectives

indiafreenotesby indiafreenotes0

Quality Circle is a small group of employees who meet regularly to identify, analyze, and solve work-related problems, aiming to enhance productivity and quality. Typically composed of workers from the same department, these circles encourage participation and collaboration, promoting a culture of continuous improvement. Members share insights and suggestions, which are presented to management for consideration. Quality Circles empower employees, foster teamwork, and enhance communication, leading to improved processes, reduced waste, and greater job satisfaction, ultimately contributing to the organization’s overall performance and competitiveness.

Features of Quality Circle:

  1. Employee Involvement

Quality Circles are formed by employees from the same work area or department, encouraging their active involvement in problem-solving. This feature empowers workers by giving them a voice in the decision-making process. Employees feel valued and engaged when they participate in identifying issues and proposing solutions, leading to a more motivated workforce.

  1. Voluntary Participation

Participation in Quality Circles is typically voluntary, allowing employees to choose whether to join. This voluntary nature fosters a genuine interest among members, as they are motivated by a desire to improve their work environment and processes. When employees are passionate about their contributions, they are more likely to be engaged and committed to the circle’s objectives.

  1. Focus on Continuous Improvement

Quality Circles aim to foster a culture of continuous improvement within the organization. Members regularly identify problems, analyze processes, and propose innovative solutions to enhance quality and efficiency. This ongoing commitment to improvement helps organizations adapt to changing circumstances and maintain a competitive edge in their industry.

  1. Structured Meetings

Quality Circles operate through structured meetings, where members discuss issues, share ideas, and develop action plans. These meetings often follow a systematic approach, such as the Plan-Do-Check-Act (PDCA) cycle, to ensure effective problem-solving. The structured format allows for organized discussions, ensuring that all voices are heard and that action items are clearly defined.

  1. Emphasis on Teamwork

Quality Circles promote teamwork and collaboration among employees. Members work together to identify challenges, brainstorm solutions, and implement improvements. This collaborative approach fosters a sense of camaraderie and strengthens relationships among team members. By working together, employees leverage diverse perspectives and skills, leading to more innovative solutions and better outcomes.

  1. Management Support

For Quality Circles to be effective, they require support from management. This support includes providing resources, facilitating training, and encouraging a culture of open communication. When management actively participates and shows commitment to the process, it enhances the credibility of Quality Circles and encourages more employees to engage.

  1. Results-Oriented Approach

Quality Circles are focused on achieving tangible results. The success of these groups is measured by the improvements they implement, such as increased productivity, reduced waste, and enhanced quality. By concentrating on measurable outcomes, Quality Circles demonstrate their value to the organization and motivate members to continue striving for excellence.

Objectives Quality Circle:

  1. Enhance Quality of Products and Services

One of the primary objectives of Quality Circles is to improve the quality of products and services offered by the organization. Members work collaboratively to identify quality-related issues, analyze root causes, and propose solutions. By focusing on quality enhancement, organizations can increase customer satisfaction and loyalty.

  1. Foster Employee Involvement and Empowerment

Quality Circles aim to empower employees by involving them in the decision-making process. By allowing team members to contribute their ideas and insights, organizations promote a sense of ownership and responsibility among employees. This involvement leads to higher morale and engagement, ultimately creating a more motivated workforce.

  1. Encourage Teamwork and Collaboration

Quality Circles are designed to promote teamwork and collaboration among employees. By working together to solve problems, team members develop strong relationships and improve their communication skills. This collaborative environment fosters a culture of cooperation, which can lead to more innovative solutions and improved organizational effectiveness.

  1. Identify and Solve Problems Proactively

Quality Circles encourage employees to take a proactive approach to problem-solving. Rather than waiting for issues to arise, team members are trained to identify potential problems before they escalate. This proactive mindset not only helps in addressing current challenges but also mitigates future risks, ensuring smoother operations.

  1. Facilitate Continuous Improvement

Continuous improvement is a core objective of Quality Circles. Members are encouraged to constantly assess and refine processes, systems, and workflows. By adopting methodologies such as the Plan-Do-Check-Act (PDCA) cycle, teams can implement incremental changes that lead to significant long-term improvements in efficiency and effectiveness.

  1. Improve Communication Across the Organization

Quality Circles facilitate open communication among employees and management. By creating a platform for dialogue, these circles enable members to voice their concerns, share ideas, and provide feedback. Improved communication leads to better understanding and alignment on organizational goals, fostering a collaborative culture.

  1. Reduce Costs and Increase Efficiency

By identifying inefficiencies and implementing improvements, Quality Circles aim to reduce operational costs. Members analyze processes to find ways to eliminate waste and streamline operations. The focus on efficiency not only lowers costs but also enhances productivity, allowing organizations to allocate resources more effectively.

Lucknow University BBA Notes / Management Notes

Strategic Management of Industrial Relations

indiafreenotesby indiafreenotes0

An IR Strategy is an expression of an enterprise’s capacity to develop and implement a sound industrial relations management plan which ensures that industrial relations issues and risks are identified, assessed and managed. The IR Strategy should demonstrate the integration of industrial relations requirements with the normal procedures, practices and performance standards of the enterprise.

It involves an enterprise:

  • Developing a policy statement on industrial relations management that has the total support of management.
  • Defining responsibilities for industrial relations management within the enterprise.
  • Identifying resources and procedures for implementing required industrial relations management measures.
  • aving planning processes and procedures in place that enable identification of potential industrial relations issues and facilitate the development of measures to minimize impacts.
  • Outlining methods used to assess the capacity of subcontractors to understand and comply with their industrial relations responsibilities, and
  • Establishing procedures to review and monitor the implementation of measures which support the IR Strategy and to initiate corrective action when required.

Factors Affecting Employee Relations Strategy:

Two sets of factors, internal as well as external, influence an IR strategy.

The internal factors are:

  1. The attitudes of management to employees and unions.
  2. The attitudes of employees to management.
  3. The attitudes of employees to unions.
  4. The inevitability of the differences of opinion between management and unions.
  5. The extent to which the management can or wants to exercise absolute authority to enforce decisions affecting the interests of employees.
  6. The present and likely future strength of the unions.
  7. The extent to which there is one dominating union or the existence of multiple unions leading to inter-union rivalry.
  8. The extent to which effective and agreed procedures for discussing and resolving grievances or handling disputes exist within the company.
  9. The effectiveness of managers and supervisors in dealing with problems and disputes related to IR.
  • The prosperity of the company, the degree to which it is expanding, stagnating or running down and the extent to which technological changes are likely to affect employment conditions and opportunities.

The external factors affecting IR strategy are:

  1. The militancy of the unions-nationally or locally.
  2. The effectiveness of the union and its officials and the extent to which the officials can and do control the activities of supervisors within the company.
  3. The authority and effectiveness of the employer’s association.
  4. The extent to which bargaining is carried out at national, local or plant level.
  5. The effectiveness of any national or local procedure agreements that may exist.
  6. The employment and pay situation-nationally and locally.
  7. The legal framework within which IR exists.

IR – STRATEGIES

  1. Trade unionism

Unions have a crucial role to play in IR. Unions have broad objectives which are:’

  1. To redress the bargaining advantage of the individual worker vis-a-vis the individual employer, by substituting joint or collective action for individual action,
  2. To secure improved terms and conditions of employment for their members and the maximum degree of security to enjoy these tern1S and conditions,
  3. To obtain improved status for the worker in his or her work, and
  4. To increase the extent to which unions can exercise democratic control over decisions that affect their interests by power sharing at the national, corporate and plant levels.

The union power is exerted primarily at two levels-at the industry level, to establish joint regulation on basic wages and hours with an employer’s association or its equivalent; and at the plant level, where the shop stewards’ organizations exercise joint control over some aspects of the organization of the work and localized terms and conditions of employment.’ Unions arc a party to national, local and plant level agreements which govern their actions to a greater or lesser extent, depending on their power, and on local circumstances (read the next chapter for more details on unions).

Employers too, are directly involved in any dispute between them and the employees. Employers are endowed with certain inalienable rights vis-a-vis labor. The management has the right to hire and fire any worker, Not withstanding union restrictions. It is not just firing a worker here or there, but the management’ s ability to control the economic destiny of the workers that matters The management has the right to relocate, close , merge, takeover or sell a particular plant- these actions affect workers’ interests. The management has another powerful weapon-introducing or threatening to use technological change. Technological change can displace labour or annihilate skills.

Armed with these rights, the management resorts to several tactics to break a strike, some of them even unethical. The management is known to adopt dubious means to forego a strike, call off a strike, or tone down union demands. The management often breaks a powerful union, sets one faction against another, and favours the more satisfied and the less militant workers. Loyal workers from sister concerns arc brought in. on the pretext of a factory visit, and are induced into the plant and advised to break the strike

  1. Grievance Procedure

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

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

These steps are:

STEP 1: In the first step the grievance is to be submitted to departmental representative, who is a representative of management. He has to give his answer within 48 hours.

STEP 2: If the departmental representative fails to provide a solution, the aggrieved employee can take his grievance to head of the department, who has to give his decision within 3 days.

STEP 3: If the aggrieved employee is not satisfied with the decision of departmental head, he can take the grievance to Grievance Committee. The Grievance Committee makes its recommendations to the manager within 7 days in the form of a report. The final decision of the management on the report of Grievance Committee must be communicated to the aggrieved employee within three days of the receipt of report. An appeal for revision of final decision can be made by the worker if he is not satisfied with it. The management must communicate its decision to the worker within 7 days.

STEP 4: If the grievance still remains unsettled, the case may be referred to voluntary arbitration.

  1. Model Grievance Procedure

The draft Model Grievance procedure, accepted by the labour conference in 1958, is as follows.

  1. An arrived employee shall first present his grievance verbally in person to the officer designated by the management for this purpose. The response shall be given by the officer within 48 hours of the presentation of the complaint. If the worker is not satisfied with the decision of the officer or fails to receive the answer within 48 hours he will, either in person or accompanied by is departmental head, present his grievance to the head of the department.
  2. The head of the department shall give his answer within 3 days or if action cannot be taken within this period, the reason for delay should be recorded. If the worker is dissatisfied with the decision of the department all head, he may request that his grievance be forwarded to the Grievance Committee.

li>The Grievance committee shall make its recommendation to the manager within 7 days if the workers request. If decision cannot be given within this period, reason should be recorded. Unanimous decision of the committee shall be implemented by the management. If there is a difference of opinion among the members of the committee, the matter shall be referred to the manager along with the views of the members and the relevant papers for final decision.

  • In either case, the final decision of the manger shall be communicated to the employee within three days from the receipt of the Grievance Committee’s recommendations.
  1. If the worker is not satisfied even with the final decision of the manager, he may have the right to appeal to the manager for revision. In making this appeal he may take a union official with him to facilitate discussion with the management. The management will communicate the decision within 7 days of workman’s revision petition.
  2. If worker is still not satisfied, the mater may be referred to voluntary arbitration.
  3. Where a workers has taken a grievance for readdress under the grievance procedure the formal conciliation machinery shall not interview till all steps in the procedure have exhausted. A grievance shall be presumed to assume the form of a dispute only when the final decision of top management is turned down by the worker.

The Grievance Committee shall consist of 4 to 6 members.

  1. Disciplinary Procedure

Maintenance of harmonious human relations in an organization depends upon the promotion and maintenance of discipline. No organization can prosper without discipline. Discipline has been a matter of utmost concern for all organizations. Maintenance of effective discipline in an organization ensures the most economical and optimum utilization of various resources including human resources. Thus, the objective of discipline in an organization is to increase and maintain business efficiency. Effective discipline is a sign of sound human and industrial relations and organizational health.

  • . Approaches to Discipline
    1. human relations approach,
    2. human resources approach,
  • group discipline approach,
  1. the leadership approach, and
  2. judicial approach.

Strategic Approach to Industrial Relations

The different approaches to discipline include,

The employee is treated as human being and his acts of indiscipline will be dealt from the viewpoint of values, aspirations, problems, needs, goals behavior etc. Under human relations approach the employee is helped to correct his deviations. The employee is treated as a resource and the acts of indiscipline are dealt by considering the failure in the areas of development, maintenance and utilization of human resources under the human resources approach. The group as a whole sets the standards of discipline, and punishments for the deviations. The individual employees are awarded punishment for their violation under the group discipline approach. Every superior administer the rules of discipline and guides, trains and controls the subordinates regarding disciplinary rules under the leadership approach.

In Judicial approach, in disciplinary cases are dealt on the basis of legislation and court decisions. The Industrial Employment (Standing Orders) Act, 1946, to a certain extent, prescribed the correct procedure that should be followed before awarding punishment to an employee in India. No other enactment prescribed any procedure for dealing with disciplinary problems. But over a period of time, a number of principles regarding the basic formalities to be observed in disciplinary procedures emerged, gradually resulting from the awards of several Industrial Tribunals, High Courts and the Supreme Court. Principles of Natural Justice.

Management Notes

Theories of Industrial Relations

indiafreenotesby indiafreenotes0

According to Encyclopaedia Britannica, “The concept of industrial relations has been extended to denote the relations of the state with employers, workers and their organisations. The subject, therefore, includes individual relations and joint consultation between employers and work people at their work place; collective relations between employers and their organisations and trade unions and the part played by the state in regulating these relations.”

Before the evolution of the concept of “industrial relations”, two concepts, namely “personnel administration” or “personnel management” and “labour relations”, were widely prevalent in industrial organisations. The term “personnel administration” laid emphasis on management’s relationships with a focus on individual employees.

The main areas of its operation comprised the following – recruitment and selection, remuneration, working conditions, promotions and transfers, termination of service and welfare amenities at the place of work. The relationships between the management and organised “labour relations” represented by unions came under the arena of “labour relations”.

The main areas covered under “labour relations” comprised the following – union recognition, collective bargaining, labour contract, industrial disputes, work-stoppages, day- to-day relationships with union representatives and governmental intervention regulating such relationships. In many organisations, “industrial relations” combined the activities and coverage of both “personnel administration” and “labour relations.”

Whatever might have been the differences in organisational arrangements, all the terms have come into usage even to date. At present, “industrial relations” is considered synonymous to “labour relations”, implying the relationships of the management with the organised labour or unions combined with governmental measures in regard to the regulation of such relationships.

Thus, “industrial relations” may be conceived of as “employees/union(s)-employers(s)/management-government relationships in industrial employment.” Some of major areas under its coverage include the following – union recognition, day-to-day dealing with union representatives, collective bargaining and collective agreements, industrial disputes and strikes, grievance settlement and union’s participation in joint bodies.

Growth of Some Other Related Concepts:

In recent years, certain new concepts have emerged in regard to the relationships of management with employees, whether as individuals or with their organisations, and also in the approaches related to managing manpower; these are employee relations, employment relations and human resource management.

One of the main reasons behind the adoption of the term “employee relations” or “employment relations” has been increasing the importance of non-industrial employment relationships in many areas of economic activities.

As management-employees relationships have come to exist in several non-industrial employments such as business, trade and commerce, insurance and other service sectors, the use of the term “human resource management” combining in itself, the functions of “personnel administration” and “labour or industrial relations” appears to be more appropriate and comprehensive.

The term “employee relations”, which also comes within the arena of human resource management as in practice now, refers to the relationships of the management with individual employees.

The ILO has used the term “employment relationship” in a wider perspective, stating that it exists “when a person performs work or services under certain conditions in return for remuneration.” The ILO also adopted Employment Relationship Recommendation No. 198 in 2006, which inter alia provides guidelines pertaining to formulation and application of a national policy on the subject, determination of such a relationship and the establishment of an appropriate mechanism.

Whatever the differences in the pattern of organisational arrangements for managing work-­people, whether present or prospective, there is common acceptance of the assertion that “industrial relations” involve relationships between management and organised workforce along with the government agencies influencing such relationships.

Some of the important features pertaining to industrial relations may be listed thus:

  1. Employment Relationship Essential:

Industrial relations do not emerge in vacuum; they are born out of “employment relationship” in an industrial setting. Without the existence of two parties, i.e., labour and management, this relationship cannot exist. It is the industry which provides the environment for industrial relations.

  1. Conflict and Cooperation Characterise Industrial Relations:

Industrial relations are characterised by both conflict and cooperation. This is the basis of adverse relationship. So the focus of industrial relations is on the study of the attitudes, relationships, practices and procedures developed by the contending parties to resolve or at least minimise conflicts.

  1. The Scope of ‘Industrial Relations’ Fairly Large and Covers Lot of Ground:

As the labour and management do not operate in isolation but are part of a larger system, so the study of industrial relations also includes vital environmental issues like technology of the workplace, country’s socio-economic and political environment, nation’s labour policy, attitude of trade unions, workers and employers and impact of the new wave of global markets, global supply demand and economy.

  1. Measures for Healthy Labour Management Cooperation Put to Close Examination:

Industrial relations also involve the study of conditions conducive to the labour, management cooperation as well as the practices and procedures required to elicit the desired cooperation from both the parties.

  1. The Legalistic Part of Industrial Relations Need to be Examined Closely:

Industrial relations also study the laws, rules, regulations, agreements, awards of court, customs and traditions, as well as policy framework laid down by the government for eliciting cooperation between labour and management and defining rights obligation of both the parties. Besides this, it makes an in-depth analysis of the interference patterns of the executive and judiciary in the regulation of labour-management relations.

  1. All Encompassing Examination of Multifarious Issues Affecting Labour- Management Relations:

The concept of industrial relations is very broad-based, drawing heavily from a variety of disciplines like social sciences, humanities, behavioural sciences, laws etc.

  1. The National Commission on Labour:

According to NCL, industrial relations affect not merely the interests of the two participants— labour and management, but also the economic and social goals to which the State addresses itself. To regulate these relations in socially desirable channels is a function, which the State is in the best position to perform. In fact, industrial relation encompasses all such factors that influence behaviour of people at work.

A few such important factors are below:

(i) Institutions:

They include government, employers, trade unions, union federations, employers’ federations or associations, government bodies, labour courts, tribunals and other organisations which have direct or indirect impact on the industrial relations system.

(ii) Characters:

It aims to study the role of workers, unions and employers’ federation officials, shop stewards, industrial relations officers / manager, mediator / conciliators / arbitrator, judges of labour court, tribunal, etc.

(iii) Methods:

Here, the focus is on collective bargaining, workers’ participation in the industrial relation schemes, discipline, procedure, grievance redressal machinery, dispute settlement machinery, working of closed shops, union recognition, organisation of protests through methods like strikes, gheraos, bandhs and lockouts, formulation and revision of existing rules, regulations, policies, procedures, decisions of labour courts, tribunals, etc. in defining the rights and obligations of the parties.

(iv) Contents:

They include matter pertaining to employment conditions like pay and other monetary non-monetary demands of the workers hours of work, leave with wages, health, and safety disciplinary actions, lay-off, dismissals, retirement etc., laws relating to such activities, legislation governing labour welfare, social security, industrial relations, issues concerned with workers’ participation in management, collective bargaining, sharing gains of productivity profits.

3 Important Approaches: Unitary Approach, Pluralistic Approach Marxist Approach

Industrial relations has become one of the most delicate and complex problems of modern industrial society. Industrial progress is impossible without labour management. So that, it is the interest of all to create and maintain good relations between employers and employees. Generally, industrial relations means the relationships between employers and employees in industrial organisations.

But, in the broad sense, the term industrial relations includes the relations between the various unions between the state and the unions as well as those between the employers and the government. Relations of all these associated in industry may be called industrial relations. It also involve the study of how people get on together at their work, what difficulties arise between them, how relations among them are regulated and what organisations are set up to protect different interest.

According to Encyclopaedia Britannica, “The concept of industrial relations has been extended to denote the relations of the state with employers, workers and their organizations. The subject, therefore, includes individual relations and joint consultations between employers and work people at their workplace, collective relations between employers and their organizations and trade unions and the part played by the state in regulating these relations.”

There are three approaches:

(i) Unitary Approach

(ii) Pluralistic approach

(iii) Marxist Approach.

1. Unitary:

Under this approach, mutual cooperation, team spirit and shared goals play a significant role. Any conflict is seen as a result of a temporary aberration resulting from poor management. Direct negotiation with workers is encouraged. This approach is criticised as a tool for seducing workers away from unionism/socialism. It is also criticised as manipulation and exploitation.

2. Pluralistic:

This approach perceives organisation as a coalition of competing interest between management and different groups, trade unions as legitimate representative of employee’s interests and stability in Industrial Relation as the product of concessions and compromises between management and workers. Unions, therefore balance the power between management and employees. Therefore, strong unions are desirable and necessary.

3. Marxist:

This approach also regards conflict between employers and employees inevitable. Marxists consider conflict as a product of the capitalistic society – the gap between “Haves and Have Not’s”. Trade Unions focus on improving the position of workers but workers’ participation in management, cooperative work culture etc., are not acceptable to the Marxists.

Management Notes

Theories underlying Motivation and Remuneration

indiafreenotesby indiafreenotes0

Remuneration Meaning: The compensation an employee receives in return of his or her contribution to the organization.

Remuneration is the reward for employment in the form of pay, salary, or wage, including allowances, benefits (such as company car, medical plan, pension plan), bonuses, cash incentives, and monetary value of the non cash incentives.

Components of Remuneration- An average employee in the organized sector is entitled to several benefits such as salary and wages, incentives, fringe benefits etc. following are the major components of remuneration:

Wages and Salary: Wages represent the hourly rates of pay whereas salary represents the monthly rates of pay regardless number of hours put in by an employee.

Incentives: incentives are basically “payment by results”. Incentives depend on productivity, sales, profits or cost reduction efforts. There are two types of incentives schemes:

Individual Incentive Scheme: Applicable to specific employee performance.

Group Incentive Scheme: It is applicable where a given task demands group efforts for completion.

Fringe Benefits: It includes PF, gratuity, medical care, hospitalization, accident relief, health & group insurance, canteen, uniform and recreation etc.

Prerequisites: These are allowed to executives and include company car, club membership, paid holidays, furnished house, stock option schemes etc.

Non Monetary Benefits: These include challenging job responsibilities, growth prospect, competent supervision, comfortable working conditions etc.

Theories of Remuneration: In order to understand which components of remuneration are more effective, we can look at theories of remuneration-

Reinforcement & Expectancy Theory

Reinforce theory suggests that behavior which has a rewarding experience is likely to be repeated. Implication of remuneration in this theory is that high employee performance followed by a will make future employee performance more likely.

Expectancy theory is link between rewards and behavior.  According to this theory, motivation is product of valance, instrumentality and expectancy. Remuneration system differs according to their impact on these motivation components.  Pay system differ most in their impact on instrumentality-the perceived link between behavior and pay. Valance of pay outcomes remains the same under different pay system. Expectancy perceptions often have more to do with job design and training than pay system.

Equity Theory: Equity theory emphasis in pay structure of employee remuneration. It suggests that an employee who perceives inequity in his or her rewards seeks to restore equity. When employee perceives inequity it can result in lower productivity, higher absenteeism or increase in turnover.

Remuneration system needs to meet three types of equity which directly impact motivation, commitment and performance-

Internal Equity: Perceived fairness of pay differentials among different jobs with organization.

External Equity: Employees’ perception of fairness of remuneration relative to those outside organization.

Individual Equity: Employees’ perception of pay differentials among individuals who hold identical job in the same organization.

Agency Theory: Focuses on the divergent interests and goals of the organization’s stakeholders and the way that employee remuneration can be used to align these interests and goals. This theory talks about two important stakeholder i.e. employer and employee. Employer plays a role of principal whereas employee plays a role of agent. Remuneration paid to employee (agent) is called agency cost. Agent wants high agency cost whereas principals want to minimize it.

Agency theory says that principal must choose a contracting schemes that helps align the interest of agent with the principal’s own interest.

Lucknow University BBA Notes / Management Notes

Possible Errors in Appraisal Process

indiafreenotesby indiafreenotes0

Rating errors are factors that mislead or blind us in the appraisal process. Armstrong warned that “appraisers must be on guard against anything that distorts reality, either favorably or unfavorably.” These are the 10 rating errors seen most often. They’re where managers and other raters are most likely to go offtrack.

  1. Central tendency. Clustering everyone in the middle performance categories to avoid extremes of good or bad performance; it’s easy, but it’s wrong. This isn’t fair to employees who are really making an effort, and it can be demoralizing.
  2. Overlooking the flaws of favored or “nice” employees, especially those whom everyone likes.
  3. Excusing below standard performance because it is widespread; “Everyone does it.”
  4. Guilt by association. Rating someone on the basis of the company they keep, rather than on the work they do.
  5. The halo effect. Letting one positive work factor you like affect your overall assessment of performance.
  6. Holding a grudge. A dangerous luxury that may result in your ending up in court. Never try to make employees pay for past behavior.
  7. The horns effect. The opposite of the halo effect letting one negative work factor or behavior you dislike color your opinion of other factors.
  8. Allowing your bias to influence the rating. Bias can come from attitudes and opinions about race, national origin, sex, religion, age, veterans’ status, disability, hair color, weight, height, intelligence, etc.
  9. Rating only recent performance, good or bad. Data should be representative of the entire review period. If you’re not keeping good notes, you may not remember the whole period. Armstrong noted that “you want to make sure, again, that you’re keeping records so that you can adequately describe performance over an entire performance period.”
  • The sunflower effect. Rating everyone high, regardless of performance, to make yourself look good or to be able to give more compensation.
Management Notes

Performance Appraisal of Managers, Objectives, Purpose, Advantages, Limitations, Process

indiafreenotesby indiafreenotes0

Performance Appraisal of managers is a systematic evaluation of a manager’s effectiveness in achieving organizational goals, leading teams, and fulfilling their responsibilities. It assesses various dimensions such as leadership, decision-making, communication skills, goal achievement, and team management. The process involves setting performance standards, measuring actual performance, providing feedback, and identifying areas for improvement. Appraisals are crucial for recognizing contributions, aligning individual performance with organizational objectives, and fostering professional development. They also aid in making informed decisions about promotions, rewards, and training needs, ensuring that managers remain motivated and equipped to handle evolving business challenges effectively.

Objectives of Performance Appraisal:

  • Assessing Performance

The primary objective is to evaluate an employee’s performance against predefined standards. This assessment identifies strengths, weaknesses, and areas needing improvement, enabling managers to make informed decisions about an employee’s future roles and responsibilities.

  • Providing Feedback

Performance appraisals aim to provide constructive feedback to employees about their work. Regular and transparent feedback fosters a culture of openness and continuous improvement, helping employees understand how their efforts contribute to organizational success.

  • Facilitating Career Development

Through performance appraisals, organizations can identify employees’ training and development needs. This helps in designing customized learning programs and career advancement opportunities, ensuring employees grow in their roles and contribute effectively to the organization.

  • Supporting Decision-Making

Performance appraisals provide a solid basis for making various HR decisions such as promotions, transfers, terminations, and compensation adjustments. They ensure that such decisions are fair, objective, and aligned with organizational goals.

  • Setting Future Goals

Appraisals help managers and employees collaboratively set realistic and measurable goals for the future. These goals guide employees in prioritizing tasks and focusing on key performance areas that align with organizational objectives.

  • Enhancing Motivation and Productivity

Recognizing and rewarding employees for their performance boosts morale and motivates them to perform better. It also creates a healthy competitive environment, encouraging all employees to strive for excellence.

  • Identifying Leadership Potential

Performance appraisals help in identifying employees with leadership capabilities and managerial skills. This is essential for succession planning, ensuring the organization is prepared for future leadership needs.

  • Aligning Individual and Organizational Goals

By assessing and aligning individual performance with organizational objectives, appraisals ensure that employees’ efforts contribute to the larger vision and mission of the company. This alignment fosters a sense of purpose and commitment among employees.

Purpose of Performance Appraisal:

  • Employee Development

One of the primary purposes of performance appraisal is to help identify an employee’s strengths and weaknesses. It provides valuable feedback to employees, which aids in their professional development. By addressing areas where improvement is needed, employees can focus on skill development, enhancing their capabilities, and becoming more effective in their roles.

  • Performance Feedback

Performance appraisals offer an opportunity for managers to provide employees with constructive feedback regarding their work performance. This feedback highlights what employees are doing well and areas where they can improve. Regular feedback fosters transparency, helping employees understand their contributions and adjust behaviors accordingly.

  • Goal Setting and Alignment

Performance appraisals are often linked with goal-setting processes. During the appraisal, employees can discuss their past goals and set new targets for the future. These goals help align individual performance with the broader objectives of the organization, ensuring that everyone works toward common goals and enhances overall performance.

  • Reward and Recognition

Performance appraisals play a vital role in determining rewards, promotions, and salary increments. By evaluating employees based on their performance, organizations can ensure that high-performing individuals are appropriately recognized and rewarded. This motivates employees to perform better and fosters a culture of meritocracy within the workplace.

  • Career Development

Performance appraisals help identify potential future leaders within an organization. They provide insights into employees’ readiness for higher roles and responsibilities. By understanding an employee’s strengths and career aspirations, HR managers can offer tailored career development opportunities, including training, mentorship, or job rotations, to prepare employees for future roles.

  • Organizational Planning

By assessing the performance of employees across various departments, performance appraisals help organizations make informed decisions about staffing needs, resource allocation, and succession planning. They provide a comprehensive view of workforce capabilities, helping organizations plan for the future and address any gaps in skills or talent.

  • Enhancing Motivation and Morale

A well-conducted performance appraisal system boosts employee morale by recognizing hard work and achievement. When employees see that their efforts are acknowledged, they feel valued and are more motivated to perform at higher levels. Positive feedback during appraisals also strengthens employee engagement and loyalty to the organization.

Advantages of Performance Appraisal:

  • Improves Employee Performance

Performance appraisals help employees understand their strengths and weaknesses through constructive feedback. By identifying specific areas for improvement, employees can focus on enhancing their skills and productivity, ultimately contributing to the organization’s success.

  • Identifies Training and Development Needs

Through appraisals, organizations can pinpoint skill gaps and training requirements among employees. This enables the design of targeted training programs to address these gaps, ensuring employees are better equipped to meet job demands and adapt to evolving organizational needs.

  • Facilitates Promotion and Career Growth

Appraisals provide a clear and objective basis for making decisions regarding promotions and career advancements. They help identify high-performing employees who deserve recognition, rewards, or leadership opportunities, fostering a meritocratic work environment.

  • Boosts Employee Motivation

Recognizing and rewarding employees for their hard work during appraisals boosts morale and motivation. Positive reinforcement encourages employees to maintain or improve their performance, creating a culture of continuous excellence within the organization.

  • Enhances Communication

Performance appraisals foster open communication between employees and management. Regular discussions during appraisals provide a platform for employees to share concerns, seek guidance, and align expectations, leading to better understanding and collaboration.

  • Supports Strategic Decision-Making

Performance appraisals provide valuable data for strategic HR decisions, such as workforce planning, promotions, transfers, and terminations. This ensures that organizational decisions are fair, data-driven, and aligned with long-term goals.

  • Aligns Individual and Organizational Objectives

Appraisals align employee efforts with organizational goals by setting clear expectations and performance standards. This alignment ensures that individual contributions support the larger mission and vision of the company, driving overall success.

Limitations of Performance Appraisal:

  • Subjectivity and Bias

Performance appraisals are often influenced by the evaluator’s personal biases or preferences. Subjective judgments can result in inaccurate assessments, where personal relationships, favoritism, or preconceived notions overshadow objective performance evaluation.

  • Halo and Horn Effect

The “halo effect” occurs when a single positive trait influences the overall appraisal, while the “horn effect” occurs when a single negative trait dominates the evaluation. These biases can distort the true performance picture and lead to unfair appraisals.

  • Lack of Standardization

Inconsistent appraisal methods and criteria across departments or evaluators can lead to discrepancies in evaluations. Without a standardized process, comparisons between employees become unreliable, and fairness in assessments is compromised.

  • Employee Demotivation

Poorly conducted appraisals can lead to dissatisfaction and demotivation among employees. If feedback is overly critical, vague, or fails to recognize genuine contributions, employees may feel undervalued and lose motivation to perform.

  • Resistance to Feedback

Employees may resist or react negatively to critical feedback, viewing it as an attack rather than an opportunity for improvement. This resistance can hinder constructive dialogue and reduce the effectiveness of the appraisal process.

  • Time-Consuming and Costly

Performance appraisals require significant time and resources for planning, implementation, and follow-up. For large organizations, conducting regular and detailed appraisals for all employees can be a complex and expensive process, leading to inefficiencies.

  • Focus on Past Performance

Appraisals often emphasize past performance rather than future potential. This retrospective approach may overlook an employee’s ability to grow, adapt, or contribute in new roles, limiting the organization’s ability to identify and nurture potential talent.

Process of Performance Appraisal:

  • Establishing Performance Standards

The first step is to define clear, measurable, and achievable performance standards based on organizational objectives. These standards serve as benchmarks for evaluating employee performance and should be communicated clearly to employees to avoid ambiguity.

  • Communicating Expectations

It is essential to ensure that employees understand the performance standards and expectations. This step involves regular communication between managers and employees to clarify roles, responsibilities, and key performance indicators (KPIs).

  • Measuring Actual Performance

In this step, employee performance is tracked and documented over a specific period using various tools such as reports, observation, and self-assessments. This data collection should be objective and based on facts rather than subjective opinions.

  • Comparing Performance Against Standards

Once the data is collected, the actual performance is compared to the predefined standards. This comparison identifies gaps, strengths, and areas for improvement, providing a comprehensive view of an employee’s performance.

  • Providing Feedback

Feedback is a critical step in the appraisal process. Managers share their observations and evaluations with employees through one-on-one discussions. Constructive feedback highlights both achievements and areas for improvement, fostering a culture of learning and development.

  • Identifying Training and Development Needs

Based on the appraisal results, managers identify specific training and development requirements for employees. Addressing these needs helps improve skills and prepares employees for future responsibilities and roles.

  • Decision-Making

Appraisals provide the foundation for making key HR decisions such as promotions, rewards, salary adjustments, transfers, or terminations. The appraisal outcomes ensure that these decisions are fair, transparent, and aligned with organizational goals.

  • Monitoring and Follow-Up

The final step involves monitoring progress and ensuring that employees work on the feedback provided. Regular follow-ups help maintain accountability and track improvements, fostering continuous growth and alignment with organizational standards.

Management Notes

Methods of Performance Appraisal

indiafreenotesby indiafreenotes0

Each method of performance appraisal has its strengths and weaknesses may be suitable for one organization and non-suitable for another one. As such, there is no single appraisal method accepted and used by all organizations to measure their employees’ perfor­mance.

  1. Traditional Methods

(i) Ranking Method

It is the oldest and simplest formal systematic method of performance appraisal in which employee is compared with all others for the purpose of placing order of worth. The employees are ranked from the highest to the lowest or from the best to the worst.

In doing this the employee who is the highest on the characteristic being measured and also the one who is L lowest, are indicated. Then, the next highest and the next lowest between next highest and lowest until all the employees to be rated have been ranked. Thus, if there are ten employees to be appraised, there will be ten ranks from 1 to 10.

(ii) Paired Comparison

In this method, each employee is compared with other employees on one- on one basis, usually based on one trait only. The rater is provided with a bunch of slips each coining pair of names, the rater puts a tick mark against the employee whom he insiders the better of the two. The number of times this employee is compared as better with others determines his or her final ranking.

N (N-1)/2

Where N = the total number of employees to be evaluated.

(iii) Grading Method

In this method, certain categories of worth are established in advance and carefully defined. There can be three categories established for employees: outstanding, satisfactory and unsatisfactory. There can be more than three grades. Employee performance is compared with grade definitions. The employee is, then, allocated to the grade that best describes his or her perfor­mance.

Such type of grading is done is Semester pattern of examinations and in the selection of a candidate in the public service sector. One of the major drawbacks of this method is that the rater may rate most of the employees on the higher side of their performance.

(iv) Forced Distribution Method

This method was evolved by Tiffen to eliminate the central tendency of rating most of the employees at a higher end of the scale. The method assumes that employees’ performance level confirms to a normal statistical distribution i.e., 10,20,40,20 and 10 per cent. This is useful for rating a large number of employees’ job performance and promo ability. It tends to eliminate or reduce bias.

It is also highly simple to understand and easy to apply in appraising the performance of employees in organizations. It suffer from the drawback that improve similarly, no single grade would rise in a ratings.

(v) Forced-Choice Method

The forced-choice method is developed by J. P. Guilford. It contains a series of groups of statements, and rater rates how effectively a statement describes each individual being evaluated. Common method of forced-choice method contains two statements, both positive and negative.

(vi) Check-List Method

The basic purpose of utilizing check-list method is to ease the evaluation burden upon the rater. In this method, a series of statements, i.e., questions with their answers in ‘yes’ or ‘no’ are prepared by the HR department. The check-list is, then, presented to the rater to tick appropriate answers relevant to the appraisee. Each question carries a weight-age in relationship to their importance.

(vii) Critical Incidents Method

In this method, the rater focuses his or her attention on those key or critical behaviours that make the difference between performing a job in a noteworthy manner (effectively or ineffectively). There are three steps involved in appraising employees using this method.

First, a list of noteworthy (good or bad) on-the-job behaviour of specific incidents is prepared. Second, a group of experts then assigns weightage or score to these incidents, depending upon their degree of desirability to perform a job. Third, finally a check-list indicating incidents that describe workers as “good” or “bad” is constructed. Then, the check-list is given to the rater for evaluating the workers.

(viii) Graphic Rating Scale Method

The graphic rating scale is one of the most popular and simplest techniques for appraising performance. It is also known as linear rating scale. In this method, the printed appraisal form is used to appraise each employee.

The form lists traits (such as quality and reliability) and a range of job performance characteristics (from unsatisfactory to outstanding) for each trait. The rating is done on the basis of points on the continuum. The common practice is to follow five points scale.

(ix) Essay Method

Essay method is the simplest one among various appraisal methods available. In this method, the rater writes a narrative description on an employee’s strengths, weaknesses, past performance, potential and suggestions for improvement. Its positive point is that it is simple in use. It does not require complex formats and extensive/specific training to complete it.

(x) Field Review Method

When there is a reason to suspect rater’s biasedness or his or her rating appears to be quite higher than others, these are neutralised with the help of a review process. The review process is usually conducted by the personnel officer in the HR department.

(xi) Confidential Report

It is the traditional way of appraising employees mainly in the Government Departments. Evaluation is made by the immediate boss or supervisor for giving effect to promotion and transfer. Usually a structured format is devised to collect information on employee’s strength weakness, intelligence, attitude, character, attendance, discipline, etc. report.

  1. Modern Methods

(i) Management by Objectives (MBO)

Most of the traditional methods of performance appraisal are subject to the antagonistic judgments of the raters. It was to overcome this problem; Peter F. Drucker propounded a new concept, namely, management by objectives (MBO) way back in 1954 in his book.

The Practice of management. The concept of MBO as was conceived by Drucker, can be described as a “process whereby the superior and subordinate managers of an organization jointly identify its common goals, define each individual’s major areas of responsibility in terms of results expected of him and use these measures as guides for operating the unit and assessing the contribution of each its members”.

An MBO programme consists of four main steps: goal setting, performance standard, compari­son, and periodic review. In goal-setting, goals are set which each individual, s to attain. The superior and subordinate jointly establish these goals. The goals refer to the desired outcome to be achieved by each individual employee.

In performance standards, the standards are set for the employees as per the previously arranged time period. When the employees start performing their jobs, they come to know what is to be done, what has been done, and what remains to be done.

In the third step the actual level of goals attained are compared with the goals agreed upon. This enables the evaluator to find out the reasons variation between the actual and standard performance of the employees. Such a comparison helps devise training needs for increasing employees’ performance it can also explore the conditions having their bearings on employees’ performance but over which the employees have no control.

Finally, in the periodic review step, corrective measure is initiated when actual performance deviates from the slandered established in the first step-goal-setting stage. Consistent with the MBO philosophy periodic progress reviews are conducted in a constructive rather than punitive manner.

(ii)  Behaviourally Anchored Rating Scales (BARS)

The problem of judgmental performance evalu­ation inherent in the traditional methods of performance evaluation led to some organizations to go for objective evaluation by developing a technique known as “Behaviourally Anchored Rating Scales (BARS)” around 1960s. BARS are descriptions of various degrees of behaviour with regard to a specific performance dimension.

It combines the benefits of narratives, critical incidents, and quan­tified ratings by anchoring a quantified scale with specific behavioural examples of good or poor performance. The proponents of BARS claim that it offers better and more equitable appraisals than do the other techniques of performance appraisal we discussed so far.

(iii) Assessment Centres

The introduction of the concept of assessment centres as a method of performance method is traced back in 1930s in the Germany used to appraise its army officers. The concept gradually spread to the US and the UK in 1940s and to the Britain in 1960s.

The concept, then, traversed from the army to business arena during 1960s. The concept of assessment centre is, of course, of a recent origin in India. In India, Crompton Greaves, Eicher, Hindustan Lever and Modi Xerox have adopted this technique of performance evaluation.

In business field, assessment centres are mainly used for evaluating executive or supervisory potential. By definition, an assessment centre is a central location where managers come together to participate in well-designed simulated exercises. They are assessed by senior managers supple­mented by the psychologists and the HR specialists for 2-3 days.

Assessee is asked to participate in in-basket exercises, work groups, simulations, and role playing which are essential for successful performance of actual job. Having recorded the assessee’s behaviour the raters meet to discuss their pooled information and observations and, based on it, they give their assessment about the assesee. At the end of the process, feedback in terms of strengths and weaknesses is also provided to the assesees.

(iv) 360 Degree Appraisal

Yet another method used to appraise the employee’s performance is 360 – degree appraisal. This method was first developed and formally used by General Electric Company of USA in 1992. Then, it travelled to other countries including India. In India, companies like Reliance Industries, Wipro Corporation, Infosys Technologies, Thermax, Thomas Cook etc., have been using this method for appraising the performance of their employees. This feedback based method is generally used for ascertaining training and development requirements, rather than for pay increases.

Under 360–degree appraisal, performance information such as employee’s skills, abilities and behaviours, is collected “all around” an employee, i.e., from his/her supervisors, subordinates, peers and even customers and clients.

In other worlds, in 360-degree feedback appraisal system, an employee is appraised by his supervisor, subordinates, peers, and customers with whom he interacts in the course of his job performance. All these appraisers provide information or feedback on an employee by completing survey questionnaires designed for this purpose.

(v) Cost Accounting Method

This method evaluates an employee’s performance from the monetary benefits the employee yields to his/her organization. This is ascertained by establishing a relationship between the costs involved in retaining the employee, and the benefits an organization derives from Him/her.

Lucknow University BBA Notes / Management Notes

Executive Development

indiafreenotesby indiafreenotes0

Developing the executives and managers is the most important positive feature of the human resources development. Executives and managers play an imperative role in organizations so their development is very precious to organization. It has been well standard now that well skilled executives and managers considered necessary in the industry. Good organizations always select the talented employees and trained them to have sufficient catalog of management skill for use so that the desire objectives of an organization might be achieved. The process by which the executives attain not only the skills and experience in their current job position but also capability for the future decision making tasks of increasing difficulty and scope is known as the executive development. We can say that this development is the premeditated attempt to get better the current performs as well as the future managerial performance of employees. Executive development includes the actions by which executives learn to develop their behavior and the level of working. Development means not to provide the basic knowledge to the employees of the work but to provide the necessary conditions and environment for their improvement. Development is the basic design to pick up the success of the managers in their existing jobs and to develop them for the difficult and advanced jobs in future.

Importance of Executive development

The importance of the executive development can be analyzed by the following points.

(i) Technological changes: Now a days the technology is getting change very rapidly. Many advanced and automatic machines have been bringing in present organization. So the managers should have high-quality working knowledge of the use of modern technological machines and equipment. It can be possible by developing the managers for the use of new opened machines

(ii) Increase in size of organizations: The size of the organizations is increasing day by day. With the increase in size the complexity is also increasing. So the executives or managers need to be developed to deal with the troubles of the bulky and complex organizations.

(iii) Lack of trained managers: There is scarcity of the trained managers and it is quite difficult to recruit the experienced and qualified managers. As a result it is very important to develop the brilliant employees by a disciplined development process.

(iv) Social and cultural changes: The social and cultural environment is getting changed rapidly. The managers must have brought up to date the knowledge of the sociology-cultural background to understand the people intentions and actions towards you.

Features of Executive development

The features of the executive development are:

  • Executive development is the well designed and systematic process of learning. In this process the executives not only gain the knowledge about the working skills of the work related to them but also get training for future work and upcoming technological machines etc.
  • Development is infinite process because knowledge is the endless and very vast so it continues throughout the executives whole specialized carrier.
  • This process is a long term course because no one can develop the managerial skills over a night. It takes time to become a professional. Experience is required to develop the executive nature or behavior in a person and it increases with the work.
  • Executive development is that process in which the executives or managers has to accomplish themselves. But the executive can do this more sufficiently under the guidance and when the occasion comes to him by the company.
  • To get ready the managers to the better presentation and serving them to give their full potentials, the development is very imperative process.

Techniques

On-The-Job Techniques of Executive Development

1. Coaching:

Coaching is an activity of guiding a manager by a senior one. A senior manager must play an active role in guiding and teaching skills. He tells him how to do a job and corrects the errors. A senior manager is referred to as a coach. So coach makes an analysis of trainee’s work performance and tries to improve it with suitable guidance. He renders advice, criticizes, makes necessary suggestions and gives directions to the trainee executive for his growth and development. This is a method of learning by doing.

A feedback is also taken by the coach. The coach must be a good teacher. The coach may divert the trainee executive from routine work and assign him to handle some complex problem and observe his performance. This technique suffers from limitations that there is heavy dependence on the coach and there developed a tendency to make present executive styles as central. This will not give way to new and developed managerial styles and practices in the organisation. The trainee executive acquires the skills and knowledge to perform a job and also acquire the teaching or coaching ability.

2. Job Rotation:

The job rotation is a very good method of transforming a functional specialist into a generalist executive. The job rotation refers to transfer of managers from one job to another or from one department to another or from one section to another in a planned mariner. The transferred executive to new job has to assume the full responsibility and duty. The object is to broaden the outlook and acquire the diverse skills and knowledge needed to perform the various jobs in the organisation. The manager will learn new ideas and gain new information underlying various jobs.

It will motivate him and help him acquire comprehensive knowledge and skills. He will understand others difficulties and realize the circumstances under which his colleagues are working. It will free him from the monotony of working in the same position. Job rotation may be horizontal or vertical. The horizontal job rotation is a lateral transfer while vertical is a promotion. Many organisations in India use job rotation technique to impart multiple skills to their executives.

The job rotation imparts multiple skills and broadens the outlook of trainee executive. It increases the knowledge and skills of performing various jobs in the organisation and aids executive to gain in experience. This technique is not cost effective. On the new assignment the manager may commit mistakes which add to costs.

3. Understudy:

It is a development technique to prepare a manager for taking over the charge of his senior after his retirement, transfer, promotion or death. This technique provides an equally competent successor to a senior manager who is currently holding the post. The executive who is understudy acts as assistant to the superior executive whom he will succeed.

The senior executive teaches him all the skills and imparts complete knowledge for the performance of the job and gives him a feel of what his job is. The understudy is developed in all respects such as decision making, leading, problem solving etc.

The senior managers realize that unless they develop their subordinates, they would not get promotion. Under these circumstances they prepare their subordinates for taking over their charge. The understudy is given an opportunity to see the job in toto in absence of senior manager who is on leave. Only a care is taken by the under study that the decision making in critical matter is delayed and is left to the manager currently holding the post.

4. Multiple Management:

Multiple management is also known as committee management, under this technique a committee consisting of some managers is formed and given an assignment to study the company problems and to make advice or give recommendations to the top management.

These committees are usually formed with the junior executives. They study the problem and find out alternate solutions, discuss them and arrive at a final decision. The appointment of managers to the committees facilitates their exposure to the organisation and widens their outlook and provides them with an excellent opportunity to develop them by acquiring knowledge of different aspects relating to business and industry and to interact with the group. This method is cost effective and develops a junior executive within a short period of time.

Off-the-Job Techniques of Executive Development

1. Sensitivity Training:

This is the technique of bringing about a change in behaviour of the executives through group processes. According to Edwin B. Flippo the objective of this technique is the “development of awareness of and sensitivity to behavioural patterns of one self and others.”

This technique is also referred to as laboratory training. The trainee executives participate and influence each other through unstructured group interaction. The participants here are provided open environment where they discuss freely among themselves.

The environment is created by a professional behaviour list. They openly express their ideas, concepts, attitudes and get opportunity to know about themselves and the impact of their behaviour on their fellow participants. This technique helps in creating mutual trust and respect.

It thus develops managerial sensitivity. It develops team spirit. This technique is regularly used by some of the Indian companies. This method helps in creating a sense of respect for others and their thoughts, tolerance, improve listening skills, remove prejudices create understanding, increase awareness of their own behaviour.

2. Case Study:

Under this technique the cases based on actual business situations are prepared and given to the trainee managers for discussion and arriving at a proper decision. Managers are given opportunity to find out the latent problems and suggest alternatives to tackle them. The selection of the best-alternative solution trainees have to suggest. This technique helps in improving the decision-making skills by making analytical judgment. Case study was made popular at the Harvard Business School.

3. Simulation Exercises:

Simulations are popular techniques of management development. In this technique a duplicate work situation similar to the actual job situation is created and the trainee is given a particular role to find out solutions to the problem and take decision. He gets a feedback of his performance. It sharpens the decision making quality of the trainee. It is a costly method of management development.

4. Management Games:

Under these techniques the trainee executives are divided into rival groups assuming the management of simulated companies. Each rival group has to discuss a given subject relating to production, marketing, pricing etc. and arrive at a decision. The groups react to the decision of each other. They get immediate feedback on their performance. This technique helps in building team spirit among executives. This is followed in many Indian companies.

5. Managerial Grid:

It is a multi-phased programme ranging from three to five years. It improves managerial skills, intergroup relations and develops leadership styles.

6. Role Playing:

It is also a simulated exercise. The participants have to assume a role of a person in the simulated situation. They have to react to one another in the similar manner as they would be doing a job as manager in real situation. Participants are given a list of learning points which they have to use during executive subordinate encounter. They can take the help of videos for improvement in management skills. Through this technique the human relations skills, marketing and sales management, interviewing skills are acquired.

7. Incident Method:

Under this technique the incidents based on real situations are prepared. Each participant is asked to study the incident and make decisions. Afterward, the group of participants makes discussion and arrives at a decision. This method develops the intellectual level, judgment of the participant. This technique was developed by Paul Pigors.

8. In Basket Method:

Under this method a basket containing various kinds of correspondences such as reports, letters, replies, applications each involving some problems is given to the trainee and within a specified time limit he has to sort out all the correspondence by passing orders, recommendations, delegating authority to his subordinates and distributing work etc. This resembles to real life situation. Through this method trainee learns the decision-making abilities. This is less expensive method.

9. Conference:

Under this technique a group of executives meet as per plan and discuss a problem of common interest. The members of the group learn through others viewpoint and develop their knowledge by comparing their opinion with others. It is the most effective method when a problem is to be analyzed and tested through different angles or viewpoints.

The conference has a leader who leads the discussion and takes due care that the participating members are not moving away from the main problem under discussion. The executives learn how to motivate people through discussion. Every participant is given an opportunity to express his opinion freely. This is a very common method of developing executives.

10. Lectures:

It is very popular and simple method. The concepts, ideas, theories, principles are explained through lectures. The speaker is an expert who collects the material and delivers a lecture to the trainee executives. It is a direct, time saving, low in cost method of explaining and presenting a viewpoint on any problem or subject to the trainees.

11. Programmes by Academic Institution:

Some academic institutions and universities run management courses. They include degree as well as short term diploma courses. These institutions also hold conferences, seminars, workshops, lecture series and other related programmes which help in management development. The effectiveness of these programmes depends upon their quality, response from the companies and implementation.

Organisations can sponsor their executives to join these courses. Besides these academic institutions, All India Management Association also conducts some management courses for company executives, hold seminars and conferences regularly.

12. Transactional Analysis:

The transactional analysis (TA) is an attempt to understand and analyze the trainee’s personality through the communicative interaction. The interaction between individual human being is viewed as transactions, for instance, “I will do this for you and you do that for me.”

TA holds the view that the human personality is constituted by three ego states i.e., parent, child and adult. All these three ego states are reflected in his personality when he communicates with others. Parent state is reflected when he behaves and interacts like a parent and offers “do’s” and “don’ts” e.g. Do this, Don’t delegate authority to him etc.

Parent state reflects dominance. An individual reflects a child state when his interaction is characterized by an impulse that is natural. An individual reflects his adult mode or state when his interactions are rational.

The transactional analysis aims at liberating the adult from the parent and child state. The adult state is rational and deals with reality. It collects information and see reasons and takes decisions. Adult behaviour and interactions are expected from executives and managers who are decision makers. Transactional analysis is an important psychiatric technique for executive development of recent origin used by many organisations.

error: Content is protected !!