Human resource management

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This Study Note includes

Study Note - 4

HUMAN RESOURCE MANAGEMENT

●●●●● Meaning of Human ResourcesMeaning of Human Resource ManagementObjectives (or Role) of Human Resource ManagementImportance (or neccesity) of Human Resource ManagementFunctions of Human Resource Management

●●●●● Recruitment and Selection of WorkersMeaning of RecruitmentSources of RecruitmentMethods of RecruitmentMeaning of SelectionProcedure for SelectionRecruitment Practice in IndiaConcept of DismissalGrounds of DismissalProcedure for DismissalRetirementLay offRedundancy

●●●●● Taylor and Scientific ManagementPrinciples of Scientific ManagementContributions of Henry Fayol

●●●●● Managerial QualitiesGeneral Principles of Management

●●●●● Human Relations SchoolBehavioural ApproachSystems ApproachContingency Approach

●●●●● TrainingPrinciples of TrainingBenefits of TrainingMethods of TrainingInduction or Orientation Training

●●●●● Concepts of Training, Education and DevelopmentTraining and EducationTraining and DevelopmentRole of Training and DevelopmentMethods of Remunerating labour

Questions for Review and Discussion

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4.1. MEANING OF HUMAN RESOURCES

Human resources represent the people at work. In other words, human resources are the sum-total of the inherent abilities, acquired knowledge, skills and aptitudes of employees. Humanresources have different needs, attitudes, values and they behave differently. At the same time,human resources are dynamic and have greatest potential to develop and grow. Performanceof an organisation is directly related to the quality of its human resources. Therefore, humanresources are to be utilised fully in order to achieve organisational goals.

4.1.1. Meaning of human resource management

Human resource management is concerned with managing human resources. It focusses onthe effective use of human resources in an organisation. It is concerned with the developmentof a highly motivated and smoothly functioning work force. It acquires, develops, utilises andmaintains human resources in the achievement of organisational goals. -

Non-human resources (e.g., materials, machines, money, etc.) remain idle without the properuse of human resources. Human resource management is essential to activate non-humanresources and in utilising the workforce to achieve organisational goals efficiently. Humanresource management is essential, as most of the problems in an organisational set up arehuman-based rather’than technical (or economical). Employees in an organisation show differentbehavioural patterns, needs, drives, goals and experiences. Human resource management triesto understand properly the psychology and the different needs of the personnel of anorganisation. It establishes a suitable organisational structure for maintaining a desirableworking relationship among all the members of an organisation.

Definitions given by eminent management experts :

· Human resource management plans, organises, directs and controls the functions ofprocuring, developing, maintaining and utilising the workforce of an organisation.”[Michael J. Jucius]

· Human resource management is the process of developing, applying and evaluatingthe policies, procedures, methods and programs relating to the personnel in theorganisation.” [Dale Yoder]

· Human resource management is that part of the management process which is primarilyconcerned with the human constituents of an organisation.”

[RF.L.Breach]

· Human resource management is the planning, organising, directing and controlling ofthe procurement, development, compensation, maintenance and separation of humanresources for achieving desired organisational goals.”

[Edwin B. Flippo]

· “Human resource management is concerned with the development of potentialities of

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employees so that they get maximum satisfaction from their work and give their bestefforts to the organisation.”

[Pigors and Myers]

Thus, human resource management deals with the management of the entire gamut of humanresources in an organisation. It attracts and selects capable men, organises them in productivegroups, develops their potentials, gives them necessary motivation, boosts and maintains theirhigh morale.

4.1.2. Objectives (or Role) of human resource management

Human resource management aims to integrate employees’ interest as well as management’sinterest through justice to employees and improving productivity. Integration of employees’interest and management’s interest is done for ensuring the satisfactory accomplishment oforganisational objectives. The main objective of the human resource department is to ensureoptimum utilisation of human resources by providing maximum satisfaction to employees. Ingeneral, the objectives of human resource management can be enumerated as follows :

(i) Maximum individual development: Efficient employees can make quality products.Human resource management provides opportunities for advancement of employees throughtraining and job education. It encourages every employee to realise his full potential. Eachemployee enjoys job satisfaction through job enrichment and job enlargement.

(ii) Healthy industrial relation: Relations between the employer and employees and amongthe employees themselves should be very cordial for ensuring team spirit, co-operation and co-ordination. Healthy industrial relations leads to industrial peace and industrial democracy. Itmaintains harmonious relations between management and the workers by solving theirproblems through the process of collective bargaining.

(iii) Optimum utilisation of human resources: An efficient management should emphasizethe effective and efficient utilisation of available human resources so that maximum productionis possible at the minimum cost. It makes rational use of qualities, knowledge and potentialitiesof the existing work force. It utilises employees’ efforts, talents and skills effectively by creatingthe proper atmosphere for work. (iv) Integration of individual and organisational goals : Thediversity in individual goals and organisational goals should be reconciled. Human resourcemanagement aims to secure integration of individual and group goals with organisationalgoals. Thus, employees feel a sense of involvement, commitment and loyalty towards theorganisation.

(v) Desirable working relationships : Human resource management aims to establish andmaintain productive, satisfying and self-respecting working relationships among members ofthe organisation. It divides the organisational tasks into functions, positions and jobs to achievethese objectives. It defines the responsibility and authority for each job and its relation withother jobs.

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(vi) Development of team spirit : Human resource management develops a team spiritamong the employees. It maintains a sound industrial and human relations so as to secure thewilling co-operation of all employees. It develops a sense of belongingness and co-operativeattitude among the employees.

(vii) Satisfying employees’ interests: An employee spends the major part of his life with theemployer and the organisation. It is the social and even moral duty of an employer to providehighly comfortable working conditions so that employees perform their jobs efficiently andeffectively. Employees should also be provided with proper monetary and fringe benefits. Theyshould be provided with adequate safety, healthy working conditions and enough recreationalfacilities.

(viii) Satisfying management’s interests: The human resource department assists themanagement in the following ways —

(a) Securing maximum productivity of employees;

(b) Reducing labour cost per unit;

(c) Ensuring loyalty of employees;

(d) Developing high morale of employees ;

(e) Developing team spirit and co-operative attitude of employees;

(f) Intelligent initiative on the part of employees.

(ix) Improving organisational effectiveness : Human resource management contributes toorganisational effectiveness by building up employees’ motivation and commitment. Employeesand management share information regarding mutual rights, obligations and the philosophyunderlying personnel policies, procedures and practices. It maintains a high morale and betterhuman relations inside an organisation by improving the conditions of work.

(x) Creating a disciplined atmosphere : Discipline creates obedience and ensures rationalbehaviour among employees. It helps to maintain ethical behaviour inside the organisation.Human resource management helps to develop a sense of discipline among the work forceengaged in the organisation.

4.1.3. Importance (or necessity) of human resource management

The importance of human resource management has been so widely recognised that nearly allorganisations realise the need for establishing a strong personnel department to ensure betterindustrial relations. The importance of human resource management can be realised from thefollowing points :

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(i) Achievement of organisational goals : Employees are the common denominator ofprogress. The effective utilisation of skills and talents of employees help in theattainment of organisational goals.

(ii) Effectiveness of operations: Human resource management helps to increase theeffectiveness of employees by their wholehearted collaboration. It creates enthusiasmamong workers and motivates them in a particular direction.

(iii) Satisfaction from work: It helps employees to utilise their potentialities for attainingmaximum individual satisfaction from their work. It offers proper monetaryincentives, economic and social security to employees. It protects them against thehazards of life such as illness, old-age problems, unemployment, etc.

(iv) Basis of success of any enterprise: Human resource management is the key to successof any enterprise. It becomes important for achieving the objectives of theorganisation. Personal aspect of management is applied by all managers throughoutthe organisation. Qualified personnel are usually employed in different departmentsfor attaining the objectives of an organisation.

(v) Important task of management: The handling of employees is an integral part ofevery line manager’s responsibility. Managing the human component is the centraltask, as all else depends on how well it is done. The personnel department rendersassistance to other functional departments to perform their functions.

(vi) Nervous system of the organisation: Human resource management is the nervoussystem of the organisation. It is a two-way channel of information reaching out toevery part of the organisation. It is a live channel and is used in every action. It isinherent in the dynamism of the structure of the organisation.

(vii) Dealing with human beings: The human factor is most difficult to manage becauseemotions, feelings, needs and outlooks differ from man to man. The human resourcemanager is the controller of human factors and he tries to ensure optimum use ofhuman resources. Thus, human resource management performs the toughest job ofdealing with the human part of the organisation.

(viii) (viii)Professional growth : This contributes to the professional growth by providingmaximum opportunities for personal development of each employee. It enhancesthe knowledge and skills of people and helps to develop them for promotion. Itutilises human resources for the benefit of mankind. It motivates employees to workefficiently and secure their willing co-operation.

4.1.4. Functions of human resource management

Human resource management covers a number of activities as follows :

(i) Human resource planning : Human resource is regarded as an important asset of anorganisation. Human resource planning is the process of determining manpowerrequirements of an organisation for achieving the organisational goals effectively.This helps in predicting the number of emplyees (skilled as well as unskilled)

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required in the business at different points of time. It also predicts problems ofmanpower in future projects.

(ii) Staff recruitment: Recruitment is a process of identifying sources of human forcesand motivating them to apply for a particular job (or jobs) in an organisation. It is aprocess to discover the sources of manpower to meet the requirements of the staffingschedule. It facilitates effective selection of an efficient work force in an organisation.A well-planned recruiting effort will result in high quality applicants.

(iii) Staff selection : Selection is the process of choosing the most suitable candidatesfrom among the applicants for the jobs. It involves careful screening and testing ofcandidates with reference to job specifications. The aim of selection is to pick theright person for the right job. It begins with an initial screening interview and endswith the final employment decision.

(iv) Staff placement: Placement refers to induction of individuals and assigning ofresponsibility with reference to particular job. Proper placement of individualsenhances their potentiality and develops overall effectiveness on the job. Anindividual is considered to be properly placed if he adjusts himself to the job andcontinues to perform as per expectations. Placement may create problem due towrong selection or improper placement or both.

(v) Staff training: Training is an act of updating (or improving) the knowledge and skillof employees in order to perform a particular job in an effective manner. It aims atincreasing the ability of employees so that they can perform the job in an effectiveand efficient manner. Training can convert raw human resources into developedhuman resources. It improves the performance of employees on the present job andprepares them for taking up new assignments in the future.

(vi) Staff remuneration: Remuneration consists of wages, salaries, commissions andbonuses paid to employees as compensation for their service. Remuneration shouldinclude both monetary compensation and non-monetary benefits to workers.Satisfactory remuneration attracts an efficient labour force. This helps in increasingoutput and lowering labour cost per unit. The method of remuneration should besuch that it encourages efficiency and promotes satisfaction of workers.

(vii) Staff promotion : Promotion means uplift of an employee to a senior position withbetter pay, better service condition, higher power, greater status and prestige. Itimplies upgrading of an employee to a higher post . involving increase in rank andresponsibility. Promotion provides motivation and job satisfaction to employees.Promotion influences the attitude and conduct of the employee’s behaviour,

(viii) Staff motivation : Motivation is an inner psychological force that activates andcompels employees to behave in a particular manner. Motivation is an act of

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stimulating employees to accomplish a desired course of action. Motivation inspiresemployees to contribute to the best of their capability for the achievement oforganisational goal. (ix) Staff transfer : Transfer is the movement of an employeefrom one job to another (or from one office to other) without any increase in pay,responsibility and status. Usually, transfer takes place between jobs (or offices) payingapproximately the same salary to employees. A transfer may take place either at theintention of the employer or at the request of the employee concerned.

(ix) Staff appraisal: Performance appraisal is a systematic way of judging the ability ofan employee in performing his tasks. It is a process of evaluating the performanceof an employee on a given job and his potential for future development. It helps theemployees in improving their job performance. It is helpful in promoting employeesto higher positions.

(x) Staff dismissal: Dismissal refers to the termination of service of an employee byway of punishment for misconduct or unsatisfactory performance. Termination ofservice of an employee may take place in any one of three forms, namely, (a)Suspension (i.e., disciplinary action against an employee); (b) Discharge (i.e.,permanent loss of job of an employee); (c) Lay-off (i.e., termination of service of anemployee when there is no work in an organisation).

(xi) Staff leadership: Staff leadership is the process of influencing the behaviour ofemployees to work willingly towards the achievement of specified organisationalgoals. Leadership is the ability to build up confidence and zeal among subordinatesand influencing the task-related activities of group members. The success of anorganisation depends to a large extent on the quality of leadership, particularly onthe part of the personnel manager.

(xii) Labour safety and welfare: A better work environment is to be provided to theworkers in the following ways: (a) Making arrangements for ventilation of fresh air; (b) Making provision for adequate light and drinking water ; (c) Rooms, staircasesand passages should be kept clean; (d) Provision for sufficient latrin ; (e) Provisionfor extinguishing fire ; (f) prevention of accidents, etc.

Workers should also be provided with adequate welfare facilities, such as, (a) Medicalfacilities, (b) Employees State Insurance, (c) Pension, gratuity and other post-retirement benefits, (d) Canteen facilities, (e) Recreational facilities, etc.

(xiii) Industrial relation : It covers all sorts of relationship that an organisation mustmaintain for its smooth functioning. It is an active relation among the workers,management, trade unions and the State. It gives emphasis on adjustment and co-operation between the employer and its employees. Industrial relation aims atindustrial peace and democracy.

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(xiv) Staff maintenance : The human resource manager is also responsible for maintainingan effective work force. He develops programmes covering various aspects of existingpersonnel as follows :

(a) Safety aspect (i.e. providing safe working conditions to prevent physical injuries of employees);

(b) Health aspect (i.e. providing healthy working environment for mental freshness ofemployees and improving their productivity);

(xv) Welfare aspect (i.e. providing proper amenities to employees such as housing, canteen,recreational facilities, etc.).

4.2. RECRUITMENT AND SELECTION OF WORKERS

4.2.1. Meaning of Recruitment

Recruitment is a process of identifying sources of human forces and motivating them to applyfor a particular job or jobs in an organisation. It is a process to discover the sources of manpowerto meet the requirements of the staffing schedule. It facilitates effective selection of an efficientworking force in an organisation. It is a linkage activity bringing together those with jobs andthose seeking jobs. It aims at securing as many applications from qualified candidates as possiblefor decreasing the hiring ratio. A well-planned and well-managed recruiting effort will resultin high quality applicants. Recruitment satisfies an organisation’s needs and shapes its future.The success of an organisation depends on how effectively human resources are managed andutilised.

Recruitment is a two-fold function : (a) to discover the sources of manpower to match jobrequirements and specifications, and, (b) to attract an adequate number of prospective employeesto permit meaningful^election of the required personnel.

· Recruitment is the process of searching for prospective employees and stimulating themto apply for jobs in the organisation”. [Edwin B. Flippo]

· Recruitment is the process to discover potential candidates for anticipated organisationalvacancies.” [Decenzo and Robbins]

· Recruitment is the development and maintenance of adequate manpower resources”.[Dales S. Beach]

· Recruitment is the process of generating a pool of qualified applicants for organisationaljobs.” [Mathis and Jackson]

Thus, recruitment involves identifying sources of potential employees who have the abilitiesand attitudes to perform the job. It stimulates and encourages prospective employees to applyfor the jobs in the organisation. It is a positive process because its objective is to increase theselection ratio. It is a linking activity because it brings together those with jobs to fill and thoseseeking jobs.

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4.2.2. Sources of recruitment

In order to recruit, both internal as well as external sources may be utilised as follows :

4.2.2.1. Internal sources of recruitments

Internal sources refer to the present working force of an organisation. Internal sources ofrecruitment include personnel already on the payroll of the organisation. The major internalsources of making recruitment are as follows :

(i) Promotion : This means appointing an employee to a position of greaterresponsibility. It refers to shifting of persons to positions carrying better prestige,higher responsibility and more salary. Whenever a clear vacancy exists in adepartment, it is filled in by promoting a suitable employee from the lower cadre inthe same department. Employee’s seniority, merit, job knowledge and career recordare considered at the time of promotion.

(ii) Transfer: This involves the shifting of an employee from one job to another withoutchanging his responsibility. It is used as a source of internal recruitment to meetpersonnel demand at the place to which the employee is transferred.

(iii) Present employees : The present employees of an organisation may be informedabout likely vacant positions. The existing employees can recommend their relativesor friends for the jobs suitable for them.

(iv) Re-employment of ex-employees : This refers to employing the employees whoserved the organisation in the past but quit voluntarily or due to retrenchment andwant to return, if the organisation wishes to re-employ them.

(v) Dependents : Dependents and relatives of the deceased and disabled employeescan be employed on compassionate grounds.

(vi) Apprentices : Persons working as apprentices in the organisation may also be hiredwhenever a clear vacancy exists.

4.2.2.2. External sources of recruitment

External sources of recruitment include selection of personnel from outside the organisation. Itis not desirable for the organisation to rely totally on internal sources for recruitment. It isnecessary to inject fresh talent into the organisation from outside also. An organisation maychoose employees from the following external sources of recruitment:

(i) Advertisements: This is the best method of recruiting personnel for skilled workers,clerical and higher staff. The organisation can advertise its vacancies throughnewspapers, trade journals, professional journals, radio, television, magazines,

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internet, etc. It can be used on a nationwide basis and the management gets a widerrange of candidates for selection.

(ii) Employment exchanges : These organisations provide information about jobvacancies to the job seekers and help employers in finding suitable candidates. Theemployment exchanges provide the list of candidates to the organisation when theyget requisitions from various employers.

(iii) Educational institutions : Sometimes, educational institutions provide placementservices. They offer opportunities for recruiting recent graduates and other diplomaholders. Junior level executives or managerial trainees may be recruited fromprofessional and technical institutes (like the IIT and IIM) through campusinterviews.

(iv) Private employment agencies: These agencies (like ABC Consultants Ltd.) serve inthe technical and professional areas to provide suitable candidates to employers.These agencies advertise the position, screen applicants and provide a guarantee tothe employer for an applicant’s satisfactory performance.

(v) Professional bodies : The professional institutions (like ICAI, ICWAI, ICSI, IIM, IITetc.) maintain a register of qualified persons from which they recommend the namesto the employers when asked for. Professional institutions publish magazines andjournals which contain advertisements for job openings.

(i) Labour contractors : Contractors are the best sources of getting workers when theyare required for short periods. Manual workers may be recruited or hired throughcontractors, who maintain close links with the workers.

(vi) Employees’ recommendation : Present employees ot a concern may also recommendfriends or relatives for jobs. Some organisations encourage their existing employeesto assist them in getting applications from persons who are known to them.

(vii) Labour unions’ list: In certain occupations (like hotels, building trades, etc.) labourunions supply the needed employees. It saves expenses of recruitment and screening.Sometimes, labour unions may be asked to recommend candidates as a courtesytowards the union.

4.2.3. Methods of recruitment

Sources of recruitment are the locations from where prospective employees are available. Onthe other hand, methods of recruitment are the means by which an organisation establishescontact with potential candidates. The task of recruitment should be conducted in an organisedmanner, preferably by the personnel department of an organisation. The personnel departmentshould keep in mind the requirements of various departments, both as regards quality andquantity. Various methods employed for recruiting employees may be classified into the

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following categories :

(1) Direct recruitment method : Under this method, workers are recruited directlythrough campus interviews, scouring, employee contacts, manned exhibits,waiting list, line register of job seekers, etc. Usually, in all such cases,preliminary screening is completed by examining the application form filledin by the candidate and the preliminary interviews.

(2) Indirect recruitment method : Under this method, workers are recruitedindirectly through advertisements in newspapers, journals, radio, television,internet, etc., in order to get suitable candidates. This method is appropriatewhen the organisation wants to reach out to a large target group scatterednationwide.

(3) Third party recruitment method : Various agencies can be used to recruitemployees. These include public and private employment exchanges,management consulting firms, professional bodies, trade unions, labourcontractors, etc. These agencies usually provide technical workers, executives,accountants, office assistants, etc., to the employers to suit their requirements.

4.2.4. Meaning of Selection

Selection is the process of choosing the most suitable candidates from among the applicants forjobs. The purpose of selection is to select the most suitable candidates who meet selection criteriaand related constraints. It involves careful screening and testing of candidates with referenceto job specifications. It is the process of eliminating unsuitable candidates and finally arrivingat the most suitable one. The aim of selection is to pick the right person for the right job. Itshould aim at the optimal match between the person and the job.

· Selection is the process by which candidates for employment are divided into two classes— those who will be offered employment and those who will not”.[Dale Yoder]

· The selection procedure is adopted for the purpose of ascertaining whether or notcandidates possess the requisite qualifications needed for the jobs”. [ M i c h a e lJucius]

· Selection is the process by which an organisation chooses from a list of screenedapplicants, the person or persons who best meet the selection criteria for the positionavailable”. [Keith Davis]

Thus, selection is the matching of personal traits of the candidate with the quality and abilityneeded for performing the job successfully. It is the process of picking out the best suitedcandidate needed for the job. It begins with an initial screening interview and ends with thefinal employment decision.

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4.2.5. Procedure for selection

The selection procedure starts immediately after recruitment. It is a process of eliminatingthose candidates who appear unpromising. It is a series of successive hurdles (or barriers)which an applicant must cross. The task of selection is to match the worth and abilities ofapplicants with the requirements of the job at every stage. Undesirable candidates are screenedout and the qualified candidates are retained at every stage. A candidate is selected when heclears all the steps laidjiown in the selection process. The steps involved in the selection processare explained in detail as follows :

(i) Reception of applicants : The selection process starts when the applicants come tothe employment office of the organisation. The receptionist’s attitude towards theapplicants must be warm and positive. The applicants should be treated in a well-behaved manner.

(ii) Receiving of applications : The receptionist in the personnel department givesinformation about new openings to the visitors and receives their applications. Thepersonnel department may also write to the employment exchanges or advertisethe vacancy in the newspapers or tap some other sources of labour force.

(iii) Scrutiny of applications : All applications received are scrutinised by the personneldepartment in order to eliminate those applicants who do not fulfil the requiredqualifications. Thereafter, a list of the candidates eligible for the job is prepared.

(iv) Preliminary interview: The initial screening is done through a preliminary interviewin order to eliminate the unsuitable candidates. The personality of the candidatecan be evaluated immediately at this interview.

(v) Blank application forms : The applicants selected at the preliminary interview aregiven blank application forms for supplying detailed information. It is a widelyused device for collecting information from candidates. Generally, the informationcollected in a blank application form relates to the (a) bio-data; (b) educationalqualifications; (c) work experience; (d) extra curricular activities ; (e) salarydemanded; (f) references ; (g) health conditions, etc.

(vi) Employment tests : A test is a measurement of an individual’s job-related abilitiesand skills. The worth of a test will be judged from its ability to reject unsuitablecandidates and help in selecting appropriate candidates. Various types of tests areapplied in the selection process (such as the personality test, intelligence test, aptitudetest, achievement test, interest test, judgement test, performance test, dexterity test,situational test, etc.)

(vii) Interviews : This is a face-to-face, oral and personal appraisal method. An interviewis conducted with a view to acting as a check on the information already obtained.It also provides an opportunity to form a better understanding about the candidates.

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Interviews enable the interviewer to judge certain qualities, such as (a) quickness toreactions ; (b) mannerism ; (c) sense of humour ; (d) level of intelligence ; (e) quickreasoning ; (f) cultural level; (g) ability to organise thoughts, etc.

(viii) Checking references : An applicant may be asked to provide two types of references,namely, (a) character reference ; and (b) experience reference. The referees mayprovide significant information about the candidate.

(ix) Medical examination : This is conducted to get the needed information about thephysical condition of the candidate. Only those candidates should be selected whoare physically fit and mentally alert. A man with poor health will prove to be aburden rather than an asset to the organisation.

(x) Final selection decision : After completing all the above-mentioned stages involvedin the selection process, successful candidates are finally selected. The managementoffers appointment letters to those successful candidates mentioning the post, payscale, starting salary, probationary period, allowances and other benefits granted tothem. The placement and orientation of the employee is also an important step inthis direction. An employee should be introduced to his immediate superior andsubordinate in the organisation.

4.2.6. Recruitment Practices In India

Industries in India depend on the following sources of recruitment :—

(i) Internal Sources

(ii) Public employment exchanges

(iii) Campus recruitment

(iv) Executive search agencies/consultants

(v) Labour contractors

(vi) Employee referrals i.e. Recommendation of existing personnel

In public sector enterprises, a specified proportion of vacancies are reserved for scheduledcastes, scheduled tribes, physically handicapped, ex-servicemen, other backward classes, etc.Some organisations give preference to local people i.e. sons of the soil.

The recruitment programme should be evaluated periodically. The criteria for evaluation mayconsist of cost per applicant, the applicant/hiring ratio, performance appraisal, tenure of stay,etc. The organisation should first find out how the applicant was attracted to the

4.2.7. Concept of Dismissal

Dismissal or discharge refers to terminating the services of an employee by way of punishmentfor misconduct or unsatisfactory performance. Unsatisfactory performance implies persistent

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failure of the employee to perform his job to the specified standards. An employee is dismissedon account of unsatisfactory performance when he has no potential to improve his performance.Misconduct means wilful violation of rules and regulations. It includes indiscipline,insubordination and dishonesty. It also includes unauthorised and prolonged absence fromduty. Dismissal is a drastic step and should, therefore, be resorted to with great care. It shouldbe supported by a just and sufficient cause. It should be used as a last step after all attempts tosalvage the employee have failed. Before an employee is discharged, he must be given theopportunity to explain his conduct and to show cause why he should- not be dismissed. Theprinciple of natural justice should be followed, Le., the punishment should not be out ofproportion to the offence.

Dismissal is different from retrenchment, layoff and suspension. Retrenchment means permanenttermination of an employee’s services due to economic reasons such as closing of business.Layq/fmeans “thefailure, refusal or inability of an employer, on account of shortage of coal, power orraw materials or accumulation of stocks or breakdown of machinery or by any other reason, to giveemployment to a workman whose name appears on the muster rolls of his industrial establishment andwho has not been retrenched”. Layoff is resorted in cyclical and seasonal industries. In minesworkers are laid off due to excess of inflammable gas, flood, fire and explosion. Layoff istemporary removal of an employee from the pay roll due to circumstances beyond the controlof the employer. Under it the employer-employee relationship does not come to an end. Theservices of the employee are not terminated and he is expected to be called for work in future.Suspension of an employee is a serious punishment and it is generally awarded only after aproper enquiry. A worker may be suspended for indiscipline during the course of an enquiry.During suspension the employee receives a subsistence allowance.

4.2.8. Grounds for Dismissal

A dismissal involves permanent separation of an employee from the payroll due to violation ofcompany rules or due to inadequate performance. An employee may be dismissed from serviceon the following grounds.

1. When the volume of work does not justify the continuing employment of the persons involved.

2. When the employee fails to work according to the requirements of the job due to incapacityor deliberate slowing down of work.

3. When the employee forfeits his right to a job due to his violation of a basic policy involvingsafety of others, the morale and discipline of the work.

Causes of Dismissal

Inefficiency Use of abusive or threatening language

Dishonesty to a superior

Indiscipline Gambling

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Insubordination Gross negligence

Misconduct Tardiness in work

Physical unfitness Frequent absences witiiout leave

Possession of firearms/narcotics Theft and other criminal activities

Unauthorised strike Wilful damage to company’s property

Subversive activity Falsifying records of work

Drunk while at work Failure to use safety devices

Sleeping on the job

4.2.9. Procedure for Dismissal

Dismissals are generally made in accordance with the standing orders. The action taken shouldbe bonalide and should not be a case of victimisation.

The following elements should be present in a dismissal programme.

(i) The employee should be given an opportunity to explain his conduct and to showcause why he should not be dismissed,

(ii) The reasons for dismissal should be clearly stated,

(iii) The supervisor in charge initiating dismissal action should be fully conversant withthe rules and regulations of the organisation.

(iv) The facts concerning the violation of the rules and regulations should be carefullyanalysed. ;

(v) Adequate provision should be made for review of the dismissed employee’s case.

The steps involved in dismissal procedure are as follows:

1. Charge sheet. The first step in the procedure is to frame and issue a written charge sheetThe charge sheet should be based upon a written complaint against the employee. It shouldcontain details of the offence with which the employee is charged and the allegations ofmisconduct made against him. The charge sheet should indicate the time limit in which a replyto the charge sheet should be submitted to the concerned authority. The employee is calledupon to show cause why he should not be dismissed from service. The contents and implicationsof the charge sheet may be explained to the employee in his own language and in the presenceof some reputed witness before a copy of the charge sheet is handed over to him. If the employeerefuses to accept the charge sheet it should be sent to his residential address under “registeredpost with acknowledgement due” (Registered A.D.). If the employee refuses to take delivery ofthe registered letter or if it is returned undelivered it should be published in a local newspaperto ensure its wide publicity.

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2. Receipt of explanation. The employee may submit his explanation within the prescribedperiod of time or he may ask for an extension of time for its submission in the latter case. Therequest should be considered in good faith in accordance with the rules of natural justice.

3. Issue of notice of enquiry. In case the explanation received from the employee is found tobe unsatisfactory, a notice of enquiry is issued to him. The notice should mention the time, dateand place of enquiry and the name of the officer who would conduct the enquiry. The employeeis required to be present at the specified time and place, alongwith his witness, if he has any.

4. The Holding of enquiry. On the specified day, time and place the enquiry office will holdthe enquiry in the presence of the employee. The contents of the charge sheet and an explanationof the procedure to be followed during the enquiry are communicated to the employee. If theemployee pleads his innocence, the enquiry proceeds. But if he pleads guilty, unconditionallyand in writing, the enquiry is dropped.

The details of the enquiry are recorded and the report is signed by the enquiry officer andthe employee. After all the witnesses have been examined against the employee, the defencewitnesses and the employee are called upon to submit their statements. The enquiry officermay call all the supporting evidence and documents and thoroughly examine them.

5. The findings. Once the enquiry is over, the enquiry officer has to give his findings. Hisreport must contain the procedure followed, the statements recorded, the documents, producedand examined, the charges made, the explanations given and the evidence produced. The officershould then record his own findings on each of the charges and the grounds on which he hasreached to a particular conclusion. He should specifically mention which charges have beenproved and which have not been proved. The officer then submits his findings to the authoritiesentitled to dismiss the employee.

6. Decision. On receiving the report from the enquiry officer the concerned authority maytake a decision for dismissal of the employee.

7. Communication of the order. A copy of the dismissal order is then handed over to theconcerned employee.

4.2.10. Retirement

Retirement is the main cause of separation of employees from the organisation. It may be of two kinds:

(a) Compulsory retirement An employee must retire after attaining the specified age. InGovernment office the retirement age is 58 whereas in the private sector the age is generally 60years.

(b) Premature retirement. An employee may retire before attaining the specified age due to badhealth, physical disability, family problem etc. He gets the full benefit of retirement providedthe management allows premature retirement.

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(c) Voluntary retirement When an organisation wants to cut down its operations or to closeforever, it may give an option to its employees with a certain minimum service for voluntaryretirement in return for a lumpsum payment. This type of retirement is called GoldenHandShake.Retirement is a significant milestone in the life of an employee. It requires a great deal ofadjustment on his part. Employees require preparation through communication and counselling.The personnel department and the immediate superior of the retiring employee should bidfarewell. At the farewell the employee is thanked for his services and given a token gift. Hemay be requested to suggest improvements in the organisation. All the dues and benefits of theretiring employee should be paid to him before the farewell.

4.2.11. Layoff

Layoff implies temporary removal of art employee from the payroll of the organisation due tocircumstances beyond the control of the employer. It may last for an indefinite period. But theemployee is not terminated and is expected to be called back in future. The employer employeerelationship does not come to an end but is merely suspended during the period of layoff. It istemporary denial of employment. The purpose of layoff is to reduce the financial burden onthe organisation when the human resources cannot be utilised profitably. Under Section 2(KKK)of the Industrial Disputes Act, 1947, layoff is defined as “the failure, refusal or inability of anemployer, on account of shortage of coal, power or raw materials or accumulation of stocks orbreakdown of machinery or by any other reason, to give employment to a workman whosename appears on the muster rolls of his industrial establishment and who has not beenretrenched”. Layoff is resorted in cyclical and seasonal industries. In mines workers are laidoffdue to excess of inflammable gas, flood, fire and explosion. According to Section 25(c) of theIndustrial Disputes Act, 1947, a laidoff worker is entitled to compensation equal to 50 per centof the basic wages and dearness allowance that would have been payable to him had he notbeen laidoff. However, in order to claim this compensation, the laidoff workman must satisfythe following conditions:

(a) he should not be a badli or a casual worker,

(b) his name must appear on the muster rolls of the industrial establishment,

(c) he must have completed not less than one year of continuous service, and

(d) he must present himself for work at the appointed time during normal working hours atleast once a day.

The right to compensation is lost if the worker refuses to accept alternative employment at aplace within 5 miles of the establishment from which he has been laidoff. No compensation ispayable when the layoff is due to strike or slowing down of production on the part of workersin another part of the establishment. An industrial establishment of a seasonal character or inwhich work is performed only intermittently or which employs less than 20 workers is notrequired to pay the compensation.

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4.2.12. Redundancy

Some of the employees in an organisation may become redundant or surplus due to reductionin the size or scale of operations. During the present period of globallisation and cut throatcompetition many firms are downsizing their operations. As a result redundancy of labouroccurs.

Restructuring of an organisation, amalgamation or merger of two or more firms and changesin technology may also lead to redundancy of staff. In order to streamline their operations andto improve competitiveness, several companies in India have introduced Voluntary RetirementSchemes (VRS). Under such a scheme employees who resign voluntarily are given a lump sumof money depending on the number of years of service left. Such a scheme is also known as“Golden Handshake”.

Redundancy is different from resignation and retrenchment. Resignation means an employeevoluntarily leaves the organisation. An employee may resign from his job due to ill health,marriage, better job offer in some other organisation, etc.

Retrenchment means permanent termination of an employee’s services for economic reasonsin a going concern. Termination of services on account of disciplinary action, or prolongedillness or retirement and superannuation, or expiry of agreement or on closure of theestablishment does not constitute retrenchment. It is terminated due to redundancy of workforce.

Retrenchment creates a sense of insecurity and resentment among the staff. Therefore, anemployee should be retrenched without humiliation and ill feeling so that he does not speakunkindly of the employer. The Industrial Disputes Act, 1947 lays down the following conditionsfor retrenchment.

(a) The employee must be given one month’s notice in writing indicating the reasons forretrenchment or wages in lieu of such notice.

(b) The employee must be paid compensation equal to 15 days’ wages for every completed yearof service.

(c) Notice in the prescribed manner must be served on the appropriate Government authority.

(d) In the absence of any agreement to the contrary, the worker employed last must be terminatedfirst.

Retrenched workers must be given preference in future employment. Establishments employing100 or more workers are required to give three months’ notice and to seek prior approval of thegovernment before retrenching an employee.

4.3. TAYLOR AND SCIENTIFIC MANAGEMENT

Frederick Winslow Taylor and other contributors notably Frank Gilbreth. Lillian Gilbreth andHenry Gantt, investigated the effective use of human beings in industrial organisations,particularly at shop floor levels. Taylor has defined Ihe basic problem of managing as the art of“knowing exactly what you want men to do and then see in that they do it in the best and

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cheapest way.” Since Taylor has put the problem of managing on a scientific way, he is oftencalled as the father of scientific management and his contributions as the principles of scientificmanagement. Though his contributions have become traditional in present-day context, stillthe label scientific management is used for his contributions. It does not mean that present-day management thoughts and practices are not scientific. In fact, management as a sciencehas been taken much later than the contributions of Taylor. Taylor joined Midvale Steel Companyin U.S.A. as a worker and later on became supervisor* During this period, he continued hisstudies and eventually completed his M.E. (Master of Engineering). Subsequently, he joinedBethlehem steel Company. At both these places, he carried experiments about how to increasethe efficiency of people. Even after his retirement, he continued to develop scientificmanagement. On the basis of hi experiments, he published many papers and books and all hiscontributions were compiled in his book ‘Scientific Management’. Taylor’s contributions canbe described in two parts: main features of scientific management and principles of scientificmanagement.

Main Feature of Scientific Management

Taylor conducted various experiments at his work places to find out how human beings couldbe made more efficient by standardizing the work and better method of doing the work. Theseexperiments have provided the following features of scientific management.

1. Separation of Planning and Doing: Taylor emphasized the separation of planning aspectfrom actual doing the work. Before Taylor’s scientific management, a worker used to planabout how he had to work and what instruments were necessary for that. The worker was putunder the supervision of a supervisor commonly known as gang boss. Thus supervisor’s jobwas merely to see how the workers were performing. This was creating lot of problems, andTaylor emphasized that planning should be left to supervisor and worker would emphasizeonly operational work.

2. Functional Foremanship: Separation of planning from doing resulted into development ofsupervision system, which could take planning work adequately besides keeping supervisionon workers. For this purpose. Taylor evolved the concept of functional Foremanship based onspecialization of functions. In this system, eight persons are involved to direct the activities ofworkers. Out of these, four persons are concerned with planning :—

(i) route clerk,

(ii) instruction card clerk, time and cost clerk, disciplinarian.

The remaining four persons are concerned with doing aspect of the work.

These are:

(i) speed boss

(ii) inspector,

(iii) maintenance foreman, and

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(iv) gang boss.

All of them give directions to workers on different aspects of work. This is against unity ofcommand principle as shown in the following figure.

Fig. 4.3 : Functional foremanship.

3. Job Analysis:

Job analysis is undertaken to find out the one best way of doing the thing. The best way ofdoing a job is one, which requires the least movement, consequently less time and cost. Thebest way of doing the thing can be determined by taking up time-motion-fatigue studies.

(i) Time study involves the determination of time a movement takes to complete. Themovement which takes minimum time is the best one, This helps in fixing the fairwork for a period.

(ii) Motion study involves the study of movements in parts, which are involved indoing a job and thereby eliminating the wasteful movements and perfbrrning onlynecessary movement. Elimination of unnecessary movements in doing a workreduces time taken in performing a work and also the fatigue of workers.

(iii) Fatigue study shows the amount and frequency of rest required in completing thework.

Managing Director

Managing Director Managing Director

Instructioncard clerk

Time andcost clerk

disciplin-arian

Speedboss Inspector

Maintenanceforeman

Gangboss

RouteClerk

Worker

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After certain period of time, workers feel fatigue and cannot work with full capacity. Therefore,they require rest in between. When the rest is allowed, they start working with full capacity.Thus job analysis, as given by Taylor., suggests the fair amount of a day’s work requiringcertain movements and rest periods to complete it.

4. Standardisation: As far as possible, standardization should be maintained in respect ofinstruments and tools, period of work, amount of work, working conditions, cost of production,etc. These things should be fixed in advance on the basis of job analysis and various elementsof costs that go in performing a work.

5. Scientific Selection and Training of Workers: Taylor has suggested that workers shouldbe selected on scientific bases taking into account their education, work experience, aptitude,physical strength, etc. A worker should be given work for which he is physically and technicallymost suitable. Apart from selection, proper emphasis should be given on the training of workerswhich makes them more efficient and effective.

6. Financial Incentives: Financial incentives can motivate workers to put in their maximumefforts. If provisions exist to earn higher wages by putting in extra effort, workers will bemotivated to earn more. Taylor himself applied the concept of differential piece rate system,which was highly motivating. According to this scheme, a worker who completes the’normalwork gets wages at higher per piece and one who does not complete gets at lower rate. Thusthere is considerable difference in wages between those who complete the work and those whodo not complete. To make the differential piece rate system work. Taylor has suggested thatwages should be based on individual performance and not on the position which he occupies.Further, the wage rate should be fixed on accurate knowledge and not on estimates.

7. Economy: While applying scientific management, not only scientific and technical aspectsshould be considered but adequate consideration should be given to economy and profit. Forthis purpose, techniques of cost estimates and control should be adopted. The economy andprofit can be achieved by making the resources more productive as well as by eliminating thewastages. Taylor has clarified by giving examples of how resources are wasted by not followingscientific management.

8. Mental Revolution: Scientific management depends on the mutual cooperation betweenmanagement and workers. For this cooperation, there should be mental change in both partiesfrom conflict to cooperation, Tayior feels that this is the most important feature of scientificmanagement because in its absence, no principle of scientific management can be applied. Inthis regard, Taylor has observed as follow:

“Scientific management is not any efficiency device, not a device of any kind for securingefficiency; nor is it bunch or group of efficiency devices. It is not a new system of figuring costs;it is not a new scheme of paying men; it is not a piecework system; it is not a bonus system; it isnot a premium system; it is no scheme of paying men.... It is not divided foremanship orfunctional foremanship; it is not any of the devices which the average man calls to mind whenscientific management is spoken of...

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Now. in its essence, scientific management involves a complete mental revolution on the partof the working man engaged in any particular establishment or industry-a complete mentalrevolution on the part of these men as to their duties toward their work, toward their fellowmenand toward their employers. And it involves the equally complete mental revolution on thepart of those on the management’s side- the foreman, the superintendent, the owner of thebusiness, the board of directors- a complete mental revolution on their part as to their dutiestoward their fellow workers in the management, toward their workman and toward all of theirdaily problems.

4.3.1 Principles of Scientific Management

Taylor has given certain basic principles of scientific management. The fundamental principlesthat Taylor saw underlying the scientific management may be given below :—

1. Replacing Rule of Thumb with Science. Taylor has emphasised that in scientificmanagement, organised knowledge should be applied which will replace rule of thumb. Whilethe use of scientific method denotes precision in determining any aspect of work, rule of thumbemphasises estimation. Since exactness of various aspects of work like day’s fair work,standardisation in work, differentia] piece rate for payment, etc., is the basic core of scientificmanagement, it is essential that all these are measured precise and should not be based onmere estimates. This approach can be adopted in all aspects of managing.

2. Harmony In-Group Action. Taylor has emphasised that attempts should be made toobtain harmony in group action rather than discord. Group harmony suggests that there shouldbe mutual give and take situation and proper understanding so that group as a whole contributesto the maximum.

3. Cooperation. Scientific management involves achieving cooperation rather than chaoticindividualism. Scientific management is based on mutual confidence, cooperation and goodwill.Cooperation between management and workers can be developed through mutualunderstanding and a change in thinking. Taylor has suggested “substitution of war for peace,hearty and brotherly cooperation for contentment and strife, replacement of suspiciouswatchfulness with mutual confidence, of becoming friends instead of enemies. It is along thisline, I say, that scientific management must be developed.”.

4. Maximum Output. Scientific management involves continuous increase in productionand productivity instead of restricted production either by management or by worker. Taylorhated inefficiency and deliberate curtailment of production. His concern was with the largesize of the cake. In this opinion, “there is hardly any worse crime to my mind than that ofdeliberately restricting output.” He deiced the product to be distributed had outgrown thesize. Therefore, he advised the management and workers to “turn their attention towardsincreasing the size of the surplus until the sizes of the surplus becomes so large that it is necessaryto quarrel over how it shall be divided.

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5. Development of Workers. In scientific management, all workers should be developedto the fullest extent possible for their own and for the company’s highest prosperity.Development of workers requires their scientific selection and providing them training at theworkplace. Training should be provided to workers to keep them fully fir according to therequirement of new methods of working which may be different than the nonscientific methods.

4.3.2. Contributions of Henry Fayol

Perhaps the real father of modern management theory is the French industrialist Henry Fayol.His contributions are generally termed as operational management or administrativemanagement. Fayol’s contributions were first published in the book form titled as‘Administration Industrielle at Generate’ in French language, in 1916. Its English translationwas published in 1949 Only in the United States of America. Therefore, in the early period,Fayol’s contributions could not make much impact on the development of management thought.However, after the publication of his book in English, he got prominence in the field ofmanagement very quickly.

Fayol looked at the problems of managing an organisation from top management point ofview. He has used the term ‘administration instead of management emphasising that there isunity of science of administration. For him, administration was a common activity and 1

administrative doctrine commerce, industry, religion, philanthropy and the State on equalfooting. His administrative science can be applied equally well to public and private affairs.Therefore, management is a universe phenomenon. However, he has emphasised that principlesof management are flexible and not absolute and are usable regardless of changing and specieconditions.

Fayol found that activities of an industrial organisation could be divided into six groups:

1. Technical (relating to production);

2. Commercial (buying, selling and exchange);

3. Financial (search for capital and its optimum use);

4. Security (protection of property and person);

5. Accounting (including statistics); and

6. Managerial (planning, organisation, command, coordination, and control).

Pointing out that these activities exist in business of every size, Fayol observed that the firstfive were well known, and consequently he devoted most of his book to analyze the sixth one,that is, managerial activity. Fayol has divided his approach of studying managemenl into threeparts :

(i) managerial qualities and training,

(i) general principles of management, and

(ii) elements of management.

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4.4. MANAGERIAL QUALITIES

Fayol was the first person to identify the qualities required in a manager. According to him,there are six types of qualities that a manager requires. These are as follows :-

(i) Physical (health vigour, and address);

(ii) Mental (ability to understand and leam, judgment, mental vigour, and adaptability);

(iii) Moral (ehergy, firmness, initiative, loyalty, tact, and dignity);

(iv) Educational (general acquaintance with matters not belonging exclusively to thefunction performed);

(v) Technical (peculiar to the function being performed); and

(vi) Experience (arising from the work).

Fayol has observed that the most important ability for a worker is technical; the relativeimportance of managerial ability increases as one goes up the scalar chain, with insight becomingthe most important ability for top level executives. On the basis of this conclusion, Fayolrecognised a widespread need for principles of management and for management teaching.He held that managerial ability should be acquired first in school and later in the workshop. Inorder to acquire managerial knowledge, he developed principles of management to be taughtin academic institutions.

4.4.1. General Principles of Management

Fayol has given fourteen principles of management. He has made distinction betweenmanagement principles and management elements. While management principle is afundamental truth and establishes cause-effect relationship, management element denotes thefunction performed by a manager. While giving the management principles, Fayol hasemphasised two things :-

(i) The list of management principles is not exhaustive but suggestive and has discussedonly those principles which he followed on most occasions.

(ii) Principles of management are not rigid but flexible.

According it him, “there is nothing rigid or absolute in management affairs; it is all a questionof proportion. Therefore, principle are flexible and capable of adapting to every need. It ismatter of knowing how to make use of them which is a difficult art requiring intelligence,experience, and proportion.” Various principles of management are as follows:

(1) Division of work. Fayol has advocated division of work to take the advantages ofspecialisation. According to him, “specialisation belongs to natural order. The workersalways work on the same part, the manager concerned always with the same matters,acquire an ability, sureness, and accuracy which increase their output. Each change ofwork brings in it training and adaptation which reduces output.. .yet division of work

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has its limits which experience and a sense of proportion teach us may not be exceeded.”This division of work can be applied at all levels of the organisation. ;”

(2) Authority and Responsibility.The authority and responsibility are related, with the latter,the corollary of the former and arising from it. Fayol finds authority as a continuationof official and personal factors. Official authority is derived from the manager’s positionand personal authority is derived from personal qualities such as intelligence, experience,moral worth, past services, etc. Responsibility arises out of assignment of activity. Inorder to discharge the responsibility proper, there should be parity of authority andresponsibility.

(3) Discipline. All the personnel serving in an organisation should be disciplined. Disciplineis obedience, application, energy, behaviour, and outward mark of respect shown byemployees. Discipline may be of two types; self-imposed discipline and commanddiscipline. Self -imposed discipline springs from within the individual and is in thenature of spontaneous response to a skillful leader. Command discipline stems from arecognised authority and utilizes deterrents to secure compliance with a desired action,which is expressed by established customs, rules and regulations. The ultimate strengthof command discipline lies it its certainty of application. Such a discipline can be obtainedby sanctions in the forms of remuneration, warnings, suspension, demotion, dismissal,etc. However, while applying such sanctions, people and attendant circumstances mustbe taken into account. This can be learned by experience and tact of the managers.

(4) Unity of command. Unity of command means that a person should get orders andinstructions from only one superior. The more completely an individual has a reportingrelationship to a single superior, the less is the problem of conflict in instructions andthe greater is the feeling of personal responsibility for results. This is contrary to Taylor’sfunctional foremanship. On this conflicting view, Fayol suggested that, “I do not thinkthat a shop can be well run in flagrant violation of this (unity of command). Nevertheless,Taylor successfully managed large-scale concerns. I imagine that, in practice, Taylorwas able to reconcile functionalism with the principle of unity of command, but this isthe supposition whose accuracy I am not in a position to verify.” Fayol has consideredunity of command as an important aspect in managing an organisation. He says that“should it (unity of command) be violated, authority is undermined, discipline is injeopardy, order disturbed, and stability threatened. This rule seems fundamental to meand so I have put it to the rank of a principle.”

(5) Unity of Direction. According to this principle, each group of activities with the sameobjective must have one head and one plan. Unity of direction is different from unity ofcommand in the sense that former is concerned with functioning of the organisation inrespect of its grouping of activities or planning while latter is concerned with personnelat all levels in the organisation in terms of reporting relationship. Unity of directionprovides better coordination among various activities to be undertaken by anorganisation.

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(6) Subordination of Individual to General Interest. Common interest is above theindividual interest. Individual interest must be subordinate to general interest whenthere is conflict between the two. However, factors like ambition, laziness, weakness, .etc., tend to reduce the importance of general interest. Therefore, superiors should setan example in fairness and goodness. The agreement between employers and employeesshould be fair and there should be constant vigilance and supervision.

(7) Remuneration of Personnel. Remuneration of employees should be fair and providemaximum possible satisfaction to employees and employers. Fayol did not favour profitsharing plan for workers but advocated it for managers. He was also in favour of non-financial benefits though these were possible only in the case of large-scale organizations.

(8) Centralization. Everything, which goes to increase the importance of subordinate’srole, is decentralization; every thing, which goes to reduce it, is centralization. Withoutusing the term ‘centralization of authority’, Fayol refers the extent to which authority iscentralised or decentralized. Centralization and decentralization are the question ofproportion. In small firms, centralization is the natural order, but in large firms, a seriesof intermediaries is required. Share of authority and initiative left to intermediariesdepends on the personal character of the manager, his moral worth, the reliability of hissubordinates, and also on the conditions of the business. Since both absolute and relativevalues of managers and employees are constantly changing, it is desirable that the degreeof centralization or decentralization may itself vary constantly.

(9) Scalar Chain. There should be a scalar chain of authority and of communication rangingfrom highest to the lowest. It suggests that each communication going up or comingdown must flow through each position in the line of authority. It can be short-circuitedonly in special circumstances when its rigid following would be detrimental to theorganisation. For this purpose, Fayol has suggested ‘gang plank’ which is used to preventthe scalar chain from bogging down action. His scalar chain and gang plank can bepresented as follows —

Fig. 4.4 : Scalar chain and gang plank.

In the fig at above, A is the top man having immediate subordinates B and L. In turn B andL are having immediate subordinates C and M. This continues to the level of G and Q.Ordinarily, the communication must flow from A to B to C to D and so on while comingfrom top to down. Similarly, it must flow from G to F to E and so on while going up. It

A

B

C

D

E

F

G

L

M

N

O

P

Q

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means if any communication is going from F to P, it will flow from F to A via E, D, C and Band coming down to P via L M N and O. Fayol suggests that this scalar chain system taketime, and therefore, can be substituted by gang plank (dotted line) without weakening thechain of command. In order to maintain authority, it is desirable that superiors of F and Pauthorize them to deal directly provided each informs his superior of any action taken.Fayol suggests that this system allows F and P to deal in a few hours with some questionsor others which via the scalar chain would pass through twenty transmissions, inconveniencepeople, involve masses of paper, lose weeks or months to get to a conclusion less satisfactorythan the one which could have been obtained via direct contact.

(1) Order. This is a principle relating to the arrangement of things and people. In materialorder, there should he a place for everything and every thing should be in its place.Similarly, in social order, there should be right man in the right place. This kind oforders demands precise knowledge of the human requirements and resources of theorganisation and a constant balance between these requirements and resources.Normally, bigger is the size of the organisation, more difficult this balance is.

(2) Equity. Equity is the combination of justice and kindness. Equity in treatment andbehaviour is liked by every one and it brings loyalty in the organisation. The applicationof equity requires good sense, experience, and good nature for soliciting loyalty anddevotion from subordinates.

(3) Stability of Tenure. No employee should be removed within short time. There shouldbe reasonable security of jobs. Stability of tenure is essential to get an employeeaccustomed to new work and succeeding in doing it well. Unnecessary turnover is bothcause and effect of. bad management.

(4) Initiative. Within the limits of authority and discipline, managers should encourage,their employees for taking Initiative. Initiative is concerned with thinking out andexecution of a plan. Initiative increases zeal and energy on the part of human beings.

(5) Esprit de Corps. This is the principle of ‘union is strength’ and extension of unity ofcommand for establishing team work. The manager should encourage esprit de corpsamong his employees. The erring employees should be set right by demanding writtenexplanations. Written explanations complicate the matters.

4.5. HUMAN RELATIONS SCHOOL

Human relation’s school is a socio psychological approach to management. It suggests that abusiness enterprise is a social system in which group norms exercise significant influence onthe behaviour and performance of individuals. Workers cannot be motivated by economicrewards alone. They require social satisfaction at the workplace. Therefore, managers shouldcreate such a climate in the organisation that worker can feel happy. Employee counselling,participative decision- making, cordial supervision, job enrichment and other techniques have

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been suggested for keeping workers happy and satisfied. According to Keith Davis, humanrelations is an area of management practice which is concerned with the integration of peopleinto a work situation in a way that motivates them to work together productively, cooperativelyand with satisfaction and achieve organisational goals.

The human relation school is based on the following ideas —

1. The Individual. According to the human relation school, each person is unique.He brings certain attitudes, beliefs, values, skills, etc. to the job situation.Therefore, an individual is motivated by not only economic factors but by severalsocial and psychological factors.

2. The Work Group. Work is a social experience and most workers find satisfactionin social or informal groups. The norms of such group determine to a greatextent the attitudes and performance of workers. Therefore, managers shouldmaintain good inter-personal and inter-group relation to maximise productivity.

3. The leader. As the leader of a work group, a supervisor/manager should providea pleasant work climate wherein employees are allowed to have say in thedecision-making process. He can gain respect and obedience by adjusting tovarious personalities and situations.

4. The Work Environment. A positive work environment enables employees tosatisfy their needs as well as to achieve organisational goals. Positive workenvironment consists of clearly defined goals, performance linked rewards, feedback on performance, participate decision making, interesting and growthoriented work, open communications, etc.

4.5.1. Behavioural Approach

Human relations movement focused on interpersonal relations and overlooked the wider subjectof organisational behaviour. Organisational behaviour involves the study of attitudes, behaviourand performance of individuals and groups in organisational setting. Behavioural approachincludes the issue of organisational behaviour. It is also known as human resource approachbecause it stresses development of human beings for the benefit of both the individual and theorganisation.

Behavioural approach is multi-dimensional and interdisciplinary in nature. Under it theknowledge drawn from behavioural science, e.g., psychology, sociology, anthropology, etc. isapplied to understand, explain and predict human behaviour. Therefore, this approach is alsoknown as behavioural science approach. Several sociologists and psychologists, e.g., AlbrahamH. Maslow, Douglas McGregor, Federick Herzberg, Rensis Likert, Kut Lewin s, Keith Davis,Chris Argysis, L.R. Sayles, George Homans and others have made significant contributions tothe development of this approach.

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Features of behavioural science approach are as follows — .

(i) An organisation is a sociotechnical system.

(ii) Individuals differ in terms of their attitudes, perceptions and value systems.Therefore, they react differently to the same situation.

(iii) People working in an organisation have their needs and goals which may differfrom the organisation’s needs and goals. Management should achieve fusion betweenorganisational goals and human needs.

(iv) A wide range of factors influence relations among people (inter personal relations).

(v) People’s behaviour as individuals may be different from their behaviour as membersof a group.

(vi) Persons working together in an organisation from their own informal groups. Suchgroups have their own norms, culture and communication systems. Informal groupsexercise a significant influence on the attitudes, behaviour and performance ofemployees.

Thus, behavioural approach js an extension and improvement of human relations movement.It has made significant contributions towards the development of management thought.However, this approach errs by identifying management with psychology. Its conclusionsdiscount theory and stress radical empiricism. They have a clinical bias and lack scientificvalidity.

4.5.2. Systems Approach

Since 1950 researchers began to look at organisations from a systems viewpoint. In -1951Weiner’s pioneering work on cybernetics developed concepts of systems control byinformation feedback. He described an adaptive system as mainly dependent uponmeasurement and correction through feedback Later Ludwig Von Bertalanffy and KennethBoulding evolved the General System Theory (GST). This theory consists of generalprinciples for understanding the physical, mechanical, biological and social entities andthe relationship among them. A.K.Rice, E.L. Trist, D.S. Poughm Robert Katz, Kahn havemade significant contributions to the development of the systems approach.

The main elements of systems approach are as follows —

(i) An organisation is a unified and purposeful system consisting of severalinterconnected, interaction and interdependent parts.

(ii) The parts or components of a system are called sub-systems. Each sub-systeminfluences the other subsystems and the system as a whole. Different sub-systemsare tied together into an organic whole through goals, authority flows, resourceflows and information flows.

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(iii) The position and function of each sub-system and can be analysed and understoodonly in relation to the other sub-system to the organisation as a whole. Similarly,the organisation as a system can be analysed and understood only by reference toits sub-systems.

(iv) Each sub-system derives its strength by its association and interaction with the othersubsystems. As a result the collective contribution of the organisation is greaterthan the aggregate of individual contributions of its subsystem. This is known assynergy.

(i) (v) Every system has a boundary that separates it from its environment. Theboundary • determines which parts are internal to the organisation and which areexternal. For instance, employees are within the boundary whereas creditors andcustomers are external to a business firm.

(v) Systems are of two types. An open system continually interacts with its environment(the forces lying outside it) whereas a closed system is self contained and isolatedfrom the environment.

(vi) A business enterprise is an open and dynamic system. It draws inputs (raw materials,machinery, labour, finance, information etc.) from its environment. It converts theseinputs into outputs (products and services etc) with the help of conversion process.The conversion or transformation process consists of production and marketingactivities and it is also called throughput. It supplies them to the environment.

Fig. 4.5.2 : An open system view of organization

The reaction or response of the environment to the output is known as feedback. Feedbackis useful in evaluating and improving the functioning of the system. Therefore, feedback isthe key to system control. As an open system, an organisation has to adapt its structure andprocesses to the environmental changes, which affect its internal functioning. In other words,an organisation has to be a steady state and in a state of dynamic equilibrium in relation tothe external environment. A steady state means internal equilibrium and stability. When

ENVIRO NM EN T

INPU TST R A N S F O R M A TIO N

P R O C E S S

OU TPUTS

FEEDBACK

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an organisation’s functioning is temporarily disturbed (say, due to power shortage) it maystrive to maintain balance and regain its original position. However, if the power shortagebecomes a - regular phenomenon, it may have to modify its production schedule or installa power plant or adopt any other adaptive response. It has to move from its original state toa new state of equilibrium, i.e., dynamic equilibrium. Thus, organisations use maintenance(for steady state) and adaptive (for dynamic equilibrium) mechanisms in order to ensuretheir survival and growth.

(i) Some systems tend to disintegrate to dissipate their energy and to becomeinactive. This tendency is called entropy. On the other hand, other systems havethe tendency (called negative entropy) towards order, activity, perpetuation, etc.These are able to generate the required energy and surplus to sustain themselves.

(ii) Organizations operate on the principle of equi-finality, which means that theyhave several alternative ways of doing the same goal. Different initial conditionsand paths are permissible to reach a single final state. Similarly, a given initialcondition to state may be adopted to reach different final states.

4.5.3. Contingency Approach

The contingency approach is a relatively new approach to organisation and management. It isrelated to the systems approach. The belief that organisations are open systems widened theperspective further leading to the development of the contingency approach. It is also knownas the situational approach. It was developed by managers, consultants and researchers whotried to apply the concepts of earlier approaches to real life situations. They found that theconcepts and techniques highly effective in one situation failed to work in other situations.

The basic theme of the contingency approach is that there is no single best way of managingapplicable in all situations. The best solution is the one that is responsive to the peculiarities ofthe given situation. Significant differences exist between one situation and others. Therefore,management should deal with different situations in different ways. In other words, theeffectiveness of any technique is contingent on the given situation. The conditions andcomplexities of the situation determine which approach is applicable and effective. The approachor technique should be a match or ‘fit’ between the situational variables and managementvariables. It is the responsibility of management to analyze the contingencies or conditionspeculiar to each situation and then choose the right approach to deal with it.

Contingency approach rejects universality of management concept. It appeals to common sense.But it is much more than common sense. It requires the ability to analyse and diagnose amanagerial situation correctly. It also requires knowledge and understanding of differentprinciples, techniques and styles of management. Use of contingency approach is not possiblewithout the ability to match the management knowledge and skills to the demands of thegiven situation.

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The main features of the contingency approach are as follows —

(i) Management is entirely situational. The application and effectiveness of anytechnique is contingent on the situation. In other words, the conditions andcomplexity of the situation determine which measure or technique is applicableand effective.

(ii) Management should, therefore match or ‘fit’ its approach to the requirement of theparticular situation. To be effective, management policies and practices must respondto environmental changes. The organisation structure, the leadership style, thecontrol system all should be designed to fit the particular situation.

(iii) Since management’s success depends on its ability to cope with its environment itshould sharpen its diagnostic skill so as to anticipate and comprehend theenvironmental changes.

(iv) Managers should understand that there is no one best way to manage. They mustnot consider management principles and techniques universal.

Several examples can be given to illustrate and explain the contingency approach. For examplethere are several forms of organising work. The functional structure is the most common. Butin a dynamic environment, matrix structure may be more appropriate because of the need forsharing authority and power. The choice of the form of organisation should be made accordingto the requirements of the enterprise. Similarly several incentives-monetary and non-monetary-are available for motivating employees. The choice of motivational technique should be basedon the needs and expectations of the people to be motivated. To take another example, aneffective leader should change his/her style to match the given situation. Thus the contingencyapproach has applicability and usefulness for all the functions of management.

Contingency approach may be viewed as ‘if and ‘then’ approach as shown below. ‘If representsenvironmental or situational variables, which are independent.’ Then represents managementvariables (concepts, principles, and techniques) which are dependent on the environment. :

Fig. 4.5.3. : Contingency Modal

THENManagementVariables

IFEnvironment Variables

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In order to operationalise the contingency approach, managers have to take four sequential

steps :-

(i) analyse and understand the situation,

(ii) study and examine the validity of various concepts, principles and tech-niques to the situation at hand,

(iii) make the right choice by matching the technique to the situation, and

(iv) implement the choice.

Tom Burns. G.W.Stalker, Joan Woodward. James Thompson, Paul Lawrence, Jay Lorsch. JayGalbraith and other pioneers have made significant contributions to the development of con-tingency approach. Burn and Stalker conducted a study of Scottish and English electronicsfirms in the 1950s. They found that organisations operating in a stable environment adoptedmechanistic structures while those operating in a dynamic environment used organic struc-ture. Joan Woodward analysed the influence of technology7 on organisation structure of about100 British firms during the 1960s. She classified the technology adopted by these firms intothree types- units of small batch production, mass or larger batch production, and continuousprocess production. She found that span of control, inter- persona! relationships, ratio of man-agers to non managers, participation in decision making, use oi committees and other struc-tural aspects of these firms differed according to the type of the technology used. Lawrenceand Lorsch also found empirically that organisations functioning in a complex environmentadopted a higher degree of differentiation and integration than those working in a simpleenvironment. Jay Galbraith revealed that the amount of information required by an organisationdepended on the level of uncertainties, interdependence anc adaptation mechanisms.

Critical Evaluation

Contingency approach provides a clear view of the realities of the managerial job. The classicalapproach suggests pre- conceived principles and techniques as having universal. validity ig-noring the situational differences. The contingency approach avoids this organic stand andsuggests situation specific solutions. It is free from value judgments and exhorts managerialchoices to be made in the light of environmental factors. To this extent, the approach is openminded and pragmatic.

Contingency approach has commonsense value and wide-ranging particle utility. It widensthe horizons of managers from the concepts, principles and techniques of management theory.It goads them to be alert and adaptive to changing situational needs. It promotes analytical,critical and multidimensional thinking with the help of which managers can innovate new andbetter approaches and widen their choice.

The contingency approach does not suggest that the findings of earlier approaches are useless.Rather it attempts to integrate them and make them contingent upon the demands of the situ-ation. It recognizes that managerial functions and principles are useful but should be used

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with discretion and care to suit the specific situation. The contingency approach accepts that.organisations and their environment are too dynamic to be always effectively managed in thesame manner . Managers must be capable of changing their approach and style to match thechanges in the environment. This approach stresses the need for a comparative study oforganisations so as to develop guidelines for coping with different situations.

The contingency approach is more eclectic than the other approaches. It recognises that man-agement thought has not advanced to the point at which definite prescriptions for the best wayto manage in every situation is made available.

The contingency approach is not free from criticism. Critics argue that it adds confusion to thepractice of management by stressing that it all depends on the situation. The manager isswamped with so many ideas, which are humanly impossible to comprehend. He has no testedand proven prescriptions to depend upon. Critics also point out that without a theoreticalfoundation, it is almost impossible to research, to gain valuable information, or develop a knowl-edge base. Some critics argue that the approach does not incorporate all aspects of the systemstheory. The approach is very complex and suffers from paucity of literature. It suggests a reac-tive strategy for coping with the environmental changes. A proactive approach would be moreeffective for managers. It is also said that there is nothing new in contingency theory becauseeven classical theorists like Fayol cautioned managers to use principles in the light of changingconditions.

4.6. TRAININGTraining starts after the recruitment of the employees. Training is the process through whichemployees are made capable of doing the job prescribed to them. According to Elippo, Train-ing is the act of increasing the knowledge and skill of an employee for doing a particular job.According to Dale Yoder, “Training is the process by which manpower is filled for the particu-lar jobs it is to perform.” According to Beach, “Training is the organised procedure by whichpeople learn knowledge and skills for definite purpose.”

The purpose of training is to achieve a change in the behaviour of those trained and to enablethem to do their jobs in a better way. The trainees will acquire new manipulative skills, techni-cal knowledge problem solving ability or attitudes etc. Training is not a one-step process but itis a continuous or never ending process. Training makes newly recruited workers fully pro-ductive in the minimum of time. Even for old workers, training is necessary to refresh themand enable them to keep up with new methods and techniques.

Advantages of Training. According to Dale S. Beach, “Training is vital and necessary activity inall organisations. It plays a large part in determining the effectiveness and efficiency of theestablishment.” Following are the advantages of imparting training to the personnel.

(A) Advantages to the Organisation

1. Training is a follow-up of selection procedure. Training helps in curing defectsin the selection process. It helps in choosing the most appropriate individualsfor different jobs.

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2. Training brings about an improvement of the quality and quantity of output byincreasing the skill of the employees. Training makes the fresh and old employ-ees more skilled and accurate in performance of their work.

3. Trained personnel will be able to make much better and more economical use ofmaterials and equipment than untrained employees, thus reducing the cost ofproduction.

4. Since trained personnel commit few mistakes, they will require less supervi-sion. The management can well-afford to focus its attention on other basic func-tions.

5. Training can help reduce turnover, absenteeism, accidents, grievances rates.Supervisory training in labour relations, administration etc. may improve su-pervisor-subordinate relationships.

6. The training will create a feeling among the workers that they are being prop-erly cared for, and that the employer is sincere to them. This will improve rela-tions between the employers and employees. Training, thus, develops a senseof duty towards their employer and builds up confidence in the organisation.

(B) Advantages to the Employees

1. As employees acquire new knowledge and job skills, they increase their mar-ket value and wage-earning power. This increases their pay and status.

2. The possession of useful skill enhances their value to their employer andthereby increases their job security.

3. Training also qualify them for promotion to more responsible jobs.

Limitations of Training. There are some limitations of the training. They are —

1. Training is a costly and expensive process.

2. Training may result in dislocation of work and loss of output because regularoffice work is likely to be interrupted or delayed because of the time spent intraining.

3. It is difficult to obtain good training instructors and leaders.

4. Self-reliance and capacity for new ideas might be stifled.

4.6.1. Principles Of Training

Training is different from education. Education is broader in scope than training. The purposeof training is to develop the skill required for a particular job whereas the purpose of educationis to develop the individual. Training usually has a more immediate utilitarian purpose thaneducation.

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4.6.2. Benefits Of Training

The main benefits of training are given below:

1. Increased productivity. Training increases the knowledge and skills of employees.Therefore, well-trained employees give better performance on the Job. Training results in higherquantity and quality of output.

2. Job satisfaction. Training builds self-confidence in the employees and enables them toachieve the required level of performance. Their enthusiasm pride and interest in the job andtheir morale goes up. Their attitude becomes more positive and co-operative. Turnover andabsenteeism are reduced.

3. Reduction in accidents. Generally, trained employees are less accident-prone than theuntrained ones. Proper training develops safety attitudes and helps to reduce the accident rate.

4. Better use of resources. Well-trained employees make better use of machines and materials.As a result the rate of spoilage or wastage of materials is reduced. There is less breakage ofmachinery and tools. The maintenance cost is reduced and life of machines is increased. Costof production per unit is reduced.

5. Reduced supervision. Trained employees need less guidance. Therefore, need forsupervision is reduced. The span of supervision can be increased and the costs of supervisionreduced.

6. Greater flexibility. An organisation with trained personnel can introduce latest technologyto reduce costs of production. Trained employees show less resistance to change. The enterprisecan easily adjust to short-term variations in the volume of work.

7. Management by exception. Trained employees are self-dependent and can perform routinework independently. Therefore, superiors can easily delegate authority and reduce theirworkload. They can practise management by exception and devote their time and energy tomore important policy matters.

Following are the important principles of training :—

1. Training must conform to the individual intelligence and efficiency of the trainees.

2. Training must be supported by motivation. Motivation enables the trainees to learnquickly.

3. Training must be imparted by qualified and well-trained trainers and instructors.

4. Every trainee must be provided with course of progress reports. This enables the train-ees to improve and rectify themselves.

5. The training of a complex and complicated jobs should be provided in parts.

6. Trainees must be encouraged to have sufficient practice.

7. Rewards and punishments must follow the process of training.

8. The approach of training should be systematic and authentic.

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8. Stability and growth. An enterprise having a pool of trained personnel can maintain itseffectiveness despite the loss of key personnel. It can more easily replace executives. It can alsomeet the personnel needs for growth and expansion. Training provides a second line of personnelwhich helps to ensure long-term stability and growth of the organisation.

4.6.3. Methods of Training

1. On-the-Job Training (OJT). In this method the trainee is placed on a regular job and taughtthe skills necessary to perform it. The trainee learns under the guidance and supervision of thesuperior or an instructor. The trainee learns by observing and handling the job. Therefore, it iscalled learning by doing.

Several methods are used to provide on-the-job training, e.g., coaching, job rotation, committeeassignments, etc. A popular form of on-the-job training is Job Instruction Training (JIT) or stepby step learning. It is widely used in the United States to prepare supervisors. It is appropriatefor acquisition or improvement of motor skills and routine and repetitive operations. The JITinvolves the following steps:

(a) Preparing the trainee for instruction. This involves putting the trainee at ease, securinghis interest and attention, stressing the importance of the job, etc.

(b) Presenting the Job operations or instructions in terms of what the trainee is required todo. The trainee is put at work site and each step of the job is explained to him clearly.

(c) Applying and trying out the instructions to judge how far the trainee has understood theinstructions.

(d) Following up the training to identify and correct the deficiencies, if any.

OJT method provides immediate feedback, permits quick correction of errors and providesextra practice when required. But it needs skilled trainers and preparation in advance.

Merits. The main advantages of OJT is that the trainee learns on the actual machine in useand in the real environment of the job. He gets a feel of the actual job. Therefore, he is bettermotivated to learn and there is no problem of transfer of training skills to the job. Secondly, thismethod is very economical because no additional space, equipment, personnel or other facilitiesare required for training. The trainee produces while he learns. Thirdly, the trainee learns therules, regulations and procedures by observing their day to day applications. Fourthly, this isthe most suitable method for teaching knowledge and skills which can be acquired throughpersonal observation in a relatively short time period. It is widely used for unskilled and semi-skilled jobs, e.g., machinist, clerical and sales jobs. Fifthly, line supervisors take an active part intraining their subordinates.

Demerits. In on-the-job training, the learner finds it difficult to concentrate due to noise ofthe actual work-place. Secondly, this method is often haphazard and unorganised. The superior

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.or experienced employee may not be a good trainer. Thirdly, in this method the trainee maycause damage to costly equipment and materials.

On-the-job training is, however, the most widely used and accepted method of training. It issuitable for all levels of employees, workers, supervisors and executives. It is appropriate forteaching knowledge and skills which can be learnt in a relatively short period of time andwhere only a few persons are to be trained on the job.

In order to make on-the-job training successful, some conditions must be satisfied: (a) whatand how to teach should be carefully, decided, (b) the instructor should be carefully selectedand trained, and (c) a definite follow-up schedule should be used to judge the results of training.

2. Vestibule training. In this method a training centre called vestibule is set up and actualjob conditions are duplicated or simulated in it. Expert trainers are employed to provide trainingwith the help of equipment and machines which are identical with those used at the workplace.

Merits. The main advantage of vestibule training is that the trainee can concentrate on learningwithout disturbance of the workplace noise. Secondly, the interest and motivation of the traineeare high as the real job conditions are duplicated. Thirdly, this method is essential in caseswhere on-the-job training might result in a serious injury, a costly accident, or the destructionof valuable equipment and material, e.g., aeronautical industry. Fourthly, correct method canbe taught effectively.by the trained instructor who knows how to teach. Fifthly, it permits thetrainee to practice without the fear of being observed and ridiculed by the superior/co-worker.Lastly, it is a very efficient method of training a large number of employees of the same kind ofwork at the same time. This method is also useful when it is not advisable to put the burden oftraining on line supervisors and when special coaching is needed. It is often used to trainclerks, bank tellers, inspectors, inactive operators, testers, typists, etc.

Demerits. Vestibule training is the most expensive method because of additional investmentin classroom, equipment and expert trainers. Secondly, the training situation is somewhatartificial and the trainee does not get a feel of the real job. Thirdly, separation of training fromthe supervisory responsibilities may lead to problems in the organisation.

3. Apprenticeship training. In this method, theoretical instruction and practical learningare provided to trainees in training institutes. In India the Government has established IndustrialTraining Institutes (ITIs) for this purpose. Under the Apprenticeship Act, 1962 employers inspecified industries are required to train the prescribed number of persons in ‘designated trades’.The aim is to develop all-round craftsmen. Generally a stipend is paid during the trainingperiod. Thus, it is an “earn when you learn” scheme.

Merits. The main advantage of this method is that it combines theory and practice. Secondly,the trainees acquire skills which are valuable in the job market. Thirdly, apprenticeshipprogrammes provide skilled workforce to industry.

Demerits. Apprenticeship training is time consuming and expensive. Many persons leavethe training programme midway as the training period ranges from one year to five years.

Apprenticeship training is the oldest method of training. It is particularly suitable for learningcrafts and technical trades wherever job proficiency is the result of a relatively long training

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period. Draughtsman, machinist, printer, tool maker, pattern designer, mechanic, carpenter,weaver, fitter, jeweller, engraver, electrician, etc. are examples of such areas.

4. Classroom training. Under this method, training is provided in company classrooms orin educational institutions. Lectures, case studies, group discussions, and audio-visual aids areused to explain knowledge and skills to the trainees. Classroom training is suitable for teachingconcepts and problem solving skills. It is also useful for orientation and safety trainingprogrammes. Some companies maintain their own training institutes or schools. Special trainingcourses are designed, e.g., management course for foremen, computer course for typists, etc.Courses in retraining and upgrading may also be conducted. Small firms depend on outsideschools and courses.

5. Internship training. It is a joint programme of training in which educational institutionsand business firms cooperate. Selected candidates carry on regular studies for the prescribedperiod. They also work in some factory or office to acquire practical knowledge and skills. Thismethod helps to provide a good balance between theory and practice. But it involves a longtime period due to slow process. This method of training is used in professional work, e.g.,MBBS, CA, ICWA, Company Secretaries, etc.

4.6.4. Induction Or Orientation Training

Induction or orientation refers to the activities involved in introducing the new employees tothe organisation and its policies, procedures, rules and regulations. When a new employeereports for work, he must be helped to get acquainted and adjusted with the work environmentand the fellow employees. Induction or orientation is basically a socialising process by whichthe organisation seeks to make an individual its agent for the achievement of its objectives. Theindividual also seeks to make an agency of the organisation for the achievement of his personalgoals. It provides the foundation for the new employee to start working efficiently andcomfortably on the new job. It enables the new employee to learn the work values and behaviourpatterns acceptable to the organisation. The main objectives of orientation are as follows:

1. Clarifying the job,

2. Developing realistic expectations about the organisation,

3. Reducing the amount of stress and anxiety of the new employee,

4. Reducing start up costs, and

5. Strengthening the relationships between new employee, his superior and peers.

In small firms the orientation is generally informal. But in big organisations it may be a formalprogramme of two to four weeks. When a formal orientation course is to be conducted severaldays after the new employee joins duty, initial introduction should be given by the supervisorof the new employee. He should be given a friendly welcome and introduced to the otheremployees. He should be given a general idea about the rules, regulations, working conditions,etc.

A formal orientation programme is necessary because the early job experiences have significantimpact on the long-term career commitment of the individual. In the absence of a formal

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programme, the new employee may form wrong impressions and he may take a lot of time inadjusting himself in new surroundings. A formal orientation programme generally providesinformation regarding the following:

1. The history of the organisation,

2. Products and services of the company,

3. Organisation structure of the enterprise, -”

4. Location of departments and units,

5. Personnel policies and practices,

6. Employee’s facilities and services,

7. Rules and regulations,

8. Grievance procedure,

9. Safety measures, and 10. Standing orders.

Some organisations conduct an interview with the new employee after the induction programmeis over. This interview helps to judge the effectiveness of the induction programme. It alsoreveals the dissatisfaction and misgivings which the employees might still be having. Furtherinformation and explanations can be given to clear his doubts and misunderstanding.

Organisation and Management Fundamental that of workers. Supervisory trainees are told how tocooperate with others, how to command respect and obedience etc. The main methods ofsupervisory training are role playing, case study, committee assignments, sensitivity training,in basket game, special projects, selective readings etc.

4.7. CONCEPTS OF TRAINING, EDUCATION AND DEVELOPMENTTraining is an organised process for increasing the knowledge and skills of people for doing aparticular job. It is a learning process involving the acquisition of skills and attitudes. Thepurpose of training is to improve the job performance. Training is a continuous process be-cause a person never stops learning. Training should be differentiated from education anddevelopment.

4.7.1. Training and Education

Training is concerned with imparting specific skills for particular purpose. The purpose oftraining is to bring about improvement in the performance of work. It includes the learning ofsuch skills as are required to do a specific job in a better way. The major burden of training fallson the employer. On the other hand, education is broader in scope and more general in pur-pose. It involves increasing general knowledge and understanding of total environment. For-mal education is given in a school or college whereas training is vocational and is generallyimparted at the workplace. Training has a more immediate utilitarian purpose than education.The major burden of education falls on the State. However, in many cases the two may takeplace simultaneously.

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4.7.2. Training and Development

Training implies learning the basic skills and knowledge required for a particular job. On theother hand, development involves the growth of the individual in all respects. In training non-managerial employees the primary focus is on imparting manual skills, technical proceduresand routine methods. But managers require generalised conceptual skills. Training is job-centredwhereas development is career-bound. Management development aims at increasing the ca-pacity for further tasks of greater difficulty. Therefore, the contents and techniques of em-ployee training may differ from those of management development. Development is moreakin to education than to training. It involves developing the whole person physically, men-tally and socially.

Education

Education is a process of learn-ing which increases knowledgeand understanding of a person.

Main aim of education is toincrease the knowledge of aperson.

Education is obtained inschools, colleges, universitiesand institutes.

It is not a liability of an enter-prise to educate its employees.

Education expenses are gener-ally borne by employees

Education increases the knowl-edge and understanding

Education is a wide term andcovers several aspects

Education is of theoreticalnature.

SI Basis ofNo. Difference

1. Meaning

2. Objective

3. Place

4. Liability

5. Burden ofexpenses

6. Importance

7. Scope

8. Nature

Training

Training is a process of increas-ing knowledge, skills andattitude of an employee to do aparticular job.

Main aim of training is toincrease the knowledge of aperson to do a particular job

Training is obtained in a insti-tute or at a training centre

Training is, a liability of theemployer itself

Expenses of training are gener-ally borne by enterprises.

Training increases ability andskill

Training is a narrow term andis limited to a particular aspect.

Training is of practical nature

Difference between Education and Training

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Difference between Training and Development

4.7.3. Role of Training and Development

No organization has a choice of whether to train its employees or not, the only choice is that ofmethods. The primary concern of an organization is its viability, and hence its efficiency.Thereis continuous environmental pressure for efficiency, and if the organization does not respondto this pressure, it may find itself rapidly losing whatever share of market it has. Trainingimparts skills and knowledge to employees in order that they contribute to the organisation’sefficiency and be able to cope up with the pressure of changing environment. The viability ofan organization depends to a considerable extent on the skills of different employees, speciallythat of managerial cadre, to relate the organization with its environment.

Bass has identified three which necessitate continuous training in an organization. These factorsare technological advances, organizational complexity, and human relations. All these factorsare technological advances, organizational complexity, and human relations. All these factorsare related to each other. For example, technological advances tend to increase the size of theorganization which increases its complexity. Similarly technological advances create humanproblems also. Thus training can play the following roles in an organization.

SI Basis ofNo. Difference

1. Meaning

2. Objective

3. Time

4. Nature

5. Suitability

6. Means &Methods

7. Scope

Training

Training is a process of increas-ing the knowledge, skills andattitude of an employee to do aparticular job.

Main aim of training is to enablethe employees to do a particularjob

Training is related with presentRelationship period.

Training is a job-centred process

Training is more suitable forworkers and employees

There are various methods oftraining

Scope of training is limited andit is a part of developmentprocess

Development

Development is a process oflearning and growth which ishelpful in overall growth ofemployees

Main aim of development is theoverall growth of employees.

Development is related withpresent and future period.

Development is a career-centred process.

Development is more suitablefor managers and executives.

Development can be attainedwith effective leadership andmanagerial courses

Development is a wide term andincludes training

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1. Increase in Efficiency. Training plays active role in increasing efficiency of employees inan organization. Training increases skills for doing a job in better way. Though an employeecan learn many things while he is put on a job, he can do much better if he learns how to do thejob. This becomes more important specially in the context of changing technology because theold method of working may not be relevant. In such a case, training is required even to maintainminimum level of output. For example, working on automatic machine requires skills differentthan that required to handle manually-operated machines. Raw employees cannot handle sucha machine. Similar changes are taking place in managerial jobs also.

2. Increase in Morale of Employees. Training increases morale of employees. Morale is amental condition of an individual or group which determines the willingness to cooperate.High morale is evidenced by employee enthusiasm, voluntary conformation with regulations,and willingness to cooperate with others to achieve organizational objectives. Training increasesemployee morale by relating their skills with their job requirements. Possession of skillsnecessary to perform a job will often tends to meet such human needs as security and egosatisfaction. Trained employees can see the jobs in more meaningful way because they are ableto relate their skills with jobs.

3. Better Human Relations. Training attempts to increase the quality of human relations inan organization. Growing complexity of organizations has led to various human problems likealienation, interpersonal and intergroup problems. Many of these problems can be overcomeby suitable human relations training. Many techniques have been developed through whichpeople can be trained and developed to tackle many problems of social and psychologicalnature.

4. Reduced Supervision. Trained employees require less supervision. They require moreautonomy and freedom. Such autonomy and freedom can be given if the employees are trainedproperly to handle their jobs without the help of supervision. With reduced supervision, amanager can increase his span of management. This ; may result into lesser number ofintermediate levels in the organization which can save much cost to the organization.

5. Increased Organizational Viability and Flexibility. Trained people are necessary; tomaintain organizational viability and flexibility. Viability relates to survival of the organizationduring bad days, and flexibility relates to sustain its effectiveness despite the loss of its keypersonnel and making short-term adjustment with the existing personnel. Such adjustment ispossible if the organization has trained people who can occupy the positions vacated by keypersonnel. The organization which does not prepare a second line of personnel who canultimately take the change of ; key personnel may note be quite successful in the absence ofsuch key personnel for whatever the reason. In fact, there is no greater organizational assetthan trained and motivated personnel, because these people can turn the other assets intoproductive whole.

4.7.4. Methods of Remunerating Labour

There are many well-known systems of remunerating labour, each of which specifies a distinctmethod of calculating the wages payable to workers. In practice, these basic systems have been

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modified and adopted in numerous ways to suit the needs of inaividual concerns. This accountsfor the very large number of methods of wage payment in use.

Methods of labour remuneration may be broadly classified into two basic types, viz. Time RateSystem and Payment by Results. These may be further subdivided into the following maintypes :—

TIME RATE SYSTEM

SYSTEMS OF REMUNERATION

PAYMENT BY RESULTS

TimeRate

MeasuredDay Work

High WagePlan

MeasuredDay Work

DifferentialTime Rate

Piece work Premium ofTime and

BonusMethods

CombinationPiece Work

Groupystem

IncentiveSchemes for

Indirectworkers

Costefficiency

bonusschemes

Straight

Differential

Ganttand Bonus

System

EmersonSystem

PointsSchemes

AcceleratedPremiumSystem

Barh System

Rown System

Halsey andHalsey-Wair

System

Taylor System

Merrick System

Bedaux System Haynes System

Fig. 4.7.4.

To the above list, two other types, viz. indirect incentives like profit sharing and co-partnership schemes, and non-monetary incentives may be added. Though strictly notsystems of remuneration, these are methods of giving incentives to workers.

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Time Kate System.

Known by various other names such as time, work, day work, day wages, and day rate, theTime Rate system is perhaps the oldest system of remunerating labour. In this system, theworker is paid on his attendance at a specified rate of pay regardless of his outturn. The wagerate for a day worker which may be fixed on hourly, daily, weekly, fortnightly, or monthlybasis depends upon the nature of his trade and skill. The rate is fixed taking into account therates prevalent in the particular industrial locality for similar trade and skill. The rate mayeither be a fixed one, or there may be a progressive scale of pay starting from a minimum andrising up to a maximum, in stages, through periodical increments.

Time work is most suitable for the two extreme grades of workers, viz. the highly skilled andthe unskilled (including learners and apprentices) and for certain types of work, such as —

(i) Where output of the worker is beyond his control, e.g. where his speed of work isrestricted by the speed of the machines or conveyor belts, or where his work is inter-linkedwith and is dependent upon the work done by other workers.

(ii) Where output cannot be measured nor can any standard time be fixed for it, e.g.maintenance and repair work.

(iii) Where close supervision of work is possible.

(iv) Where quality, accuracy and high precision in work is of primary importance. As thetime-worker has no necessity for nor a tendency to speed up work, this results in less spoilage.

(v) Where increase in production or productivity is not commensurate with the incentivepaid.

The advantages of the time rate system are as follows —

(a) Calculation of wages is simple involving less clerical expenditure.

(b) The worker easily understands the calculation.

(c) He is assured of a steady income for each wage period.

Although time rate of payment is widely applied, the disadvantages and shortcomingsattached to the system far outweigh its merits. These are summarized below —

(i) From the workers’ point of view, the system does not encourage initiative. As the samerate and amount of wages are paid to the fast and the slow workers, there is no incentive forincreased efficiency and outturn.

(ii) Decrease in productivity leads to rising labour cost and reduction in profit.

(iii) Decrease hi production results in upsetting of production schedules, creation ofbottlenecks in production, and increase in the cost per unit.

(iv) Estimates of labour cost and quotations given to customers, if based on time work,may ultimately prove to be wrong as the actual performance will depend upon the inefficiency

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or efficiency of the time worker. The employer is entirely dependent on the workers in regardto the quantum and rate of production.

(v) Standards for labour are difficult to set. .

Payment by Results.

System of remunerating labour in which the payments made have direct relation with theoutturn of the workers are known as systems of ‘Payment by results’. For many such systems,the attendance of the worker or the time he takes for doing a job has no bearing on the rate oramount of payment. A special feature of these systems is that the worker gets a direct financialincentive and he is at liberty to increase his outturn and thus receive payment according to hisability, energy, and speed of work. Systems of payment by results may be broadly groupedinto four categories, namely —

(a) Systems in which the payment is directly proportionate to the worker’s output, e.g.straight piecework system ;

(b) Systems in which the proportion of the payment to the outturn increases progressivelywith increase in production, e.g. differential piecework system ;

(c) Systems in which the rate of payment decreases with increase in outturn, e.g. premiumbonus methods ; and

(d) Systems with earnings varying in proportions which differ at different levels ofproduction, e.g. accelerated premium systems.

Requisites for a Successful Incentive System of Payment.

For the successful working of an incentive of payment by results, the following factors shouldbe kept in view :-

1. The system should be simple and easily understandable by the workers. Properunderstanding and cooperation keep up workers morale.

2. The cost of operating the system should be reasonably low.

3. The scheme should be such as to be susceptible to easy supervision.

4. The incentive should be large enough to induce workers to achieve it.

5. The time lag between the performance of the work for which the payment of theincentive is due and the actual payment should be reduced to the minimum.

6. The system should be fair enough to meet the viewpoint of the employer as well as theemployees and it should be applied in a manner that would be fair to both.

7. The rates and standards fixed should be reasonable so that each worker gets a fairchance to earn the incentives. Unreasonably high standard of performance which theworker is not capable of achieving should not be set.

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8. For work above the standard, the reward should be sufficiently high.

9. The system should be flexible so that minor changes, as necessary in the method ofcalculation, can be easily made in order to suit changes in production methods. Suchvariations should not seriously affect the basic system of payment,

10. The workers must be properly educated and motivated by the desire to earn money.

11. There should be an equitable distribution of work and no worker should suffer adeduction of earnings for factors beyond his control, such as for stoppage of work dueto lack of tools, instructions, or materials, or due to power failure or due to breakdown,or slowdown of the plants. Such contingencies should be covered by-

(a) including extra time in the standard, wherever practicable, or

(b) payment of idle time wages, or

(c) payment of minimum guaranteed wages.

12. There should be a satisfactory system of inspection so that workers are paid only forgood performance.

13. The incentive system should be conducive to the setting up of standard costs andbudgetary control.

14. Working conditions should be as uniform as practicable so that the worker can fullycontrol the rate of his output. Factors which normally affect output adversely are :deterioration in the quality of the input material and tools, machines of low efficiency,noise, dust, fumes, bad lighting, etc.

15. There should be no rate cutting and no ceiling should be placed on an individual’searning. Standards once set should not be altered unless there is a change in the methodof production. Payment should be made in accordance with what has been agreedupon by the employer and the worker.

16. The system should be introduced on a permanent basis and should not be discontinuedin times of financial stringency. No incentive system should be introduced only as astopgap arrangement in order to temporarily tide over labour troubles.

17. Workers putting in the same amount of effort should get uniform incentives irrespectiveof the jobs involved.

18. Indirect workers should also be included so as to get the benefit of incentive plans.

Advantages and Disadvantages of payment by Results.

The advantages of systems of payment by results are summarized below -

(i) Initially in the process of work measurement carried out for the purpose of fixation ofstandard time, all useless efforts and movements are detected and eliminated and themost economical method of doing a task is determined. This, by itself, reduces labourcosts.

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(ii) Loss of production time is reduced and there is maximum utilization of the resourceslike space, plant and machinery.

(iii) There is an increase in productivity ; more work is turned out in a shorter period oftime.

(iv) Increase in production results in lower costs due to the reduction in fixed cost per unitof production.

(v) The earnings of the workers go up; this raises personnel morale.

(vi) It is possible to estimate labour costs and set labour standards accurately.

(vii) Less supervision work is required.

Unless proper measures are taken, systems of payment by results often turn out to bedisadvantageous. For example :

(i) With the increase in the tempo of work, the quality of production is likely to deteriorate.This can, no doubt, be obviated by a strict system of inspection and quality control butat higher costs.

(ii) If the rates are not equitable for the various grades of workers employed on similartasks, they would cause discontent. However correct and fair the rate fixing may be,workers are not prepared to accept almost any kind of job ; they are reluctant toundertake jobs which, in their opinion, are unrenumerative.

(iii) In their eagerness to speed up in order to earn more, the workers may disregard safetyprecautions and thus expose themselves to greater risks of accidents.

(iv) Most of the payment systems are expensive and need additional expenditure forinstallation and operation.

(v) Group systems of payment by results, if not properly organized, result in dissatisfactionamong the workers constituting the group.

(vi) Discontentment may also be due to inefficient workers being jealous of the efficientworkers who earn higher wages. Efficient workers may lose the friendship, cooperationand regard of their colleagues.

(vii)The workers may be satisfied with a lower wage level and may not like to exert forachieving the standard expected, particularly where day rates are guaranteed. Theymay also be under the apprehension that if they earn high bonus, the rates may be cut.

Supplementary Financial Incentives.

So far, incentive plans based on output have been discussed. Incentives supplementary toproduction and payable in addition to the normal wages, may be given to the employees forvarious other purposes and in a number of ways. Some of these are mentioned below :

(a) For reducing the cost of material by getting greater yields, reducing waste as fuel,

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power, steam, compressed air, etc. These methods are used when the cost of material isproportionately high. A normal percentage of waste is fixed for each item of production as astandard per unit and all reductions below the standard are rewarded by a suitable bonusproportionate to the saving effected. The method is similar to the cost efficiency bonus plans.

(b) For improving quality. This is used when the quality of a product is of paramountimportance. A high standard for inspection of quality is laid down and a bonus is paid ininverse proportion to the rejections detected in course of inspection,

(c) For good maintenance work so that breakdown is reduced.

(d) For regular attendance and punctuality (time-keeping or Attendance bonus). This isused for discouraging absenteeism and tardiness and it is usually given as a percentage of thebasic wages.

(e) For safety precautions. This is used to obviate payment of compensation when the jobis of a hazardous nature. The bonus is mostly in the form of a cash reward or prize.

(f) Prizes and cash awards for suggestions, technological improvements, etc.

(g) Special awards for long periods of service.

Non-Monetary Incentives (or Psychological Incentives).

These incentives, usually given in the form of amenities or facilities, do not offer cash reward tothe employee for any specific or measured work done. Such non-monetary benefits create apsychological effect by making the working conditions and terms of employment lucrativeenough to induce the employee to increase his efforts. The benefit goes to all the employees inthe undertaking and is not limited to any individual, class, or:; group. As a result of this andalso because there is no immediate return which can be linked with individual effort, theemployees take the benefits for granted and the incentive element , is lost.

Non-financial benefits may be offered in several ways. A few examples are mentioned below:

(a) Favourable working conditions

(b) Medical facilities for the individual and his family

(c) Education facilities

(d) Welfare measures

(e) Cheap grains

(f) Subsidized canteen

(g) Recreational amenities .

(h) Housing facilities

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(i) Pension schemes

(j) Fund contributions

(k) Protective clothing, liveries, uniforms, etc.

(l) Tea, milk, etc. for specially arduous work.

It will be noted from the above list that some of the benefits offered are obligatory under law orare given as a matter of convention. Such benefits cannot, strictly speaking, be termed asincentives. They are non-financial only so far as the employee is concerned. The employer hasto incur expenditure to provide for the incentive.

Non-financial incentives offer the following advantages -

(a) Reduce labour turnover.

(b) Impart satisfaction to the employees and create a sense of loyalty and cooperation inthem.

(c) Reduce absenteeism.

(d) Create a reputation for the undertaking so that the best labour is attracted.

Payment of Salaries/Compensation to Managerial Personnel.

The determination of equitable compensation payable to managerial personnel poses a difficultproblem for the management. It is difficult to measure the job worth of euch personnel, thereare no market rates available as guides since an individual having the same designation asanother in a sister concern may have different jobs assigned and be paid different rates of pay,and, there is no definite relationship between the pay of a manager and the number of men hesupervises. As a result of these problems, pay scales of executives particularly those holdinghigher or top positions are usually fixed on more or less arbitrary basis.

The common practice is to compensate the managerial personnel by allowing perquisites orfringe benefits in addition to their salary. Some of these are :

(i) Bonus on profits. This may be related to the profit of the manager’s Division or tothe overall profit of the business.

(ii) Benefits of conveyance, house, electricity etc.

(iii) Membership of clubs.

(iv) Rights to buy shares of the company at advantageous price.

(v) Medical aid.

(vi) Pension, gratuity and other deferred fringe payment.

It may be noted that some of these fringe benefits are now being made admissible tononmanagerial personnel as well but the compensation to managerial personnel would bedefinitely on a higher scale to take care of additional hours of work put in and the added skill,efficiency and responsibility required by their jobs.

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Exercise – 4

QUESTIONS FOR REVIEW AND DISCUSSION

1. Write down the steps involved in the recruitment various sourcesavailable for recruitment.

2. State the principles of scientific management.

3. Differentiate between training and development.

4. What are the requisites of a successful incentive system of payment ?

5. Discuss the important methods of imparting training to the employees ?

6. Write short note on ‘contingency approach

7. Explain the advantages of training.

8. How does training help in employee development?

9. What is on the Job Training? Explain its merits and demerits:.-

10. What do you understand by off-the-job training? Describe its advantages limitations.

11. Explain orientation training.

Human resource management

Documents

human resource department

human constituents

meaning of human resources

nonhuman resources

separation of human

human resourceshuman

management process

proper use of human