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UNIT 3-HRM.pptx

  1. 1. UNIT- 3
  2. 2. 1. Training 2. Development 3. Career Planning 4. Career Development 5. Succession Planning 6. Compensation 7. Job Evaluation
  3. 3. • Training and development involves improving the effectiveness of organizations and the individuals and teams within them. • Training may be viewed as related to immediate changes in organizational effectiveness via organized instruction, while development is related to the progress of longer-term organizational and employee goals.
  4. 4. • Quality • Productivity • Morale • Development of skills of employees • Development of human resources • Optimum utilization of human resources
  5. 5. Training helps to bridge the gap Existing • Skills • Knowledge • Attitudes Required • Skills • Knowledge • Attitudes Training is expensive……….... Without training it is more expensive
  6. 6. • TRAINING is a learning process that involves the acquisition of knowledge, sharpening of skills, concepts, rules, or changing of attitudes and behaviours to enhance the performance of employees • Training focuses on specific job knowledge and skill that is to be applied in the short run • Edwin B. Flippo Said, “Training is the act of increasing the knowledge and skills of an employee for doing a particular job”. • In the words of Dale S. Beach, “Training is the organized
  7. 7. New candidates who join an organization Refresh and enhance their knowledge. Implementation of updates and amendments Promotion and career growth
  8. 8. 1. Induction or Orientation Training 2. Job Training 3. Safety Training 4. Remedial Training 5. Refresher Training 6. Promotional Training
  9. 9. Self Confidence Higher Earnings Safety Adaptability Promotion New Skills Improves morale of employees
  10. 10. Company Policies and Procedures Skill-based Training Human Relations Training Problem Solving Training Managerial and Supervisory Training
  11. 11. On-the Job Training Internship Job Rotation Committee Assignments Apprenticeship Coaching JIT (Job Instructions Training) Off-the Job Training Organizing Special Curriculum and Classes Organizing Conference and seminars Simulation Vestibule training Management Games Programmed Instructions (E-Learning) Case Study Method Role Playing Method Lecture Method IncidentAnalysis Method Study Method
  12. 12. Determining training need of employee Select a target group for training Preparing trainers Developing training packages Presentation Performance Follow up
  13. 13. 1. Determining training needs of employee :- In the very 1st step of training procedure, the HR department, identifies the number of people required training, specific area in which they need training, the age group of employee, the level in organization etc. in some cases the employee may be totally new to the organization. Here the general introduction training is required. Some employees may have problems in specific areas; here the training must be specific. This entire information is collected by HR department 2. Selecting target group :- Based on information collected, the HR department divides employee into groups based on the following. Age group i. The area of training ii. Level in the organization iii. The intensity of training etc.
  14. 14. 3. Preparing trainers :- Once the employees have been divided into groups, the HR department arranges for trainers. Trainers can be in house trainers or specialized trainers from outside. The trainers are given details by HR department, like number of people in group, their age, their level in organization, the result desired at the end of training, the area of training, the number of days of training, the training budget, facilities available etc. 4. Preparing training packages :- Based on the information provided by trainers, he prepares entire training schedule i.e. number of days, number of sessions each day, topics to be handled each day, depth of which the subject should be covered, the methodology for each session, the test to be given foe each session, handout/printed material to be given in each session
  15. 15. 5. Presentation :- On the first day of training program the trainer introduces himself and specifies the need and objective of the program and then actually stars the program. The performance of each employee is tracked by the trained and necessary feedback is provided. 6. Performance :- At the end of training program the participants reports back to their office or branches. They prepare report on the entire training program and what they have learned. They the start using whatever they have learned during their training. Their progress and performance is constantly tracked and suitable incentives are given if the participant is able to use whatever he has learned in training. 7. Follow up :- Based on the employee performance, after training, the HR department is able to identify what is exactly wrong with training program and suitable correction is made.
  16. 16.  Training programs can be evaluated by asking following questions. a) Has change occurred after training? b) Is the change due to training? c) Is the change positive or negative? d) Will the change continue with every training program?
  17. 17.  Training effectiveness is the degree to which trainees are able to learn and apply the knowledge and skills acquired in the training programme.  It depends on the attitudes, interests, values and expectations of the trainees and the training environment.  Contents of a training programme, and the ability and motivation of trainers also determine training effectiveness.
  18. 18.  “Evaluating training is any attempt to obtain information on the effects of a training programme and to access the values of the training in the light of that information.” - Hamblin ◦ “Evaluating is the systematic collection and assessment of information for deciding how best to utilize available training resources in order to achieve organisational goals.” - Warr
  19. 19.  To determine whether the specific training objectives are accomplished or not.  To identify which trainees benefits most or least from the programme  To ensure that any changes in trainee capability are due to the training programme and not due to any other conditions.  To determine the financial benefits and costs of the training programme.
  20. 20. 1 : Evaluation Reaction Did the trainees like the programme and the facilities? Did they think the course was useful? What improvements can they suggest? 2. Evaluate Learning To what extent do trainees have greater knowledge or skill after the training programme than they did before? 3. Evaluate Behaviour Are trainees behaving differently on the job after training? Are they using skills and knowledge they learned in training? 4. Evaluate Results Is the organization or unit better because of training?
  21. 21.  The opinions and judgments of trainers, superiors and peers  Asking the trainees to fill up evaluation forms  Using a questionnaire to know the reactions of trainees  Giving oral and written tests to trainees to ascertain how far they have learnt  Arranging structured interviews with the trainees  Comparing trainees performance on the job before and after training  Studying profiles and career development charts of trainees  Measuring levels of productivity, wastages costs, absenteeism after training.  Trainees’ comments and reactions during the training period
  22. 22. • Management Development is a systematic process of training and growth by which individuals gain and apply knowledge, skills, insights, and attitudes to manage work organizations effectively. Management development programs shape the managers into new personalities. • It is a planned and organized process and programme of training and growth whereby an individuals manager or executive gains knowledge, skills and attitude to manage workers and work organisations effectively.
  23. 23.  “Management development includes the process by which managers and management acquire not only skills and competency in their present jobs but also capabilities for future managerial tasks of increasing difficulty and scope.” — Flippo  “Management development focuses on developing in a systematic manner, the knowledge base, attitudes, basic skills, interpersonal skills and technical skills of the managerial cadre”. —Johnson
  24. 24.  To ensure the availability of competent managers to achieve the goals of the organization.  To ensure optimum utilization of human capital  To prepare present employees for higher assignments.  To replace retiring executives with younger talents.  To promote progress, productivity and profits of the enterprise.
  25. 25. 1. To improve the performance of managers in their respective fields such as marketing, production, finance, personnel, etc. 2. To make managers efficient in using managerial techniques like work study, inventory control, operational research, quality control, etc. 3. To encourage innovation and creativity to improve methods and procedures. 4. To understand the working of whole organization (of all departments). 5. To develop problem solving abilities. 6. To develop decision making skills. 7. To utilize the full potential of executives in present and in future. 8. To develop a sense of responsibility in executives. 9. To provide knowledge regarding human relations. 10. Enhancing managerial skills and making executives able to handle higher level responsibilities in future.
  26. 26.  Helps in develop the right attitude  Networking takes places between executives  More patience and better understanding pf another department’s limitations  Skills and knowledge enhancement is substantial.
  27. 27. Determination of Organization's objectives Appraisal of current management resources Ascertain the development activities Determine individual development needs Evaluation
  28. 28. 1. Determination of Organization’s Objectives: The process of management development must begin by looking at the organization’s objectives. The objectives will provide us the direction we must go and give a framework to determine our managerial needs. 2. Appraisal of Current Management Resources: On the basis of the information gathered from human resource planning, we can prepare an executive inventory. The executive inventory can provide us background and qualifications of our current managers as to appraise our current management resources.
  29. 29. 3. Ascertain the Development Activities: The third step in a sound management development is to ascertain the development activities needed to ensure that we have adequate managerial talent to fulfill future managerial needs. This analysis can tell us the potential obsolescence of some our executives, the inexperience or shortage of managers in certain functions, and skill deficiencies relative to our future needs. 4. Determine Individual Development Needs: The next step is to identify individual development needs: skill development, changing attitudes, and knowledge acquisition. Generally, most of management development effort focuses on the changing of attitudes and the acquisition of knowledge in specific areas.
  30. 30. 5. Evaluation: The final step in the process is to evaluate the management development efforts. Once managers have engaged in development activities, it is necessary to assess changes in behavior and managerial performance.  Observation of trainee behaviour  Rating of the training elements  Opinion surveys  Interview  Test
  31. 31. On the Job Techniques Coaching •Under Study •Position Rotation •Project Assignment •Committees •Multiple Management •Selected Readings Off the Job Techniques Lectures •Case Studies •Group Discussions •Conferences •Role Playing •Management games •In Basket Games •Sensitivity Training •Programmed Instructions
  32. 32.  Under on the job, the employees get trained while doing their day to day job. Skills are gained while employees are carrying out their daily tasks and responsibilities.  They learn in the real work environment by facing challenges and situations and solving them under the guidance of a much superior and experienced employee.
  33. 33. Coaching is a process under which the trainee is placed under a much experienced employee or a supervisor who instructs and guides the trainee in the day-to-day work. ◦ He instructs him what tasks are to be completed and the procedure to successfully finish them and would guide him in times of errors committed by him. ◦ To help the trainee grow and to enhance his decision making and analytical skills the supervisors may also ask him to handle complex situations and problems.
  34. 34. A position in the organization may fall vacant in the near future because of reasons like retirement, promotion or transfer of the current job holder. ◦ In such a case a junior resource is chosen by the head of a particular department who is placed as an understudy under the superior who is about to leave that position. ◦ The superior will train the understudy closely and make him capable to handle the role efficiently by including him in all day to day processes and decision making. ◦ This helps the organization to not get affected when the job holder moves on as they have trained staff ready to replace him.
  35. 35. An employee is shifted between two or more roles or departments . This helps them gain knowledge and experience in varied fields. They get huge exposure to various aspects of the business. ◦ They get developed in this way to handle larger roles where knowledge of the various fields is required. ◦ It helps to keep them motivated as they have to face new challenges under different roles. ◦ It also helps to reduce the monotony of the job and does not lead to boredom. ◦ It helps them gain more experience and insights in the various fields of operations
  36. 36. Employees might be given some special projects and assignments to handle. They might have to do in-depth research, analysis and present a report that advises a solution to the problem or case in hand. ◦ This provides the employee a first-hand experience and in-depth knowledge to work in the field.
  37. 37. In this method the special committee is constituted and is assigned the problem to discuss and to provide the recommendations. This method is similar to the special project assignment. ◦ All the trainees participate in the deliberations of the committee. ◦ Trainees get acquainted with different viewpoints and alternative methods of problem solving through the deliberations and discussions in the committee. ◦ Interpersonal skills of the trainees are also developed.
  38. 38. This method involves the constitution of the junior board of the young executives. ◦ This junior board evaluates the major problems and makes the recommendations to the Board of Directors. ◦ The junior board learns the decision making skills and the vacancies in the Board of Directors are filled from the members of the junior board who have sufficient exposure to the problem solving.
  39. 39. Under this method the executives read the journal, books, article, magazines, and notes and exchange the news with others. ◦ This is done under the planned reading programmes organized by some companies. ◦ Reading of the current management literature helps to avoid obsolescence.  This method keeps the manager updated with the new developments in the field.
  40. 40.  Off the Job training is imparted when new job skills and knowledge is to be taught to the employees. Off the job training takes place away from the immediate work place.  There might be classroom sessions and trainers from outside the organization to train the employees. It is costlier and more artificial than on the job training.
  41. 41. Lectures are conducted on a particular topic or a specialized area of work to a group of people. It is conducted by an experienced and learned person who has an in-depth knowledge in that area. ◦ It can be done in the form of a power point presentation, audio-visual aids or just a speech. ◦ The presenter should have good communication and interpersonal skills, he should be completely confident about his knowledge and very clear while imparting it. ◦ He should give room to discussions and allow it to become an interactive session to keep the atmosphere lively and maintain the interest of the audience.
  42. 42. Decision making is a very important role of a manager that impacts the profitability of a business to a large extent. Case study method brings interesting real world situations into the classroom. These cases are generally based on complex situations that can arise in the business environment. ◦ Participants are expected to thoroughly read and master the content of the case, they should be able to grasp the objective of the case study and identify the problem. ◦ The solution to the problem would more or less be on the lines of the concepts already taught to them. ◦ They should be able to decide on a corrective course of action to resolve the case study. ◦ They should also be able to judge the impact and effectiveness of their corrective actions on the end result. ◦ This helps in improving their managerial and decision-making skills.
  43. 43.  In this method, one topic of study is discussed by members of a group.  Through this discussion, knowledge and communication skills of all group members improve.  The topic is summarised by the chairman of group discussion.
  44. 44. Conference is a meeting of people conducted to discuss a common topic of interest. All the individuals are asked to prepare on the topic and get together to discuss about it in detail. The conference leader creates an environment that promotes healthy discussions. The participants are encouraged to freely voice out their opinions on the topic in discussion. ◦ It is an enriching experience for each participant as they have a lot to learn from other participants views and opinions. ◦ The conference leader should make sure that the conference proceeds on the desired and planned guidelines
  45. 45. Under the role playing method a complex or conflicting situation is presented to the trainees. Each trainee then plays a role of a specific organizational member whose presence and decision making is required to resolve the situation. ◦ It is like a spontaneous stage act where each participant plays a different role and works towards solving a given problem in hand in a different capacity. ◦ While they act out their roles they get familiar with their own business acumen, on immediate feedback they can correct mistakes and reorient their focus in the right way, this way they learn by doing things. ◦ The main purpose of role play is to enhance the interpersonal skills of the participants as they learn how others react to their suggestions and how their decisions impact other roles.
  46. 46. Under this method of executive development, the trainees are generally divided into teams and given a hypothetical situation that is very close to a real-time situation. ◦ They are asked to take certain decisions and solve the situation at hand or produce the desired results. ◦ Once they come up with a plan it is fed in the system and they are informed about the impact and result of their decision. ◦ On the basis of the feedback provided to they might want to change the course of action to be adopted to solve the situation, this exercise goes on till they are able to achieve the desired results.  This exercise helps in improving the managerial and leadership skills and the decision making ability of the participants. It is a very effective tool of executive development as it allows them to experience how their decisions and actions impact the business.
  47. 47. In this approach the trainees are presented with a number of tasks and problems that they might find in their “basket” while performing the role of a manager. ◦ Various files, phone calls, reports, messages are handed over to them in no particular sequence. ◦ They need to priorities the tasks in hand, delegate the work and clear the basket within a given time frame. ◦ This helps acquaint them with the complexities of the job of a manager.
  48. 48. Sensitivity training aims at developing behavioral flexibility by improving the tolerance power of the participants to each other’s behavior. ◦ It enables them to understand the views and opinions of others in a better manner. ◦ It consists of an unstructured group of 10-15 people with no trainer or leader to guide them; hence the trainees are motivated to resolve the situation themselves. ◦ In order to find out a solution they start forming some kind of hierarchy, some forcefully try to become leaders and might be opposed by other trainees. ◦ It leads to self-realization of what one wants and how the others react to their way of handling a situation. ◦ Without the trainers support the trainees begin to examine their interpersonal behavior, giving each other feedback and starting to experiment with range of new behaviors and values which they might further use in their workplace.
  49. 49. Instruction is delivered by a program via some electronic device without the presence of an instructor.  This method incorporates a prearranged acquisition of some specific skills. Information is broken into meaningful units and these units are arranged in a proper way to form a logical and learning package.  Each package is built upon the earlier ones and knowledge is imparted with the help of a teaching machine. The package involves presenting questions to utilize the information given and instant feedback is given to indicate the accuracy of answers.
  50. 50. ● These both things provide us the practical knowledge of the corporate which elevate the capability of the employees. ● These also increases the performance of the employees. ● These also helps them to do less mistakes from them. ● Both Training and Development can be given to all types of employees whether they are Fresher or Experienced. ● These both can be done in many waysbecause they both have so many methods.
  51. 51. Basis of Difference Training Development Benefit Benefit for short-term Benefit for the long- term Goal Fix Current Skills Deficit Prepare for Future Work Demands Time Frame Immediate Long-term Job Scope Individual Employee Work Group, Organization Meaning It is the process of enhancing the skills of an employee to do a specific job. It is an education process as it tries to enhance one’s ability to understand and interpret knowledge in an useful way. Cost It’s cost nothing because this training will also benefit the efficiency of the firm. In Development, Employees sometimes have to pay the charges for the consultation, development etc. Conducted by Management Individual
  52. 52. Methods Involved On the Job and Off the Job Training Method Decision Making Skills, Interpersonal Skills, Job Knowledge, Organizational Knowledge, General Knowledge and Specific Individual needs Used For Operatives Executives Learning Specific Job Related Information General Knowledge
  53. 53. Career is an occupation or a profession, that one undertakes for a long period of his life time & derives monetary benefit from it.
  54. 54.  Career planning is the systematic process by which one selects career goals and the path to these goals.  It consists of activities and actions that you take to achieve your individual career goals.  It is way by which one can achieve goals & ambitions successfully  It is a difference between success & failure which always leads to satisfactory results
  55. 55. 1. To identify positive characteristics of the employees. 2. To develop awareness about each employee’s uniqueness. 3. To respect feelings of other employees. 4. To attract talented employees to the organization. 5. To train employees towards team-building skills. 6. To create healthy ways of dealing with conflicts, emotions, and stress.
  56. 56. Identifying Individual Needs and Aspirations Analyzing Career Opportunities Identifying Match and Mismatch Formulating and Implementing strategies Reviewing Career Plans
  57. 57. Self assessment revolves around the thoughtful consideration, reflection, and evaluation of your interests, personality characteristics, values, and skills through a variety of methods, such as the use of a whole host of career- related tools and instruments.  Category 1- Employees- Fit and Willing to take up higher responsibilities - Promotion  Category 2- Employees- Potential and willingness to take up higher responsibilities- Suggest- Take training and experience  Category 3- Employees- Capacity to take higher responsibilities- Lack of interest and desire
  58. 58. The career planning component consisting of exploration and research is all about being in information gathering mode. This is the time to explore, collect, and organize all available resources to eventually begin analyzing them to see what top options arise.
  59. 59.  The decision-making step of the career planning process is when you put all the pieces of information about yourself and your carefully collected career information together as best as possible to produce a list of career-related goals and options.
  60. 60.  Taking action is one of those things that’s easier said than done. This stage is about literally being proactive with your career plans and following through with what you’ve decided on doing.
  61. 61.  After you have made your career-related decision(s) and identified your goals, keep in mind that many of the folks who achieve career success are the ones who continually evaluate and assess their status. They keep track of their career progress throughout their lifetime.
  62. 62.  Career development refers to a set of programmes designed to match an individual’s needs, abilities, and career goals with current and future opportunities in the organization. Since career development focuses on future opportunities, it has essentially a long-term orientation.  The career development involves the process of conversion of personal career plan into action in order to achieve career goals. There are three key heroes who share responsibility for an employee’s career development- the employee, the organization, and the manager.
  63. 63. The main objectives of career development is to ensure that people with appropriate qualifications and experience are available when needed. (i) Obtaining relevant information about employees’ interests and preferences; (ii) Matching individuals’ career interests and aptitudes to job requirements; (iii) Providing career path information to employees to enable them to make their career plans; (iv) Providing financial inducements and facilities to employees for acquisition of new skills and capabilities; (v) Developing a suitable T&D programme both within the organization and outside to help employees improve their career.
  64. 64. The need for effective employees’ career development are for following reasons: i. Making Available Needed Talent ii. Attracting and Retaining Talents iii. Reduced Employee Frustration iv. Enhancing Cultural Diversity v. Improving Organizational Goodwill
  65. 65. i. Making Available Needed Talent: Career development is a natural extension of strategic and employee training. Identifying staff requirements over the intermediate and long-term is necessary when a firm sets long-term goals and objectives. Career development will help organizations in putting the right people in the right job. ii. Attracting and Retaining Talents: There is always a scarcity for talented people and there is competition to secure their services. Talented people always prefer to work in organizations which care for their future concern and exhibit greater loyalty and commitment to organizations where there is career advancement. As career development is an important aspect of work life as well as personal life, people prefer to join firms which offer challenges, responsibility and opportunities for advancement. iii. Reduced Employee Frustration: Along with educational level and knowledge, the aspirational level of occupations is also increasing. When these levels are not met due to economic stagnation
  66. 66. iv. Enhancing Cultural Diversity: Fast changing scenarios in globalization reflects a varied combination of workforce representing different types of races, nationalities, religious faiths, ages and values in the workplaces. Effective career development programmes provide access to all levels of employees. v. Improving Organizational Goodwill: It is quite natural that if employees think their organizations care about their long-term well-being through career development they are likely to respond in kind by projecting positive images about their organizations. Career development does help organization in impressing image and goodwill.
  67. 67. Self- Assessment Research (Career Exploration) Decision- Making Search (Taking Action) Acceptance
  68. 68. • Evaluating who you are as a person. • This involves taking a personal inventory of who you are and identifying your individual values, interests, skills, and personal qualities. • What makes you tick as a person? • You will look at those personal attributes under a microscope and come up with key qualities you can identify and use in your search for the perfect career. • Career assessments may be required to promote a better understanding of personal attributes and skills. • Contact your Career Services Office at your college to discuss if a career assessment may be right for you.
  69. 69. •Obtain an insider’s perspective about the career field you are considering. Conduct Informational Interviews in person, phone, or by email. •Professionals enjoy sharing their expertise with people interested in the field. •Perform informational interviews with alumni from your college to gain their perspective of the field and to listen to what they have to say. •This strategy provides firsthand knowledge from someone currently working in the field and gives you an opportunity to ask about their experiences as well as potential jobs and what one might expect if just entering the field. •Gain experience through internships or by job shadowing for one to several days to see what a typical work day entails and to gain perspective of what the environment is like and the typical job responsibilities of someone working in the field. •Research what types of jobs are available in your area of interest
  70. 70. • Once you’ve made a thorough self-assessment and have done some research of career options, it’s time to make a decision. • This can be difficult since there may still be many unknowns and a fear of making the wrong choice. • One thing for sure is that although we can do all the necessary steps to making an informed decision, there is no absolute certainty that we are unquestioningly making the right decision. • This uncertainty is easier for some people than others but a key point to remember is that you can always learn from any job you have and take those skills and apply them at your next job.
  71. 71. • It’s now time to look for prospective jobs and/or employers, send out cover letters and resumes, and begin networking with people in the field. • Keep in mind that cover letters and resumes are designed to make a favorable impression on employers (if done properly) and the interview process is what will ultimately land you the job. • In other words, make sure your cover letter and resume highlight your skills and strengths based on the employer’s needs and that you are fully prepared to knock their socks off at the interview. • Take time to research the employer’s website prior to the interview, and be prepared to ask thoughtful questions based on your research.
  72. 72.  Wow! You’ve completed all of the steps above and you’ve been accepted into a new and exciting or different job. Congratulations! • According to the Bureau of Labor Statistics, 64.1% of people change jobs between 5 and 14 times in their lifetime. • Consequently, learning the skills above will increase your chances of gaining meaningful and satisfactory work as well as help you to avoid many of the stresses that occur with changing jobs. • By recognizing that change is good (even advantageous), changing jobs can be viewed as a positive experience and need not be as anxiety provoking as it may initially seem. • You will continue the process of self-assessment, research, decision-making, and job searching in order to make effective and fulfilling career changes throughout your lifetime.
  73. 73.  Succession Planning is defined as the systematic process of recognizing and creating future leaders who are able to take the position of the old ones when they leave the organization due to retirement, resignation, termination, transfer, promotion or death.  A process of selecting and grooming employees for higher positions within the organization.  It enhances the organizational capability by providing experienced and competent individuals for senior level roles that are critical for the company.
  74. 74. i. To create organizational data that can be used for staffing decisions. ii. To identify employees with high potential so that they can be trained to undertake higher responsibility iii. To provide assignments and opportunities for high potential employees so that they get the necessary exposure to groom themselves iv. To involve senior leaders of the organization in grooming these identified employees v. To improve employee loyalty and engagement
  75. 75. •Ensures Business Continuity •Develops Potential Employees •Identifies Next Successor •Smooth Functioning •Reduces Cost of the Organization •Developing Career Paths
  76. 76. Planning Analysis Identification of talent pool Development planning Implementati on
  77. 77. • The first step is to develop a strategic plan that will provide a blueprint of how the succession plan is to be implemented. • The long-term vision and goals of the organization are identified and the current personnel policies and procedures are studied. • For a succession plan to be successful, it is vital to integrate the plan with the interests and aspirations of the senior employees who are being groomed for succession.
  78. 78. • In this step, the various challenges the company is likely to face in the future and the skills and competencies the CEO would need to meet them are analyzed. • The future CEO would need a variety of managerial and technical skills to be able to fulfill his responsibilities effectively. • The current supply of manpower in the organization should be studied in relation to the anticipated demand. • Efforts should be made to determine the knowledge, talents, skills and capabilities that would be required in the organization in the future. • It is necessary to identify the overall long term talent needs of the company and not just of a particular position.
  79. 79. • The competencies and skill levels of the current workers need to be assessed in order to identify the available pool of talent. • It is also necessary to evaluate the employee’s capacity to perform in more responsible jobs in future through potential appraisal techniques and psychological appraisal. • Factors like the employee’s educational background, time spent with the company, his behaviour and attitude should also be taken into account. • The skill sets of the employees should be compared with the skills needed for the key leadership roles and any gaps between the two should be identified.
  80. 80. • After the gaps have been identified, the next step involves creating development plans. • The development plan includes the formal development procedures, coaching and mentoring, special job assignments, learning projects, etc. which will help the employees to gain the necessary skills and experiences. • The employee’s progress will be monitored against the plan. The duration of the development plan would depend upon the succession plan strategy of the organization.
  81. 81. • Implementing the succession plan includes the retention strategies like retention bonuses, promotions, challenging work, etc. • It is essential to compare the progress of the succession plan with the upcoming personnel requirements of the organization so that a capable employee is available to fill a prestigious post should it fall vacant either expectedly (due to planned retirement), or unexpectedly (due to death, disability, illness, etc. of the position holder).
  82. 82.  Compensation is a systematic approach to providing monetary value to employees in exchange for work performed.  The word compensation may be defined as money received in the performance of work, plus the many kinds of benefits and services that organization provides their employee.  It refers to wide range of financial and non-financial rewards to employee for their service rendered to the organization.  It is paid in the form of wages, salaries , special allowance and employee benefits such as paid vacation, insurance, maternity leaves, free travel facility , retirement benefits etc.
  83. 83.  According to Thomas J. Bergmann(1988) compensation consists of four distinct components: Compensation = Wage or Salary + Employee benefits + Non - recurring financial rewards + Non-pecuniary rewards.  According to Wendell French,” Compensation is a comprehensive term which includes wages, salaries and all other allowance and benefits.”
  84. 84. 1. To be legal: It must get approval from the govt. or top management in the organization 2. To be adequate: compensation must be sufficient so that needs of the employees are fulfilled substantially 3. To be Motivational: compensation must increase the level of motivation and job satisfaction of the employees. 4. To be equitable: compensation policy should be declared in such a way so that no discrimination can be observed. 5. To provide security: Employees must have guarantee of getting wages or compensation regularly without any break. 6. To be cost benefit effective: The organization must make a balance between cost for giving compensation and benefits to be accrued from the employees.
  85. 85. A sound compensation structure tries to achieve these objectives:  To attract manpower in a competitive market.  To control wages and salaries and labour costs by determining rate change and frequency of increment.  To maintain satisfaction of employees by exhibiting that remuneration is fair adequate and equitable.  To induce and improved performance, money is an effective motivator a) To Employees: i. Employees are paid according to requirement of their jobs i.e highly skilled jobs are paid more compensation than low skilled jobs. This eliminates inequalities. ii. Jobs sequence and lines of promotion are established wherever they are applicable. iii. Employee’s moral and motivation are increased because of the sound compensation structure.
  86. 86. b) To Employers: i. They can systematically plan for and control the turnover in the organization. ii. A sound compensation structure reduces the likelihood of friction and grievance over remunerations. iii. It enhance an employee morale and motivation because adequate and fairly administrative incentives are basis to his wants and need. iv. It attracts qualified employees by ensuring and adequate payment for all the jobs. v. In dealing with a trade union, they can explain the basis of their wages programme because it is based upon a systematic analysis of jobs and wages facts.
  87. 87. Various modes of compensation are as follows a) Wages and Salary- Wages represent hourly rates of pay and salary refers to monthly rate of pay irrespective of the number of hours worked. They are subject to annual increments. They differ from employee to employee and depend upon the nature of jobs, seniority and merit. b) Incentives- These are also known as payment by results. These are paid in addition to wages and salaries. Incentive depends upon productivity, sales, profit or cost reduction efforts. Incentive scheme are of two types:  Individual incentive schemes.  Group incentive schemes. c) Fringe Benefits- These are given to employees in the form of benefits such as provident fund, gratuity, medical care, hospitalization, accident relief, health insurance, canteen, uniform etc. d) Non- Monetary Benefits- They include challenging job responsibilities, recognition of merit, growth prospects, competent supervision, comfortable working condition, job sharing and flexi time.
  88. 88.  Compensation provided to employees can direct in the form of monetary benefits or indirect in the form of non- monetary benefits known as perks, time off etc. Direct Compensation Indirect Compensation 99
  89. 89. It is used to describe financial remuneration usually cash and includes such elements as  Basic pay  Dearness allowance  Special allowance  Basic Pay  House Rent allowance  Medical Reimbursement  Incentive  Bonus 10 0
  90. 90. • Basic Wages/Salaries: Basic wages / salaries refer to the cash component of the wage structure based on which other elements of compensation may be structured. It is normally a fixed amount which is subject to changes based on annual increments or subject to periodical pay hikes. • Dearness Allowance: The payment of dearness allowance facilitates employees and workers to face the price increase or inflation of prices of goods and services consumed by him. The onslaught of price increase has a major bearing on the living conditions of the labour. • Special Allowance: Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced interest loans; insurance, club memberships, etc are provided to employees to provide them social security and motivate them which improve the organizational productivity.
  91. 91. • Basic Salary: Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her services. • House Rent Allowance: Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work • Medical Reimbursement: Organizations also look after the health conditions of their employees. The employees are provided with medi- claims for them and their family members. These medi-claims include health-insurances and treatment bills reimbursements.
  92. 92. • Incentives: Incentives are paid in addition to wages and salaries and are also called ‘payments by results’. Incentives depend upon productivity, sales, profit, or cost reduction efforts. There are: • Individual incentive schemes, and • Group incentive programmes. •Individual incentives are applicable to specific employee performance. Where a given task demands group efforts for completion, incentives are paid to the group as a whole. The amount is later divided among group members on an equitable basis • Bonus: The bonus can be paid in different ways. It can be fixed percentage on the basic wage paid annually or in proportion to the profitability.
  93. 93. Indirect Compensation refers to non-monetary benefits offered and provided to employees in lieu of services provided by them to the organization. Indirect compensation or wage supplements or fringe benefits refers to such benefits such as:  Leave Policy  Overtime Policy  Hospitalization  Flexible Timings  Insurance  Leave Travel  Retirement Benefits  Holiday Homes 10 4
  94. 94. • Leave Policy: It is the right of employee to get adequate number of leave while working with the organization. The organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and maternity leaves, statutory pay, etc. • Overtime Policy: Employees should be provided with the adequate allowances and facilities during their overtime, if they happened to do so, such as transport facilities, overtime pay, etc. • Hospitalization:The employees should be provided allowances to get their regular check-ups, say at an interval of one year. Even their dependents should be eligible for the medi-claims that provide them emotional and social security. • Flexible Timings: Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons.
  95. 95. • Insurance: Organizations also provide for accidental insurance and life insurance for employees. This gives them the emotional security and they feel themselves valued in the organization. • Leave Travel: The employees are provided with leaves and travel allowances to go for holiday with their families. Some organizations arrange for a tour for the employees of the organization. This is usually done to make the employees stress free. • Retirement Benefits: Organizations provide for pension plans and other benefits for their employees which benefits them after they retire from the organization at the prescribed age. • Holiday Homes: Organizations provide for holiday homes and guest house for their employees at different locations. These holiday homes are usually located in hill station and other most wanted holiday spots. The organizations make sure that the employees do not face any kind of difficulties during their stay in the guest house.
  96. 96. 10 8  It refers to various extra benefits provided to employees, in addition to the compensation paid in form of wage and salary.  They are tangible benefits.  It can be in form of cash or kinds such as housing accommodation, entertainment allowance, travelling allowance, facility of car or any other vehicle, facility of education for the children, medical facilities, savings & investment programs, facility of refreshment etc.
  97. 97.  According to Encyclopedia of Social Sciences “ Fringe benefits are the legal and voluntary efforts of employers for improving the standard of living and working conditions of their workers.  According to International Conference Board “Fringe Benefits must have four elements: i. Payment in addition to the payment for the time of work at pre- determined rates such as overtime, leave encashment etc. ii. Payment for the safety of the employees. iii. Payment for idle time. iv. Payment for the service of employees.
  98. 98.  They are provided to employees in addition to their wages/salaries & other performance related incentives.  They may be provided either statutorily or on voluntary basis.  Means for facilitating the performance of their jobs.  Provided to all employees irrespective of their efficiency.  It is given on the basis of length of service, his sickness, sex, hazards of life etc.  They are significant part of the workers total income.
  99. 99.  To attract capable , efficient & experienced persons to join the enterprise.  To meet the economic, social & psychological needs of the employees.  Increase in Goodwill.  To compensate the losses and risk of employment.  Boost the morale of employees.  Check industrial disputes & to promote industrial peace.  Reduce the rate of absenteeism & turnover.  Maintain discipline in the enterprise.  Motivate the employees to work to the best of their efficiency and ability.
  100. 100. I. Payment for time not worked: ◦ Weekly-off day ◦ Gazetted Holidays ◦ Personal Leave II. Retirement Benefits: ◦ Provident Fund Scheme ◦ Pension Scheme ◦ Gratuity III. Compensation Benefits IV. Insurance Benefits V. Health & Safety Provisions ◦ Health ◦ Safety ◦ Working hours VI. Recreational and other Benefits
  101. 101.  Rising prices & cost of living.  It presents attractive areas of negotiation when large wage & salary increases are not feasible.  Fringe benefits are non-taxable rewards & has been a major stimulus to their expansion.  Growth & strength of trade unions has substantially influence of company benefits & services.  Labor scarcity & completion for qualified personnel has led to initiation, evolution & implementation of a number of compensation plans.  Growing volume of labor legislation, particularly social security made it imperative for employers to share with their employees the cost of old age, survivor & disability benefits.
  102. 102. Establish benefits objectives Assess environmental Factors Assess Competitiveness Communicate benefit information Control benefits Costs and Evaluation Environment
  103. 103. BASE COMPENSATION SUPPLEMENTARY COMPENSATION 1. It denotes the base wage in form of wages or salaries paid to the worker 2. These are provided in cash 3. They are paid to compensate employees for their services. 4. These are determined by job evaluation, demand & supply of labor, organization's ability to pay etc. 1. It refers to various extra benefits provided to employees in addition to the compensation paid in form of wage or salary 2. These are provided in the form of services like housing, medical etc 3. These are made to increase the efficiency of employees & to retain them in the organization on a long term basis. 4. These are determined by the history of organization, philosophy of management, organization capacity to pay, desire to enhance public image etc.
  104. 104. 11 6
  105. 105.  Job evaluation is the process of systematically determining a relative internal value of a job in an organization. In all cases the idea is to evaluate the job, not the person doing it.  Job evaluation is the process of determining the worth of one job in relation to that of the other jobs in a company so that a fair and equitable wage and salary system can be established.  The process of determining how much a job should be paid, balancing two goals ◦ Internal Equity: Paying different jobs differently, based on what the job entails. ◦ External Competitiveness: Paying satisfactory performers what the market is paying. 11 7
  106. 106. Process of systematically determining the relative worth of jobs to create a job structure for the organization. The evaluation is based on a combination of job content, skills required, value to the organization, organizational culture, and the external market. This potential to blend internal forces and external market forces is both a strength and a challenge to job evaluation. Job evaluation is the process of analyzing and appraising the content of jobs , set in the family of other jobs, so as to put them in a suitably evolved rank-order which can then be utilized for installation of an acceptable wage structure in an organization.
  107. 107. DETERMINING AN INTERNALLY ALIGNED JOB STRUCTURE Some Major Decisions in Job Evaluation • Establish purpose of evaluation/ Value preposition • Decide whether to use single or multiple plans • Choose among alternative approaches • Obtain involvement of relevant stakeholders • Evaluate plan’s usefulness Job Design Job Analysis Job Description Job classification Job Evaluation Work relationships within the organization Job specification
  108. 108. EVALUATION OBJECTIVES Primary Objectives Secondary Objectives 12 0
  109. 109. To establish wage level of an organization To establish relative wage level of a plant To bring new jobs to their proper relative parity with existing jobs. To facilitate wage negotiations.
  110. 110. To determine qualities for new jobs for employee selection To determine criteria for merit ratings & promotions To analyze wage rates To find scope for automation & improvement To train new supervisors To improve working conditions as better compensation in lieu of that 12 2
  111. 111. Select the group of jobs Study the job Prepare job description Device an evaluation plan Establish a committee of raters & rate Classify the jobs Money allocations Obtain approval Establish suitable grievance procedure
  112. 112. Ranking Method Grading Method Point Rating Factor Comparison Method
  113. 113. Ranking method: The job ranking method arranges jobs in numerical order on the basis of the importance of the job's duties and responsibilities to the organization. This method, though easy to understand, is highly subjective in nature. Classification/Grading method: The job classification method slots jobs into pre established grades. Higher-rated grades demand more responsibilities, tougher working conditions and varied job duties. This method is easy to understand and takes care of all relevant factors affecting the performance of a job. However, it is not easy to write all inclusive descriptions of a grade. Further, the method oversimplifies sharp differences between different jobs and different grades.
  114. 114. Point method: The point system of job evaluation uses a point scheme based on the compensable job factors of skill, effort, responsibility and working conditions. The more compensable factors a job possesses, the more points are assigned to it. Jobs with higher accumulated points are considered more valuable to the organization.  Select key jobs  Identify the factors to all identified jobs such as skill, effort, responsibility etc.  Divide each major factor into a number of sub factors. Each sub factor is defined and expressed in order of importance.  Find the maximum number of points assigned to each job  Once the worth of a job in terms of total points is known, the points are converted into money values, keeping the wage rates in mind.
  115. 115. Factor comparison method: In this method, jobs are ranked according to a series of factors such as mental effort, physical effort, skill needed, responsibility, supervisory responsibility, working conditions, etc. Pay will be assigned in this method by comparing the weights of the factors required for each job. •Selection of key jobs. •Selection of Key Factors •Comparison of a Job Factor with a Key job Factor. •Determination of Worth.
  116. 116. 1. It offers a systematic procedure for determining the relative worth of jobs. 2. An equitable wage structure is a natural outcome of job evaluation. 3. Helps resolve wage related grievances. 4. It links the pay with the requirements of the job. 5. It points out possibilities of more appropriate use of the plant’s labor force by indicating jobs that need more or less skilled workers than those who are manning these jobs currently.
  117. 117. Method Factors of job which are evaluated How is job evaluated Type of method Major advantages Major disadvantages Ranking Whole job( compensable factors are implicit) Jobs are subjectively ordered according to relative worth Qualitative Relatively quick and in-expensive Entirely subjective Classification / Grade Whole job Compare job to description of job grades Qualitative Readily available and in-expensive Cumbersome system Factor comparison compensable factors of job Compare job to key jobs on scales of compensable factors Quantitative Easy to use Hard to construct ; Inaccurate over time Point Method compensable factors of job Compare job to standardized descriptions of degrees of universal compensable factors Quantitative Accurate and stable overtime May be costly