3. Career Planning
4. Career Development
5. Succession Planning
7. Job Evaluation
• 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.
• Development of skills of employees
• Development of human resources
• Optimum utilization of human resources
Training helps to
bridge the gap
Training is expensive………....
Without training it is more expensive
• 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
• In the words of Dale S. Beach, “Training is the organized
of updates and
1. Induction or Orientation Training
2. Job Training
3. Safety Training
4. Remedial Training
5. Refresher Training
6. Promotional Training
Safety Adaptability Promotion New Skills Improves
On-the Job Training
JIT (Job Instructions
Off-the Job Training
Curriculum and Classes
Case Study Method
Role Playing Method
training need of
Select a target
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.
i. The area of training
ii. Level in the organization
iii. The intensity of training etc.
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
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.
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?
Training effectiveness is the degree to which trainees are able
to learn and apply the knowledge and skills acquired in the
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.
“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.”
◦ “Evaluating is the systematic collection and assessment of
information for deciding how best to utilize available training
resources in order to achieve organisational goals.”
To determine whether the specific training objectives are
accomplished or not.
To identify which trainees benefits most or least from the
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
Did the trainees
Did they think
the course was
To what extent
do trainees have
skill after the
they did before?
the job after
Are they using
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
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
Trainees’ comments and reactions during the training period
• 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.
“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.” —
“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
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
To replace retiring executives with younger talents.
To promote progress, productivity and profits of
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.
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
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.
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
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
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
On the Job
Off the Job
•In Basket Games
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.
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.
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.
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
◦ 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
◦ 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
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.
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
◦ 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.
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.
Under this method the executives read the journal, books,
article, magazines, and notes and exchange the news with
◦ This is done under the planned reading programmes organized by some
◦ Reading of the current management literature helps to avoid
This method keeps the manager updated with the new developments in
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.
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
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.
In this method, one topic of study is discussed by members of
Through this discussion, knowledge and communication skills
of all group members improve.
The topic is summarised by the chairman of group discussion.
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
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
◦ 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.
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.
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
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.
Instruction is delivered by a program via some
electronic device without the presence of an
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
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
● These both things provide us the
practical knowledge of the corporate
which elevate the capability of the
● 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
● These both can be done in many
waysbecause they both have so
Basis of Difference Training Development
Benefit Benefit for short-term Benefit for the long- term
Goal Fix Current Skills Deficit Prepare for Future Work
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
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,
Conducted by Management Individual
Methods Involved On the Job and Off the Job
Decision Making Skills,
Interpersonal Skills, Job
Knowledge and Specific
Used For Operatives Executives
Learning Specific Job Related
Career is an occupation or a profession, that one
undertakes for a long period of his life time & derives
monetary benefit from it.
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
1. To identify positive characteristics of the employees.
2. To develop awareness about each employee’s
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.
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 -
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
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.
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
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
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.
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
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.
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
(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.
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
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
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.
• 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.
•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
• 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.
• 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.
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
• You will continue the process of self-assessment, research, decision-making, and
job searching in order to make effective and fulfilling career changes throughout
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.
i. To create organizational data that can be used for staffing
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
•Ensures Business Continuity
•Develops Potential Employees
•Identifies Next Successor
•Reduces Cost of the Organization
•Developing Career Paths
• 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
• 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.
• 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
• 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.
• 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
• 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.
• After the gaps have been identified, the next step involves creating
• 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
• 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.
• 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).
Compensation is a systematic approach to providing
monetary value to employees in exchange for work
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.
According to Thomas J. Bergmann(1988) compensation consists of four
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.”
1. To be legal: It must get approval from the govt. or top management in the
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
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
To maintain satisfaction of employees by exhibiting that remuneration is fair adequate and
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
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
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
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
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
It is used to describe financial remuneration usually cash and includes such elements as
House Rent allowance
• 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
• 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
• 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.
• 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.
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: 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.
• 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.
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.
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
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.
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
They are significant part of the workers total income.
To attract capable , efficient & experienced persons to join the
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.
I. Payment for time not worked:
◦ Weekly-off day
◦ Gazetted Holidays
◦ Personal Leave
II. Retirement Benefits:
◦ Provident Fund Scheme
◦ Pension Scheme
III. Compensation Benefits
IV. Insurance Benefits
V. Health & Safety Provisions
◦ Working hours
VI. Recreational and other Benefits
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
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.
Establish benefits objectives
Assess environmental Factors
Control benefits Costs and
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
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.
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
◦ Internal Equity: Paying different jobs differently, based on what the job
◦ External Competitiveness: Paying satisfactory performers what the market
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.
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
Work relationships within
To establish wage
level of an
To establish relative
wage level of a plant
To bring new jobs to
their proper relative
parity with existing
To facilitate wage
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
To train new supervisors
To improve working conditions as
better compensation in lieu of that
jobs Study the
of raters &
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
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
Select key jobs
Identify the factors to all identified jobs such as skill, effort,
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.
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.
1. It offers a systematic procedure for determining the relative worth of
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.
Method Factors of job which are
How is job evaluated Type of method Major
Ranking Whole job( compensable
factors are implicit)
Jobs are subjectively ordered
according to relative worth
Qualitative Relatively quick
Whole job Compare job to description
of job grades
Qualitative Readily available
compensable factors of
Compare job to key jobs on
scales of compensable
Quantitative Easy to use Hard to construct
; Inaccurate over
Point Method compensable factors of
Compare job to standardized
descriptions of degrees of
Quantitative Accurate and
May be costly
Apparemment, vous utilisez un bloqueur de publicités qui est en cours d'exécution. En ajoutant SlideShare à la liste blanche de votre bloqueur de publicités, vous soutenez notre communauté de créateurs de contenu.
Vous détestez les publicités?
Nous avons mis à jour notre politique de confidentialité.
Nous avons mis à jour notre politique de confidentialité pour nous conformer à l'évolution des réglementations mondiales en matière de confidentialité et pour vous informer de la manière dont nous utilisons vos données de façon limitée.
Vous pouvez consulter les détails ci-dessous. En cliquant sur Accepter, vous acceptez la politique de confidentialité mise à jour.