Data processing method:
Cross checking of all gathered information
Putting the information in various statistical charts to the show the gap between
policy and practice.
1.3 Limitation of the study:
The nature of this research requires a huge reference which was not available.
HSBC is known as the world’s local bank and growing in hard competitive market,
It may not disclose all policies. That is why; the analysis will be conceptual.
1. All the details were not in the internet.
2. Due to short time, information were not collected in a detail
from the person.
3. Lack of knowledge and experience was our limitations as
1.6 Activity schedule for the term paper preparation:
|i . Preparation of report out Line and Proposal||14 /0 5/2010||31/05/2010||18 Days|
|ii. Collection of information||01 /06 /2010||10/06/ 2010||10 Days 111|
|iii. Analysis of Information||11/ 06/ 2010||20/06/ 2010||10 Days|
|iv. Draft Report writings and Submission for Suggestion||21/06 /2010||05/ 7/ 2010||15 days|
|v. Final Report Writing, printing and submission of the Report||06/07/ 2010||25/07/2010||20 days|
Human resource and the management is truly one of the functional and credible areas in the organization and human resource management has challenges that they must learn to recognize and learn to work out. It is now strongly felt that high morale and employee competence, distinctive organizational cultures, management process and systems are vital for the success for a company’s continuous success. It is being recognized that competitive advantage can only be obtained by building up highly motivated and skilled employees at all levels that will enable organization to compete in a volatile market scenario and to respond appropriately to the market needs, with regard to quality products & services and technological innovations.
To ensure the dynamic environment of an organization Human Resource Policy is the guideline of an organization, where the HR issues are suggested to manage. This policy covers all the aspects related to Human Resources of the organization. These includes
• Human Resource Planning
• Employment Policy
• Training & Staff Development
• Compensation & Benefit Package
• Performance Appraisal System
• Disciplinary Procedure
2.0 Human Resource Planning
Human resources planning refer to classic HR administrative functions, and the
evaluation and identification of human resources requirements for meeting
organizational goals. It also requires an assessment of the availability of the
qualified resources that will be needed. Human resources planning should be a key
component of nearly every corporation’s strategic business planning. To ensure
their competitive advantage in the marketplace, organizations must implement
innovative strategies that are designed to enhance their employee retention rate and
recruit fresh talent into their companies.
Its supply of human resources must be sufficient to ensure the healthy operation of
the organization, whether it be a business, a government agency, a professional
football team, or a university. Toward this objective of continuing healthy
operations, the organization requires human resource planning.
2.1 Why HR Planning? :
For any enterprise to function effectively, it must have money, materials, supplies,
equipment, ideas about the services or products to offer those who might use its
outputs and people (the human resource) to run the enterprise. The effective
management of people at work is Human Resource Management (HRM).The HR
planning has received considerable attention in recent years because of the
1. Nature of Human Resources
2. Supply of skilled Human Resources
3. Rapid Technological Changes
4. Costs of recruitment and hiring
5. Increased Transition
6. Reduction of Wastage
7. Human Resource as corporate assets
8. Size of the firm
2.2 HR Planning have purpose as follows:
• To ensure optimum use of manpower and capitalize on the strength of HR.
• To forecast future requirements
• To face the challenges the business is facing due to turbulent and hostile
• To face Rapid Technological Changes.
2.3 Benefits of HR planning
Human Resources planning are an essential tool in maintaining the balance between s
Supplies and demand in any organization.
1. Conduct in-depth analysis of competency requirements.
2. Link strategic goals and competency directly to individual employees.
3. Determine knowledge capital needs for mid-to long-term business
4. Reduce hiring time and expense, lower training costs, and increase
productivity across the organization.
5. Improve human resources utilization with corresponding reduction in HR
6. More stable environment
7. Development of plans for management succession
8. Assistance in career planning
9. Determination of training and development needs
10. Expand the workforce to meet future demands
11. Encourage team working across professional and organizational boundaries.
12. Flexible working to make best use of the range of skills and knowledge which staffs have
13. Maximize the contribution of all staff for the organization
14. Modernize education and training
15. Develop new, more flexible careers
16. Decide how many employees are and will be needed
17. Manage employment expenditure by anticipating changes
18. Ensure that sufficient and appropriate training and development is provided
19. Cope with peaks and troughs in supply and demand for different skills
20. Retain employees and identify longer-term requirements.
2.4 HR Planning Model:
HR planners can influence the process so that resource decisions are made with due
thought and the organization does not hurt itself by either undercutting its talent pool or
retaining excess flab. HR planners should take this mission seriously if they want to
have any control over the changing face of the organization of the future. Conversely,
in the absence of these practices, many “deals” have failed and others will undoubtedly
follow. Workforce planning generally follows this four-step model:
Step-1: Supply Analysis
The first and most straightforward-step in workforce planning are to identify the composition and capabilities of our current workforce. It also involves examining attrition statistics, including resignations, retirements, internal transfers and promotions and involuntary terminations. Technology-HRIS applications and “skills inventories” in particular can be an enormously helpful data gathering tool. Armed with this information, you can develop a profile of your current staff as it will exist in the future in the absence of management action. In other words, this is what your workforce will “look like” if all recruitment, training and other 1-IR programs arc suspended.
Step-2: Gap analysis
The purpose of demand analysis is to forecast the competencies that will be required by your future workforce for your organization to be successful. In order to do this, you must be considered. This includes business mission, strategies and goals as well as legislation, economic conditions, technological advances and market competition. Scenario planning is an effective way to systematically evaluate the interplay of multiple variables.
Step-3: Gap analysis
As the name implies, gap analysis is the comparison of the supply and demand data collected during steps 1 and 2. The result is the determination of skill surplus and deficiencies. While identifying competencies that are lacking is an obvious goal of this activity, it is equally important to understand which are in excess. After all employees with skills that will be needed to a lesser extent-it at all-in several years are of limited long-term value to your organization. No matter how well they perform now, they may eventually become obsolete without corporate intervention. Gap analysis helps you pinpoint who is at risk and proactively deal with each situation as appropriate.
Step-4: Solution Analysis
Solution Analysis is the development of strategies for closing the gaps identified in step 3. Specifically, it is the identification of ways to build skills that are the in short supply and reduce those that are overly-abundant in relation to your organizations projected needs. A variety of targeted recruitment, development and retention activities can be employed to achieve these ends.
HR planning and smooth staff transition
The 1-IR forecast is concerned with anticipating the number of replacements required
6. Promotions etc.
Smooth staff transition also depends on the following factors-
• It should estimate changes in the existing work force resulting from
promotion, separation, and transfers.
• It should predict the probable effect of changes in HR policies and
• It should take account of technological developments which may change the
mix and levels of skills and the relative size of occupational groups.
• It should consider changes in the amount of time needed to train or recruit HR
to fill the increasing number of technical and professional openings.
One feature of HR planning is that it should emerge out of recognition that
development of HR is a time-consuming process. It is difficult to produce an
engineer or doctor or for that matter a manager without definite planning. In
a free society human beings enjoy unrestricted geographic mobility within
the society or country.
There is nothing to keep the worker from moving on when another job
appears attractive. As a result. Individual employers face greater difficulties i
in holding preferred employees. Proper HR planning will reduce the rate of
turnover and it will help the organization smooth staff transition. HR planning
is the integration of HR policies, practices, and procedures so as to achieve
the right number of people in the right jobs at the right time. In other words,
from the standard point of a firm, HR planning is the process by which an
organization ensures that it has the right number of HR and the right kind HR
at the right places at right time, doing things for which they are economically
most useful. In short, human resource planning is a strategy for matching future
HR numbers and skills with organizational activities.
Recruitment and selection plays an important and vital role in achieving the
organizational vision, mission, goals and objectives. Organizations today consider
human resources as the critical resource of the organization. Recruitment and selection
is the staffing function in organizations.
3.1 Recruitment Avenues:
The primary goal of staffing is to get the right people for the company to operate as
efficiently and effectively as possible. Before recruitment and selection, an organization
must analyze the external environment and examine its internal situation to develop
human resource plans considering any new requirement and existing vacant positions.
Getting the right people interested in applying for a job at a company is the core of
3.2 Screening Applications :
Effective recruitment depends on knowing how applicants and organizations view it. It
is important for Human Resource Management (HRM) Department to know the need of
the applicants and the company. At all stages of recruitment and selection, FIRM
Department must seek individuals with best match of skills and competencies to the
need, the highest standards of personal integrity and a willingness to face challenges
and develop themselves in a changing environment. Recruitment and selection process
must be conducted in a transparent and consistent with relevant civil right laws. It has to
be non-discriminatory manner and participatory to be successful.
“Remarks” column of the checklist for CVs, the reasons for selecting or not selecting of
applications may clearly be stated. Screening criteria may be defined with reference to
specific job requirements.
Usually, a team makes short listing, preferably from different units and HRM
Department. Service records should be consulted before short-listing internal
candidates. While screening candidates, consideration may be given for
gender/diversity balance in the organization.
The screening process may be conducted
in accordance with benchmark (required skills, competencies, education and
experiences) for each position. However, certain skills can only be assessed through o
observation or simulation or practical test. After screening of applications, tests may
be administered depending on need of the positions. All candidates should receive a
brief job description for the position applied for along with the interview notice.
3.3 Interview panel/board:
The interview panel/board may consist of 3 to 5 experience persons, representing
diverse perspectives. It is important that the board members have adequate knowledge,
have specific skills and competencies of the position being interviewed. When possible,
at least one woman may participate in interview board depending on capability and the
availability for position being interviewed. The line manager’s or his/her designate and
HRM representative’s participation is mandatory. Other members may come from
different units or functions even from other organizations.
3.4 Employment test:
The most common and important method to assess applicants’ capability is through
written tests. HRM Department may code written tests scripts to prevent subjectivity
during examining the papers. This is more important when internal and external
candidates sit for the same test.
HRM Department must set questions by taking inputs from interview panel. Questions s
should set relevant to the positions along with general questions. Final question should
prepare and write out by trusted person and make copy just before test. Minimum two p
persons from different units including the line manager to ensure fairness should the
examine answer scripts. Obviously, the type of questions will depend on the level of
position. Generally, questions should be on core business, on management-related issues
and job specifics.
In work simulations, an applicant completes verbal or physical activities that replicate
actual work. These techniques have a high degree of validity, as they are difficult to fake. To be effective, work simulations must be specific to job; therefore, costly to develop. Example could be to ask the candidate to conduct a meeting in a participatory manner or interact with customer or beneficiaries.
Assessment centers build from simple work simulations using situational tests or exercises so that specific behaviors of the candidates can be observed and scored by trained evaluators. Assessment centers are especially appropriate for complex attributes and abilities that are unique in that they combine several different types of selection tools into one device. They have been used for some time as managerial development tools, but their popularity as a selection device has grown in recent years. An important consideration in assessment centers as selection devices is that, to be effective, an assessment centre should specifically fit the job for which it is intended; therefore, it can be quite costly to develop.
A practical test/demonstration should be arranged for some positions like drivers, technicians, electrician etc. It is better to test their capability through assigning practical tests. Their evaluation criteria arc how well they perform their specific functions for which they arc needed.
Job interview is the most common device to select right person. In the event that a test is administered, all candidates-both internal and external should take the same test under identical conditions. Viva interviews generally occur after written tests or exercises. The viva could be on an individual basis (one-to-one with each member of the interview board) or with a panel (one interview before all members of the board). In either case, the interview board should develop a set of questions with scoring criteria just before the interview.
Interview questions should focus on areas relevant to the job, including hypothetical scenarios and questions regarding required competencies. The same questions should be asked to all candidates, though the board may ask additional questions to probe for more information regarding answers where this seems justified. This is more relevant if the candidate appears promising. No question may be asked of a personal nature that does not relate to job requirements. No considerations should be given on candidate’s gender. Religion, culture, physical handicap, age etc unless such aspect is directly related to requirements of the job.
However, some advantage may be given to women candidates if all other qualifications
are equal and organizations willing to increase female personnel. The interview
panel/board should evaluate the performances through a grading system for each
question. On the basis of overall grade obtained in the tests and the subjective
judgment, the board should prepare a justifying note of recommendation for final s
3.5 Panels for Future Vacancies:
Where it is clear that more than one person is suitable for the position, a panel of
suitable applicants should be compiled from which future similar vacancies can be
filled within 6 months, thereby reducing the costs of recruitment.
3.6 Notifying Unsuccessful Applicants:
HRM Department should inform in writing all candidates who came out unsuccessful.
A note of thanks for attending examination or viva test should be included. Such of
letter will create a positive image of the organization among perspective job seekers.
Internal unsuccessful candidates and their supervisors should receive constructive
feedback for future development. This feedback could be a basis for the employee to
plan their personal development and get supervisor’s support.
3.7 Reference Check:
HRM Department should conduct reference check for all finally selected candidates
and on the basis of positive feedback from the referees, the appointment should be
given. Referees may be contacted through email, telephone for formal letters. A
mandatory reference check with the employee’s last employer is necessary to gather
integrity and performance related information.
3.8 Medical tests:
All finally recommended candidates should go through some basic
pathological/physical tests to ensure that the selected person is physically and mentally
fit for employment and does not carry any harmful diseases.
3.9 Salary Negotiation:
Negotiation of salary and benefits particularly of external candidates is an important
task for HRM department. Normally it is not that many complexes for junior level
positions but it is difficult for senior level positions. It is better to include the salary
and benefits range in the job vacancy notice.
Negotiating the salary with the candidate is sort of bargaining the principle of which
is that there is no winner or loser. For internal candidates the salary and benefits must
be commensurate to the position even if her/his current level is low.
3.10 Interview Records:
Records must be kept of all tests and HRM Department should see that this is done.
Records should include the short listings; all tests related papers including
Recommendation of the interview panel/board. IIRM department should preserve all
documents for future HR audit at least for five years or as per policy of organization.
3.11 Appointment letter:
After finalization of selection; selected candidate must be given an appointment letter
mentioning all major terms and conditions including salary and other benefits
packages. This must be signed by the perspective employee who makes the
4.0 Training & Staff Development:
The word “training” has many meanings. To some writers in the field of personnel
management, training means developing manpower for particular jobs. Other writers
interpret it more broadly, including training for adequate job performance and
extending an employee’s intellectual range through general education. Still other
writers speak of an overall development, which they divide into education and training.
Training in this instance means fitting the man to the job, whereas the purpose of
education fits the man to his environment off and on-the-job.
Training is a learning experience in that it seeks a relatively permanent change in an
individual that will improve his or her ability to perform on the job. That means
training can involve the changing of skills, knowledge, attitudes, or social behavior. It
may mean changing what employees know, how they work, their attitudes toward their
work, or their interactions with their co-workers or their supervisor.
4.1 Basics/objectives of training:
• To train or orient new employees
• To upgrade the knowledge/skills of existing staff
• To provide long term professional development
• To resolve operating problems
4.2 Importance of training:
Training programme plays a vital role in achieving the organizational goal with all
other components. It upgrades capacity to deliver precise, effective and timely
technical information and relevant marketing & technical skills concerning wide scale
dissemination of goods and services. Training ensures following benefits for an
If employees know how to do work the right way, cost will be lower; profit will be
Employees who know how to do work according to their superior’s expectations will
be less anxious and turnover will be reduced.
Saving Customers and Making New Ones
Customers are happy when they receive the products/services they expect. Training
helps assure that this will consistently happen.
Training can provide all of these benefits. Customers, employees, and organization
have much to gain — and nothing to lose- with a high quality-training program. Which
of the following will benefit in an organization?
A trained staff will promote efficiency. Both the manager’s time and that of
employees will be saved.
Reducing Staffing Concerns
Trained employees are better prepared and more eligible for promotion opportunities.
Managers who show their concern for employs with quality training help motivate
them and moral levels are likely to increase.
4.3 Steps of training:
Employees should not be learned to do a job until the correct way to do the work has
been defined. This step is often omitted. Training activities need to be planned.
planning is often non-existent or inadequate. Professional trainers know that
significant preparation is required before training begins.
Regardless of the purpose of the training program (to reach new employees to update
knowledge /skills of experienced employees or to resolve operating problems) or the
training (individual or group) four basic steps are involved. These are:
Step # 1: TNA or Define how job should be done (Position Analysis)
the first step in training is to define how the job you will train others for should be
done. The following activities are required to develop a position analysis:
• Develop a list of tasks
• Define the job
• Determine the required quality level for each task
• Construct a Job Description
Step #2: Plan the training
The second step in training planning. Some individuals omit or deemphasize this step
(what is there to plan?). To plan a training following activities should follow:
Consider training objectives
• Develop a training plan
• Design a training lesion
• Select the trainee
• Prepare the trainees
Step # 3: Present the training: Group or Individual
The third step in the training process becomes important once work procedures have been defined and after the training is planned. The training must be presented to the trainees. No doubt, the decision to use group or individual methods was address as the training was planned.
There are a wide range of useful training methods. This includes:
Where a trainer talks to the trainees. Videos, overheads, slides, films, etc. can supplement the lecture.
Trainees act out situations after learning basic principles.
Trainees read, analyze and discuss real life situations.
A trainer (or other party) shows how to do something.
Books, Journals, magazines etc.
On—I lie—job training
On the job training is the most popular training method in small organizations. Many mangers believe on-the-job training is the best method because;
a. It is simple and fast.
b. No planning is required.
c. It is a method any body can use.
Step # 4: Training Evaluation: Back to the objectives
All trainers need to learn if their training has been successful. If it has subject matter, approach and method may be used for additional training efforts. If it has not, current trainees may need additional training and future programmes may need to include different subject matter and/or utilize different training methods or techniques.
4.4 Basics of Staff Development:
Staff Development is a systematic process if training and growth by which individuals gain and apply knowledge, skills, insights and attitudes to manage work organizations effectively. In other words, it is a programme of training and planned personal development designed to prepare and aid managers in their present and future jobs.
This aims to ensure that the organization has the effective managers it requires to meet its present and future needs. It is concerned with improving the performance of existing managers, giving them opportunities for growth and development, and ensuring that management succession within the organization is provided for the objectives of a typical management development programme can be defined as follows:
• Improving the performance of the managers
• Identifying manager’s potential
• To provide adequate succession and create a system where by this is kept under regular review.
A. On the Job development:
2. Job Rotation
3. Understudy Assignments
4. Lateral Promotion
5. Junior Trainee Programme
6. Company Training Courses
7. Committee Assignments
B. Of the Job development
1. Sensitivity Training
2. Transactional analysis
3. Lecture courses
4. Role Playing
5. Simulation Exercises
6. Management or Business Games
7. Programmed Instructions
8. Educational & Professional Institutions.
9. Professional Reading.
5.0 Compensation and Benefits
5.1 Basics of Compensation and Benefits
Competitive pay is the most recognizable part of a company’s compensation and
benefits package, and it’s key in gaining and maintaining an advantage in the
marketplace. Some of the first toots used to gain that advantage is market salary
reports, which are used to determine the going market pay rate in similar companies
When trying to keep up with market salary reports and the going market rates, small to medium-size businesses arc sometimes at a disadvantage. Why is that? For one thing, the uniqueness of job roles within smaller companies can make it difficult to compare job responsibilities in the market and obtain suitable salary comparison data. A company’s degree of competitiveness and ability to pay what the market bears can be another challenge.
But the going market rate must be considered in an effort to achieve and maintain external equity. If you are a business owner concerned with retaining top talent, you must consider the compensation practices of other companies in your industry as a tool for reducing both turnover and recruiting costs. Especially in a business where employees believe they can receive better pay for performing the same work somewhere else, there’s little incentive to stay with an employer; therefore, you must be concerned with external equity.
Factors within a company must also be taken into consideration when you’re addressing compensation issues. Internal equity seeks to place the same value on jobs that are similar in nature, responsibility and requirements. Jobs requiring greater skills or more responsibility are seen as more valuable than lower-skilled jobs. But remember, how your employees view their compensation is just as important as the compensation package itself. The potential exists for pay programs to be
misunderstood or characterized as unfair, subjective or downright unlawful. In some cases, there may be merit to those perceptions.
Overall, a good pay program should be S M A R T, meaning it should be
S = strategically based
When designing a pay structure, you should look at your company’s goals and take its future business direction into account, while rewarding and recognizing employee performance.
M = Market tough
You should also look at the market and monitor what the market is doing to regularly attract and retain the best.
A = Analyzed thoroughly
You must analyze not only the market but also the jobs your employees are doing, and the jobs your employees will be expected to do in the future to maintain that competitive edge.
R = Reward results
Reward results and recognize potential. Most employers want to give incentives to encourage employees toward an expected end rather than fully paying out dividends based solely on potential. Integrating rewards with recognition strategies allows you to encourage employees to exceed performance expectations.
T = Transformative
You don’t want a compensation plan that’s totally out of line with what the business environment looks like today–your plan should resemble the times. Therefore, your practices and reward elements should constantly change with the times.
5.2 Objective of Compensation Administration
Sound compensation and benefit administration is one of the most important functions of the management. This is often one of the largest components cost of production and as such have serious implications for growth and profitability of the company. Though these benefits and services are not always directly related to the productive effort of the employees, management orca excepts to aid its
• Attract and retain top talent;
• Motivate your employees to achieve and maintain high performance;
• Ensure competitive and consistent pay practices;
• Comply with applicable federal and state laws and regulations;
• Operate within the constraints of your budget and financial resources;
• Ensure administrative efficiency; and
• Allow you to offer competitive salaries relative to the labor market.
Smartly integrated compensation plans take into accounts what’s necessary for your company to maintain its competitive edge today and its sustained growth tomorrow. When compensation dollars are limited, including a good balance of benefits, recognitions and rewards can create a more appealing offering–and help you attract and retain top talent.
These benefits also may supply financial protection against some risk such as illness, accident, unemployment and loss of income due to retirement etc. They may provide extra leisure, extra income and a better work environment. Some benefits and services help to fulfill the social and recreational needs of the employees.
5.3 Compensation determination
Employees are paid according to requirements of their jobs i.e. highly skilled jobs are paid more compensation than low skilled jobs. Job analysis is important to design a
compensation package. Following information is required to develop a compensation package:
• Determine what people do?
• Determine how much roles are worth
• Develop/Administer compensation program
• Appraise and Reward performance
5.4 Compensation Philosophy
Compensation package should be designed keeping in mind the Maslow’s Hierarchy theory. This shows desires of the individual at different levels. If the organization develop its compensation and benefit packages for different levels considering these desires, package would be obviously attractive to the employee.
A compensation philosophy should specify:
• Who the organization defines as competition for people/skills?
• How the organization positions itself compared to the market?
• How internal equity and external competitiveness are balanced?
Approach to recommend a compensation package
Paying what is necessary to attract, retain and motivate a sufficient number of qualified employees. Following steps are required to design a compensation package.
First, you need to know what compensation plans your competitors offer. What salaries, base rates, draws, commissions, incentives, quotas, perquisites and benefit packages do they provide? That why it is needed market analysis and salary survey.
Market survey is required to design a compensation package so that competitive package can be designed comparison to the other homogeneous organizations.
• Compares pay practices to the relevant external market(s).
• Customized surveys may be required to supplement existing sources
• Compares pay practices to the relevant external market(s).
• Customized surveys must be required to supplement existing.
• Decide on the depth of the information that needs to be gathered and what jobs should be included.
• Include the organizations identified as the principal competition for people/skills.
• As for relevant data: salary range minimums, midpoints and maximums; current average pay, starting salaries, etc.
Make sure you’re comparing apples to apples. That’s why you are needed job analysis of all employees:
• Concentrates on actual job content, which includes responsibilities! duties being performed or the relative worth of a job.
• Results depend on the factors selected and the weights used to evaluate these factors.
• Each level encompasses a range of relative values.
B. Ask employees what they want
Far too many firms skip this step, either because they don’t care what the sales representatives want or because they think they already know. Don’t make assumptions—ask! Your sales associates will tell you what they like about your compensation plans (and your competitions’ plans), what they don’t like, what
motivates them, and how they would prefer to be paid. Find out what you can afford. Many companies skip this step too. But you can’t be aggressive about compensation without knowing how much your business can afford to pay your sales force. Analyze your expenses and revenue to find the maximum that you can afford to pay.
C. Blend what the sales reps want with what the company needs
When you know what your sales force wants and you know what you can pay and you know what else is available in your market, you are in a good position to create very desirable plans.
For example, top producers might be frustrated with plans that put a ceiling on their income. You can create a compensation plan with a lower base and a higher commission that rewards them for accepting more risk by giving them the opportunity to make more money.
Sales associates who have high fixed expenses (or trouble managing their money) might be willing to accept a lower total compensation package in exchange for the security of a higher base.
People who have health insurance through a spouse’s plan may resent having to pay for coverage through your insurance plan. You can structure plans so people who don’t want benefits don’t have to pay for them.
D. Offer a choice
The key to success is realizing that the same compensation plan isn’t going to work for everyone. You’ll get the best results if you create several plans, each meeting the needs of a different group, and then let your sales associates choose which they prefer.
When you follow this five-step process, you can design a compensation strategy that supports your business plan, positions your company successfully against competitors, and allows you to recruit and retain the sales force you need.
5.6 Salary Structure
• The principal control device, consisting of minimums, midpoints and maximums
• Used to guide managers in making salary determination decisions
Components of Total Compensation
Usual Compensation & Benefits Fixed Cash
Leave Travel Allowance
• Company Housing
• Company Car
• Furnishing program
• Housing Loan
• Personal loans
• Tuition Refund Plan
• Professional Body Membership
• Provident Fund
• Individual Performance Award/Annual Bonus
• Sales Incentive Plans
6.0 Performance Management
6.1 Basics of Performance Management
Performance Management is the system by which individual performance is monitored, guided, evaluated and rewarded. Performance Management is designed to:
• Communicate and reinforce core values and performance competencies
• Articulate performance expectations and monitor progress
• Support employee development
• Ensure ongoing two-way communication
• Provide the basis for merit increases
6.2 Supervisor’s Role
The supervisor usually does the actual appraising. He! she must be familiar with the basic appraisal techniques, understand and avoid problems that can cripple an appraisal and conduct the appraisal fairly.
In Orion Laboratories Ltd. the Human Resource Department serves as policy making and advisory role. Human Resource Department provides advice and assists regarding the appraisal tool to use but leaves the final decisions on the appraisal procedures to operating divisional heads. Besides the Human Resource Department prepares detailed forms and procedures and insists that the other departments use them. Human Resource Department is responsible for the overall appraisal system. Particularly for ensuring that the format aiid criteria are being used correctly and not being outdated.
6.3 Basic Consideration in Appraisal
When a supervisor or an immediate senior evaluates someone, he tends to think what kind of person he is and what he has done. Thus appraisal plan require the rater to rate or score the employee on his personal traits and characteristics on his contribution. Determination on the former is rather subjective, since different raters may appraise the same individual differently.
An employer is primarily interested in assessing the employee’s performance and therefore more emphasis should be given on its factors. However, it is also apparent tat such personal traits as cooperation, dependability, attitude, communication, initiative and ability to get along with others also have a bearing upon the employees value on the organization. It has already been mentioned that the Orion Laboratory Ltd evaluates the performance of each of its employees by the Supervisors, immediate senior manager and the 1-luman Resource Department. In order to judge an employee it is very important that there is a positive correlation between the ability, esthetic interests, emotional stability, high social skill and social detachment.
6.4 The Appraisal Methods
Here are some guidelines for developing a legally defensible appraisal process:
6.4.1 Graphic Rating Scale
It is the simplest and the most popular technique for appraising performance. A graphic rating scale lists traits (such as quality and reliability) and a range of performance values (from poor to excellent) for each trait. Each subordinate is rated by circling or checking the score that best describes his or her performance for each trait. Then the assigned values are totalled for the traits.
6.4.2 Alternation Ranking Method
Ranking employees from best to worst on a trait or traits is another option. Since it is usually easier to distinguish between the worst and the best employees, an Alternation Ranking Method is most popular. First, All subordinates are listed to be rated and then crossed out the names any not known well enough to rank.
6.4.3 Paired Comparison Method
A paired comparison method helps make the ranking method more precise. For every trait (quality of work, quantity of work and so on) every subordinate is paired and compared with every other subordinate.
6.4.4 Forced Distribution Method
This method is similar to grading on a curve. With this method predetermined percentages of rates are placed in various performance categories. For example employees may be distributed as follows:
15% high performers
20% high average performers
30% average performers
20% low average performers
15% low performers
6.4.5 Critical Incident Method
In this method the supervisor keeps a record of uncommonly good or undesirable examples of an employee’s work related behaviour and reviews it with the employee at predetermined times.
6.4.6 Narrative Forms
The final written appraisal is often in presented in Narrative Forms. For example, managers use it to evaluate the progress and development of employees. The supervisor is asked to (1) rate the employee’s performance for each performance factor or skill, (2) write down examples, (3) to make an improvement plan. This aids the employee in understanding where his or her performance was good or bad and how to improve that performance.
6.4.7 Behaviorally Anchored Rating Scale
This is an appraisal method that aims at combining the benefits of narrative critical incidents and quantifying ratings by anchoring a quantifying scale with specific narrative examples of good or poor performance.
6.4.8 Management by Objectives
This process requires the manager to set specific measurable goals with each employee and then periodically discuss the latter’s progress towards the goal. The progress may engage the subordinate by jointly setting goals and periodically providing feedback.
6.4. 10 Computerized and Web Based Performance Appraisal
Several relatively inexpensive Performance Appraisal software programmes are on the market. These generally enable managers to keep notes on subordinates during the year, and then to electronically rate the employees on their traits. The programmes then generate written text to support each part of the appraisal. The software programmes also enable employees to check their own performance against prescribed criteria.
6.4. 11 Mixing the Methods
Most firms combine several methods. Basically this is a graphic rating scale with descriptive phrases included to define each trail. However, it also has a section for comments below each trait. This lets the rater provide several critical incidents. The quantifiable rating facilitates comparing employees and is useful for salary, transfer and promotion decision.
6.5 Problem and solution of Performance Appraisal
It’s probably safe to say that problems like these can make an appraisal worse than no appraisal at all. Would an employee not be better off with no appraisal than with a seemingly objective but actually biased one? Problems like these aren’t inevitable, though, and you can minimize them.
First, learn and understand the potential problems and the solutions (like clarifying standards) for each. Understanding the problem can help you avoid it.
Second, use the right appraisal tool. Each tool has its own pros and cons. For example, the ranking method avoids central tendency but can cause bad feelings when employees’ performances are in fact all “high”; and the ranking and forced distribution methods both provide relative-not absolute–ratings.
Third, train supervisors to reduce rating errors such as halo, leniency, and central tendency. In one training program, raters watched a videotape of people at work., and then rated the workers. The trainers then placed the supervisors’ ratings of these workers on a flip chart, and explained and illustrated the various errors (such as leniency and halo)
Training isn’t always the solution, however. In practice, several factors -including the extent to which employees’ pay is tied to performance ratings, Union pressure, employee turnover, time constraints, and the need to justify ratings-may is more important than training. This means that improving appraisal accuracy calls not just
for training, but also for reducing the effect of outside factors such as union pressure and time constraints.
A fourth solution–diary keeping is worth the effort. The program explained the role of critical incidents, and how the supervisors could compile these incidents into a diary or incident file to use later as a reference for a subordinate’s appraisal. Then came a practice session, followed by a feedback and group discussion session aimed at reinforcing the importance of recording both positive and negative incidents.
6.6 Performance Management Model
Performance Management starts from performance planning then supervisor ensures proper monitoring of the plan and support for development, its end by the performance appraisal and plan for next year.
• Performance Planning
• Monitoring and Development
• Annual Performance Appraisal i
• Performance Planning
Performance Planning is process of Clarifying goals and expectations for an individual. It can be done through a proper job description.
Job Description includes:
• Defines the job purpose, responsibilities, and tasks of a position
• On-going accountabilities
• More generic than the Individual Operating Plan
• Job Description Format
• Job Summary – One brief paragraph
• Responsibilities – What is being done and why.
• Authority – Spending, autonomy, supervision
• Key Relationships – Internal/External
• Working Conditions
• Qualifications – Education, experience, languages, licensing, competencies
• Core Values and Performance Competencies
6.7 Legal and Ethical issues in Performance Appraisal
Appraisals affect promotions, raises, and dismissals. They have often found that the inadequacies of an employer’s appraisal system lay at the root of illegal discriminatory actions, ~pariicularly” in cases concerning layoffs, promotions, discharges, merit pay, or combinations of these. The practice may be illegal because:
1. Based the appraisals on subjective supervisory observations.
2. Didn’t administer and score the appraisals in a standardized fashion.
3. Two of the three supervisory evaluators did not have daily contact with the employees they appraised.
Personal bias, unreasonably rating everyone high (or low), and relying just on recent events are some other reasons were unfair. Furthermore, legal doesn’t always mean ethical, but ethics should be the bedrock of an appraisal. Most managers understand appraisal, can “stick to the rules” and do lawful performance reviews but still fail to provide honest assessments. As one commentator puts it:
“The overall objective of high-ethics performance reviews should be to provide honest ‘assessment of performance and to mutually develop a plan to improve the individuals’ effectiveness. That requires that we tell people where they stand and that we be straight with them”
7.0 Disciplinary Procedures
Well-founded allegations of misconduct lead to disciplinary sanctions. To ensure that the action taken is reasonable, and therefore lawful, it is vital that the employer undertakes a fair investigatory and decision-making procedure. The following checklist will be useful to ensure that the employer keeps on the right side of the law.
• Establish the exact nature of the complaint
• Collate all relevant information and obtain statements from all witnesses.
• Examine the employee’s personal record in relation to the allegation.
• Consider any explanations or mitigating circumstances that the employee may rely upon.
7.2 Preliminary Interview:
This interview will only become a disciplinary matter once you are satisfied that the misconduct complained of has taken place.
• Inform the employee that he is to attend an investigatory hearing into the allegation of misconduct.
• inform the employee of what is alleged of him and invite his explanation.
• Make further enquiry of any explanation provided by the employee to ensure that you are equipped with sufficient information to progress your investigation.
• inform the employee that the matter will be given further consideration and he will be informed of its outcome.
• If the employee’s explanation is accepted and no further action needs to be taken, inform the employee.
7.3 Examining the Evidence:
If it is established that there is no case to answer, immediately inform the employee of the same.
• Re-examine the evidence in light of the employee’s explanation and carry out all appropriate investigations.
• Consider whether you genuinely believe that an act of misconduct has been committed.
• if you believe the employee has committed an act of gross misconduct, consider suspending him on full pay, pursuant to a Disciplinary Hearing.
7.4 Arranging the Disciplinary Hearing:
Determine whether the disciplinary procedure is contractual, if it is consider the procedural steps that need to be taken in light of the following:
• Ensure that no party to the allegation is involved in the Hearing.
• Write informing the employee of the allegation, possible sanctions and details of the evidence, including witness statements that will be produced at the Hearing.
• Confirm the date, time and place of the Hearing (giving the employee requisite notice of the same. Further, inform the employee of his right to representation.
• Arrange for the presence of an employee representative as a note-taker.
Conducting the Hearing:
The hearing provides a further opportunity to gather additional information that will enable you to make a decision based on all relevant considerations.
• Introduce all parties present to the proceedings and the role they will play.
• Explain the purpose of the Hearing, emphasizing the gravity of the allegation.
• Ensure that the employee understands the allegation he is required to answer.
• Outline the format the interview will take.
• Explain to the employee that he will have an opportunity to challenge evidence, call witnesses and provide any mitigating explanation.
• Give the employee an opportunity to challenge any witness statements by asking questions of the witness.
• To eliminate the possibility of any misunderstanding, agree a summary of the employee’s case.
• If the employee’s explanation is not satisfactory adjourn the meeting to reach a decision.
If further investigations are necessary, inform the employee of this and carry out those investigations without undue delay.
7.5 Making a Decision:
The decision will not only establish the culpability of the employee but also the resulting disciplinary sanction, in all the circumstances the decision must be adjudged to be fair.
• Ensure that the decision is made in light of all relevant considerations.
• Consider whether you hold a genuinely belief that an act of misconduct has been committed, whether you have reasonable grounds to hold that belief and whether a thorough investigation has been carried out.
• Consider the proportion of fault that is attributed to the employee.
• In gross misconduct cases, consider whether the employee knew or ought reasonably to have known that the act complained of amounted to gross misconduct.
• If the decision is not to dismiss, decide on the disciplinary penalty. Therefore. consider the penalty applied in previous cases where no distinction can be drawn between the act committed, the mitigating factors, and the employees’ race, sex or disability.
Informing the Employee:
• Where action short of dismissal has been taken, inform the employees of the same in writing, explaining the improvement required of them, how long the warning will remain on record, the consequences of future misconduct and the right to appeal.
• Where dismissal is the penalty, provide written reasons for dismissal, detailing the effective date of termination and the employee’s right to appeal.
7.6 Written Records:
Written records are important in establishing that a fair procedure has taken place and the action taken has been reasonable in all the circumstances.
• Place all relevant documents, including this checklist, on the employee’s personal file.
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