Module I Introduction to HRM & Human resource Planning

Introduction
For any production of goods or services 6 Ms are required. The six Ms are Manpower (Human
Resource) , Material, Machinery, Money, Method & Market.

Machiner
y

Money

Materia
l
Manpow
er
(Human
Resourc
e)

Method

Producti
on of
goods &
services

Market

6 M's of production
Of all the 6Ms of production human resource is the most important M, as Manpower (Human
resources) as it makes all the decision as to how the other Ms will be utilized. i.e. manpower
decides to start the organization , it decides which material to use, which machinery to use,
where the money (capital) would be spent, the method (process) to be followed, to which market
(customers) will they cater too. These decisions taken by the human resource decides if the
company would be successful in the long run or not. If the human resource (employees) are well
recruited , trained and motivated. They become the competitive edge of the organization, which
cannot be easily copied or replicated by completion.

Explain the concept of HRM (Nov 2001) (Nov 2012)

How can organization Plan for Human resources in an effective Manner? (NOV 2001)
Define Human Resource Management. Explain its functions and objectives.(Nov 2002) (Nov
2007) (Nov 2009)
What is the current status of HRM in India? What are the factors that have contributed to change
in HRM? (Nov 2005)
Human Resource Management is advancement over traditional personnel management- If so
explain its significance in organizational set up. (Nov 2003)
External Forces affecting HRM (Nov 2007)
Short note on Role of personnel manager as a specialist (Nov 2002)
Role of HR manager in todays scenario (Nov 2014)
Compare HRM with personnel Management. Do you think it is old wine in new bottle? Justify
your stand? ( Nov 2013)
Explain the functions of HRM and the future scope of HRM? (April 2011)
Explain the importance of HRM in todays Global scenario? (Apr 2012)
Describe the nature and scope of Personnel(HRM) function in an organization . What are the
indicators that they are working in the organization ? (Nov 2006)

Human Resource Management (HRM)

HRM is management of people working in the organization. It is concerned with the people
dimension in management. Every organization irrespective of its type (government , private,
NGO etc) is made up of people and thus managing them in order to achieve the organizations
goal becomes very vital
HRM is concerned with
1. Getting the right people (recruitment & selection)
2. Developing them (training & development)
3. Maintaining them (compensating & Performance appraisal )
So that the organizations goal is achieved
HRM was earlier known as personnel management, it is old wine in new bottle.

Definition of HRM as per David Deconzo & Stephen Robbins HRM is concerned with the
people dimension in management. Since every organization is made up of people , acquiring
their services, developing their skills, motivating them to higher level of performance and
ensuring that they continue to maintain their commitment to the organization are essentials to
achieving organization objectives.
Objectives of HRM (What does HRM wants to achieve)
1. To attain maximum individual development
2. To attain good working relationship between employer and employee and between
different groups of employees
3. To ensure workers are satisfied
4. To ensure that the required number of employees to run the organization are available at
any given point.
5. To help organization achieve its goal by providing well trained , motivated employees
6. To maintain high morale and good human relationships within organization
7. To integrate individuals / group goals with organizations goals.
8. To satisfy individual needs of the employees through monetary and non- monetary
benefits and incentives.
Scope of HRM (what are the types of work HRM department have to do)
The scope of HRM can be classified under three heads
Scope of HRM

Human
Resource
aspect
Concerned with
all activities
from taking the
employee in
organization till
he/ she leaves
the
organization
which includes
the following
HRP (human
resource
planning
recruitment &
selection
placement
training and
development
promotion &
demotion
salary
management
incentives

Welfare aspect
Concerned with
working
condition
amenties for
employees
which includes
the following
canteen
restroom
housing
transportaion
health facilities
medical
facilities
recreational
facilities

Industrial
relationship
aspect
Concerned with
companies
relationship
with employees
which includes
Trade-Union
Management
joint
consultaion
collective
bargaining
greviance
management
settlement of
disputes
disiplinary
procedures

Functions of HRM
The function of HRM can be classified in 5 parts
1. Managerial functions
Planning includes planning for having the size of employees, preparing human
resource budget
Organizing implementing the plan. Allocating task amongst the team ,
establishing authority responsibility relationship between them
Directing motivating, activating, leading and supervising people.
Controlling if there is deviation from the result that has been planed, then
control measures are implemented.
2. Operational functions
Procurement function

Job analysis deciding the details of the job in terms of description & job
specification

Recruitment ensuring eligible candidates apply for the job

Selection selecting the right candidate for the job
Placement placing the selected candidate as per his skill & aptitude
Induction & orientation- familiarize the newly recruited employee with
organization and make him feel comfortable

Development Function

Performance and potential appraisal evaluating the employees performance

against their predefined goals & also assessing the growth potential of the
employee
Training upgrading the skill , knowledge & attitude of the employee
Career planning & development planning how the employee would achieve
his long term growth in the organization
3. Compensation function
Job evaluation deciding the worth of a job in context to the organization
Wages & salary administration
Bonus administration- follow statutory rules in giving bonus to employees
4. Integration function integrating individual goals with that of the organization
5. Maintenance function protect and promote the physical & mental well being of the
employees through health safety & welfare schemes

Write a short note on Present Challenges and the future opportunities of Human Resource
Management in India(Nov 2004)
Define HRM. What are the modern day challenges faced by todays HR Manager? (Nov 2010)
(Dec 2011)

Challenges faced by the HR Manager in todays global scenario

Qualities required in a HR Manger

Educational qualification
o Degree from recognized college
o Masters Degree (post graduate degree) in HR, Labour Laws, psychology etc
Personal Qualities
o Intelligence
o Communication skills
o Decisiveness
o Human skills

o Teaching skills
o Executing Skills
o Leadership skills
Training & experience should have training & experience in human psychology,
labour laws
Professional attitude should have professional attitude towards work

Challenges faced by HR manager in todays global scenario

1. Outsourcing of HR activity - Today in large organizations HR activities are being
outsourced. HR activities such recruitment, training , maintaining statutory records are
being performed by outside contractors. The Challenge of the HR Manager is prove
that his department is as important as the other departments in the organization.
2. Call Centers & BPO - With majority of MNC are transferring their routine jobs
including customer care call centers to India. The major challenges in front of HR
managers in these call centers & BPOs
a. Retention of employees
b. Managing high attrition rates
c. Managing the employees transportation due to odd working hours
d. Safety & security of women employees
e. Preventing early burnouts of employees (burnout means the employee is no
longer motivated to work, this loss of motivation happens due to high stress felt
by them over a long period of time)
3. Balancing Work with life with both husband & wife taking jobs , it becomes difficult
to give adequate attention to the family. HR manger needs to ensure that the employees
get enough time that they can take care of their family obligation. The HR manger needs
to start programs like flexi time , work from home option, so that the employee can
balance his / her work with his family obligation.
4. Making HR Activities ethical The HR manager needs to build ethical climate in the
organization. He needs to ensure that the right type of people are selected. The screening
process must ensure that people without integrity are not selected, this can be done by
reference checks, third party verification, aptitude test, graphology etc
5. Managing diversity with opening up of economy there is free movement of
manpower, which increases the diversity in the organization. With increased diversity the
HR manager should deal all issues with open mind.
6. Changing demographic there is change in the composition of workforce, like dual
carrier couples, with older generation unable to quickly adapt to technology, decline in
blue collared jobs preference etc
7. Changed employee expectation traditional methods (job security, higher salary, other
monetary benefits ) no longer completely satisfy the employees .They are looking for
opportunities for taking additional responsibility, learning new skills , recognition. The
HR manager has the challenge to fulfill these requirements.

8. Corporate reorganization with opening of the economy , Indian companies need to

face stiff competition from MNCs which leads to reorganization (transfer, retrenchment).
Such situations create a anxiety and fear among the employees. The HR manager needs to
keep motivating the employees.
9. Integration of workforce after merger or acquisition - Also companies with mergers
and acquisition becoming common, the HR manager has a huge task of integrating the
work force of both the organization. The two workforce main have different values and
integrating the workforce would be a challenging job.
Role of HR manager
The HR manager has to perform the following roles
1. Specialist The HR manager has to be an expert in his field, as he would interact
with the Head of departments (HOD) and give them advice as to the recruitment,
selection , training and other requirement for employees reporting to them. If the
quality of advice given by the HR manager is not up to the mark, the decision
taken by the HOD would be faulty and the company would suffer , thus the HR
manger should be a specialist in his field.
2. Information source HR manger due to his expertise in Labour laws & labour
market, becomes a source of information. He also maintains all records in regard
to employees , which also used for statutory requirements.
3. Change agent Many times an organization needs to make drastic changes, here
the HR manager needs to convince the employees that this change is necessary
and would benefit the organization and employees in the long run . e.g. During the
last decade (2003- 2008) a lot of Nationalized banks implemented any where
banking , which required all employees to learn working on computers, most of
the employees were in their 40s resisted to this change. Here the HR department
played a vital part in convincing the employees and the trade union for
implementation.
4. Controller HR manger need to ensure that HR policies and procedure is
followed. He acts as a controller incase of any deviation.
5. Liaison man- he acts as a link between departments
6. House keeper- he has to look after the safety and welfare of employees
7. Fire fighter he has to manage aggressive trade unions , and when matter
escalate between the trade union and management, he acts as firefighter to cool
the situation.

Write a short note on characteristics of Work force today (Nov 2007) (Nov 2008) (Nov 2009)

Traits / Characteristics of workforce

Workforce refers to the people who are selling their labour to the employer. The
workforce has mainly three categories , agricultural workers, Industrial workers &
office workers. In India majority of workforce has been employed in Agriculture and
Industry. The following are some of the traits of Indian workforce
Composition of Work force - The composition of the workforce is changing very
fast there is a influx of educated people joining the workforce. These new entrants are
no longer fascinated by government sector or job security, there are more keen in
joining private sector as it provides better compensation and challenging
opportunities.
Women at work The percentage of women employees is also increasing
drastically. The new generation women are getting themselves educated and joining
the workforce. They are not limiting their selves to the traditional role of managing
the family.
Changes in employee values With change in composition there have been changes
in values. The workforce today will not hesitate to change the organization, if they are
not given the opportunities; also there is a drop in ethical values, which has lead to
increase in (white collared frauds) corporate frauds.
Level of education with increase in standard of living , the new entrants to the
workforce are educated. They are reluctant to accept blue collared jobs
(manual / physical labour)
Dual career couples With entrance of women in the workforce, there is rise with
dual career couples. These couples are career minded but, they are not flexible in
changing taking transfers.
Size of workforce The size of organizations have increased, so is the demand for
quality employees which has lead to higher pay packages to employees.
Employees expectation the employees list of both monetary & noon- monetary
expectations is rapidly growing
Life style changes employees are ready to change jobs, join start up companies,
work at different locations, or at odd times.

Personnel Philosophy

Personal Philosophy revolves around managements belief about people in terms of

their nature , need , values and approach to work.
Personal philosophy gives rise

to the style of management followed and

it also creates operational goals

Approaches for treating people (

Commodity approach considers people as commodity where labour can be

bought & sold
Machine approach considers employees as part of machinery and can be fitted
anywhere
Humanistic Approach treats every individual differently as per each
individuals character

Ideally all organizarion should base their personnel philosophy on the following beliefs

Humans are most important asset of the organization

Humans have great potential which can be developed
Employees cannot be just retained by giving higher salary
It is managements responsibility to create a healthy and motivating environment

Explain the concept of personnel Manual (Nov 2003) (Nov 2006) (Nov2009) (Nov 2010) (Apr
2012) (Apr 2013)

Personnel Manual
Personnel manual is a booklet containing the details of personnel policies of the organization. It
should be provided to every employee of the organization. Every supervisor, manager should use
personnel manual as a guidebook. When these managers are faced by a situation, they can refer
to the personnel manual and take the decision. So when all supervisor/ managers use personnel
manual to make decision , then the decision taken by them would be similar and thus all
employees will be equally and fairly treated. As personnel manual is available with all
employees , they are aware of the organizations rules and regulations and thus are aware of the
consequences if the rules are broken.
Objective of Personnel manual
1. It acts as a communication tool

2. It helps in consistent application of rules throughout the organization

3. Helps in being just and fair to all employees
4. Helps in maintaining cordial relationship

Explain the concept of Personnel Policies (Nov 2004) (Nov 2012)

Personnel Policies also known as Human resource Policies are statements of the human
resource objectives of an organization. They provide a broad frame work within which matter
relating to employees can be made.
Example of Human Resource policies

Promotion policy
Minimum performance policy
Transfer policy
Policy for employees taking other employment
discipline policy
Policy for taking leave.
Training & development policy

The main objective of having personnel policy are

Prevent misunderstanding amongst the employees as to what is expected from them

Helps supervisors / managers to deal with a situation in a fair manner
Ensures equity and justice to all employees
Provides opportunity to employees to develop
Provides job security

Explain the concept of HRD (Nov 2011)

It is known that all human being have huge potential to grow and perform. Based on this
assumption, HR department tries to train and develop all employees.
HRD (Human Resource Development) can be explained as continuous process by
which the employees are helped to

Acquire and Sharpen capabilities required to perform various functions for present

Develop general capabilities as individual for exploiting their individual capabilities

Develop an organization culture which good relationship with superior & subordinate ,
better team work and collaboration among sub units

Objectives of HRD

Provide an opportunity and framework for development of Human Resources

Develop constructive mind and overall personality

Develop individual Capabilities to perform their present and future assignments

Develop and maintain high motivation level

Strengthen Superior subordinate relationship

Develop a sprit of team work, team spirit and collaboration

Generate systematic information about employees.

Define Human Resource Planning. Explain the process of Human Resource planning with the
help of a diagram. (Nov 2004) (Nov 2011) (Apr 13)
Failure in Planning and developing HR could be a limiting factor in attaining organizational
goals - explain the statement in reference to objective and importance of HR planning. (Nov
2008)
Personnel Planning (Nov 2007)
Short note on HRP (Nov 2002)
Write a short note on Objectives of HRP (Nov 2005)
Explain HRP Demand forecasting techniques (Nov 2014)
Define HRP & explain the steps involved in HRP?

Human resource planning

Human resource planning can be defined as the process of identifying the number of people
required by an organization in terms of quantity and quality. All human resource
management activities start with human resource planning. So we can say that human resource
planning is the principle/primary activity of human resource management. From human resource
planning the organization identifies how many people it has currently and how many people will
be required in future. Based on this information major human resource decisions are taken.
Human resource planning consists of analysing and identifying the need for and availability of
human resources required by an organisation to meet its objectives. It is a process by which an
organisation ensures that it has the right number and kinds of people, at the right place, at
the right time, capable of effectively and efficiently completing those tasks that will help the
organisation achieve its overall goals and objectives.

WHY IS HRP IMPORTANT?

Human resource planning serves many purposes. Specifically, planning enables an organisation
to

Reduce costs, by anticipating and correcting labour shortages and surpluses before they
become unmanageable and expensive.

Make optimum use of workers' aptitudes and skills.

Improve the overall business planning process.

Identify the specific employee skills available and needed.

Promote sound human resource management throughout all levels of the organisation

Evaluate the effect of alternative HR actions and policies

Enhance continuous quality improvement.

Organizational Objectives Plans and policies

Human Resource Planning

Forecasting needs for Human Resources

Forecasting supplies to human resources

Identification of Human Resources Gap

Surplus Human Resources

Shortage of Human Resources

Action Plan for Bridging Gap

Recruitment / Transfer/ Downsizing

Steps in Human Resource Planning

1. Determination of objectives of human resource planning In HRP the future
requirements of Human resources are arranged. It is absolutely vital that the person
making the plan understands the objectively clearly.
2. Assessing current human resource situation- Here the present human resource
situation is processed by doing a human resource inventory. The inventory would consist
of all the details of all the employees . Details that will be captured includes age ,
experience, qualification, salary , skills. The inventory will basically try to capture the
quality and quantity of human resource.
3. Forecasting future human resource need - In this step the future human resource
requirement is assessed, which includes their number sat various levels, their
qualification , their place of posting.

4. Projecting supplies of future human resources Here the supply is forecasted. Which
includes the present strength of employees . The inventory which was made at the time of
assessments helps in providing the information.
5. Comparison of forecast needs with projected supply to determine net employees
requirement Based upon the demand forecast and the supply forecast, the human
resource Gap is assessed. If the demand is more than the supply then there is a shortage
and when the supply is more than the demand then there is a surplus human resource.
6. Planning policies and programs to meet human resource needs Based upon the
outcome of the comparison, programs and policies are implemented. If there is a
shortage, the same is by fresh recruitment or by transfers wherever possible. In case there
is surplus then, the present employees can be placed within the organization then
transfers are done. In case of temporary surplus the excess staff can be layed off, but if
the surplus is for long-term then the excess staff are retrenched (permanently removed0
7. Evaluating HRP effectiveness One the HRP is implemented then its effectiveness is
assessed. If there are too many vacancies remaining or too many people are excess after
the implementation then the HRP would be considered ineffective. The HR manager
needs to assess the same.
Factors affecting Human Resources Planning
External Factors
1. Government policies Sudden change in Government policies can affect the HRP, e.g.
if the government comes with a rule for having certain percentage of employees to be
women or from local state or from reserved categories, then the original plan would be
needed to change implement the same.
2. Level of economic development - HRP is highly affected with the level of economic
development, e.g. if the HRP was made during a lean economic period and if the same
was implemented when the economy is booming, the organization would find it difficult
to recruit the right kind of employees.
3. Business environment It affects the demand of the goods or services, thus would also
affect the human resource demand.
4. Information technology Information brings in sweeping changes in the ways business
is done. It drastically changes the quality and quantity of human resource required. E.g.
when Core Banking Software (CBS) was implemented by banks. The routine work of

entries and tallying which was done by the operation staff of the bank was now being
done by the software, thus thousands of bank employees became surplus.
5. Level of technology - Level of automation / technology decodes the human resource
requirement.
6. International factors International demand for labour also affect the HRP planning
Internal Factors
1. Strategy of company Weather the company is planning for expansion / diversification
then fresh employees would have to be recruited.
2. Human resource policies Companies policies in terms of compensation , taking people
on contract basis etc also affects the HRP
3. Type of quality of information If the HR inventory (data of the quality and quantity of
employees) is not made properly , then the planning will be badly affected.
4. Trade unions Trade unions influence the working hours, timings (night shift or not),
source of employees (on pay-roll, through contractors) affect HRP.\
5. Companies production & operation policies the company need to decide what would
be produced by them and what should be outsourced. The level of outsourcing would
decide the number of people required
Limitations of HRP
1. Inaccuracy As HRP is dependent on number of factors such including forecasting it is
bound to be in accurate
2. Employees resistance The assessment done by HRP may not always be employees
favour, e.g. as per HRP of a particular company, there are surplus staff and excess
employees needs to be retrenched , as such times, employees resist HRP. Another
example when employees HRP is when it demands higher productivity from employees.
3. Uncertainties HRP is highly affected by external environment which is not in its
control e.g. change in government policy.
4. Inefficient HRIS If HRIS (Human Resource Information system ) is updated regularly,
the data on which HRP Is based becomes in accurate and does affect the HRP outcome.
E.g. if the data of employees who have been taken on contract basis is not inputted in
HRIS, it will show shortage of human resource and will make a prediction of hiring
excess staff then required

5. Lack of top management support - If the top management lacks vision and do nt
support complete implementation of HRP , then it bound to fail
6. Time and expensive - any planning including HRP need lot of energy time & money,
which cannot be provided by all organization
7. Unbalanced focus - In HRP the main focus lies on the quantity factor and less on the
quality factor.

Demand Forecasting Techniques

One of the steps in HRP include includes demand forecating
Some of the techniques include
1. Statistical Techniques
a. Ratio Analysis- Ratios of the pat data is taken into consideration basis which the forecast
or future demand is predicted e.g. for selling 10000 unit of goods we require 5 salesmen,
so for selling 20000 units we would require 10 sales men
b.

Econometric Model - Econometric models for estimation of manpower requirement

differ from the statistical methods. Past statistical data are analyzed in the hope that it will
prove possible to describe precisely the relationships between a number of variables in
mathematical and statistical terms.

c. Regression analysis -It identifies the movement of two or more inter-related series. It is
used to measure the changes in a variable as a result of changes in other variables.
Regression analysis determines the relationship between Y variables such as the number
of employees and X variables such as service delivery by actually measuring the
relationship that existed in the past. Use of the method begins with a series of observation
each costing of a value for the Y variable plus a value for each X variable.
2. Work study technique - itis based on the volume operation and work
efficiency of
personnel. Volume of operation is derived from the
organizational plan documents and increase/decrease in operation can be
measured.

Planned output
Standard output per hour x standard hours per person

3. Managerial Judgment - This techniques is very simple. In this, manager sit together,
discuss and arrive at a figure which would be the future demand for labor. The technique may
involve a bottom-to-top or top-to-bottom approach.

Explain the concept of HRIS (Nov 2002) (Nov 2008)

HRIS (Human Resouce Information System)

The concept of HRIS is dereived from the concept of MIS(managemet information system),
which tries the right type of information to the right type of employees so that proper decision
can be made.
HRIS s a systematic procedure for collecting, storing maintainting and retrieving data
needed by the organization about the human resources (employees) based on which the
future requirements can be predicted.
It is not necessary tha HRIS should be a computerised system , there are huge advantage if they
are computer aided as the data can be easily inpputed,updated and retreived by many people at
the same timeand in the format as they require it.
HRIS has 3 components
1. Input includes gathering and inputting of data
2. Storage stroring the data in ways, that it can be easily updated
3. Output the various users can easily be able to retrieve the data when required and in
format that they require it
Objectives of HRIS

To provide accurate and relevant data as and when required

To provide information so that all statutory information can be provided and complied
To input update and supply information in a cost effective way

Uses of HRIS
1. Personnel administration to have all basic information of employee like name ,
address, DOB, martial status, date of joining , contact details of familymembers.
2. Salary administration
3. Leave / absence administration & controll
4. Skill inventory to have data of people who can perform a particular job
5. Medical History based on which the employee can be posted suitably

6.
7.
8.
9.

Performance appraisal can be done easily based on information available

Recruitment
Manpower planning (HRP)
Career Planning

Explain the concept of VRS (Nov 2002) (Nov 2008) (Nov 2010)
Explain the concept of downsizing (Nov 2009)
Explain the concept of Downsizing (Nov 2005)
Explain the concept of transfer (Nov 2006)
Explain the concept of promotion (Nov 2009) (Nov 2014)
Explain the concept of transfer (Nov 2009)
Explain the concept of Pink Slip (Nov 2012)
Explain the concept of Layoff (Apr 13)
Explain the concept of retrenchment (Apr 2011)
Explain the concept of outsourcing (Nov 2014)

Sepration

Personal
Reasons

Organizational
Reason

Nonvoluntary

Voluntary
Downsizing
Resignation
Voluntarily

VRS (Voluntary
Retirement
scheme)

NonVoluntarily

Retrenchment
(permanent )

Death

Termination
/ Pink Slip

Suspension

Lay-off
(temporary

Separation Separation is a situation when the service agreement between the employee and the
organization comes to an end. The separation can be due to organizational reasons such as
downsizing , VRS , retrenchment , lay off.

Downsizing- Downsizing means elimination of certain type of jobs from the organization with a
view to increase efficiency. The main of downsizing is to right size the organizations , i.e.
have only the required number of people to run the organization. The excess staff is tried to
be removed by VRS , retrenchment, layoff.
Reasons for downsizing

Faulty HRP leading to excess staff

Technological up gradation which reduces manual labour , thus leading to excess staff
Outsourcing of activities

Consequences

Insecurity amongst staff

Competent staff (best employees) leaving
Affects morale and efficiency

Role of HR manager in Downsizing is to keep the morale of the employees high, remove the
feeling of insecurity , and to stop false rumors about the organization by continuously
communicating.

Retrenchment as per industrial dispute act when employees are permanently removed for
any reason apart from disciplinary reasons is called retrenchment. The reasons for retrenchment
thus can be surplus staff, poor demand, economic slowdown etc. Here the employee is paid
compensation @ 15 days per year of service with the organization . So if the employee has
worked for 10 years he would receive 150 days of wages as compensation . Also when the
organization recruiting again , then first preference of employment is to be given to employees
who have been retrenched.
Layoff Lay off is temporary in nature and it is done when the circumstances are beyond the
control of employees e.g. breakdown in machinery, natural disaster, shortage of raw material or
electricity . The organization has to pay half the wages during the period of lay off.
Outsourcing It means getting work done by outside agencies on payment basis. Buy rather
than make is strategy used in outsourcing e.g. Bata which is in manufacturing of shoes used to
make all the components of the shoes. Later they outsourced the manufacturing of the laces of
the shoes. Here Bata does not find that the lace is such a critical part of the shoes so they asked
another company to manufacture and supply laces. It decided to Buy rather than make laces.
A lot of HRM activities is also being outsourced , which includes recruitment and selection,
managing pay roll and salary management, training , employee benefit , employee welfare etc.
Advantages of outsourcing
1. It allows companies to focus on the more critical aspect such attrition level motivational
level
2. Employees gets more timely and proper data because of greater efficiency
3. Company need not invest in getting new technology or staff for the thinghs that are
outsourced e.g.if the training is outsourced then the company need not invest in
equipment such as projectors laptops as the same would be bought by the company which
is conducting the training.
4. If record keeping is outsourced (e.g. number of days absent, salary amount paid etc) ,
then such record keeping helps easy and quick access.

Problems in outsourcing HRM function

1. The department becomes highly dependent on outside agency
2. The level of quality of the work done by an outsourced firm is yet not upto the mark
in India.
3. Affects the morale of HR department employees

Contracting & Sub Contracting

Along with outsourcing , contracting and sub contracting are methods used for transferring
certain jobs to outside agencies .
Contracting and subcontracting are very popular in both production and service sector. E.g. in the
construction line , company may give of all the electrical air-conditioning work to a outside
company on contract basis , this is known as contracting. If this companyto whom the contract
has been given decides that the air-conditioning ducts should be made by another company, then
this would mean sub-contracting.
The advantages and disadvantages remain the same as outsourcing.
Short Note on promotion
Promotion means advancement within the organization, which would include a

change in job (e.g from a team member to team leader) ,

better payment (increase in salary and other benefits),
higher status (from sales executive to Manager)
greater responsibility ( earlier as sale executive , you were responsible for your target
achievement , now as team leader , you are responsible for target achievement of the
entire team)

Objectives of promotion

To develop healthy competition amongst the employees

To develop internal source of talent
To promote employee self development
To develop morale, loyalty and sense of belonging towards the company
To reward committed employees
To create a feeling of contentment ( feeling of achievement) within the employees

Principles / essentials of sound promotion policy

The promotion policy must be writing and must be understood by all

The management of the company should inform in advance the percentage of vacancies
to be filled by promotion
Should inform all employees the basis on which promotion will be made i.e. meit or
seniority
Promotion programs should be closely connected to training programs
Scientific (proper) method should be followed judging employees performance
Supervisor/ immediate boss should recommend promotion
If an employee wants to challenge a promotion given to a colleague and not him / her,
then there should be process for such cases
Promotion should be voluntary and not forced (e.g. a employee who is reluctant to take
additional responsibility should not be forced for promotion)

Should promotion be done basis seniority or basis merit?

Seniority means the length (duration) of service with the organization
Merit means knowledge , skill, and performance of the employee
Advantage of giving promotion basis seniority

Easy to judge
There is no chance of favoritism
Trade union prefer this method
Promotes loyalty
Minimizes scope of grievance / conflict

Disadvantages of giving promotion basis seniority

Not necessary that senior staff is the most capable in taking responsibility
Will demotivate younger staff
Will not promote competition
Capable staff not getting promotion will leave

Advantages of Promotion basis merit

Motivates competent (capable) staff

Retains young staff
Promotes competition

Disadvantages of Promotion basis merit

Difficult to judge merit

Old employees feel insecure & leave organisation

Past performance basis which promotion is being given may not be repeated
Trade union may oppose such policy

A company should follow a mixture of both giving promotion basis seniority and merit. A
senior staff who is performing well should be the first choice for promotion. If a choice has
to be made between staff which senior and which is performing well, promotion should be
given to staff who is performing better (merit), as this will lead to increased efficiency and
staff would continuously try to improve themselves.

Short note on Transfer

Transfer is movement of an employee without any substantial change in his duties ,
responsibilities, skill requirement, status & compensation.
Objective/Purpose of transfer

To meet organization needs

To satisfy employee needs
To make better use of employee
To make employee more versatile
To provide relief to employee from stressful position
To punish an employee
To reduce conflict
To accommodate family related matters

Principles of sound Transfer

Transfer policy should be writing

When and why a transfer will be made should be known to all
People who can initiate and approve transfer should be known to all
It should be in organizations benefit
The employee should know if the transfer is temporary or permanent
Mutual transfer should be allowed( employees ready to swap position)
Transfer should be intimated (informed) to the employee in advance
Transfers should not be done frequently