HR Reviewer 3 PDF

L3: ASSESSMENT AND DEVELOPMENT OF 3. Use data-driven insights from the system to HUMAN RESOURCE MANAGEMENT: quantify the value your workforce delivers to PERFORMANCE MANAGEMENT the business. I. PERFORMANCE MANAGEMENT...

L3: ASSESSMENT AND DEVELOPMENT OF 3. Use data-driven insights from the system to HUMAN RESOURCE MANAGEMENT: quantify the value your workforce delivers to PERFORMANCE MANAGEMENT the business. I. PERFORMANCE MANAGEMENT PURPOSE OF PERFORMANCE MANAGEMENT The system is collaborative, with managers Strategic Purpose – A PMS should link and employees working together to set employee activities with the expectations, identify employee goals, define organization’s goals. performance measurement, share employee Administrative Purpose – Organizations use performance reviews and appraisals, and performance management information provide feedback. (performance appraisals in particular) in many administrative decisions: When properly defined and consistently Salary Administration applied, a performance management system Promotions increases overall workforce productivity. Retention-termination Employees are more invested in their work and Lay-offs turnover is minimized while revenue per Recognition of Individual Performance employee is maximized. Developmental Purpose A performance management system tracks To develop employees who are effective at the performance of employees in a manner that their jobs. is consistent and measurable. When employees are not performing as well as they should, performance management 3 KEY PROCESS OF PMS seeks to improve their performance. I. Plan and act with goal management The feedback given during a performance 1. Align employee performance to the evaluation process often pinpoints the objectives of the organization. employee’s weaknesses. 2. Assign work that is meaningful and fulfilling to increase employee engagement. PERFORMANCE MEASURES CRITERIA 3. Quickly adapt goals when business priorities Strategic Congruence – The extent to which shift. the PMS elicits job performance that is consistent with the organization’s strategy, II. Monitor with continuous performance goals, and culture. management – If a company emphasizes customer service, 1. Monitor the goals of each employee to then its performance management ensure ongoing alignment with organizational system should assess how well its employees goals. are serving the company’s customers. 2. Provide feedback and guidance to improve – Strategic congruence emphasizes the need for performance. the management system to 3. Recognize good results as they happen. guide employees in contributing to the organization’s needs. III. Evaluate and recognize through performance assessments Validity – The extent to which a performance 1. Assess performance consistently and measure assesses all accurately. the relevant- and only the relevant- aspects of 2. Recognize and reward strong performers. job performance. – A performance measure is deficient if it does not measure all aspects of performance.  Reliability – The consistency of a performance 2. Forced Distribution measure; the degree to which a performance ▪ Uses a ranking format but employees are measure is free from random error. ranked in groups. This technique requires – If salespeople are evaluated based on their the manager to put certain percentages of actual sales volume during a given month, it employees into predetermined categories. would be important to consider their consistency of monthly sales across time. 3. Paired Comparison ▪ Requires managers to compare every Acceptability – The extent to which a employee with every other employee in the performance measure is deemed to be work group, giving an employee a score of 1 satisfactory or adequate by those who use every time he or she is considered the higher it. performer. – Acceptability is affected by the extent to which employees believe Evaluating Comparative Approach performance management system is fair. It is an effective tool in differentiating employee performance. Specificity – The extent to which a It virtually eliminates problems of leniency, performance measure gives detailed guidance central tendency, and strictness. to employees about what is expected of them This is especially valuable if the results of the and how they can meet these expectations. measures are to be used in making – If a measure does not specify what an administrative decisions such as pay raises and employee must do to help the company achieve promotions. its strategic goals, it does not achieve its It lacks specificity for feedback purposes. strategic purpose. Individuals are completely unaware of what – Additionally, if the measure fails to point out they must do differently to improve their employee’s performance problem, it is almost ranking. impossible for the employees to correct their performance. II. ATTRIBUTE APPROACH It focuses on the extent to which individuals APPROACHES TO MEASURING PERFORMANCE have certain attributes (characteristics or I. COMPARATIVE APPROACH traits) believed desirable for the company’s It requires the rater to compare an success. individual’s performance with that of others. The techniques that use this approach define a set of traits – such as initiative, Techniques leadership, and competitiveness- and 1. Ranking evaluate individuals on them. ▪ Simple Ranking – requires managers to rank Techniques employees within their departments 1. Graphic Rating Scales from higher performer to poorest performer (or ▪ The manager considers one employee at a best to worst). time, circling the number that signifies how ▪ Alternation Ranking – consists of a manager much of that trait the individual has. looking to a list of employees, deciding who is the best employee, and crossing that 2. Mixed-Standard Scales person’s names off the list. From the ▪ Define the relevant performance dimensions remaining names, the manager decides who the and then develop statements worst employee is and crosses that name off the list – and so forth. representing good, average, and poor employee has exhibited each behavior during performance along each dimension. the rating period. Evaluating Attribute Approach 4. Organizational Behavior Modification They are quite easy to develop and are Entails managing behavior of employees generalizable across a variety of jobs, through a formal system of behavioral strategies, and organizations. feedback and reinforcement. These techniques fall short on several of the criteria for effective performance 5. Assessment Centers management. There is usually little congruence A process in which multiple raters evaluate between the techniques and the employees’ performance on a number of company’s strategy. exercises. None of these techniques provides any The advantage of assessment centers is that specific guidance on how an employee can they provide a somewhat objective support the company’s goal or correct measure of an individual’s performance at performance deficiencies. managerial tasks. III. BEHAVIORAL APPROACH Evaluating of the Behavioral Approach Attempts to define the behaviors an It can link the company’s strategy to the employee must exhibit to be effective in the specific behavior necessary for job. implementing that strategy. It provides specific guidance and feedback 5 Techniques for employees about the performance 1. Critical Incidents expected of them. ▪ Requires managers to keep a record of specific Although the behavioral approach can be examples of effective and ineffective closely tied to a company’s strategy, the performance on the part of each employee. behaviors and measures must be constantly monitored and revised to ensure that they are 2. Behaviorally Anchored Rating Scales (BARS) still linked to the strategic focus. ▪ It is designed to specifically define performance dimensions by developing IV. RESULTS APPROACH behavioral Focuses on managing the objective, anchors associated with different levels of measurable results of a job or work group. performance. This approach is a simple and straightforward concept, wherein organization rate 3. Behavioral Observation Scales (BOS) employees on the basis of employee BOS differs from a BARS in 2 basic ways – performance results. (1) rather than discarding a large number of the Techniques behaviors that exemplify effective or ineffective 1. Management by Objectives (MBO) performance, BOS uses many of them to more The process consisted of having all the specifically define all the behaviors that are subordinate managers write a letter to their necessary for effective performance. superiors, detailing what their performance (2) rather than assessing which behavior best goals were for the coming year and how they reflects an individual’s performance, a BOS planned to achieve them. requires managers to rate the frequency with MBO systems have 3 common components- which the specific, difficult, and objective. 2. Productivity Measurement and Evaluation involvement of both internal and external System (ProMES) factors To motivate employees to higher levels of productivity. APPROACHES TO MEASURING PERFORMANCE It is a means of measuring and feeding back productivity information to personnel. 4 Steps of ProMES 1. Identify the objectives which the organization wants to achieve. It is usually highly acceptable to both managers and employees. 2. Measures how well these objectives are made. 3. How effective are they in evaluating employee performance. 4. Gives feedback to the employees. CHOOSING A SOURCE FOR PERFORMANCE Evaluating Results Approach INFORMATION It minimizes subjectively, relying on objective, quantifiable indicators of I. MANAGERS performance. Managers are the most frequently used It is usually highly acceptable to both source of information. managers and employees. It is usually safe to assume that supervisors It links an individual’s results with the have extensive knowledge of the job organization’s strategies and goals. requirements and that they have had adequate However, it can be both contaminated and opportunity to observe their employees – in deficient – contaminated other words, that they have the ability to rate because they are affected by things that are not their employees. under the employee’s control, such as economic Because supervisors have something to gain recessions, and deficient because not all the from the employees’ high performance and important aspects of job performance are something to lose from low performance, they amenable to objective measurement. are motivated to make accurate ratings. Finally, feedback from supervisors is strongly V. QUALITY APPROACH related to performance and to employee This approach focuses on improving perceptions of the accuracy of the appraisal if customer satisfaction by reducing errors and managers attempt to observe employee achieving continuous service improvisation. behavior or discuss performance issues in the Employers take regular feedback on the feedback session. personal and professional traits of the employee from managers, peers, and clients to resolve PROBLEMS WITH USING SUPERVISORS performance issues. Supervisor does not have an adequate The advantages of this approach include: opportunity to observe the employee assessment of both employee and system, performing his duties. problem-solving through teamwork, Some supervisors may be biased against a use of multiple sources to evaluate particular employee. performance and Favoritism is a fact of organizational life. II. PEERS emphasizing employee satisfaction over Peers are an excellent source of information productivity. in a job such as law enforcement, where the supervisors does not always observe the To assure subordinates that they need not employee. fear retribution from their managers, it is Peers have expert knowledge of job necessary to use anonymous evaluations and at requirements, and they often have the most least three subordinates for each manager. opportunity to observe the employee in day-to- day activities. IV. SELF Peers also bring a different perspective to the Although self-ratings are not often used as evaluation process, which can be valuable in sole source of performance information, they gaining an overall picture of the individual’s can still be valuable. performance. Individuals have extensive opportunities to Peers have been found to provide extremely observe their own behavior, and they usually valid assessments of performance in several have access to information regarding their different settings. results on the job. PROBLEMS IN USING PEERS PROBLEMS USING SELF RATING Tendency toward inflated assessments. One disadvantage of using peer rating is the If ratings are going to be used for POTENTIAL FOR FRIENDSHIP to bias ratings. administrative decisions (like pay raises), it is in When the evaluations are made for the employees’ interests to inflate their ratings. administrative decisions, peers often find the Although self-ratings are less inflated when situation of being both rater and ratee supervisors are frequent performance uncomfortable. When these ratings are used feedback, it is not advisable to use them for only for developmental purposes, however, administrative purposes. peers react favorably. The best use of self-ratings is a prelude to the performance feedback session to get employees III. SUBORDINATES thinking about their performance and to focus Subordinates are an especially valuable discussion on areas agreement. source of performance information when managers are evaluated. V. CUSTOMERS Subordinates often have the best Customer is often the only person present to opportunity to evaluate how well a manager observe the employee’s performance and thus treats employees. is the best source of information. Managers viewed receiving upward feedback When an employee’s job requires direct more positively when receiving feedback from service to the customer or linking the customer subordinates who were identified, but to other services within the company. subordinates preferred to provide anonymous Customer evaluations are appropriate when feedback. the company is interested in gathering When subordinates were identified, they information to determine what products and inflated their ratings of the manager. services the customer wants. Customer evaluations collected for this PROBLEMS USING SUBORDINATES purpose are useful for both evaluating the They give subordinates power over their employee and helping to determine whether managers, thus putting the manager in a changes in other HRM activities (such as difficult situation. This can lead to managers’ training or compensation system) are needed to B. CONTRAST improve customer service. Error occurs when we compare individuals PROBLEMS USING CUSTOMERS with one another instead of against an objective The weakness of customer surveys is their standard. expense. Printing, postage, telephone, and Consider a completely competent performer labor can add up to hundred of dollars for who works with a number of peers who are the evaluation of one individual. outstanding. If the competent employee receives lower- IN CONCLUSION... than-deserved ratings because of the The best source of performance information outstanding colleagues, that is contrast error. often depends on the particular job. Eliciting performance information from a C. DISTRIBUTIONAL ERRORS variety of sources results in a performance management process that is accurate and Distributional errors are the result of a rater’s effective. tendency to use only one part of the rating scale. 360 Degree Appraisal Leniency occurs when a rater assigns high A performance appraisal process for (lenient) ratings to all employees. managers that includes evaluations from a wide Strictness occurs when a manager gives low range of persons who interact with the ratings to all employees – that is, hold all manager. The process includes self-evaluations employees to unreasonably high standards. as well as evaluations from the manager’s boss, Central tendency reflects a manager rates all subordinates, peers, and customers. employees in the middle of the scale. The major advantage of the technique is that 1. They make it difficult to distinguish among it provides a means for minimizing bias in an employees rated by the same person. otherwise subjective evaluation technique. 2. They create problems in comparing the performance of individuals rated by different RATING ERRORS IN PERFORMANCE raters. MANAGEMENT If one rater is lenient and other is strict, A. SIMILAR TO ME employees of the strict rater will receive significantly fewer rewards than those rated by It is the error we make when we judge those the lenient rater. who are similar to us more highly than those who are not. Research that this effect is strong, D. HALO AND HORNS and when similarity is based on demographic characteristics such as race or sex, it can result Halo error – when one positive performance in discriminatory decisions. aspect causes the rater to rate all other aspects Most of us tend to think of ourselves as of performance positively/ effective, and so if others are like us – in race, Horns error – when one negative aspects gender, background, attitudes, or beliefs – we results in the rater assigning low ratings to all assume that they too are effective. other aspects. Halo error leads to employees believing that no aspects of their performance need improvement.  Horns error makes employees frustrated and Foster a climate of openness to encourage defensive. employees to be honest about weaknesses. REDUCING RATER ERRORS 2 APPROACHES PERFORMANCE FEEDBACK Rating error training attempts to make Once the expected performance has been managers aware of rating errors and helps them defined and employees’ performances have develop strategies for minimizing errors. been measured, it is necessary to feed that performance information back to the Rater accuracy training or frame-of-reference employees so they can correct any deficiencies. training attempts to emphasize the multidimensional nature of performance and THE MANAGER’S ROLE IN AN EFFECTIVE thoroughly familiarize raters with the actual PERFORMANCE FEEDBACK PROCESS content of various performance dimensions. Feedback should be given frequently, not once a year. APPRAISAL POLITICS – Managers have a responsibility to correct Refer to evaluators purposefully distorting a performance deficiencies immediately on rating to achieve personal or company goals. becoming aware of them. – A major determinant of the effectiveness of Appraisal politics are most likely to occur the feedback session is the degree to which the when raters are accountable to the employee subordinate is not surprised by the evaluation. being rated, there are competing rating goals, – An easy rule to follow is that employees and a direct link exists between performance should receive such frequent performance appraisal and highly desirable rewards. feedback that they already know almost exactly what their formal evaluation will be. Appraisal politics are likely to occur if top executives tolerate distortion or are complacent Create the right context for the discussion. toward it, and if distortion strategies are part of – Managers should choose a neutral location for “company folklore” and are passed down from the feedback session. senior employees to new employees. – The manager’s office may not be the best place for a constructive feedback session Managers should... because the employee may associate the office with unpleasant Train raters on the appropriate use of the conversations. process as discussed previously. – Managers should describe the meeting as an Build top management support for the opportunity to discuss the role of appraisal system and actively discourage the employee, the role of the manager, and the distortion. relationship between them. Give raters some latitude to customize – Managers should also acknowledge that they performance objectives and criteria for their would like the meeting to be an ratees. OPEN DIALOGUE. Recognize employee accomplishments that are self-promoted. Ask the employee to rate his or her Make sure constraints such as budget do not performance before the session. drive the process. – Having employees complete a self-assessment Make sure appraisal processes are consistent before the feedback session can be very across the company. productive. – It requires employees to think about their – This only reduces the employees’ self-esteem performance over the past rating period, and it and increases defensiveness, neither of which encourages them to think about their will improve performance. weaknesses. – To improve poor performance, a manager – It can make the session go more smoothly by must attempt to solve the problems causing it. focusing discussion on areas where This entails working with the employee to disagreement exists, resulting in a more determine the actual cause and then agreeing efficient session. on how to solve it. – Employees who have thought about past performance are more able to participate fully Focus Feedback on Behavior or Results, Not in the feedback session. on the Person – Avoid questioning the employee’s worth as a Encourage the subordinate to participate in person. the session. – This is best accomplished by focusing the – When employees participate in the feedback discussion on the employee’s behaviors or session, they are consistently satisfied with the results, not on the employee. process. Minimize Criticism 1. Tell-and-sell: Managers tell the employees – If an individual’s performance is below how they have rated them and then justify standard, some criticism must take place. these ratings. However, an effective manager should resist the 2. Tell-and-listen: Managers tell employees how temptation to reel off a litany of offenses. they have rated them and then let the employees explain their side of the story. Agree to Specific Goals and Set a Date to 3. Problem-solving: Managers and employees Review Progress work together to solve performance problems – It is one of the most effective motivators of in an atmosphere of respect and performance. encouragement. – Beside setting goals, the manager must also set a specific follow-up date to review the Recognize effective performance through employee’s performance toward the goal. praise. – This provide an added incentive for the – The purpose of the session is to give accurate employee to take the goal seriously and work performance feedback, which entails toward achieving it. recognizing effective performance as well as poor performance. – Praising effective performance provides reinforcement for that behavior. – It also adds credibility to the feedback by making it clear that the manager is not just identifying performance problems. Focus on solving problems. – A common mistake that managers make in providing performance feedback is to try to use the session as a chance to punish poorly performance employees by telling them how utterly lousy their performance is. L4: ASSESSMENT AND DEVELOPMENT OF meaningful to the employee rather than those HUMAN RESOURCE MANAGEMENT: set by parents, peers, or the company. EMPLOYEE DEVELOPMENT APPROACHES TO EMPLOYEE DEVELOPMENT The Relationship between Development, Training, and Careers I. FORMAL EDUCATION Formal education programs include off-site DEVELOPMENT AND TRAINING and on-site programs designed specifically ❖ Development refers to formal education, job for the company’s employees, short courses experiences, relationships, and assessment of offered by consultants or universities, personality and abilities that help employees executive MBA programs, and university prepare for the future. programs in which participants actually live at ❖ Training focuses on helping employees’ the university while taking classes. performance in their current jobs. These programs may involve lectures by ❖ Development prepares them for other business experts, business games and positions in the company and increases their simulations, adventure learning, and meetings ability to move into jobs that may not yet exist. with customers. Formal training is given in leadership and ❖ Development also helps employees prepare presentational skills. Participants are mentored for changes in their current jobs that may result by experienced communication leaders. They from new technology, work designs, new receive formal education on their progress and customers, or new product markets. feedback. Development and Careers II. ASSESSMENT ❖ Protean Career is a career that frequently changes based on changes in the person’s Assessment involves collecting information interests, abilities, and values and also in the and providing feedback to employees about work environment. their behavior, communication style, or skills. ❖ Psychological Contract is the expectations Assessment is most frequently used to that employers and employees have about each identify employees with managerial potential other. It emphasized that the company would and to measure current manager’s strengths provide continued employment (job security) and weaknesses. and advancement opportunities if the employee Assessment is also used to identify managers remained with the company and performed with the potential to move into higher-level well. executive positions, and it can be used with ❖ The goal of the protean career is work teams to identify the strengths and PSYCHOLOGICAL SUCCESS: the feeling of pride weaknesses of individual team members and and accomplishment that comes from achieving the decision processes or communication styles life goals that are not limited to achievements at that inhibit team’s productivity. work (such as raising a family and having good physical health). Popular assessment tools include: ❖ A career can be considered as 1. The Myers-Briggs Type Indicator (MBTI) – A “boundaryless” in the sense that career plans psychological test for team building and or goals are influenced by personal or family leadership development that identifies demands and values. employees’ preferences for energy, information ❖ Boundaryless may also refer to the fact that gathering, decision making, and lifestyle. career success may be tied not to promotions but to achieving goals that are personally 2. Assessment centers – A process in which Enlarging the Current Job multiple raters evaluate employees’ Job enlargement refers to adding challenges performance on a number of exercises. or new responsibilities to employees’ current jobs. This could include special project a. Leaderless group discussion – Process in assignments, switching roles within a which a team of 5 to 7 employees solve an work team, or researching new ways to serve assigned problem together within a certain time clients and customers. period. Job rotation gives employees a series of job b. Interview – Employees are questioned about assignments in various functional areas their work and personal experiences, of the company or movement among jobs in a skills, and career plans. single functional area or department. c. In-basket – A simulation of the administrative tasks of a manager’s job. Transfers, Promotions, and Downward Moves d. Role plays – A participant taking the part or 1. Transfer: An employee is assigned a job in a role of a manager or other employee. different area of the company. Transfers do not necessarily increase job 3. Benchmarks – An instrument designed to responsibilities or compensation. measure the factors that are important to 2. Promotions: Advancements into positions managerial success. This includes items that with greater challenges, more measure manager’s skills in dealing with responsibility, and more authority than in subordinates, acquiring resources, and creating previous job. Promotions usually a productive work climate. include pay increases. 3. Downward move: Occurs when an employee 4. Performance appraisal and 360-degree is given less responsibility ad feedback Systems – The process through which authority. This may involve a move to another an organization gets information on how well an position at the same level (lateral employee is doing his or her job. demotion), a temporary cross-functional move, ❖ Upward feedback refers to appraisal that or a demotion because of poor involves collecting subordinates’ evaluations performance. of managers’ behaviors or skills. ❖ 360-degree feedback measures employees’ Temporary Assignments with Other behavior or skills not only by subordinates but Organizations by peers, customers, their bosses, and 1. Externship refers to a company allowing themselves. employees to take full-time operational role at another company. III. JOB EXPERIENCES 2. Sabbatical refers to leave of absence from the Job experiences refers to the relationships, company to renew or develop skills. problems, demands, tasks, and other features that employees face in their jobs. IV. INTERPERSONAL RELATIONSHIPS To succeed in their jobs, employees must stretch their skills – that is, they are forced Employees can also develop skills and to learn new skills, apply their skills and increase their knowledge about the company knowledge in a new way, and master new and its customers by interacting with a more experiences. experienced organization member. MENTORING III. GOAL SETTING – A mentor is an experienced, productive senior ❖ Refers to the process of employees employee who helps develop a less experienced developing short and long-term career employee (protégé). objectives. – Most mentoring relationships develop ❖ These goals usually relate to desired informally as a result of interests or values positions (such as becoming sales manager shared by the mentor and protégé. within 3 years), level of skill application (use one’s budgeting skills to improve the unit’s cash COACHING flow problems), work setting (move to – A peer or manager who works with an corporate marketing within 2 years), or skill employee to motivate him, help him develop acquisition (learn how to use the company’s skills, and provide reinforcement and feedback. human resource information system). ❖These goals are usually discussed with the Career Management and Development manager and written into a development plan – Planning Systems include description of strengths and weaknesses, career goals, and development I. SELF-ASSESSMENT activities for reaching career goal. ❖Refers to the use of information by Employee responsibility: Identify goal employees to determine their career interests, and method to determine goal process. values, aptitudes, and behavioral tendencies. Company responsibility: ensure that ❖It often involves psychological tests. goals is specific, challenging, and Employee Responsibility: identify attainable; commit to help employee opportunities and needs to improve reach the goal. Company Responsibility: provide assessment information to identify IV. ACTION PLANNING strengths, weaknesses, interests, and ❖ Employees determine how they will achieve values their short and long term career goals. ❖ Action plans may involve any one or II. REALITY CHECK combination of development approaches such ❖Refers to the information employees receive as enrolling in courses and seminars, getting about how the company evaluates their skills additional assessment, obtaining new job and knowledge and where they fit into the experiences, or finding a mentor or coach. company’s plans (potential promotion Employee responsibility: identify steps opportunities, lateral moves). and timetable to reach goal. ❖It is usually provided by the employee’s Company responsibility: identify manager as part of performance appraisal. resources employee needs to reach Employee responsibility: identify what goal, including courses, work needs are realistic to develop. experiences, relationships Company responsibility: communicate performance evaluation, where SPECIAL ISSUES IN EMPLOYEE DEVELOPMENT employee fits in long-range plans of the company, changes in industry, I. MELTING THE GLASS CEILING profession, and workplace ❖ A barrier to advancement to higher-level jobs in the company that adversely affects women and minorities. ❖ This barrier may be due to stereotypes or ❖ Such behavior includes insensitivity to others, company systems that adversely affect the inability to be a team player, arrogance, poor development of women or minorities. conflict management skills, inability to meet ❖ It is likely caused by lack of access to training business objectives, or inability to change or programs, development experiences, or adapt during a transition. relationships (e.g. mentoring). ASSESSMENT AND DEVELOPMENT OF HUMAN II. SUCCESSION PLANNING RESOURCE MANAGEMENT: EMPLOYEE ❖ Refers to the process of identifying and SEPARATION AND RETENTION tracking high-potential employees capable of filing higher-level managerial positions. Managing Involuntary Turnover ❖ It help attract and retain managerial employees by providing them with ❖ Involuntary Turnover refers to turnover development opportunities that they can initiated by the organization (often among complete if upper management is career goal people who would prefer to stay). for them. ❖ Employment-at-will doctrine – the doctrine ❖ High-potential employees are those the that, in the absence of a specific contract, either company believes are capable of being an employer or employee could sever the successful in higher-level managerial positions employment relationship at any time. such as general manager or Chief Executive ❖ Discharging employees can be a very difficult Officer (CEO). task that need to be handled with the utmost care and attention to detail because: PROCESS OF DEVELOPING A SUCCESSION 1. There are legal aspects to this decision that PLANNING can have important repercussions for - Identify what positions are included in the organization; the plan 2. There is a great financial risk associated with - Identify employees who are included in any termination decision; and the plan 3. There are issues related to personal safety. - Develop standards to evaluate positions - Determine how employee potential will Principles of Justice be measured ❖ Outcome fairness - Develop the succession planning review The judgment that people make with respect - Link the succession planning system to the outcomes received relative to the with other human resource systems, outcomes received by other people with including training and development, whom they identify. compensation, and staffing systems E.g. A situation where one person is losing - Determine what feedback is provided to his or her job while others are not is conducive employees to perceptions of outcome unfairness on the part of the discharged employee. III. HELPING MANAGERS WITH The degree to which this potentially unfair DYSFUNCTIONAL act translates into the type of anger and BEHAVIORS resentment that might spawn retaliation in the ❖ A number of studies have identified form of violence or litigation, however, depends managerial behavior that can cause an on the perceptions of procedural and otherwise competent manager to be “toxic” or interactional justice. ineffective manager. ❖ Procedural justice 4 DETERMINANTS OF INTERACTIONAL JUSTICE: A concept of justice focusing on the methods EXPLANATION: emphasizes aspects of used to determine the outcomes received. procedural fairness that justify the Even given all the negative ramifications of decision. being dismissed from one’s job, the person SOCIAL SENSITIVITY: treat the person being dismissed may accept the decision with dignity and respect with minimum anger if the procedures used to CONSIDERATION: listen to the person’s arrive at the decision are consistent, unbiased, concerns accurate, correctable, representative, and EMPATHY: identify with the person’s ethical. feelings 6 DETERMINANTS OF PROCEDURAL JUSTICE: ❖ Functional retention, which occurs when CONSISTENCY: The procedures are high-performing employees remain employed, applied consistently across time and can benefit both the individual and the other persons. organization. BIAS SUPPRESSION: The procedures are ❖ Functional turnover, which occurs when low- applied by a person who has no vested performing employees voluntarily quit, can also interest to the outcome and no prior benefit both parties. prejudices regarding the individual. INFORMATION ACCURACY: The ❖ Dysfunctional Turnover – Undesirable procedure is based on information that employee turnover that occurs when good is perceived to be true. employees quit. CORRECTABILITY: The procedure has ❖ Dysfunctional retention occurs when low- built-in safeguards that allow one to performing employees remain with the appeal mistakes or bad decisions. organization. Later in the chapter, we deal with REPRESENTATIVENESS: The procedure situations in which the organization must is informed by the concerns of all terminate low performers who do not leave groups or stakeholders affected by the voluntarily decision, including the individual being ❖ When a good employee chooses to leave, the dismissed. organization usually must identify and hire ETHICALITY: The procedure is consistent another worker to fill the position. This process with prevailing moral standard as they can be highly disruptive. pertain to issues like invasion of privacy ❖ Frequently replacing employees consumes or deception. many resources and makes it difficult for organizations to develop a competitive ❖Interactional justice advantage. A concept of justice referring to the interpersonal nature of how the outcomes were Progressive Discipline and Alternative Dispute implemented. Resolution (ADR) When the decision is explained well and implemented in a fashion that is socially Employees should not be fired for minor sensitive, considerate, and empathetic, this infractions; instead, they should be fired at the helps defuse some of the resentment that might conclusion of a methodical punishment come about from a decision to discharge an program. employee.  – Whistleblowing, or making grievances public by turning to the media or the government, is one way for employees to bring about change. Physical Job Withdrawal – If the working conditions cannot be improved, a disgruntled employee may be able to fix the problem by quitting. Absence is another option for physically withdrawing oneself from unsatisfying job short of quitting entirely. Psychological Withdrawal – Employees may psychologically disengage from their work if they are unable to modify their situation or physically leave their jobs. JOB SATISFACTION – a pleasant sensation that arises from the belief that one's employment satisfies or permits one's essential job values to be fulfilled ❖ When work is consistent with employees’ values and needs, job satisfaction is likely to be high. ❖ Satisfaction increases when employees are able to pursue goals and Managing Voluntary Turnover activities that are truly important to them. ❖ Employees are also happier when they are ❖ Voluntary Turnover – Employee separation able to do work that fits that occurs because the employee chooses to with their interests and life plans. leave. ❖ Someone may have high satisfaction in the area of job fulfillment Process of Job Withdrawal because he enjoys the work he does, for ❖ Job withdrawal is a series of practices used instance, but have little by unhappy employees to avoid their current satisfaction with how much pay he receives. work circumstances. Sources of Job Dissatisfaction Behavior Change – "Voice opportunities" for lower-level 1. Personal Dispositions employees, when appropriately channeled ❖ Negative Affectivity – a dispositional by a secure and supportive leader, can often dimension that reflects pervasive individual result in significant organizational differences in satisfaction with any and all improvements and prevent turn-over among aspects of life. highly engaged staff. ❖ People who are high in negative affectivity ❖ They may help the person attain some valued tend to focus extensively on the negative outcome. aspects of themselves and others. ❖ People who are low in emotional stability 4. Pay and Benefits tend to be less satisfied with work regardless of ❖ For some people, pay is a reflection of self- the nature of the job. worth, so pay satisfaction takes on critical significance when it comes to retention. 2. Task and Roles ❖ Employees being recruited away from one ❖ Boredom generated by simple, repetitive organization by another are often lured with jobs that do not mentally challenge the worker promises of higher pay levels. leads to frustration and dissatisfaction. ❖ Job enrichment refers to specific ways to add Withdrawal from the Organization complexity and meaningfulness to a person’s ❖ Employees who are unhappy with their work work. tend to withdraw from the ❖ Job rotation – The process of systematically organization. moving a single individual from one job to ❖ Withdrawal occurs when employees put less another over the course of time. The job effort into their work activities assignments may be in various functional areas and become less committed to the organization. of the company or movement may be between ❖ Early signs of withdrawal include increased jobs in a single functional area of department. lateness and absenteeism. ❖ Dissatisfied employees begin to provide less 3 aspects of Organizational Roles stand out as input to the organization and become less significant influences on job satisfaction helpful toward coworkers. ❖ People with chronically low job satisfaction a. Role ambiguity refers to the level of tend to experience negative moods in all uncertainty about what the organization aspects of their lives. expects from the employee in terms of what to ❖ They also tend to have dysfunctional do it or how to do it. characteristics such as perfectionism that b. Role conflict refers to the recognition of undermine their feelings of self-worth. incompatible or contradictory demands by the person occupying the role. E.g. an employee is Exit from the Organization occupying more than one role at a time and the roles have incompatible expectations; Conflict ❖ A number of employees who begin the between work roles and family roles is common withdrawal process enter into a job search that in organization eventually leads to their separation from the c. Role overload refers to a state in which too organization. many expectations or demands are placed on a person. ❖ One important factor that determines whether workers continue in undesirable jobs is 3. Supervisors and Coworkers the availability and desirability of alternative A person may be satisfied with her supervisor jobs. and coworkers for 3 reasons: ❖ Dissatisfied employees are more likely to ❖ She may have many of the same values, leave when they expect it to be easy to find attitudes, and philosophies. alternative work with pay that is equal to or higher than what they are receiving. ❖ They provide social support in a way which the person is surrounded by other people who are sympathetic and caring. L5: COMPENSATION OF HUMAN RESOURCES: 1. Product-market competition – the challenge PAY STRUCTURE DECISIONS to sell goods and services at a quantity and price that will bring a return on investment. PAY STRUCTURE 2. Labor-market competition – the amount an organization must pay to compete against other ❖A pay structure is a system that defines what organizations that hire similar employees. each individual and job role is paid based upon their value to the business and effectiveness in Employees as a Resource their role. A philosophy that considers employees to be an investment that will yield valuable ❖For each type of pay structure, there are a returns. variety of different methods for deciding upon Controlling costs through noncompetitive pay and separating employee pay, each with its own can result in low employee productivity and advantages and disadvantages. quality. Pay policies and programs are one of From the employer’s point of view: the most important human resource Pay is critical in attaining strategic goals. tools for encouraging desired employee Pay has a major impact on employee attitudes behaviors and discouraging undesired and behaviors. behaviors. Employee compensation is typically a significant organizational cost. DECIDING WHAT TO PAY From the employee’s point of view: ❖ Deciding pay levels is discretionary, and is Policies having to do with wages, salaries, and based on a broad range. other earnings affect their overall income and ❖ The organization has to decide whether to thus their standard of living. pay at, below, or above the market average. Both level of pay and fairness compared with ❖ The advantage of paying above the market others’ pay are important. average is the ability to attract and retain the top talent available, which can translate into a PAY DECISIONS highly effective and productive workforce. ❖Pay structure refers to the relative pay of ❖ The disadvantage, however, is the added different jobs (job structure) and how much cost. they are paid (pay structure). ❖ Efficiency wage theory states that wages ❖Pay level is the average pay in organizations, influence worker productivity. including wages, salaries, and bonuses. ❖ The benefits of higher wages may outweigh ❖Job structure is the relative pay of jobs in higher costs when the organization's technology organizations (i.e., the range of pay often or structure depends on highly skilled expressed by salary grades). employees or when the organization has ❖Pay policies are attached to jobs, not difficulty observing and monitoring employee individuals. performance. ❖ The theory is that employees who are paid Developing Pay Levels - Market Pressures more than they would be paid elsewhere will be ❖ Two important competitive market reluctant to shirk (neglect their duty) because challenges in deciding what to pay its they wish to retain their good jobs. employees: MARKET PAY SURVEYS pay on market surveys that cover as many key jobs as possible. Benchmarking is a procedure by which an 2. Pay-policy line - A mathematical expression organization compares its own practices against that describes the relationship between a job’s those of the competition. pay and its job evaluation points. It combines The following issues must be determined information from external and internal before pay surveys are used: comparisons. – Which employers should be included in the 3. Pay grades - Grouping jobs of similar worth or survey? content together for pay administration – Which jobs are included in the survey? purposes. – If multiple surveys are used, how are all the The range spread is the distance between the rates of pay weighted and combined? minimum and maximum amounts in a pay grade. RATE RANGES Rate ranges refer to different employees in Why are pay structures important? the same job that may have different pay rates. Pay structures are important for the following reasons: 2 General Types of Jobs Helping monitor and control company Key jobs are benchmark jobs that have expenses. relatively stable content and are common to – Well defined pay structures help companies many organizations so that market-pay survey monitor the amount of money spent on salaries data can be obtained. and control if and when additional money is Nonkey jobs are unique to organizations and allocated for raises or new employees. With set cannot be directly valued or compared through salary ranges in place, accountants have strict the use of market surveys. parameters for budgeting and financial planning. Developing a Job Structure A job structure refers to the relative worth of Informing employees of current and future various jobs in the organization, based on salary expectations. internal comparisons. – Pay structures provide employees set figures Job evaluation is an administrative procedure for expected earnings. This improves that measures a job's worth to the organization. transparency and open communication – The evaluation process is composed of between employees and employers. compensable factors, which are the characteristics of jobs that an organization Remain competitive as an employer. values and chooses to pay for. – Using current market salary data ensures – Job evaluators often apply a weighting employers are offering competitive salaries scheme to account for the differing importance compared to other businesses in their industry. of the compensable factors to the organization. This will help organizations attract and retain – For example: Job Complexity, working the best candidates for open positions. conditions, required education, required experience, and responsibility. Helpful for calculating raises. – Having defined pay grades for employees Developing a Pay Structure alleviates some of the subjectivity involved in Three pay-setting approaches include: determining pay raises. Employers and 1. Market survey approach - The greatest employees should understand the pay structure emphasis is on external comparisons. It bases in place and their corresponding pay grades.  Create fair and impartial opportunities for RECOGNIZING EMPLOYEE CONTRIBUTIONS pay raises. WITH PAY – Adhering to market standards and predetermined pay grades helps employers ❖Organizations have a relatively large ensure fair, honest and unbiased opportunities discretion in deciding how to pay. for pay raises. ❖Differences in performance by an individual, How to choose a pay structure for your group, organization, seniority, or skills business determine the pay. The type of pay structure you choose for your ❖ Regardless of cost differences, different pay company may depend on several factors, programs can have very different consequences including: for productivity and return on investment. Business size: – Different sized companies often have different How Does Pay Influence Individual financial and operational goals. Smaller Employees? companies generally need to exercise more strict control over their spending. Larger REINFORCEMENT THEORY: A response companies may want to pay more than their followed by a reward is more likely to competitors. recur in the future. EXPECTANCY THEORY: Motivation is a Industry: function of valence, instrumentality, – Some pay structures are best suited for and expectancy certain industries due to the nature of the field. AGENCY THEORY: The interests of the For instance, larger, stable companies with a lot principals (owners) and their agents of lateral employee transitions may opt for a (managers) may not converge. broadband pay structure. PROGRAMS FOR RECOGNIZING EMPLOYEE Location: CONTRIBUTIONS – Geographic location can play a factor in ❖Programs differ by payment method, choosing a pay structure. Market data may frequency of payout, and ways of measuring reveal that the most successful companies in a performance. certain region use a one type of pay structure. ❖Potential consequences of such programs are Employee classification: performance motivation of employees, – Employees are generally full-time, part-time attraction of employees, organization culture, or temporary. A business with a large and costs. percentage of part-time or temporary workers ❖Contingencies that may influence whether a may choose a traditional pay structure with pay program fits the situation are management more control. style, and type of work. I. MERIT PAY COMPENSATION OF HUMAN RESOURCES: ❖ Merit pay programs link performance- RECOGNIZING EMPLOYEE CONTRIBUTIONS appraisal ratings to annual pay increases. WITH PAY ❖ A merit increase grid combines an employee’s performance rating with the employee’s position in a pay range to determine the size and frequency of his or her 1. Subjectivity of application: Even when merit pay increases. pay is based on objective goals, managers may ❖ Some organizations provide guidelines still award it subjectively. percentage of employees who should 2. Perceived favoritism: Employees who are not performance category. satisfied with their merit pay may feel like there is manager favoritism toward other employees, Companies may choose merit pay as their regardless of their performance reviews. compensation model based on its 3. Use of resources better spent elsewhere: potential benefits. These advantages include: Merit pay systems require a business to develop competencies, determine measurements and 1. Attracting top talent: Offering merit-based create performance baselines in addition to pay can help a company attract confident talent. scheduling and holding actual evaluations, so Top employees who know their worth and they require a lot of resources. Not all believe in their skills are generally eager to have businesses can implement merit pay because their pay tied to their performance. they need to use those resources for the 2. Clarifying expectations: When compensation profit-driving aspects of the business. is related to their performance, employees have 4. Managerial burden: Thoughtful completion clear guidance regarding what their employer of the merit pay process takes a lot of considers exceptional work. In that way, merit work from managers. Since no two managers pay can help differentiate critical tasks and low are the same, some may be more up to the priority undertakings. challenge than others. Managers who have 3. Identifying employee rankings: Employers better communication skills, for example, may can use merit evaluations to create a ranked list find it easier to express what employees need of employees by strength. Top performers to do to qualify for merit increases. receive the highest merit pay and 5. Morale implications: Merit pay can have underperforming employees receive less or no negative implications on company morale. merit pay. Some employees may be discouraged by what 4. Making company objectives clear: When they see as unequal rewards for the same work, companies tie compensation increases to while others may feel like they are being accomplishing goals, they make their business compensated similarly to other employees objectives real to their employees. Presenting whose work they view as subpar. an actionable to-do list that leads to more pay 6. Unfounded expectations: Merit pay can lead takes vision and mission statements from employees to expect the same increase year concepts to reality. after year, regardless of budgetary restraints 5. Increasing productivity and efficiency: When and changes in employee behavior. employees know there are financial rewards for 7. Negative competition: In less positive quality work, they are more likely to self- company cultures, the promise of merit pay motivate. Merit pay can help combat workplace may encourage employees to act selfishly complacency. instead of in the company's best interest. 6. Generating team-friendly competition: In a positive corporate culture, merit pay can inspire ❖ Edward W. Deming, who is a critic of merit employees to compete to produce the best pay, argues that it is unfair to rate individual results. When pay increases are directly related performance because "apparent differences to accomplishing company goals, both top between people arise almost entirely from the performers and the business itself are winners. system that they work in, not the people themselves.” While merit pay can have many benefits, there ❖ Criticisms of merit pay include: are also a few potential drawbacks, such as: ❖ the focus on merit pay discourages ❖ One method to achieve employee ownership teamwork. is through stock options, which give employees ❖ The measurement of performance is done the opportunity to buy company stock at a fixed unfairly and inaccurately. price. ❖ Merit pay may not really exist. ❖ Employee stock ownership plans (ESOPs) are employee ownership plans that give employers II. INDIVIDUAL INCENTIVES certain tax and financial advantages when stock is granted to employees. ❖ Individual incentives reward individual ❖ ESOPs can carry significant risk for performance, but payments are not rolled into employees. base pay, and performance is usually measured as physical output rather than by subjective V. GAINSHARING ratings. ❖ They are relatively rare because: ❖ Gainsharing programs offer a means for Most jobs have no physical output measure. sharing productivity gains with employees, There are many potential administrative and are based on group or plant performance problems. that does not become part of the employee’s base salary. Employees may do what they get paid for and nothing else. ❖ Conditions that should be in place for gainsharing to be effective include: They typically do not fit in with the team – management commitment approach. – the need to change or a process of continuous They may be inconsistent with organizational improvement goals. – management's acceptance and Some incentive plans reward output at the encouragement of employee input expense of quality. – high levels of cooperation and interaction – employment security III. PROFITSHARING – information sharing on productivity and costs – goal setting ❖ Under profit sharing, payments are based on – commitment and agreement of all parties a measure of organization performance – standards that are understandable, fair, and (profits), and payments do not become a part of related to objectives. base pay. An advantage is that profit sharing may VI. GROUP INCENTIVES AND TEAM AWARDS encourage employees to think more like owners. ❖Group incentives tend to measure The drawback is that workers may perceive performance in terms of physical output. their performance has little to do with profit but is more related to top management decisions ❖Team award plans may use a broader range of over which they have little control. performance measures. IV. OWNERSHIP ❖Drawbacks are that individual competition may be replaced by competition between ❖ Ownership encourages employees to focus teams. on the success of the organization as a whole, but, like profit sharing, may not result in motivation for high individual performance. BALANCED SCORECARD one offers better rewards, then the organization offering the better rewards will get the edge in ❖Some companies design plans that combine the market. various elements of the above programs that are appropriate to the situation. REASONS WHY EMPLOYERS SHOULD ❖The four categories of a balanced scorecard BE GIVING EMPLOYEE BENEFITS include: – financial 1.Helps to attract talented employees. – customer 2. Minimize employee turnover. – internal 3. Promoting and maintaining a healthy – learning and growth workplace. 4.Boost employee productivity. MANAGERIAL AND EXECUTIVE PAY 5. Increasing employee satisfaction and loyalty. ❖ Top managers and executives are a TYPES OF EMPLOYEE BENEFITS IN HRM strategically important group whose 1. Life Insurance Benefit - The principal purpose compensation warrants special attention. of life insurance is to protect the employee’s family if he dies. All the benefits get transferred ❖ In some companies rewards for executives directly to the Life insurance policy beneficiary are high regardless of organizational or beneficiaries. Generally, the beneficiaries are performance. children, wives, or husbands. ❖ Executive pay can be linked to organizational performance (from agency theory). 2. Paid Leaves/Vacation Benefits - It can come ❖ There has been increased attention to up in the form of vacations, sick leave, and executive pay from regulators. holidays. The Securities and Exchange Commission (SEC) 3. Fringe Benefits - Benefits given to the employees in the non-cash payments. Also, it COMPENSATION OF HUMAN RESOURCES: includes child care benefits, bonuses indirectly EMPLOYEE BENEFITS related to productivity, tuition assistance, child care spending accounts. WHAT IS EMPLOYEE BENEFITS? ❖ Employee Benefits can be termed as non- 4. Medical Insurance Benefit - Medical cash compensation which is Insurance covers all the medical fees, given to the employee. medication fees, hospital bed fees, surgeon fees, as well as prescription fees. It also includes ❖ These benefits are given to the employee the dental and optical care benefits as a whole. apart from salaries and wages. 5. Retirement Benefit - Retirement Benefits are ❖ These are also known as fringe benefits that generally provided to the employees in monthly are offered with the intention to attract and pensions or income after they end their careers. retain employees. 6. Disability Insurance Benefit - It enables the ❖ Employee benefits include various health benefit of getting the lost income from the day insurance, stock options, outing plans, etc. If you are met with an accident, leading you two organizations provide the same salary and to stop working as well as earning. WHO IS ENTITLED TO BENEFITS IN THE types of holidays: regular holidays and special PHILIPPINES? holidays. Minimum wage - The minimum wage in the The labor laws in the Philippines are Philippines varies between administered by the Department regions. of Labor and Employment. Night shifts - The labor laws of the Philippines The Philippines employee benefits all depend make it mandatory to on which of the four kinds of employment pay night shift differential to the workers arrangements is underway: regular, project- working between 10pm and based, seasonal, and casual employment. 6pm. General minimum conditions of employment Overtime - If an employee works more than in respect to working hours, rest periods, eight hours on an ordinary overtime age, night shift, holidays, and leave are workday, they are entitled to an extra 25% of codified in the Book 3 of the Philippines Labor their average hourly rate. Code. Exceptions can be made for managerial- ranked employees, field personnel, and some Premium pay - Employees are eligible to other workers. receive premium pay for working on their rest days or special holidays. STATUTORY AND COMMON EMPLOYEE – If an employee needs to work on their rest day BENEFITS or special day, they receive an extra 30% of their Statutory benefits, also known as mandatory daily salary. benefits, are entitlements that employers are – If they work on a special day that is also their to their obligated by law provide to employees. rest day, they get 50% extra payment. – If the work is performed on a regular holiday STATUTORY BENEFITS that is also a rest day, the employee gets a total Social Security System (SSS) - Social insurance of 260%. covers private-sector employees, self-employed workers, as well as household workers. 13-month pay entitlement - 13 month pay, or Health insurance - PhilHealth is the name of the colloquially named “13 month salary” is a the health insurance plan in place for private statutory requirement that employers must employees in the Philippines. provide to certain employees. Home Development Mutual Fund (HDMF) - – This extra month of salary must be released by The HDMF, also known as Pag-IBIG fund, 24 December. provides housing loans. It also offers financial – Some employees opt to receive the payment assistance to Filipinos to enable them to afford into two installments — in May and December. decent housing. – Employees who have worked for at least one Working hours and holidays - In the month for an employee are entitled to receive Philippines, an employee's regular hours of the 13th-month pay. This is paid pro rata for work are a maximum of eight hours a day, those who work less than the year. excluding an hour’s lunch break. This does include short breaks for rest during the Service incentive leave - Employers in the working hour. Philippines are obligated to grant five days Weekly rest day - Every employee in the of paid leave to every employee who has Philippines is entitled to get worked for at least one year. 24 consecutive hours of rest after six – This can be used either as sick leave or consecutive working days. vacation leave. Public Holidays - The workers in the Maternity and paternity leave - Both married Philippines are entitled to two and unmarried female workers are entitled to 105 days of paid maternity leave for ❖ By “relations” we mean “the relationships their first four pregnancies, including that exist within the industry between miscarriages. the employer and his workmen.”. Solo parent leave - Solo parents can take up to seven days’ leave to fulfill their parental ❖ The term industrial relations explains the duties, especially where physical presence is relationship between employees and necessary. To be eligible for solo parent leave, management which stem directly or indirectly one must work for at least one year, including from union-employer relationship. holidays and authorized absence. This one-year period of service can be continuous or broken. ❖The HR Employee Relations Manager directs Leave for victims of gender violence - In the the organization's employee relations function. Philippines, female workers who are the They develop employee relations policies and victims of violence are entitled to ten days of ensure consistent application of company paid leave. The violence may include physical, policies and procedures. In addition, they are sexual, psychological, or economic abuse. responsible for employee dispute resolution procedures, performing internal audits, and Special leave for gynecological surgery - taking appropriate action to correct any Women requiring gynecological surgery who employee relations issues. have worked for at least six months are entitled to get up to two months of fully paid leave. IMPORTANCE OF INDUSTRIAL RELATIONS Bereavement Leave - Employees can take up to three days of unpaid leave on the occasion of 1.Uninterrupted production a death in the family. 2.Reduction in Industrial Disputes Retirement benefit - The pension scheme in 3.High Morale the Philippines is regulated under Social 4.Mental Revolution Security System. Retired employees who have 5.Reduced Wastage paid their contribution to SSS for at least 10 years before their retirement are eligible to OBJECTIVES OF INDUSTRIAL RELATIONS receive a monthly pension. 1. To safeguard the interest of labor and – Workers who have paid their contribution for management by securing the highest level of less than 10 years get a lump sum equal to the mutual understanding and good-will among all contribution made by them and their those sections in the industry which participate employers, including interest earned. in the process of production. 2. To avoid industrial conflict or strife and INDUSTRIAL RELATIONS develop harmonious relations, which are an ❖ Industrial progress is impossible without essential factor in the productivity of workers cooperation of labors and harmonious and the industrial progress of a country. relationships. Therefore, it is in the interest of 3. To raise productivity to a higher level in an all to create and maintain good relations era of full employment by lessening the between employees (labor) and employers tendency to high turnover and frequency (management). absenteeism. 4. To establish and promote the growth of an ❖ The term ‘Industrial Relations’ comprises of industrial democracy based on labor two terms: ‘Industry’ and ‘Relations’. “Industry” partnership in the sharing of profits and of refers to “any productive activity in which an managerial decisions, so that ban individuals individual (or a group of individuals) is (are) personality may grow its full stature for the engaged”. benefit of the industry and of the country as well. 5. To eliminate or minimize the number of strikes, lockouts and gheraos by providing reasonable wages, improved living and working conditions, said fringe benefits. 6. To improve the economic conditions of workers in the existing state of industrial managements and political government. 7. Socialization of industries by making the state itself a major employer 8. Vesting of a proprietary interest of the workers in the industries in which they are employed. WORKPLACE SAFETY Workplace safety is a process that seeks to eliminate or reduce risks of injury or illness to employees. The chief aim of workplace safety is to protect an organization's most valuable asset—its people.