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HUMAN RESOURCEMANAGEMENT
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NTPC
NTPC incorporated in 1975 has evolvedas progressive, high performingorganization capable of competing
globally. ONGC a Maharatana considered as one
of the best company to work.
TATA spends over 250 cr annually forup keeping the Jamshedpur city.
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HRM
NTPC People first & in 2008 rankedno. 1 as best workplaces for largeorganization.
ONGC HR is strength. TATA Value HR
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HRM
Management of work force of anorganisation ie how to manage thedifferent people working together in a
organisation.
HRM is a management function that
helps managers recruit, train anddevelop members for an organisation.
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HRM
HRM is concerned with the peopledimension in management. Since everyorganisation is made up of people,acquiring their services, developing
their skills, motivating them to higherlevel of performance, and ensuring thatthey continue to maintain theircommitment to the organisation areessential to achieving organisationalobjectives. This is true, regardless ofthe type of organisation ie government,
business, education, health.
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Objectives of HRM Societal objectives To be socially responsible to
the needs of the society.
Organisational Objective To recognise the role ofHRM in bringing about organisational effectiveness.
Functional objective To maintain departmentscontribution at a level appropriate to theorganisations needs.
Personal Objective To assist employees in achievingtheir personal goals, at least in so far as these goalsenhance the individuals contribution to theorganisation.
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Objective of HRM
HRM Obj. Supporting function
Societal Objective
1. Legal compliance
2. Benefits
3. Union Management relations
Organisational
Objectives
1. HRP
2. Employee relations
3. Selection
4. Training & Development5. Appraisal
6. Placement
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Objectives of HRM
HRM Obj. Supporting function
Functional objectives1. Placement
2. Assessment
Personal Objectives 1.Training & Development2. Compensation
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Competitive challenges and HR
1. Going global2. Embracing new technology
3. Managing change and organisationculture
4. Responding to the market
5. Containing costs Downsizing
Outsourcing and employee leasing
Enhancing productivity
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Other challenges faced
Demographic and Employee concerns Diversity of backgrounds
Age distributions
Gender distribution Rising level of education
Cultural changes
Concern for employee rights Changing attitude towards work
Balancing work and family
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Functions of HR
MANAGERIALFUNCTIONS
PlanningOrganising
Directing
Controlling
OPERATIVEFUNCTIONS
Staffing
Development
Compensation
Motivation
Maintenance
Integration
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Operative functions of HR
STAFFING Job analysis, HRP, Recruitment,Selection, Placement, Induction,Internal Mobility
DEVELOPMENTCompetency profiling, Training anddevelopment, Performance &potential management, Careermanagement, 360 degree feedback
COMPENSATION& MOTIVATION
Job design, Work scheduling, Jobevaluation, Compensationadministration, Incentives and
benefits
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Operative functions of HR (contd.)
MAINTENANCE Health, Safety, Welfare
INTEGRATIONEmployment relations, Grievance,Discipline, Trade unions,Participation
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Scope of HRM
Labouror Personnel aspectRecruitment, Selection, Transfer,Promotion etc.
Welfare aspect Housing, Lunch room,Health and Safety, Transport,education etc.
Industrial relation aspect UnionManagement relations, Negotiation,Grievance handling etc.
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HRM Environment - External
Professionalism
Social & cultural
Union
Political & legal
Economic
Technology
HRM
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HRM Environment - Internal
Mission OrganisationalConflict
Policies
HRM
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Xerox
In 2000 Xerox was in debt of $17billion, stock was tumbling & it wasloosing money.
Securities & exchange commission wasinvestigating the way company had beenaccounting for copier leases.
Company made the remarkable comeback & returned to profitability and thestock prices increased.
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Xerox ?
Question How did thecompany turn around?
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HR the Xerox way
Cost cutting but major focus remaintowards quality ie product, servicesthrough Quality .....?
Xerox CEO Anne M. Mulcahy saidcompanys strategy of offering worldclass products & services requires worldclass people.
Brand of employment employerbranding through implementing express
yourself initiative.
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HR the Xerox way
Employer branding justified through making Xerox a place where passion,diversity, ideas & contributions of everymember of the family proves thecapability for bold innovation andleading edge work environment.
Xerox relies on HR service center takes care of routine as well as criticalHR services as well as with R & D.
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HR the Xerox way
During rainy times HR at Xerox played aresponsible role and supported eventhose employees who were to separate.
Laid off employees who were nearretiring age were treated with dignity &was given a year off with out paid whichkept their status active and all qualifiedfor retirement benefits.
Employee surveys to know the internalcustomers perception / views oncompany & its practices.
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HR the Xerox way
During sunny days Xerox focuses ontalent management by improving KSA &prepare future leaders by exposingemployees to different environmentwhich includes transfers oninternational assignments.
Xerox top managements philosophy every employee is unique and is able tobring valuable difference.
Treat HR as Biggest Asset
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Possibility..
Properly managing human resourcescan provide solutions to how best tosatisfy the objectives of multiple
stakeholders, even when theobjectives seem to conflict.
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HRM Cycle
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HRM Policies
Policy is predetermined course of actionestablished to guide the performance of worktowards accepted objectives.
Importance -:
(1) Clear Thinking
(2)Uniformity & Consistency of Admin.(3)Sence of Security
(4)Control
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Types of HR Policies
Originated policies Made by topManagement.
Appealed policies Made on request to handlecertain situation, or if certain aspects are
missing in the main policy. Imposed policies Imposed by Govt & Legal
authorities.
General policies Do not relate any issue, mayrepresent the priority of Top Mgmt. (WPM).
Specific Policy Related to specific issueslike Recruitment, Transfer, Promotion etc.
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GHRM or IHRM
Scope -:1. Cross cultural management
2. Comparative industrial relation
3. HRM in multinational firms
Cross CulturalManagement
IHRM inMNC
ComparativeIR systems
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HRM v/s GHRM
HRM activities includes
1. HRP
2. Staffing3. Performance Management
4. Training & Development
5. Compensation & benefits6. IR
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HRM v/s GHRM
GHRM- includes1. Broad HR activities (procurement,
allocation & utilization)
2. National or Country categories iea) Host country Subsidiary may be
located
b) Parent country Firm is Headquartered
c) Other country Source of labour
3. Category of employees ie HCN, PCN & TCN
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GHRM
HCN Host country national like Indiancompany has its unit in US and employsUS locals.
PCN Parent country nationals likeIndian company employs Indian locals orIndian company sends Indian employeeto US unit.
TCN Third country National likeIndian company employs Japanese towork in US unit.
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Expatriates
In GHRM the staff generally moves across nationalboundaries into various roles, these employees aretraditionally been called as expatriates.
An expatriates is an employee who is working and
temporarily residing in a foreign country. Some firms prefer to call them international
assignees.
PCN & TCN are always expatriates but what when
HCN transferred to Parent country of theorganization?
Inpatriate or expatriates.
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Is GHRM complex? In addition to complexity, there are four other variables
that moderate differences between domestic andinternational HRM. These variables are below:
1. The Cultural Environment cultural shock &
nepotism.2. Industry Type
3. Reliance of the Multinational on its Home-Country
Domestic Marketsmall homemarket.
4. Attitudes of Senior Management to International
Operationsfailure in managing humanresources.
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Global staffing
Ethnocentric approach PCN preferred
Polycentric approach HCN preferred
Geocentric approach Best people forkey jobs.
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Approaches to staffing - GHRM Ethnocentric approach PCN preferred, because of lack of
qualified HCNs and also to have better 3 Cs at initialinternationalization process.
Polycentric approach HCN preferred, treat subsidiary asseparate entity, PCN dont get transferred to subsidiary,chances of promoting HCN to hold key position in HQ, furthereliminates language issues, adjustment issues & reduces theexpenses in terms of training cost.
Geocentric approach Best people for key jobs, helps MNC todevelop international executive teams, it overcomes federationdrawback of polycentric approach, supports cooperation &resource sharing across units.
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Approaches to staffing - GHRM Ethnocentric approach High compensation package,
adapting to culture & environment.
Polycentric approach Career path of HCN & PCN,complexities in bridging the gap between HQ &subsidiary.
Geocentric approach Host country requirement toplace high number of their citizen, extensivedocumentation related to expatriates, increasedtraining & relocation cost.
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Barriers to GHRM There are a number of unique problems that global
companies face when trying to implement consistentpractices across their global HR networks. Theseproblems act as barriers to effective Global HRM.These are:
Variations Perception of HR Attitude and actions of headquarters toward HR Resistance to change Cultural differences in learning and teaching styles
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Human Resource Planning Meaning Assessment of Human Resource
Requirements & also the time & stages ofrequirement.
Right person ---At Right place ---At Righttime.
Definition HRP is defined as the process by
which management determines how an orgshould move from its current manpowerposition to its desired manpower position.
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Objectives of HRP
To ensure optimum use of existing HR. To forecast future requirement for HR.
To provide control measures to ensure
that necessary HR are available as andwhen required.
To asses the surplus and shortage of
HR. (Downsizing/expansion). To anticipate the impact of technology
on jobs and HR.
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Objectives of HRP Contd.
To determine the level of Recruitmentand Training.
To estimate the cost of HR and Housing
needs of employees. (Or HRA). To provide the basis of MDP.
To meet the needs of expansion and
diversification programmes.
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Importance of HRP Future Personnel needs defective planning leads to surplus or
shortage. Govt. companies.
Creating highly talented personnel Talent management.
International Strategies - Diversification & expansion
Foundation of personnel function
Resistance to change and move Test of loyalty & dedication?
Increasing investment in HR
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Factors Affecting HRP
Outsourcing
Strategy of
Organisation
Environmental
Uncertainties
Organisational
growth cycle
& planning
HRP
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Factors Affecting HRP
Organisation growth cycle and planning-:
HRP is Critical when organisation enters
the growth stage.
Mature organisations experiences less
flexibility and variability, growth slowsdown. HRP is dominated by Layoffs,Retrenchment, Retirements.
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Factors Affecting HRP
Environmental Uncertainties -:
When Political, Social and other changes
affect the organisation, HR plannersdeal with uncertainties.
It can result in Recruitment, Training,Succession Planning, Retrenchment etc.
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Factors Affecting HRP
Strategy of Organisation -:Strategic plan of the organisation defines theorganisations HR needs.
Internal Growth
Informal
Reactive
Narrow
Inflexible
Growth through Mergers
Broad
Formal
Proactive
Flexible
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HRP Process
HR Need Forecast
HR Programming
HRP Implementation
Control & Evaluation
ShortageSurplus
Environment
Org objectives & policies
HR Supply Forecast
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HRP Process (Contd.)
Environmental Scanning - :1) Economic factors including general ®ional conditions
2) Technological Changes including automation
3) Demographic changes including age,composition & literacy
4) Political and legislative issues including
laws & administrative rulings5) Social concerns including child care &
educational facilities
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HRP Process (Contd.)
Org objectives and policies-:
HR plans need to be based on org
objectives, this implies that theobjectives of the HR plan must bederived from Org objectives.
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HRP Process (Contd.)
HR Demand forecast-:
The process of estimating the future quantityand quality of people required.
The basis of forecast will be annual budgetand long term corporate plans.
Demand forecasting must consider several
factors like internal (Budget constraints,employee separations, production level) andexternal (Competition, laws, change intechnology).
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HRP Process (Contd.) Demand forecasting techniques are-:
Managerial judgment Managers sit to gather to reach acommon solution.
Ratio trend analysis Based on the past sale & worker ratiopredicting the future.
Delphi technique Expert surveys & formulate the report but
the process goes on till every one reaches the commonconclusion. Regression analysis Similar to ratio trend analysis but more
use of statistical tool.
HR Supply forecasting-:
Supply forecasting measures the number of people likely to beavailable from within and outside an org.
Based on existing HR, internal & external sources of supply.
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HRP Process (contd.)
HR Programming-: Once the Orgs HR Demand and Supplyare forecast, the two must bereconciled or balanced in order that
vacancies can be filled by the rightemployee at the right time.
HR Plan Implementation-:
Implementation requires converting anHR plans into action. (Recruitment,Training, Succession plan, retentionplan, redeployment etc.)
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HRP Process (contd.)
Control and Evaluation -:Critical to have proper control andregular checks to know the
achievements of HRP.
Surplus Shortage
Restricted hiring R & S
VRS, Lay off
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E - HRM
E-HRM is the planning, implementation andapplication of information technology for bothnetworking and supporting at least twoindividual or collective actors in their shared
performing of HR activities. E-HRM is not the same as HRIS or VHRM
VHRM - a network-based structure built onpartnerships and typically mediated byinformation technologies to help theorganization acquire, develop, anddeploy intellectual capital
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HRIS
HRIS is a database system that keepsimportant information about employeesin a central and accessible location.
The information provided by HRIS canhelp the organisation to gaincompetitive advantage. (SWOT of org.)
f f
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Information categories of HRIS
Basic non confidential information-:
Employee name, Org name, Worklocation
General non confidential information -:
Social security number, Position relatedinformation (codes, tittles, effectivedate)
f f HR ( d )
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Info categories of HRIS (contd.)
General information with salary -:
Current salary, Effective date, Amount
of last change, Reason for last change.
Confidential information with salary -:
Information of previous category,Educational data
f f HR ( d )
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Info categories of HRIS (contd.)
Extended information with salary -:
Information of previous category, Bonusinformation, Projected salary increaseinformation, Performance evaluation
information.
J b A l i
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Job Analysis
Job analysis is the process of collectingjob related information. Suchinformation helps in the preparation ofjob description and job specification.
Job Analysis
Job Description Job Specification
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P f J b A l i
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Purposes of Job Analysis
HRP
Recruitment & Selection
Training & Development Remuneration
Safety & Health
Performance Appraisal
M th d f C ll ti J b D t
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Methods of Collecting Job Data
Observation
Interviews
Questionnaire Technical Conference Method
P f J b A l i
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Process of Job Analysis
Strategic Choices
Gather Information
Process Information
Job Description
Job Specification
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P bl ith J b A l i
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Problems with Job Analysis
Support from Top management
Single Means or Source
No Training or Motivation
Activities may be Distorted
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M th ds f J b D si
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Methods of Job Design
Job Design Methods -:
Job
Design
Job
Simplification
Job
Enlargement
Job
Enrichment
Job
Rotation
J b d si n
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Job redesign
Restructuring the elements including tasks,duties and responsibilities of a specific job inorder to make it more encouraging andinspiring for the employees or workers is
known as job redesigning. The process includes revising, analyzing,
altering, reforming and reshuffling the job-related content and dimensions to increase
the variety of assignments and functions tomotivate employees and make them feel as animportant asset of the organization.
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Advantages of Job redesign
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Advantages of Job redesign
Enhances the Quality of Work-Life Increases Organizations andEmployees Productivity
Brings the Sense of Belongingness inEmployees
Creates a Right Person-Job Fit
Job carving
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Job carving
Job carving is a technique used by our jobdevelopers as they probe the needs ofprospective employers. They analyze anorganization's operations in order to identify
repetitive tasks that do not make the bestuse of a current employee's time. Then withthe help of the employer combine such tasksinto a position matching the skills of our
internal customer. This is a win-win approachthat increases the productivity of allconcerned
Job carving
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Job carving
Job Carvingis a way of splitting jobs toensure the most suitable person carriesout each task.
It is a concept that can benefit bothemployers and employees throughincreasing productivity by realigningworkers tasks.
Advantages to employer
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Advantages to employer
Develop existing employee skills Create a diverse workforce
Increase understanding of Disability
Positive impact in your local community Access to a valuable, committed source
of recruitment
Advantages to employee
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Advantages to employee
Improved confidence and self-esteem Learn new work-based skills
Increased independence
Better social networks Career development
Recruitment
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Recruitment
The process of finding and attractingcapable applicants for employment. Theprocess begins when new recruits aresought and ends when their applications
are submitted. The result is a pool ofapplicants from which new employeesare selected.
Recruitment is a process of invitingapplications from prospectiveemployees.
Recruitment is a positive process.
Purpose & Importance of
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p pRecruitment
Determine the present and futurerequirements of the organisation inrelation with the HRP and Job Analysis.
Increase the pool of job candidates atminimum cost.
Meet the organisations legal and socialobligations regarding the composition ofits workforce.
Sources of Recruitment
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Sources of Recruitment
Internal Sources -:Transfer , Promotions.
External Sources-:Press Advertisements , EducationalInstitutions, Placement Agencies,
Employment Exchange, LabourContractors, Recruitment at factoryGate.
Recruitment Process
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Recruitment Process
Recruiting Required Personnel
Search for Perspective Employees
Internal Sources
External Sources
Evaluating effectiveness of process
Recruitment Process
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Recruitment Process
Personnel Requisition -: Requisition forrecruitment from other deptt., Containsinfo like no of person required, duties tobe performed, desired qualification,
time of appointment, info about job. Locating and developing sources of
required no and type of employees.
Identifying the prospective employeeswith required characteristics.
Process (contd )
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Process (contd.)
Communicating the info about the org,the job and the terms and condition ofservice.
Encouraging the identified candidatesto apply for jobs in the org.
Evaluating the effectiveness ofrecruitment process.
Alternatives to Recruitment
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Alternatives to Recruitment
Overtime
Employee Leasing
Temporary Employment
Selection
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Selection
Selection is the process of pickingindividuals (out of the pool of jobapplicants) with requisite qualificationsand competence to fill jobs in the
organisation.
Selection is a negetive process.
Selection Procedure
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Selection Procedure
Preliminary Interview
Application blank
Selection Test
Employment Interview Reference Check and Background
Analysis
Medical Examination Final Approval
Evaluation
Test and Interview
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Test and Interview
Psychological tests -: Aptitude test
Informal Interview
Formal Interview Depth Interview
Stress Interview
Induction Or Orientation
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Induction Or Orientation
Planned introduction of employees totheir jobs, their co workers and theorganisation.
Orientation also called Induction, isdesigned to provide a new employee withthe information he or she needs tofunction comfortably and effectively inthe organisation.
Objectives of Induction
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Objectives of Induction
To help new comer overcome his naturalshyness and nervousness in meeting newpeople in the environment.
To develop among the newcomers asense of belonging and loyalty to theorganisation.
To develop a close and cordialrelationship between newcomers and theold employees and their supervisor.
Objectives (contd )
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Objectives (contd.)
To ensure that the newcomers do notform negative or false impression andattitude towards the organisation orthe job because first impression is the
last impression. To give newcomers necessary
information such as leave rules, rest
period, locker room etc.
Advantages of Formal Induction
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Advantages of Formal Induction
Helps in build up a two way channel ofcommunication between management andworkers.
Proper induction facilitates informalrelations and teamwork amongemployees.
Effective induction helps to integratethe new employees into the organisationand to develop the sense of belonging.
Types of Induction Programme
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Types of Induction Programme
Formal
Informal
Individual
collective
Contents of Induction Programme
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Contents of Induction Programme
History and operation of company
Products and services of company
Policies and procedures of company
Grievance procedure Benefit and services for employees
Opportunities for training and
development, promotion, transfer etc.
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Placement Problems
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Placement Problems
Difficulty with the placement is thatwe tend to look at the individual butnot at the job.
Job in this context may be classifiedinto three categories.
1. Independent
2. Sequential
3. Pooled
Training & Development
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Training & Development
Training is an attempt to improvecurrent or future employeeperformance by increasing an employeesability to perform through learning,usually by changing the employeesattitude or increasing his or her skills
and knowledge. Training refers to the process of
imparting specific skills. (Employees)
T & D
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T & D
Development refers to learningopportunities designed to helpemployees grow. (Executive)
Education is theoretical learning inclassroom.
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Difference between T & Edu
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Difference between T & Edu Training -:
1. Application base,2.Job Experience,3. Specific Task,
4. Narrow Perspective.
Education -:1.Theoretical Orientation,2. Classroom learning,3. General Concepts,4. Broad Perspective.
Inputs in T & D
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Inputs in T & D
Skills
Education
Development Ethics
Attitudinal Changes
Decision making and Problem solvingskills
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Training Program
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ra n ng Program
Need Assessment
Deriving Instructional Objectives
Designing Training & Development Program
Implementation of Training Program
Evaluation
Training Process
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ra n ng rocess
Need Assessment -: Diagnoses the present
problems & future challenges to be metthrough training and development.
Need Assessment Methods -: As follows Group Assessment (intro of new product.)
1. Org goals & objectives.
2. Personnel skill inventories3. Exit interviews
4. Customers Satisfaction data
Training Process
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g
Needs Assessment & Remedial measures
Lack of Skill &
Knowledge
TrainingNon Training
Measures
Other Causes
Performance
Deficiency
Training process
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g p Individual Analysis -:1. Performance Appraisal2. Interviews3. Questionnaires
4. Attitude Surveys.
Issues in need assessment -:1. Org Support2. Org Analysis3. Task and KSA analysis4. Person Analysis
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Training process
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g p
Implementation of training program
Evaluation
Types of training
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yp g
On the job -:
1. Orientation Training ie Induction
2. Job instruction Info about how to
conduct the job.3. Apprentice training - ITI
4. Internship / Assistantship - Doctors
5. Job rotation - Bank6. Coaching Cricket team
Types of training
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yp g Off the job -:1. Vestibule Utilisation of actual equipments.2. Lecture Verbal presentation of
information.
3. Role playing is to create realistic situation.4. Simulation technique that duplicates asnearly as possible actual conditionencountered on the job.
5. Laboratory / Sensitivity training smallergroup ie 12 or less. Provides awarenessabout their own behaviour & how otherpercieve them.
Performance Appraisal
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pp
It is the systematic evaluation of theindividual with respect to his or herperformance on the job and his or herpotential for development.
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Objective of Performance Appraisal
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j pp
To decide upon pay rise where regularpay scales have not been fixed.
Finally, performance Appraisal can beused to determine whether HRprogrammes such as selection, trainingand transfers have been effective or
not.
Relationship of PA and Job Analysis
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p y
Job Analysis Describe work andPersonnel requirement of a particularjob.
Performance Standards Translate jobrequirements into levels of acceptableor unacceptable performance.
Performance Appraisal Describes the
job relevant strengths and weaknessesof each individual.
PA and Competitive Advantage
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p g
Improving Performance
Making Correct decisions
Minimizing job dissatisfaction and turnover
Consistency between organizationalstrategy
Performance Appraisal process
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pp pObjective of Performance Appraisal
Establish Job expectations
Design an Appraisal Programme
Appraise Performance
Performance Interview
Use Appraisal Data for Appropriate Purposes
P A Process
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Objective Correct or Improve performance
Expectation In forming what is expectedfrom employee
Design Appraisal Helps in posing question
which needs answers like Formal v/s InformalAppraisal, whose performance should be rated(group, team, individual), Who are Raters,What should be rated (Quality, Quantity,
Time, Cost effectiveness, Need ForSupervision), When to Evaluate, WhatMethods to be opted.
P A Process
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Appraise the Performance Quantity,Quality and time of Output.
Performance Interview
Use the Appraisal Data HRP,Promotion, Remuneration, Training andDevelopment etc.
Performance Appraisal Methods
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pp
90 Degree Only Supervisor is
Evaluator. 180 Degree Superior and Peer Group 270 degree Superior, Peer and
Subordinates 360 Degree Superior, Peer,
Subordinates, Clients and Self
540 Degree - Superior, Peer,Subordinates, Clients and Self 720 Degree - Superior, Peer,
Subordinates, Clients, Self and Family
Performance Appraisal Methods
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Past Oriented Methods - : Rating Scales Excellent-Good-Acceptable-
Fair-Poor (Simplest & most popular) Checklist Yes / No (Is employee interested
in job? Does have adequate qualification?) Forced Choice Method Two Choices and no
other option (The rater is forced to selectstatements which are readymade) Learns fast----- Work hard.
Critical Incident Method this approachfocuses on certain critical behaviours of anemployee
Performance Appraisal Methods
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Behaviourally Anchored Rating Scales On the basis of the behavioural criteriaof the employee rating is being done bythe superior.
Field Review Method Some one outsidethe assessees own department, usuallyfrom corporate office or HR
department.
Future Oriented Methods
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360 Degree Appraisal
Assessment Centers (PotentialAppraisal)
Psychological Counseling
Problems in Performance Appraisal
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Leniency or Severity
Central Tendency
Halo Error Rater Effect Rating based on raters
attitude towards ratee
Primacy or Recency effects Perceptual Set Raters perception
Job Evaluation
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Job evaluation seeks to determine therelative worth of each job so thatsalary differentials can be established.
In job evaluation only jobs are ratedunlike in performance appraisal whereonly job holders are rated.
Job Evaluation Process
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Objectives of Job Evaluation
Job Analysis
Job Description Job Specification
Job Evaluation Programme
Wage Survey
Employee Classification
Methods of Job Evaluation
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Non Analytical Methods
Analytical Methods
Non Analytical method
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Ranking Method The evaluationcommittee assesses the worth of eachjob on the basis of its title or on itscontents, if the later is available.
Job Grading Method There is ayardstick in the form of job classes or
grades.
Compensation
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Remuneration is the compensation an
employee receives in return for his orher contribution to the organisation.
Society Some people see pay as a
measure of justice. Stockholders To stockholders,
executive pay is of special interest, as
linking executive pay to companyperformance is supposed to increasestockholders wealth.
Compensation
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Managers Compensation influencestheir success in two ways. First, it is amajor expense. In addition to treatingit as an expense, a manager also uses it
to influence employee behaviour andimprove organisation performance.
Employees The pay individuals receive
in return for the work they perform isusually the major source of theirfinancial security.
Components of Compensation
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Financial :
1. Hourly and monthly rated wage andsalary.
2. Incentives ie individual plans and groupplans.
3. Fringe benefits ie PF , Gratuity,Medical care, Group Insurance.
4. Perquisites are Company car, furnishedhouse (Offered to retain competentexecutives)
Components of Compensation
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Non Financial -: Recognition, GrowthProspects.
Factors Influencing EmployeeRemuneration
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Remuneration External -:1. Labour Market Demand & Supply,
Going Rate2. Cost of Living Escalatory clause
3. Labour Unions4. Labour Laws Payment of wages
act1936, Minimum wages act 1948,
Payment of Bonus act 1965, Equalremuneration act 1976, Payment ofgratuity act 1972.
5. Society
Factors Influences EmployeeRemuneration
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Remunerat on
Internal -:
1. Business Strategy Rapid growth =High Pay
2. Job Evaluation and Performance
Appraisal3. Employee Performance , Experience,Seniority
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Challenges of Remuneration
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Salary reviews
Pay secrecy
Skill based pay
Employee Participation Above Market or Below Market Rates
Monetary V/S Non Monetary Rewards
Comparable Worth
Concept of Wages
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Minimum Wage Wage for sustenance of life
plus for preservation of the efficiency ofworker. (Determined through Legislation)
Fair Wage Equal to the rate prevailing in the
same trade and in the neighborhood or equalto the predominant rate for similar workthroughout the country.
Living Wage Higher than fair wage. Provides
for bare essentials plus frugal comforts.
Incentives
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Incentives are variable rewards grantedto employees according to variations intheir performance. The other name for
incentives is Payments by results. Butthe word Incentives is mostappropriate because of its motivational
content.
Importance of Incentives
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Motivation of worker for higher
efficiency and greater output. Earning of employees would be enhanced
due to incentives.
Increased earning helps employee toimprove standard of living. Other advantages Reduced
Supervision, better utilisation ofequipments, reduced lost time, reducedabsenteeism and turnover and increasedoutput.
Disadvantages of Incentives
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Deteriorate the quality of product as
employee want to earn more by producingmore quantity of products.
When job is restudied there are chances that
it may yield in lower earning in terms ofearning incentives as new and high challengingjobs offers more scope for earning ascompared to old jobs.
Increases jealousy among the workers as theperson earning less is jealous of the personearning more.
Employee benefits
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Employee benefits and services includeany benefits that the employee receivesin addition to direct remuneration.
Employee benefits and services arealternatively known as fringes or hiddenpayroll.
Types of employee benefits
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For fringe benefits three criteriasare needed to be fulfilled.
1) It should be computable in terms ofmoney.
2) The amount of benefit is not generallypredetermined.
3) No contract, indicating when the sumis payable, should exists.
Fringe benefits
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Legally required payments -: Old age,survivors, disability and healthinsurance.
Contingent benefits -: pension plans,
group life insurance, group healthinsurance, maternity leave, sick leave,service awards.
Other benefits -: payments for the timenot worked like holidays, leaves.
Benefits and services
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Treats -: free lunches, festival bashes,dinner for the family.
Awards -: trophies, certificates, letterof appreciation.
Office environment -: flexible hours.
Tokens -: movie tickets, vacation trips.
On the job -: job rotation, representingthe company at public meetings.
Administration of fringe benefits
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Establish benefits objectives
Assess environmental factors
Access competitiveness
Communicate benefit information
Control benefit cost and evaluation
Executive remuneration
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Components of remuneration -:
1) Salary
2)Bonus3) Commission
4) Long term incentives
5) Perks
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Industrial Relation
Industrial Relations
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IR is concerned with the system , rulesand procedures used by unions andemployers to determine the reward for
effort and the conditions ofemployment, to protect the interest ofthe employed and their employers, and
to regulate the ways in which employerstreat their employees.
IR contd
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IR is concerned with the relationship
between management and workers and therole of regulatory mechanism in resolvingany industrial dispute.
IR specially covers the following areas-:1) Collective bargaining2) Role of management , unions and govt.
3) Machinery for resolution of industrialdispute4) Individual grievance and disciplinary policy
and practice
Approaches to IR
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Unitary Approach Direct negotiation with
employee and participation of Govt. Tribunals,and unions are not sought.
Pluralistic Approach (a) org as coalitions ofcompeting interest, where the managementsrole is to mediate amongst the differentinterest group.
(b) TU are legitimate representatives of
employee interest.(c) Stability in IR is a product of concession and
compromises between management and unions.
Approaches to IR
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Marxist Approach same as Pluralisticbut feels conflict arises not because ofrift between management and workers,
but because of the division in thesociety between those who ownresources and who have only labour to
offer.
Parties to IR
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Employees
Employee Associations
Government
Employer Employee Relations
Employers Employer Associations
Courts and Tribunals
Trade Unions
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TU are voluntary organisations ofemployees or employers formed topromote and protect their interest
through collective action. Though theterms employees and employers areused, when we say trade unions they
generally refer to employees.
Why do employees join unions?
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Dissatisfaction
Lack of power
Union Instrumentality
Union Tactics
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Unions employ several tactics to deal
with management are-:
1) Strike
2) Invoking political patronage
3) Blackmailing
4) Unionising
Strategic choices beforeManagement
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Mgmt must decide whether the org shouldremain union free or allow unionisation.
If mgmt decide company should remain union
free then they must take steps to keep unionaway from the org.
If unionisation should be allowed, managersmust decide what type of union mgmt
relations they want. Mgmt must also choose the type of tactic to
use while negotiating a new wage settlement.
Strategic choices before Unions
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Bread and Butter V/S Political objective
Adversarial V/S Co operative role
Traditional issues V/S New services
Strategies and Tactics for remainingUnion - Free
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Effective supervision Open communication
Effective personnel search Healthy and Safe working environment
Effective Employer and Employee
relations Effective remmuneration
Some of the major Trade Unions
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INTUC Indian National Trade UnionCongress
CITU Centre of Indian Trade Unions
HMS Hind Mazdoor Sabha
AITUC All India Trade Union Congress
BMS Bhartiya Mazdoor Sangh UTUC United Trade Union Congress
Disputes and Their Resolution
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Acc to Industrial Dispute Act, 1947,industrial dispute mean any dispute ordifference between employers and
employers or between employers andworkmen, workmen and workmen, whichis connected with the employment or
non employment or terms ofemployment.
Causes of Disputes
W D d
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Wage Demands
Union Rivalry (Singareni Collieries - 445TU loss 3.12 million tones)
Political Interference (ideology differs,union works on party lines, CITU-Communist love to fight but hate to winso they have not signed any settlementin last 15 years)
Causes of Disputes
U f i L b P i
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Unfair Labour Practice - :
a) Management unwillingness to recognisea particular TU and dilatory tactics.
b) Negotiation of settlement of disputethe representatives of employers takethe side of management which resultsin disputes.
Multiplicity of Labour Laws
Settlement of Disputes
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Collective Bargaining (reps of employees &employers meet to solve the issue)
Collective Bargaining Process-:
a) Preparing for negotiationb) Identifying bargaining issues
c) Negotiations
d) Reaching the agreemente) Ratifying the agreement
f) Administration of agreement
Settlement Contd.
C ll ti B i i t k l h
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Collective Bargaining takes place when
representatives of trade union meetmanagement representatives todetermine employee wages and benefits
and to solve other issues.
Collective Bargaining is the most
effective method of resolving industrialdisputes.
Settlement of Disputes
G i P d
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Grievance Procedure
Arbitration Conciliation
Adjudication
Consultative Machinery
Settlement Contd.
G i P d
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Grievance Procedure -:
Stage One (Sectional Head) 5 days
Stage two (Deptt Head) 5 days
Stage Three (Divisional Head) 10 days
Fourth Stage (Union)
Settlement Contd
A bit ti f t th d i hi h
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Arbitrations refers to the procedure in which
a neutral third party studies the dispute,listen to both the parties and collects theinformation , and make recommendationswhich are binding on both the parties.
Conciliation -: As per the Industrial Disputeact 1947, Sec 4, says that the govt shall
appoint conciliation officers and their mainduty is to mediate and promote settlement ofIndustrial Dispute.
Settlement Contd
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Adjudication a mandatory settlement ofIndustrial Dispute by a labour court orTribunal.
Consultative Machinery
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Safety and Health
Bh l G s T d
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Bhopal Gas Tragedy
23 years ago, there was a gas leak froma Union Carbide plant which led to killingover 20000 thousands of people in
Bhopal and become the worst industrialaccident in India due to negligence ofproper safety features. Survivors still
suffer from various diseases andbattling for life and waiting for theirturn to get compensated.
Safety and Health
Major Accident in last decade (India) :
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Major Accident in last decade (India)-:
1) Bhopal gas leak in December 1984.2) Delhi gas leak from Sriram foods and
fertilizers in December 1985.
3) Gwalior blast at a dyeing departmentof GRASIM in December 1991.4) Khalgaon boiler explosion in NTPC in
October 1992.5) Mumbai ONGCs helicopter crash in theoffshore Heera Panna oilfields Neelamarea in August 2003.
Safety and Health
M j r Int rn ti n l ccid nt :
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Major International accident-:
1) NASA Columbia space shuttle brokeapart during reentry on Feb 1, 2003.
Wing damage sustained during launch bya chunk of fuel tank insulation was citedas the accident cause.
Safety and Health
Safety : refers to the absence of
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Safety -: refers to the absence of
accidents. Stated differently, safetyrefers to the protection of workersfrom the danger of accidents.
Research says Every twenty secondsof working minute of every hour
throughout the World, someone dies asa result of an industrial accident.
Safety and Health
Types of accidents :
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Types of accidents -:
Accidents
Internal External
Major Minor
Fatal Disability
Safety and Health
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Disability
Temporary Permanent
Partial Total Partial Total
Safety and Health
Internal If a bone is fracture which
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Internal If a bone is fracture which
cant be seen and judged from open eyes. External wounds which are seen
through our open eyes.
Major Accidents results in death orresults in prolonged injury. Minor A scratch or injury does not
seriously disable. Temporary If a person recovers
disability from which he can recoverfully after certain period.
Safety and Health
Permanent Any injury which
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Permanent Any injury which
permanently disabled the person.
Safety and Health
Need for safety -:
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Need for safety -:
1) Cost saving Direct cost iecompensation and Indirect cost ie lossof production, damages of equipment,
wastage of time.2) Increased productivity Safetypromotes productivity, employees feelsafe and produce good quality and
quantity.
Safety and Health
3) Moral Providing safety to the
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3) Moral Providing safety to the
employee has moral dimension, inaddition to being a legal requirement. Anemployer has no right to cause accidentto an employee which might kill theperson. Monetary compensation does notbring the person back as a healthyindividual.
Can monetary compensation be asubstitute for person?
Safety and Health
4) Legal Supreme court says An
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4) Legal Supreme court says An
enterprise which is engaged in ahazardous dangerously industry whichposes a potential threat to the healthand safety of the persons working inthe factory or industry must ensurethat neither the workers nor thesociety suffers any kind of damages .
All safety related requirements to befulfilled by the industry as legalrequirement before start of work.
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Safety and Health
2) The most important function of safety
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2) The most important function of safety
programmes is to identify potential hazards,provide effective remedial actions.
This is possible only if there are -:
a)
Effective system for reporting all accidentscausing damage or injury.
b) Adequate accidents records.
c) Systematic procedures for carrying out
safety checks, inspections.d) Methods of ensuring that safety equipment
is maintained.
Safety and Health
3) Safety policy of the organisation should be
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3) Safety policy of the organisation should be
determined by the top management and itmust continuously involved in monitoringsafety performance.
4) The management and supervision must bemade fully accountable for safetyperformance in the working areas theycontrol.
5) All employees should be given thoroughtraining in safe methods of work and theyshould get regular guidance on eleminatingsafety hazards.
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Safety and Health
Strategic choices Management must make
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Strategic choices Management must make
decision regarding safety of their workers.Some strategic choices are-:
1) Must determine the level of protection.Some co because of financial constraintsprefer low level.
2) Must decide whether a safety program willbe formal or informal. Formal have written
regulation & carefully monitored. Informalare enforced because of pressure andinclude good training.
Safety and Health
3) Management can be proactive or
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3) Management can be proactive or
reactive.4) Management can use safety of workers
as a marketing tool of the organisation.
Safety and Health
Health - : The well being of the employees in
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Health : The well being of the employees in
an industrial establishment is affected byaccidents and by ill health physical as wellas mental.
Health in Industry can be discussed throughfollowing angles-:
1) Physical health
2) Mental health
3) Noise control4) Stress management
5) Violence at work place
Safety and Health
Health hazards -:
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Health hazards :
Health hazards Causes
Lung cancer oven emissions, smokes
Leukemia Radiation
Reproductive problems Radiation
Vision Chemical fumes, Office equip.Hearing High noise level
Safety and Health
Mental health -: Specially at executive
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Mental health : Specially at executive
cadre. Three reasons for thisdevelopment are mental breakdownsbecause of pressure & tensions. Mental
disturbances because of reducedproductivity & lower profits. Mentalillness alcoholism & poor humanrelations.
Safety and Health
Noise Control -: Noise can only be
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Noise Control : Noise can only be
minimised but can not be totallyeliminated. Constant exposure to noisenot only effects hearing ability but also
effect the general health of theemployees.
Safety and Health
Work stress -: refers to an individuals
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Work stress : refers to an individuals
response to a disturbing factor in theenvironment . Stress is mostlyunderstood to be negative, but it has
positive dimension also. When stressbrings out something better from anindividual, it is called eustress.
V l k l