Managerial Economics - Managerial Economics Notes

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MANAGERIAL ECONOMICS

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bipulintouch

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Re: managerial economics notes

Assignments
MBA – I SEM.
Subject Code – MB0027
Set – 1
Subject: Human Resources Management
***
Question 1: Discuss the difference between personnel management and Human Resource Management

1. Answer: The genesis of Human Resources Management traces its roots to the erstwhile personnel Management that was prevalent in the companies of a few decades age. Though the two terms ‘Personnel Management’ and ‘Human Resources Management’ are interchangeably used by most of the authors, there are some differences between them.. Management of Human Resources is a new field of study embodying behavioural science knowledge relating to the working of line and staff officials and union leaders to motivate organizational goals. On the other hand Personnel Management is that phase of management which deals with the effective control and use of manpower. Yoder, Heneman and others agreed that the HRM is a broad concept which covers many personnel aspects and include social, professional and individual enterprise aspects, whereas Personnel Management focuses only on personnel aspects such as leadership, justice determination, task specialization, staffing, performance appraisal, etc. HRM is more growth- oriented whereas Personnel Management is slightly narrow. Human Resource Planning is very vital in HRM. This is because it leads to the maximum utilization of human resources, reduces excessive labour turnover and high absenteeism; improves productively and aids in achieving the objectives of an organization. In addition to the above function, HRM emphasizes on training, an important area of personnel, which covers the following aspects:

1. Increasing productivity;
2. Improving quality;
3. Improving organizational climate;
4. Ensuring personnel growth etc.

While in practice both pertained to people management philosophically the approach is vastly different. The expectations from Personnel management approach is to ‘take care’ of the people working in a organization, addressing grievances and complaints formen a large part of the Personnel Management function. The focus is largely reactive and followed the Theory X approach that believed that people do not naturally like to work and need to be coerced to work and often need to be driven to work. The philosophy is more the ‘stick’ approach rather than ‘carrot’ approach. Employee welfare is of paramount importance and managing industrial relations as a result of heightened trade union activity formed the highlights of the Personnel Management functions.

Human Resources Management on the other hand adopts a proactive and delight Hiring the right talent, providing for ample opportunities for career growth and job satisfaction are the highlights of this management style. The basic philosophy is driven by the Theory Y approach where the belief is that people like to work and do not prefer to be supervised and made to perform.

***








Question 2: Explain the Human Resource Planning System.

Answer:

Manpower planning consists in projecting future manpower requirements and developing manpower plans for the implementation of the projection.

Through human resource planning, the management strives to have the right number and right kinds of people at the right places, at the right time, to do things which result in both the organization and the individual receiving the maximum long-range benefit.

It is the process by which a management determines how an organization should move from its current manpower position to its desired manpower position. According to Wickstorm, Human-resource Planning consists of a series of activities, viz.

1. Forecasting future manpower requirements, either in terms of mathematical projections of trends in the economic environment and development in industry, or in terms of judgmental estimates based upon the specific future plans of a company.
2. Making an inventory of present manpower resources and assessing the extent to which these resources are employed/optimally.
3. Anticipating manpower problems by projecting present resources into the future and comparing them with the forecast of requirements to determine their adequacy, both quantitatively and qualitatively and
4. Planning the necessary programs of requirement selection, training, development, utilization, transfer, promotion, motivation and compensation to ensure that future manpower requirements are properly met.

Importance of Manpower Planning:

Human resource planning is necessary for all organization due to the following reasons:

1. Due to constant need for replacing employees due to retirement, die, mental ailments etc. so that work would not suffer
2. The need of personnel with necessary qualification, skills, knowledge, experience could be satisfied through effective manpower planning.
3. Due to unavoidable frequent labour turnover such as voluntary quits, discharges, marriage etc. manpower planning is essential to face any change.
4. To meet the needs of expansion programs which becomes necessary because of increase in the demand for goods and services by a growing population, a rising standard of living – which calls for larger quantities of the same goods and services as also for new goods; the competitive position of a firm which brings in more business arising from improvements effected in the slumps period, and the rate of growth of the organization, human resource planning is unavoidable.
5. It is also needed in order to identify areas of surplus personnel or areas in which there is a shortage of personnel. If there is a surplus it can be redeployed; and it there is shortage it may be made good.
The human resource planning is practically useful at the following different levels:
1. At the national level, it is generally done by the govt. and covers items like population projection, program of economic development, educational facilities, occupational distribution, and growth, industrial, educational facilities, occupational distribution, and growth, industrial and geographical mobility of personnel.
2. At the sector level, it may be done by the govt. central or state and may cover manpower needs of agricultural, industrial service sector.
3. At the industry level, it may cover manpower forecast for specific industries, such as engineering, heavy industries, consumer goods industries, public utility industries etc.
4. At the level of individual unit, it may relate tot its manpower needs for various departments and for various types of personnel.

Process of Human Resource Planning

The process of human resource planning is one of the most crucial, complex and continuing managerial functions, which according to the Tata Electrical Locomotive Company, “embraces organization development, management development, career planning and succession planning.

It may be rightly regarded as a multi-step process, including various issues, such as
1. Deciding goals or objectives;
2. Estimating future organizational structure and manpower requirements.
3. Auditing human resources
4. Planning job requirements and job description and developing a human resource.














A. Objectives of human Resource Planning:

Human Resource Planning fulfils individual, organizational and national goals; but, according to Sikula, “the ultimate mission or purpose is to relate future human resources to future enterprise needs, so as to maximize the future return on investment in human resources. In effect, the main purpose is one of matching or fitting employee abilities to enterprise requirements.” The objectives may be laid down for a short-term (i.e. for one year).

B. Estimating the Future Organizational Structure or Forecasting the Manpower Requirements:

The management must estimate the structure of the organization at a given point in time. For this estimate, the number and type of employees needed have to be determined. Many environmental factors affect this determination. They include business forecasts, expansion and growth, design and structural changes, management philosophy, government policy, product and human skills mix, and competition.
Forecasting provides the basic premises on which the manpower planning is built. Forecasting is necessary for various reasons, such as:

1. The eventualities and contingencies of general economic business cycles such as inflation, wages, prices, costs and raw material supplies have an influence on the short-range and long-run plans of all organizations.
2. An expansion following enlargement and growth in business involves the use of additional machinery and personnel, and a reallocation of facilities, all of which call of which call for advance planning of human resources.
3. Changes in management philosophies and leadership styles.
4. The use of mechanical technology (such as the introduction of automatic controls, or the mechanization of materials handing functions) necessitates changes in the skills of workers, as well as a change in the number of employees needed.
5. Very often, changes in the quantity or quality of products or services require a change in the organization structure. Plans have to be made for this purpose as well.

C. Auditing Human Resources :
Once the future human resource needs are estimated, the next step is to determine the present supply of manpower resources. This is done through what is called “Skills inventory”. A skills inventory contains data about each employee’s skills, abilities, work preferences and other items of information which indicate his overall value to the company.

D. Job Analysis :
After having decided how many persons would be needed, it is necessary to prepare a job analysis, which records details of training, skills, qualification, abilities, experience and responsibilities, etc., which are needed of a job. Job analysis includes the preparation of job descriptions and job specifications.
E Developing a Human Resource Plan :
This step refers to the development and implementation of the human resource plan, which consists in finding out the sources of labour supply with a view to making an effective use of these sources. The first thing, therefore, is to decide on the police-should the, personnel be hired from within through promotional channels or should it be obtained from an outside source. The best policy which is followed by most organizations is to fill up higher vacancies by promotion and lower level positions by recruitment from the labour market.

***

Question 3: Write a detailed Note on Training needs identification.

Answer: Training could be a useful aid in improving the transformation process that takes place in an organization in terms of the processing of inputs to outputs. Training needs have to be related both in terms of the organization’s demands and that of the individual’s. Diversification of product lines, new technology, and hence a new kind of job demands the individual’s growth and development through induction, training, or training necessitated by job rotation due to an organization’s internal mobility policies.
A survey conducted by A.D. Sinha, listed in rank order the following methods of identifying training needs :
1. Views of the line manager
2. Performance appraisal
3. Company and departmental plans
4. Views of training manager
5. Analysis of job difficulties
The model we shall examine here is the Thayer and McGhee model. It is based on the following three factors :
1. Organization analysis
2. Task analysis
3. Man analysis
Total Organization Analysis
Total Organization Analysis is a systematic effort to understand exactly where training effort needs to be emphasized in an organization. It involves a detailed analysis of the organization structure, objectives, human resources and future plans, and an understanding of its culture, milieu.
The first step in organization analysis is achieving a clear understanding of both short-run and long-run goals. Long-term objectives are the broad directions in which th4e organizations would move over a long duration. These ling-term objectives are then broken down into specific strategies and short-term goals for each of the units/departments. In an organization, the cumulative effect of all these would ultimately lead to the long-term goal. Short-term goals are constantly in need of adaptation to the changing environment, both external and internal.
For an organization analysis, there are three essential requirements: (1)an adequate number of personnel performance is up to the required standard, operation;(2) that personnel performance is up to the required standard; (3) that the working environment in their units/departments is conducive to fulfillment of tasks.
In order to ensure the first two requirements a human resource inventory needs to be made. Date regarding positions, qualifications, vacancies, replacements and training time required for replacements have be worked out. Job standards must also be worked out.
Various efficiency and productivity indexes, or ratios such a productivity ratios, cost per unit etc, can be worked out to determine not only efficiency but also adequacy, in terms of under-manning or over-manning, of the workforce.
Diagnosing the state of the organization”climate” is a less precise exercise than the two indicators suggested above. While rules, procedures, systems and methods all contribute to the making of the environment, much of it is also determined by the attitude that the “people” have in the organization-for instance, the attitude that top management has towards its subordinate staff and the attitudes that members have towards work, supervisors and company procedures. These attitudes are learnt, they result from the person’s experience both within and outside the organization, and training inputs could be used to effect changes of attitude and consequently of the organizational climate.
In analyzing the organization climate both direct and indirect methods could b e used. Direct methods are observation, use of questionnaires, and interviews. Reliance or indirect methods would not give a clear understanding of the attitudes and predispositions of employees. In fact, factors such as low absenteeism and low turnover are not by themselves indicators of positive or negative attitudes, and high or low morale. It would be better to make a careful analysis and study each indicator in a particular situation in conjunction with more direct methods like attitude surveys. Analysis and interpretation of the data may give clear clues not only t attitudinal training needs but possibly also to kill training needs.
Task Analysis
This activity entails a detailed examination of a job, its components, its various operations and the conditions under which it has to be performed. The focus here is on the “task” itself, rather than on the individual and the training required to perform it. Analysis of the job and its various components will indicate the skills and training required to perform the job at the required standard.

Standard of Performance: Every job has an expected standard of performance. Unless such standards are attained, not only will inter-related jobs suffer, but organizational viability will be affected, and so will the expectations that have been set for that particular job itself. If the standards set for the performance of a job are known, then it is possible to know whether the job is being performed at the desired level of output or not. Knowledge of the “task” will help in understanding what skills knowledge an employee should have.

Methods: if an employee is asked to perform a job, the exact components of the job and the standard of performance must be known. Task analysis entails not merely a simple listing of the various job components, but also of the relatively critical nature of the various sub-tasks. Conventional methods of job analysis are usually suitable for task analysis. They are:-

(a) Literature review regarding the job.
(b) Job performance.
(c) Job observation.
(d) Data Collection regarding job interviews.
For blue-collar workers, more precise industrial-engineering techniques, like time and motion studies, could be used, and for white- collar workers, work sampling observation, interviews, and job performance data analysis could be employed. The object of this exercise is to get as much information as possible about the nature of the talks and its various components, leading to the performance standard to be set. This information would be useful in establishing the training programmed for an employee.
Analysis of the job is but one part of task analysis. Other areas are the skill required, either in terms of education or training, to perform the job, knowledge, and finally attitudinal pre-dispositions such as the attitudes, towards safety, or interpersonal competence.


Man Analysis
Man analysis is the third component in identifying training nees. The focus of man analysis is on the individual employee, his abilities, and the inputs required for job performance, or individual growth and development in terms of career planning.

Man analysis is still less precise than the other two analyses, primarily because the available measures are much less objective and there are many individual variations. Yet, through observation and unobtrusive measures, it is possible to get an indication of the training requirement of an individual.

Man analysis helps to identify whether the individual employee requires training and if so, what kind of training. Clues to training needs can come from an analysis of an individual’s or a group’s typical behaviour. The primary sources of such information are:-
(a) Observation at place or work, examination of job schedules, quantum of spoilage, wastage, and clues about interpersonal relations of the employees.

(b) Interviews with superiors and employees.

(c) Comparative studies of good vs poor employees, to identify differences, skills and training gaps.

(d) Personnel records.

(e) Production reports.

(f) Review of literature regarding the job and machines used. Job-knowledge tests, work sampling and diagnostic psychological tests also provide information about employees. This, it may be stated that a variety of sources need to be studied.

Question 4 Explain different types of appraisal methods.

Answer: When it has been decided who will evaluate, when, and on what basis, the technique to be used will be selected. A number of approaches will be described here. There are several ways to classify these tools. The three categories used here will be :-

(A) Individual evaluation Methods.

There are five ways to evaluate an employee individually. In these systems, employees are evaluated one at a time without directly comparing them with other employees.
Graphic Rating Scale. The most widely used performance evaluation technique is a graphic rating scale. In this technique, the evaluator is presented with a graph and asked to rate employees on each of the characteristics listed. The number of characteristics rated varies from a few to several dozen. A factor analysis for the results indicate that only two traits were being rated: quality of performance and ability to do the present job.

The rating can be in a series of boxes, or they can be on a continuous scale (0-9) or so. In the latter case, the evaluator places a check above descriptive words raging from none to maximum. Typically, these ratings are then assigned points. For example, outstanding may be assigned a score of 4 and unsatisfactory a score of 0. Total scores are then computed. In some plans, greater weights may be assigned to more important traits. Evaluators are often asked to explain each rating with a sentence of two.

Forced Choice: The forced-choice method of evaluation was developed because other methods used at the time led to a preponderance of higher ratings, which made promotion decisions difficult. In forced choice, the evaluator must choose from a set of descriptive statements about the employee. The two, three, or four statement items are grouped in a way they the evaluator cannot easily judge which statements apply to the most effective employee.

Typically, personnel specialists prepare the items for the form, and supervisors or other personnel specialists rate the items for applicability; that is, they determine which statements describe effective and ineffective behaviour. The supervisor then evaluates the employee. The Personnel Department adds up the number of statements in each category (for example, effective behaviour), and they are summed into an effectiveness index. Forced choice can be used by superiors, peers, subordinates, or a combination of these in evaluating employees.

Essay Evaluation: In the essay technique of evaluation, the evaluator is asked to describe the strong and weak aspects of the employee’s behaviour. In some enterprises, the essay technique is the only one used; in others, the essay is combined with another form, such as graphic rating scale. In this case, the essay summarizes the scale, elaborates on some of the ratings, or discusses added dimensions not on the scale. In both of these approaches the essay can be open ended, but in most cases there on. The essay method can be used by evaluators who are superiors, peers, or subordinates of the employee to be evaluated.

Management by Objectives: Another individual evaluation method in use today is Management by Objectives (MBO). In this system, the supervisor and employee to be evaluated jointly set objective in advance for the employee to try to achieve during a specified period. The method encourages, if not requires, them to phrase these objectives primarily in quantitative terms. The evaluation consists of a joint review of the degree of achievement of the objectives. This approach combines the superior and self-evaluation systems.

Critical Incident Technique: In this technique, personnel specialists and operating managers prepare lists of statements of very effective and very ineffective behaviour for an employee. These are the critical incidents. The personnel specialists combine these statements into categories, which vary with the job. Once the categories are developed and statements of effective and ineffective behaviour are provided, the evaluator prepares a long for each employee. During the evaluation period, the evaluator “records” examples of critical (outstandingly good or bad) behaviours in each of the categories, and the log is used to evaluate the employee at the end of the period. It is also very useful for the evaluation interview, since the evaluator can be specific in making positive and negative comments, and it avoids “recency” bias. The critical incident technique is more likely to be used by superiors than in peer of subordinate evaluations.

Checklists and Weighted Checklists. Another type of individual method is the checklist. In its simplest form, the checklist is a set of objectives or descriptive statements. If the Rater believes that the employee possess a trait listed, the Rater checks the items; if not, the Rater leaves it blank. A rating score from the checklist equals the number of checks.
A more recent variation is Weighted Checklist. Superviosor or personnel specialists familiar with the jobs to be evaluated prepare a large list of descriptive statements about effective and ineffective behavour on jobs, similar to the critical incident process. Judges who have observed behaviour on the job sort the statements into piles describing behaviour that is scaled from excellent to poor (usually on a 7-11 scale). When there is reasonable agreement on an item (for example, when the standard deviation is small), it is included in the weighted checklist. The weight is the average score of the Raters to the checklist’s use.

The supervisor or other Raters received the checklists without the scores, and they check the items that apply, as with an un-weighted checklist. The employee’s evaluation is the sum of the scores (weights) on the items checked. Checklists and weighted checklists can be used by evaluators who are superiors, peers, or subordinates, or by a combination.

Behaviourally Anchored rating Scale: Another technique which essentially is based on the critical incident approach is the Behaviourally anchored rating scale (BARS). This technique is also called the behavioural expectation scale (BES). This is a new, relatively infrequently used technique.
Supervisors give descriptions of actually good and bad performance, and personnel specialists group these into categories (five to ten is typical). As with weighted checklists, the items are evaluated by supervisors (often other than those who submitted the items)/ A procedure similar to that for weighted checklists is used to verify the evaluations (outstndigly good, for example) with the smallest standard deviation, hopefully around 1.5 on a 7-11 point scale. These items are then used to construct the BARS.

B. Multiple Person Evaluation Methods

The multiple person evaluation methods are used to evaluate employees one at a time. Three techniques that have been used to evaluate an employee in comparison with other employees being evaluated are as under:-

(a) Ranking: In ranking method, the evaluator is asked to rate employees from highest to lowest on some overall criterion. This is very difficult to do if the group of employees being compared number over 20. It is also easier to rank the best and worst employees than it is to evaluate the average ones. Simple ranking can be improved by alternative ranking. In this approach the evaluators pick the top of bottom employees first, then select the next highest and next lowest, and move towards the middle.

(b) Paired Comparison: This approach makes the ranking method easier and more reliable. First, the names of the perosons to be evaluated are placed on separate sheets (or cards) in a predetermined order, so that each person is compared to all others to be evaluated. The evaluator then checks the perons he feels is the better or the two on a criterion for each comparasion. Typically the criterion is overall ability to do the present job. The number of times a person is preferred is tallied, and this develops and index of the number of preferences compared to the number being evaluated.

These scores can be converted into standard scores by comparing the scores to the standard deviation and the average of all scores. This method can be used by superiors, peers, subordinates, or some combination of these groups.

(c) Forced Distribution: The forced distribution system is similar to “grading on a curve”. The evaluator is asked to rate employees in some fixed distribution of catergories, such as 10 percent in low, 20 percent in low average, 40 percent in average, 20 percent in high average, and 10 percent in high. One way to do this is type each employee’s name on a card and ask the evaluators to sort the cards into five piles corresponding to the ratings. This should be done twice for the two key criteria of job performance and promotability. One reason forced distribution was developed was to try to alleviate such problems as inflated ratings and central tendency in the graphic rating scale.

(B) Degree Appraisal.

Typically, performance appraisal has been limited to a feedback process between employees and supervisors. However, with the increased focus on teamwork, employee development, and customer service, the emphasis has shifted to employee feedback from the full circle of sources depicted in the diagram below. This multiple input approach to performance feedback is sometimes called “360 degree assessment” to connote that full circle.










There are no prohibitions in law or regulation against using a variety of rating sources, in addition to the employee’s supervisor, for assigning performance. Research has shown assessment approaches with multiple rating sources provide more accurate, reliable, and credible information. For this reason, personnel management supports the use of multiple rating sources as an effective method of assessing performance for format appraisal and other evaluative and developmental purposes.

Superiors: Evaluations by superiors are the most traditional source of employee feedback. This form of evaluation includes both the ratings of individuals by supervisors on elements in an employee’s performance plan and the evaluation of programs and team by senior managers.

Self Assessment:

This form of performance information is actually quite common but usually used only as an informal part of the supervisor-employee appraisal feedback session. Supervisors frequently open the discussion with: “How do you feel you have performed?” In a somewhat more formal approach, supervisors ask employees to identify the key accomplishments they feel best represent their performance in critical and non-critical performance elements. In a 360 degree approach, if self ratings are going to be included, structured forms and formal procedures are recommended.

Peers:

With downsizing and reduced hierarchies in organization, as well as the increasing use of teams and group accountability, peers are often the most relevant evaluators of their colleagues; performance. Peers have a unique perspective on a co-worker’s job performance and employees are generally very receptive to the concept of rating each other. Peer ratings can be used when the employee’s expertise is known or the performance and results can observed. There are both significant contributions and serious pitfalls that must be carefully considered before including this type of feedback in a multifaceted appraisal program.

Subordinates:

An upward-appraisal process or feedback survey is among the most significant and yet controversial features of a full circle performance evaluation program. Both managers being appraised and their own superiors agree that subordinates have a unique, often essential, perspective. The subordinate ratings provide particularly valuable data on performance elements concerning managerial and supervisory behaviors. However, there is usually great reluctance, even fear, concerning implementation of this rating dimension. On balance, the contributions can outweigh the concerns if the precautions are addressed.

Customers:

Setting customer service standards, requires agencies to survey internal and external customers, publish customer service standards, and measure agency performance against these standards. Internal customers are defined as users of products or services supplied by another employee or group within the agency or organization. External customer are outside the organization and include but are limited to the general public.

(c) MBO: Management by Objectives
MBO is very common industry practice used to review employees at the workplace. At the beginning of the year clear objectives are laid down for achievement during the course of the years. These objectives are popularly called by the following names.

1. KRA – Key Result Areas
2. KPA-Key Performance Areas
3. Targets
4. Commitments

These objective are designed using the SMART framework in …. Specific, Measurable, Achievable, Results oriented and Time bound. All objectives must conform to this framework. Thereafter the objectives are broken up into half yearly, quarterly and may be monthly objectives, again keeping in mind the SMART framework. All along the process both the employee and the manager are in consensus of the objective and the timeliness as well as the deliverables.

MBO is one of the most effective methods for performance review primarily because it is identified at the beginning of the review period and is regularly reviewed for achievements and modified on going again in consensus between the employee and the manager.

At the end of the review year, the MBO’s are reviewed and completion with the SMART framework. In case of a new employee or someone moving jobs/assignments between teams; after about 6-8 weeks of being in the job this process is undertaken and objectives are set.

***


Question 5: Write a note of Motivation Techniques.

Answer:

Man is by nature constantly motivated and is an organic system, not a mechanical one. The inputs of energy such as food, water etc., are converted by him into outputs of behaviour. His behaviour is determined by relationships between his characteristics as organic system and the environment in which he moves. Management involves creation and maintenance of environment for performance of individuals working together in groups towards accomplishment of common objectives and therefore the manager cannot perform his functions without knowing what motivates people.
Concept of Motivation
The personnel function is all about motivation and unless individuals are motivated to make sufficient potential to perform effectively, they may not achieve the level of performance that is desired from them. Managerial people are always facing the problems of motivating their subordinates to release their potential most effectively and thereby permit the desired goals of the organization and the needs of employees to be achieved. Knowledge of the motivational process provides the basis for understanding why people do what they do.
Motivation is positively correlated with concepts of (1) level of aspiration, (2) degree of commitment, and (3) inclination towards action.
It is rightly said, “You can buy a man’s time, you can buy a man’s physical presence at a given place, but you cannot buy his enthusiasm, initiative and loyalty.” Motivation aims at transforming the ‘ability to do’ into ‘the will to do’. Motivated employees are in a state of tension. To relieve this tension, they engage in activity. The greater the tension, the greater shall be the activity to bring about relief. When we see someone working hard at some activity, we can conclude that the individual is driven by a desire to achieve some goal which perceives as having value to him.
Motivation has been defined as the act of stimulating someone to take a desired course of action-to push the right button to get a desired reaction. It includes a stimulus and desired results. Motivation concerns itself with the will to work. It seeks to know the motives for work and to find out ways and means, by which their realisation can be helped and encouraged.
Mr. Urwick has called it the dynamic aspect of management. According to Michael Jucius, motivation is an ‘act of stimulating someone to get a desired course of action’. James Driver says that, motivation means the phenomena involved in the operation of incentives and drives. In the words of P.T.Young, motivation is the process (a) of arousing or initiating behaviour, (b) of sustaining an activity in progress, and (c) of channeling of activity in the given course.
A man’s performance on a specific task is a function of his skill and motivation. Thus it can be said that p=f(S,M), where P is for performance, S for skill and M for motivation. Skill does not guarantee that the individual will put forth his best effort. There is another variable, namely motivation which finally determines the effort which can be expected from such employee. That difference in motivation affects performance has been demonstrated very conclusively. In laboratory experiments it was found that other things being equal, performance level is higher if the motivation level is higher.
The key to understand motivation lies in the meaning and relationships between needs, drives and goals. This demonstrated through ‘the motivation cycle’ given below:

1. Needs: The best one word definition of a need is efficiency. In the domestic sense, needs are created whenever there is a physiological or psychological imbalance. For example, a need exists when a cell in the body is deprived of food and water or when the human personality is deprived of other persons who serve as friends or comparisons.
2. Drives: Drives are set up to alleviate needs. A drive can be defined as deficiency with direction. Drives are action-oriented and provide an energizing thrust toward goal accomplishment. The examples of the needs for food and water are translated into hunger and thirst drives, and need for friends becomes a drive for affiliation.
3. Goals: At the end of the motivation cycle is the goal. A goal in the motivation cycle can be defined as anything which will alleviate a need and reduce a drive.
Motivation may range from a threatening gesture to a tradition inspired activity. Thus the atmosphere of working situation, the past history of human relations in a company, expectations about the future as well as a wage incentive plan be stimuli to action, It is believed that the full force of motivation lies in the person doing the motivation. In the case the management, it is the magnetic personality of the executive which induces high loyalty and production. If the executive does not have this quality, he is obviously at a disadvantage. However, he can develop effective plans of motivation.
Motivation Techniques
Following Michael Jucius, let us see how management may proceed to motivate employees. This activity may be divided into two parts: (a) what is to be done and (b) how and why what is done. The former are steps in motivation and the latter are rules governing the steps. Both are performed simultaneously. The steps of motivation are listed below:
1. Size up situation requiring motivation: The first stage of motivation is to make sure of motivational needs. Every employee needs motivation. However, all people do not react in exactly the same way to the same stimuli. Keeping this in mind the executive shall size up how much and what kind of motivation is needed and when and by which individuals.
2. Prepare a set of motivating tools: Having determined the motivational needs of a particular person or group an executive must have a list from which he should select and apply specific tools of motivation. An executive from his personal experience should prepare a list of what devices are likely to work with what type of people and under what circumstances.
3. Selecting and applying the appropriate motivator: Proper application of motivational plan is very important. This involves selection of the appropriate technique, the method of application and the timing and location of applications. Having selected appropriate techniques, thought must be given to its application.
4. Follow-up the results of the application: The last stage of motivation is to follow-up the results of the application of the plan. The primary objective is to ascertain if an employee has been motivated or not. If not, some other technique should be tried. A secondary purpose of follow-up is to evaluate motivation plans for future guidance.

Rules of Motivating: In following the steps of motivation a manager should be guided by some fundamental rules which should be based upon the following principles:
1. Self-interest and Motivation: Undoubtedly, motivation is mainly built on selfishness. Psychologically speaking, selfishness is a part and parcel of life. To deny this is to build the theory on unrealistic foundation. To seek some other basis of motivation would be to ignore the real nature of man. The aim should be to learn more about selfishness.
2. Attainability: Motivation must establish attainable goals. What is prescribed for a particular person must be attainable by him. This does not mean that the goal is realised at once. Such goals as promotion or desirable transfer may take years to attain. But it must be within reach.
Eight Ways to Motivate Plant Employees: Based on a fact-finding study conducted at several manufacturing plants of the General Electric Company, Sorcher and Meyer have made the following recommendations for improving the motivation of employees in routine jobs.
1. Provide assembly line employees with more than minimum training. Providing some sort of formal training for a factory employee beyond the required minimum should result in greater personal involvement in the job.
2. Create sub-goals to measure accomplishment. A sense of competition is important to good motivation. When people work towards clearly defined goals they perform better. Moreover, they are likely to be more interested in the work which will reduce monotony and mental fatigue.
3. Provide regular feedback on performance. Psychological studies show that people perform better when they receive positive as well as negative feedback about their performance on a regular basis.
4. Maintain a neat and orderly work area. If the foreman does not care about neatness, employees may feel that they need not care about it and this attitude may also affect the quality of their work.
5. Arrange work situations so that conversation between employees is either easy or impossible. Experienced workers can do routine jobs with little attention to the task. Conversation while working may reduce monotony and fatigue and thus have a favourable effect on output.
6. If possible, increase the number of operations performed by one employee. This can be done by the simplification of manual operations. It offers several advantages, viz.,
i) the risk of errors is reduced;
ii) training costs are minimized;
iii) Management can hire employees at lower wages.
iv) Structure jobs, so that workers can, at least occasionally move about the work area. Besides job rotation, there are other ways to provide for physical movement such as setting employees secure their own tools or by adding operations which require some physical activity.
v) Explore ways to assign greater personal responsibility. Increased responsibility means greater self-esteem and greater job meaningfulness. One way to enlarge responsibility is to let an employee inspect his own work.
Question 6: Elaborate the importance of grievance handling.

Answer:
The personnel function is really all about motivation and unless individuals are motivated to make sufficient potential to perform effectively, they may not achieve the level of performance that is desired from them. Knowledge of the motivational process provides the basis for understanding why people do what they do.

Motivation is positively considered with concepts of 1, level of aspiration 2, degree of commitment, and 3, inclination towards action.

It is rightly said, “You can buy a man’s time, you can buy a man’s physical presence at a given place, but you cannot buy his enthusiasm, initiative and loyalty.” Motivation aim at transforming the ‘ability to do’ and ‘the will to do’ Motivated employees are in a state of tension. To relieve this tension, they engage in activity. The greater the tension, the greater shall be the activity to bring about relief.

Motivation has been defined as the act of stimulating someone to take a desired course of action-to push the right button to get a desired reaction. It includes a stimulus the desired results. Motivation concerns itself with the will to work. It seeks to know the motives for work and to find out ways and means, by which their realization can be helped and encouraged.

The key to understand motivation lies in the meaning and relationships between needs, drives and goals. This demonstrated through the motivation cycle’ given below:

1. Needs: The best one word definition of a need is efficiency. In this domestic sense, needs are created whenever there is a physiological or psychological imbalance. For example a need exists when a cell in the body is deprived of food and water or when the human personality is deprived of other persons who serve as friends or comparisons.
2. Drives: Drives are set up to alleviate are action-oriented needs. A drive can be defined as deficiency with direction. Drives are action-oriented and provide an energizing thrust toward goal accomplishment. The examples of the needs for food and water are translated into hunger and thirst drives, and need for friends becomes a drive for affiliation.
3. Goals: At the end of the motivation cycle is the goal. A goal in the motivation cycle can be defined as anything which will alleviate a need and reduce a drive.

It is believed that the full force of motivation lies in the person doing the motivation. In the case of management, it is the magnetic personality of the executive which induces high loyalty and production. If the executive does not have this quality, he is obviously at the disadvantage. However, he can develop effective plans of motivation.

Motivation Techniques:

Following Michael Jucius, let us see how management may proceed to motivate employees. This activity may be divided into two parts; (a) what is to be done and (b) how and why what is done. The former are steps in motivation and the latter are rules governing the steps. Both are performed simultaneously. The steps of motivation are listed below:

1. Size up situation requiring motivation: The first stage of motivation is to make sure of motivational needs. Every employee needs motivation. However, all people do not react in exactly the same way to the same stimuli. Keeping this in mind the executive shall size up how much and what kind of motivation is needed and when by which individuals.
2. Prepare a set of motivating tools: Having determined the motivational needs of a particular person or group an executive must have a list from which he should select and apply specific tools of motivation. An executive from his personal experience should prepare a list of what devices are likely to work with what type of people and under what circumstances.
3. Selecting and applying the appropriate motivator: Proper application of motivational plan is very important This involves selection of the appropriate technique, the method of application and the timing and location of applications. Having selected appropriate techniques, thought must be given to its application.
4. Follow-up the results of the application of the plan. The primary objective is to ascertain if an employee has been motivated or not. If not, some other technique should be tried. A secondary purpose of follow-up is to evaluate motivation plans for future guidance.

Rules of motivating:

In following the steps of motivation a manager should be guided by some fundamental rules which should be based upon the following principles:

1. Self-Interest & Motivation:

Undoubtedly, motivation is mainly is mainly built on selfishness. Psychologically speaking, selfishness is a part and parcel of life. To deny this is to build the theory on unrealistic foundation. To seek some other basis of motivation would be to ignore the real nature of man. The aim should be learn more about selfishness.
2. Attainability:

Motivation must establish attainable goals. What is prescribed for a particular person must be attainable by him. This does not mean that the goal is realized at once. Such goals as promition or desirable take to attain. But it must be within reach.

Eight Ways to Motivate Plant Employees: Based on a fact-finding study conducted at several manufacturing plants of the general electric company, Sorcher and Meyer have made the following recommendations for improving the motivation of employees in routine jobs.

1. Provide assembly line employees with more than minimum training. Providing some sort of formal training for a factory employee beyond the required minimum should result in greater personal involvement in the job.
2. Create sub-sub-goals to measure accomplishment. A sense of competition is important to good motivation. When people work towards clearly defied goals they perform better. Moreover, they are likely to be more interested in the work which will reduce monotony and mental fatigue.
3. Provide regular feedback on performance. Psychological studies show that people perform better when they receive positive as well as negative feedback about their performance on a regular basis.
4. Maintain a neat and orderly work area. If the foreman does not care about neatness, employees may feel that they need not care about it and this attitude may also affect the quality of their work.
5. Arrange work situations so that conversation between employees is either easy or impossible. Experienced worker can do routine jobs with little attention to the task. Conversation while working may reduce monotony and fatigue and thus have a favourable effect on output.
6. If possible increase the number of operations performed by one employee. This can be done by the simplification of manual operations. It offers several advantages, viz.
i. The risk of errors is reduced.
ii. Training costs are minimized
iii. Management can hire employees at lower wages.
iv. Structure jobs, so that workers can, at least occasionally move about the work area. Besides job rotation, there are other ways to provide for physical movement such as setting employees secure their own tools or by adding operations which require some physical activity.
v. Explore ways to assign greater personal responsibility self-esteem and greater job meaningfulness. One way to enlarge responsibility is to let an employee inspect his own work.
***
 

bipulintouch

New member
Human Resources Management

:lmfaooo:Assignments
MBA – I SEM.
Subject Code – MB0027
Set – 1
Subject: Human Resources Management
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Question 1: Discuss the difference between personnel management and Human Resource Management

1. Answer: The genesis of Human Resources Management traces its roots to the erstwhile personnel Management that was prevalent in the companies of a few decades age. Though the two terms ‘Personnel Management’ and ‘Human Resources Management’ are interchangeably used by most of the authors, there are some differences between them.. Management of Human Resources is a new field of study embodying behavioural science knowledge relating to the working of line and staff officials and union leaders to motivate organizational goals. On the other hand Personnel Management is that phase of management which deals with the effective control and use of manpower. Yoder, Heneman and others agreed that the HRM is a broad concept which covers many personnel aspects and include social, professional and individual enterprise aspects, whereas Personnel Management focuses only on personnel aspects such as leadership, justice determination, task specialization, staffing, performance appraisal, etc. HRM is more growth- oriented whereas Personnel Management is slightly narrow. Human Resource Planning is very vital in HRM. This is because it leads to the maximum utilization of human resources, reduces excessive labour turnover and high absenteeism; improves productively and aids in achieving the objectives of an organization. In addition to the above function, HRM emphasizes on training, an important area of personnel, which covers the following aspects:

1. Increasing productivity;
2. Improving quality;
3. Improving organizational climate;
4. Ensuring personnel growth etc.

While in practice both pertained to people management philosophically the approach is vastly different. The expectations from Personnel management approach is to ‘take care’ of the people working in a organization, addressing grievances and complaints formen a large part of the Personnel Management function. The focus is largely reactive and followed the Theory X approach that believed that people do not naturally like to work and need to be coerced to work and often need to be driven to work. The philosophy is more the ‘stick’ approach rather than ‘carrot’ approach. Employee welfare is of paramount importance and managing industrial relations as a result of heightened trade union activity formed the highlights of the Personnel Management functions.

Human Resources Management on the other hand adopts a proactive and delight Hiring the right talent, providing for ample opportunities for career growth and job satisfaction are the highlights of this management style. The basic philosophy is driven by the Theory Y approach where the belief is that people like to work and do not prefer to be supervised and made to perform.

***








Question 2: Explain the Human Resource Planning System.

Answer:

Manpower planning consists in projecting future manpower requirements and developing manpower plans for the implementation of the projection.

Through human resource planning, the management strives to have the right number and right kinds of people at the right places, at the right time, to do things which result in both the organization and the individual receiving the maximum long-range benefit.

It is the process by which a management determines how an organization should move from its current manpower position to its desired manpower position. According to Wickstorm, Human-resource Planning consists of a series of activities, viz.

1. Forecasting future manpower requirements, either in terms of mathematical projections of trends in the economic environment and development in industry, or in terms of judgmental estimates based upon the specific future plans of a company.
2. Making an inventory of present manpower resources and assessing the extent to which these resources are employed/optimally.
3. Anticipating manpower problems by projecting present resources into the future and comparing them with the forecast of requirements to determine their adequacy, both quantitatively and qualitatively and
4. Planning the necessary programs of requirement selection, training, development, utilization, transfer, promotion, motivation and compensation to ensure that future manpower requirements are properly met.

Importance of Manpower Planning:

Human resource planning is necessary for all organization due to the following reasons:

1. Due to constant need for replacing employees due to retirement, die, mental ailments etc. so that work would not suffer
2. The need of personnel with necessary qualification, skills, knowledge, experience could be satisfied through effective manpower planning.
3. Due to unavoidable frequent labour turnover such as voluntary quits, discharges, marriage etc. manpower planning is essential to face any change.
4. To meet the needs of expansion programs which becomes necessary because of increase in the demand for goods and services by a growing population, a rising standard of living – which calls for larger quantities of the same goods and services as also for new goods; the competitive position of a firm which brings in more business arising from improvements effected in the slumps period, and the rate of growth of the organization, human resource planning is unavoidable.
5. It is also needed in order to identify areas of surplus personnel or areas in which there is a shortage of personnel. If there is a surplus it can be redeployed; and it there is shortage it may be made good.
The human resource planning is practically useful at the following different levels:
1. At the national level, it is generally done by the govt. and covers items like population projection, program of economic development, educational facilities, occupational distribution, and growth, industrial, educational facilities, occupational distribution, and growth, industrial and geographical mobility of personnel.
2. At the sector level, it may be done by the govt. central or state and may cover manpower needs of agricultural, industrial service sector.
3. At the industry level, it may cover manpower forecast for specific industries, such as engineering, heavy industries, consumer goods industries, public utility industries etc.
4. At the level of individual unit, it may relate tot its manpower needs for various departments and for various types of personnel.

Process of Human Resource Planning

The process of human resource planning is one of the most crucial, complex and continuing managerial functions, which according to the Tata Electrical Locomotive Company, “embraces organization development, management development, career planning and succession planning.

It may be rightly regarded as a multi-step process, including various issues, such as
1. Deciding goals or objectives;
2. Estimating future organizational structure and manpower requirements.
3. Auditing human resources
4. Planning job requirements and job description and developing a human resource.














A. Objectives of human Resource Planning:

Human Resource Planning fulfils individual, organizational and national goals; but, according to Sikula, “the ultimate mission or purpose is to relate future human resources to future enterprise needs, so as to maximize the future return on investment in human resources. In effect, the main purpose is one of matching or fitting employee abilities to enterprise requirements.” The objectives may be laid down for a short-term (i.e. for one year).

B. Estimating the Future Organizational Structure or Forecasting the Manpower Requirements:

The management must estimate the structure of the organization at a given point in time. For this estimate, the number and type of employees needed have to be determined. Many environmental factors affect this determination. They include business forecasts, expansion and growth, design and structural changes, management philosophy, government policy, product and human skills mix, and competition.
Forecasting provides the basic premises on which the manpower planning is built. Forecasting is necessary for various reasons, such as:

1. The eventualities and contingencies of general economic business cycles such as inflation, wages, prices, costs and raw material supplies have an influence on the short-range and long-run plans of all organizations.
2. An expansion following enlargement and growth in business involves the use of additional machinery and personnel, and a reallocation of facilities, all of which call of which call for advance planning of human resources.
3. Changes in management philosophies and leadership styles.
4. The use of mechanical technology (such as the introduction of automatic controls, or the mechanization of materials handing functions) necessitates changes in the skills of workers, as well as a change in the number of employees needed.
5. Very often, changes in the quantity or quality of products or services require a change in the organization structure. Plans have to be made for this purpose as well.

C. Auditing Human Resources :
Once the future human resource needs are estimated, the next step is to determine the present supply of manpower resources. This is done through what is called “Skills inventory”. A skills inventory contains data about each employee’s skills, abilities, work preferences and other items of information which indicate his overall value to the company.

D. Job Analysis :
After having decided how many persons would be needed, it is necessary to prepare a job analysis, which records details of training, skills, qualification, abilities, experience and responsibilities, etc., which are needed of a job. Job analysis includes the preparation of job descriptions and job specifications.
E Developing a Human Resource Plan :
This step refers to the development and implementation of the human resource plan, which consists in finding out the sources of labour supply with a view to making an effective use of these sources. The first thing, therefore, is to decide on the police-should the, personnel be hired from within through promotional channels or should it be obtained from an outside source. The best policy which is followed by most organizations is to fill up higher vacancies by promotion and lower level positions by recruitment from the labour market.

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Question 3: Write a detailed Note on Training needs identification.

Answer: Training could be a useful aid in improving the transformation process that takes place in an organization in terms of the processing of inputs to outputs. Training needs have to be related both in terms of the organization’s demands and that of the individual’s. Diversification of product lines, new technology, and hence a new kind of job demands the individual’s growth and development through induction, training, or training necessitated by job rotation due to an organization’s internal mobility policies.
A survey conducted by A.D. Sinha, listed in rank order the following methods of identifying training needs :
1. Views of the line manager
2. Performance appraisal
3. Company and departmental plans
4. Views of training manager
5. Analysis of job difficulties
The model we shall examine here is the Thayer and McGhee model. It is based on the following three factors :
1. Organization analysis
2. Task analysis
3. Man analysis
Total Organization Analysis
Total Organization Analysis is a systematic effort to understand exactly where training effort needs to be emphasized in an organization. It involves a detailed analysis of the organization structure, objectives, human resources and future plans, and an understanding of its culture, milieu.
The first step in organization analysis is achieving a clear understanding of both short-run and long-run goals. Long-term objectives are the broad directions in which th4e organizations would move over a long duration. These ling-term objectives are then broken down into specific strategies and short-term goals for each of the units/departments. In an organization, the cumulative effect of all these would ultimately lead to the long-term goal. Short-term goals are constantly in need of adaptation to the changing environment, both external and internal.
For an organization analysis, there are three essential requirements: (1)an adequate number of personnel performance is up to the required standard, operation;(2) that personnel performance is up to the required standard; (3) that the working environment in their units/departments is conducive to fulfillment of tasks.
In order to ensure the first two requirements a human resource inventory needs to be made. Date regarding positions, qualifications, vacancies, replacements and training time required for replacements have be worked out. Job standards must also be worked out.
Various efficiency and productivity indexes, or ratios such a productivity ratios, cost per unit etc, can be worked out to determine not only efficiency but also adequacy, in terms of under-manning or over-manning, of the workforce.
Diagnosing the state of the organization”climate” is a less precise exercise than the two indicators suggested above. While rules, procedures, systems and methods all contribute to the making of the environment, much of it is also determined by the attitude that the “people” have in the organization-for instance, the attitude that top management has towards its subordinate staff and the attitudes that members have towards work, supervisors and company procedures. These attitudes are learnt, they result from the person’s experience both within and outside the organization, and training inputs could be used to effect changes of attitude and consequently of the organizational climate.
In analyzing the organization climate both direct and indirect methods could b e used. Direct methods are observation, use of questionnaires, and interviews. Reliance or indirect methods would not give a clear understanding of the attitudes and predispositions of employees. In fact, factors such as low absenteeism and low turnover are not by themselves indicators of positive or negative attitudes, and high or low morale. It would be better to make a careful analysis and study each indicator in a particular situation in conjunction with more direct methods like attitude surveys. Analysis and interpretation of the data may give clear clues not only t attitudinal training needs but possibly also to kill training needs.
Task Analysis
This activity entails a detailed examination of a job, its components, its various operations and the conditions under which it has to be performed. The focus here is on the “task” itself, rather than on the individual and the training required to perform it. Analysis of the job and its various components will indicate the skills and training required to perform the job at the required standard.

Standard of Performance: Every job has an expected standard of performance. Unless such standards are attained, not only will inter-related jobs suffer, but organizational viability will be affected, and so will the expectations that have been set for that particular job itself. If the standards set for the performance of a job are known, then it is possible to know whether the job is being performed at the desired level of output or not. Knowledge of the “task” will help in understanding what skills knowledge an employee should have.

Methods: if an employee is asked to perform a job, the exact components of the job and the standard of performance must be known. Task analysis entails not merely a simple listing of the various job components, but also of the relatively critical nature of the various sub-tasks. Conventional methods of job analysis are usually suitable for task analysis. They are:-

(a) Literature review regarding the job.
(b) Job performance.
(c) Job observation.
(d) Data Collection regarding job interviews.
For blue-collar workers, more precise industrial-engineering techniques, like time and motion studies, could be used, and for white- collar workers, work sampling observation, interviews, and job performance data analysis could be employed. The object of this exercise is to get as much information as possible about the nature of the talks and its various components, leading to the performance standard to be set. This information would be useful in establishing the training programmed for an employee.
Analysis of the job is but one part of task analysis. Other areas are the skill required, either in terms of education or training, to perform the job, knowledge, and finally attitudinal pre-dispositions such as the attitudes, towards safety, or interpersonal competence.


Man Analysis
Man analysis is the third component in identifying training nees. The focus of man analysis is on the individual employee, his abilities, and the inputs required for job performance, or individual growth and development in terms of career planning.

Man analysis is still less precise than the other two analyses, primarily because the available measures are much less objective and there are many individual variations. Yet, through observation and unobtrusive measures, it is possible to get an indication of the training requirement of an individual.

Man analysis helps to identify whether the individual employee requires training and if so, what kind of training. Clues to training needs can come from an analysis of an individual’s or a group’s typical behaviour. The primary sources of such information are:-
(a) Observation at place or work, examination of job schedules, quantum of spoilage, wastage, and clues about interpersonal relations of the employees.

(b) Interviews with superiors and employees.

(c) Comparative studies of good vs poor employees, to identify differences, skills and training gaps.

(d) Personnel records.

(e) Production reports.

(f) Review of literature regarding the job and machines used. Job-knowledge tests, work sampling and diagnostic psychological tests also provide information about employees. This, it may be stated that a variety of sources need to be studied.

Question 4 Explain different types of appraisal methods.

Answer: When it has been decided who will evaluate, when, and on what basis, the technique to be used will be selected. A number of approaches will be described here. There are several ways to classify these tools. The three categories used here will be :-

(A) Individual evaluation Methods.

There are five ways to evaluate an employee individually. In these systems, employees are evaluated one at a time without directly comparing them with other employees.
Graphic Rating Scale. The most widely used performance evaluation technique is a graphic rating scale. In this technique, the evaluator is presented with a graph and asked to rate employees on each of the characteristics listed. The number of characteristics rated varies from a few to several dozen. A factor analysis for the results indicate that only two traits were being rated: quality of performance and ability to do the present job.

The rating can be in a series of boxes, or they can be on a continuous scale (0-9) or so. In the latter case, the evaluator places a check above descriptive words raging from none to maximum. Typically, these ratings are then assigned points. For example, outstanding may be assigned a score of 4 and unsatisfactory a score of 0. Total scores are then computed. In some plans, greater weights may be assigned to more important traits. Evaluators are often asked to explain each rating with a sentence of two.

Forced Choice: The forced-choice method of evaluation was developed because other methods used at the time led to a preponderance of higher ratings, which made promotion decisions difficult. In forced choice, the evaluator must choose from a set of descriptive statements about the employee. The two, three, or four statement items are grouped in a way they the evaluator cannot easily judge which statements apply to the most effective employee.

Typically, personnel specialists prepare the items for the form, and supervisors or other personnel specialists rate the items for applicability; that is, they determine which statements describe effective and ineffective behaviour. The supervisor then evaluates the employee. The Personnel Department adds up the number of statements in each category (for example, effective behaviour), and they are summed into an effectiveness index. Forced choice can be used by superiors, peers, subordinates, or a combination of these in evaluating employees.

Essay Evaluation: In the essay technique of evaluation, the evaluator is asked to describe the strong and weak aspects of the employee’s behaviour. In some enterprises, the essay technique is the only one used; in others, the essay is combined with another form, such as graphic rating scale. In this case, the essay summarizes the scale, elaborates on some of the ratings, or discusses added dimensions not on the scale. In both of these approaches the essay can be open ended, but in most cases there on. The essay method can be used by evaluators who are superiors, peers, or subordinates of the employee to be evaluated.

Management by Objectives: Another individual evaluation method in use today is Management by Objectives (MBO). In this system, the supervisor and employee to be evaluated jointly set objective in advance for the employee to try to achieve during a specified period. The method encourages, if not requires, them to phrase these objectives primarily in quantitative terms. The evaluation consists of a joint review of the degree of achievement of the objectives. This approach combines the superior and self-evaluation systems.

Critical Incident Technique: In this technique, personnel specialists and operating managers prepare lists of statements of very effective and very ineffective behaviour for an employee. These are the critical incidents. The personnel specialists combine these statements into categories, which vary with the job. Once the categories are developed and statements of effective and ineffective behaviour are provided, the evaluator prepares a long for each employee. During the evaluation period, the evaluator “records” examples of critical (outstandingly good or bad) behaviours in each of the categories, and the log is used to evaluate the employee at the end of the period. It is also very useful for the evaluation interview, since the evaluator can be specific in making positive and negative comments, and it avoids “recency” bias. The critical incident technique is more likely to be used by superiors than in peer of subordinate evaluations.

Checklists and Weighted Checklists. Another type of individual method is the checklist. In its simplest form, the checklist is a set of objectives or descriptive statements. If the Rater believes that the employee possess a trait listed, the Rater checks the items; if not, the Rater leaves it blank. A rating score from the checklist equals the number of checks.
A more recent variation is Weighted Checklist. Superviosor or personnel specialists familiar with the jobs to be evaluated prepare a large list of descriptive statements about effective and ineffective behavour on jobs, similar to the critical incident process. Judges who have observed behaviour on the job sort the statements into piles describing behaviour that is scaled from excellent to poor (usually on a 7-11 scale). When there is reasonable agreement on an item (for example, when the standard deviation is small), it is included in the weighted checklist. The weight is the average score of the Raters to the checklist’s use.

The supervisor or other Raters received the checklists without the scores, and they check the items that apply, as with an un-weighted checklist. The employee’s evaluation is the sum of the scores (weights) on the items checked. Checklists and weighted checklists can be used by evaluators who are superiors, peers, or subordinates, or by a combination.

Behaviourally Anchored rating Scale: Another technique which essentially is based on the critical incident approach is the Behaviourally anchored rating scale (BARS). This technique is also called the behavioural expectation scale (BES). This is a new, relatively infrequently used technique.
Supervisors give descriptions of actually good and bad performance, and personnel specialists group these into categories (five to ten is typical). As with weighted checklists, the items are evaluated by supervisors (often other than those who submitted the items)/ A procedure similar to that for weighted checklists is used to verify the evaluations (outstndigly good, for example) with the smallest standard deviation, hopefully around 1.5 on a 7-11 point scale. These items are then used to construct the BARS.

B. Multiple Person Evaluation Methods

The multiple person evaluation methods are used to evaluate employees one at a time. Three techniques that have been used to evaluate an employee in comparison with other employees being evaluated are as under:-

(a) Ranking: In ranking method, the evaluator is asked to rate employees from highest to lowest on some overall criterion. This is very difficult to do if the group of employees being compared number over 20. It is also easier to rank the best and worst employees than it is to evaluate the average ones. Simple ranking can be improved by alternative ranking. In this approach the evaluators pick the top of bottom employees first, then select the next highest and next lowest, and move towards the middle.

(b) Paired Comparison: This approach makes the ranking method easier and more reliable. First, the names of the perosons to be evaluated are placed on separate sheets (or cards) in a predetermined order, so that each person is compared to all others to be evaluated. The evaluator then checks the perons he feels is the better or the two on a criterion for each comparasion. Typically the criterion is overall ability to do the present job. The number of times a person is preferred is tallied, and this develops and index of the number of preferences compared to the number being evaluated.

These scores can be converted into standard scores by comparing the scores to the standard deviation and the average of all scores. This method can be used by superiors, peers, subordinates, or some combination of these groups.

(c) Forced Distribution: The forced distribution system is similar to “grading on a curve”. The evaluator is asked to rate employees in some fixed distribution of catergories, such as 10 percent in low, 20 percent in low average, 40 percent in average, 20 percent in high average, and 10 percent in high. One way to do this is type each employee’s name on a card and ask the evaluators to sort the cards into five piles corresponding to the ratings. This should be done twice for the two key criteria of job performance and promotability. One reason forced distribution was developed was to try to alleviate such problems as inflated ratings and central tendency in the graphic rating scale.

(B) Degree Appraisal.

Typically, performance appraisal has been limited to a feedback process between employees and supervisors. However, with the increased focus on teamwork, employee development, and customer service, the emphasis has shifted to employee feedback from the full circle of sources depicted in the diagram below. This multiple input approach to performance feedback is sometimes called “360 degree assessment” to connote that full circle.










There are no prohibitions in law or regulation against using a variety of rating sources, in addition to the employee’s supervisor, for assigning performance. Research has shown assessment approaches with multiple rating sources provide more accurate, reliable, and credible information. For this reason, personnel management supports the use of multiple rating sources as an effective method of assessing performance for format appraisal and other evaluative and developmental purposes.

Superiors: Evaluations by superiors are the most traditional source of employee feedback. This form of evaluation includes both the ratings of individuals by supervisors on elements in an employee’s performance plan and the evaluation of programs and team by senior managers.

Self Assessment:

This form of performance information is actually quite common but usually used only as an informal part of the supervisor-employee appraisal feedback session. Supervisors frequently open the discussion with: “How do you feel you have performed?” In a somewhat more formal approach, supervisors ask employees to identify the key accomplishments they feel best represent their performance in critical and non-critical performance elements. In a 360 degree approach, if self ratings are going to be included, structured forms and formal procedures are recommended.

Peers:

With downsizing and reduced hierarchies in organization, as well as the increasing use of teams and group accountability, peers are often the most relevant evaluators of their colleagues; performance. Peers have a unique perspective on a co-worker’s job performance and employees are generally very receptive to the concept of rating each other. Peer ratings can be used when the employee’s expertise is known or the performance and results can observed. There are both significant contributions and serious pitfalls that must be carefully considered before including this type of feedback in a multifaceted appraisal program.

Subordinates:

An upward-appraisal process or feedback survey is among the most significant and yet controversial features of a full circle performance evaluation program. Both managers being appraised and their own superiors agree that subordinates have a unique, often essential, perspective. The subordinate ratings provide particularly valuable data on performance elements concerning managerial and supervisory behaviors. However, there is usually great reluctance, even fear, concerning implementation of this rating dimension. On balance, the contributions can outweigh the concerns if the precautions are addressed.

Customers:

Setting customer service standards, requires agencies to survey internal and external customers, publish customer service standards, and measure agency performance against these standards. Internal customers are defined as users of products or services supplied by another employee or group within the agency or organization. External customer are outside the organization and include but are limited to the general public.

(c) MBO: Management by Objectives
MBO is very common industry practice used to review employees at the workplace. At the beginning of the year clear objectives are laid down for achievement during the course of the years. These objectives are popularly called by the following names.

1. KRA – Key Result Areas
2. KPA-Key Performance Areas
3. Targets
4. Commitments

These objective are designed using the SMART framework in …. Specific, Measurable, Achievable, Results oriented and Time bound. All objectives must conform to this framework. Thereafter the objectives are broken up into half yearly, quarterly and may be monthly objectives, again keeping in mind the SMART framework. All along the process both the employee and the manager are in consensus of the objective and the timeliness as well as the deliverables.

MBO is one of the most effective methods for performance review primarily because it is identified at the beginning of the review period and is regularly reviewed for achievements and modified on going again in consensus between the employee and the manager.

At the end of the review year, the MBO’s are reviewed and completion with the SMART framework. In case of a new employee or someone moving jobs/assignments between teams; after about 6-8 weeks of being in the job this process is undertaken and objectives are set.

***


Question 5: Write a note of Motivation Techniques.

Answer:

Man is by nature constantly motivated and is an organic system, not a mechanical one. The inputs of energy such as food, water etc., are converted by him into outputs of behaviour. His behaviour is determined by relationships between his characteristics as organic system and the environment in which he moves. Management involves creation and maintenance of environment for performance of individuals working together in groups towards accomplishment of common objectives and therefore the manager cannot perform his functions without knowing what motivates people.
Concept of Motivation
The personnel function is all about motivation and unless individuals are motivated to make sufficient potential to perform effectively, they may not achieve the level of performance that is desired from them. Managerial people are always facing the problems of motivating their subordinates to release their potential most effectively and thereby permit the desired goals of the organization and the needs of employees to be achieved. Knowledge of the motivational process provides the basis for understanding why people do what they do.
Motivation is positively correlated with concepts of (1) level of aspiration, (2) degree of commitment, and (3) inclination towards action.
It is rightly said, “You can buy a man’s time, you can buy a man’s physical presence at a given place, but you cannot buy his enthusiasm, initiative and loyalty.” Motivation aims at transforming the ‘ability to do’ into ‘the will to do’. Motivated employees are in a state of tension. To relieve this tension, they engage in activity. The greater the tension, the greater shall be the activity to bring about relief. When we see someone working hard at some activity, we can conclude that the individual is driven by a desire to achieve some goal which perceives as having value to him.
Motivation has been defined as the act of stimulating someone to take a desired course of action-to push the right button to get a desired reaction. It includes a stimulus and desired results. Motivation concerns itself with the will to work. It seeks to know the motives for work and to find out ways and means, by which their realisation can be helped and encouraged.
Mr. Urwick has called it the dynamic aspect of management. According to Michael Jucius, motivation is an ‘act of stimulating someone to get a desired course of action’. James Driver says that, motivation means the phenomena involved in the operation of incentives and drives. In the words of P.T.Young, motivation is the process (a) of arousing or initiating behaviour, (b) of sustaining an activity in progress, and (c) of channeling of activity in the given course.
A man’s performance on a specific task is a function of his skill and motivation. Thus it can be said that p=f(S,M), where P is for performance, S for skill and M for motivation. Skill does not guarantee that the individual will put forth his best effort. There is another variable, namely motivation which finally determines the effort which can be expected from such employee. That difference in motivation affects performance has been demonstrated very conclusively. In laboratory experiments it was found that other things being equal, performance level is higher if the motivation level is higher.
The key to understand motivation lies in the meaning and relationships between needs, drives and goals. This demonstrated through ‘the motivation cycle’ given below:

1. Needs: The best one word definition of a need is efficiency. In the domestic sense, needs are created whenever there is a physiological or psychological imbalance. For example, a need exists when a cell in the body is deprived of food and water or when the human personality is deprived of other persons who serve as friends or comparisons.
2. Drives: Drives are set up to alleviate needs. A drive can be defined as deficiency with direction. Drives are action-oriented and provide an energizing thrust toward goal accomplishment. The examples of the needs for food and water are translated into hunger and thirst drives, and need for friends becomes a drive for affiliation.
3. Goals: At the end of the motivation cycle is the goal. A goal in the motivation cycle can be defined as anything which will alleviate a need and reduce a drive.
Motivation may range from a threatening gesture to a tradition inspired activity. Thus the atmosphere of working situation, the past history of human relations in a company, expectations about the future as well as a wage incentive plan be stimuli to action, It is believed that the full force of motivation lies in the person doing the motivation. In the case the management, it is the magnetic personality of the executive which induces high loyalty and production. If the executive does not have this quality, he is obviously at a disadvantage. However, he can develop effective plans of motivation.
Motivation Techniques
Following Michael Jucius, let us see how management may proceed to motivate employees. This activity may be divided into two parts: (a) what is to be done and (b) how and why what is done. The former are steps in motivation and the latter are rules governing the steps. Both are performed simultaneously. The steps of motivation are listed below:
1. Size up situation requiring motivation: The first stage of motivation is to make sure of motivational needs. Every employee needs motivation. However, all people do not react in exactly the same way to the same stimuli. Keeping this in mind the executive shall size up how much and what kind of motivation is needed and when and by which individuals.
2. Prepare a set of motivating tools: Having determined the motivational needs of a particular person or group an executive must have a list from which he should select and apply specific tools of motivation. An executive from his personal experience should prepare a list of what devices are likely to work with what type of people and under what circumstances.
3. Selecting and applying the appropriate motivator: Proper application of motivational plan is very important. This involves selection of the appropriate technique, the method of application and the timing and location of applications. Having selected appropriate techniques, thought must be given to its application.
4. Follow-up the results of the application: The last stage of motivation is to follow-up the results of the application of the plan. The primary objective is to ascertain if an employee has been motivated or not. If not, some other technique should be tried. A secondary purpose of follow-up is to evaluate motivation plans for future guidance.

Rules of Motivating: In following the steps of motivation a manager should be guided by some fundamental rules which should be based upon the following principles:
1. Self-interest and Motivation: Undoubtedly, motivation is mainly built on selfishness. Psychologically speaking, selfishness is a part and parcel of life. To deny this is to build the theory on unrealistic foundation. To seek some other basis of motivation would be to ignore the real nature of man. The aim should be to learn more about selfishness.
2. Attainability: Motivation must establish attainable goals. What is prescribed for a particular person must be attainable by him. This does not mean that the goal is realised at once. Such goals as promotion or desirable transfer may take years to attain. But it must be within reach.
Eight Ways to Motivate Plant Employees: Based on a fact-finding study conducted at several manufacturing plants of the General Electric Company, Sorcher and Meyer have made the following recommendations for improving the motivation of employees in routine jobs.
1. Provide assembly line employees with more than minimum training. Providing some sort of formal training for a factory employee beyond the required minimum should result in greater personal involvement in the job.
2. Create sub-goals to measure accomplishment. A sense of competition is important to good motivation. When people work towards clearly defined goals they perform better. Moreover, they are likely to be more interested in the work which will reduce monotony and mental fatigue.
3. Provide regular feedback on performance. Psychological studies show that people perform better when they receive positive as well as negative feedback about their performance on a regular basis.
4. Maintain a neat and orderly work area. If the foreman does not care about neatness, employees may feel that they need not care about it and this attitude may also affect the quality of their work.
5. Arrange work situations so that conversation between employees is either easy or impossible. Experienced workers can do routine jobs with little attention to the task. Conversation while working may reduce monotony and fatigue and thus have a favourable effect on output.
6. If possible, increase the number of operations performed by one employee. This can be done by the simplification of manual operations. It offers several advantages, viz.,
i) the risk of errors is reduced;
ii) training costs are minimized;
iii) Management can hire employees at lower wages.
iv) Structure jobs, so that workers can, at least occasionally move about the work area. Besides job rotation, there are other ways to provide for physical movement such as setting employees secure their own tools or by adding operations which require some physical activity.
v) Explore ways to assign greater personal responsibility. Increased responsibility means greater self-esteem and greater job meaningfulness. One way to enlarge responsibility is to let an employee inspect his own work.
Question 6: Elaborate the importance of grievance handling.

Answer:
The personnel function is really all about motivation and unless individuals are motivated to make sufficient potential to perform effectively, they may not achieve the level of performance that is desired from them. Knowledge of the motivational process provides the basis for understanding why people do what they do.

Motivation is positively considered with concepts of 1, level of aspiration 2, degree of commitment, and 3, inclination towards action.

It is rightly said, “You can buy a man’s time, you can buy a man’s physical presence at a given place, but you cannot buy his enthusiasm, initiative and loyalty.” Motivation aim at transforming the ‘ability to do’ and ‘the will to do’ Motivated employees are in a state of tension. To relieve this tension, they engage in activity. The greater the tension, the greater shall be the activity to bring about relief.

Motivation has been defined as the act of stimulating someone to take a desired course of action-to push the right button to get a desired reaction. It includes a stimulus the desired results. Motivation concerns itself with the will to work. It seeks to know the motives for work and to find out ways and means, by which their realization can be helped and encouraged.

The key to understand motivation lies in the meaning and relationships between needs, drives and goals. This demonstrated through the motivation cycle’ given below:

1. Needs: The best one word definition of a need is efficiency. In this domestic sense, needs are created whenever there is a physiological or psychological imbalance. For example a need exists when a cell in the body is deprived of food and water or when the human personality is deprived of other persons who serve as friends or comparisons.
2. Drives: Drives are set up to alleviate are action-oriented needs. A drive can be defined as deficiency with direction. Drives are action-oriented and provide an energizing thrust toward goal accomplishment. The examples of the needs for food and water are translated into hunger and thirst drives, and need for friends becomes a drive for affiliation.
3. Goals: At the end of the motivation cycle is the goal. A goal in the motivation cycle can be defined as anything which will alleviate a need and reduce a drive.

It is believed that the full force of motivation lies in the person doing the motivation. In the case of management, it is the magnetic personality of the executive which induces high loyalty and production. If the executive does not have this quality, he is obviously at the disadvantage. However, he can develop effective plans of motivation.

Motivation Techniques:

Following Michael Jucius, let us see how management may proceed to motivate employees. This activity may be divided into two parts; (a) what is to be done and (b) how and why what is done. The former are steps in motivation and the latter are rules governing the steps. Both are performed simultaneously. The steps of motivation are listed below:

1. Size up situation requiring motivation: The first stage of motivation is to make sure of motivational needs. Every employee needs motivation. However, all people do not react in exactly the same way to the same stimuli. Keeping this in mind the executive shall size up how much and what kind of motivation is needed and when by which individuals.
2. Prepare a set of motivating tools: Having determined the motivational needs of a particular person or group an executive must have a list from which he should select and apply specific tools of motivation. An executive from his personal experience should prepare a list of what devices are likely to work with what type of people and under what circumstances.
3. Selecting and applying the appropriate motivator: Proper application of motivational plan is very important This involves selection of the appropriate technique, the method of application and the timing and location of applications. Having selected appropriate techniques, thought must be given to its application.
4. Follow-up the results of the application of the plan. The primary objective is to ascertain if an employee has been motivated or not. If not, some other technique should be tried. A secondary purpose of follow-up is to evaluate motivation plans for future guidance.

Rules of motivating:

In following the steps of motivation a manager should be guided by some fundamental rules which should be based upon the following principles:

1. Self-Interest & Motivation:

Undoubtedly, motivation is mainly is mainly built on selfishness. Psychologically speaking, selfishness is a part and parcel of life. To deny this is to build the theory on unrealistic foundation. To seek some other basis of motivation would be to ignore the real nature of man. The aim should be learn more about selfishness.
2. Attainability:

Motivation must establish attainable goals. What is prescribed for a particular person must be attainable by him. This does not mean that the goal is realized at once. Such goals as promition or desirable take to attain. But it must be within reach.

Eight Ways to Motivate Plant Employees: Based on a fact-finding study conducted at several manufacturing plants of the general electric company, Sorcher and Meyer have made the following recommendations for improving the motivation of employees in routine jobs.

1. Provide assembly line employees with more than minimum training. Providing some sort of formal training for a factory employee beyond the required minimum should result in greater personal involvement in the job.
2. Create sub-sub-goals to measure accomplishment. A sense of competition is important to good motivation. When people work towards clearly defied goals they perform better. Moreover, they are likely to be more interested in the work which will reduce monotony and mental fatigue.
3. Provide regular feedback on performance. Psychological studies show that people perform better when they receive positive as well as negative feedback about their performance on a regular basis.
4. Maintain a neat and orderly work area. If the foreman does not care about neatness, employees may feel that they need not care about it and this attitude may also affect the quality of their work.
5. Arrange work situations so that conversation between employees is either easy or impossible. Experienced worker can do routine jobs with little attention to the task. Conversation while working may reduce monotony and fatigue and thus have a favourable effect on output.
6. If possible increase the number of operations performed by one employee. This can be done by the simplification of manual operations. It offers several advantages, viz.
i. The risk of errors is reduced.
ii. Training costs are minimized
iii. Management can hire employees at lower wages.
iv. Structure jobs, so that workers can, at least occasionally move about the work area. Besides job rotation, there are other ways to provide for physical movement such as setting employees secure their own tools or by adding operations which require some physical activity.
v. Explore ways to assign greater personal responsibility self-esteem and greater job meaningfulness. One way to enlarge responsibility is to let an employee inspect his own work.
***
 

jasonb

New member
Re: managerial economics notes

Hi everyone! Can you help me find a copy of a fortune magazine and/or Harvard business review case study related to demand and/or supply? Please help!thanks!
 

koliamit

New member
Re: managerial economics notes

HEy,the notes were really very helpful,thnx 4 it.....keep it up!!:SugarwareZ-286:
 

komalgangi

New member
Re: managerial economics notes

Exceptions to the law of demand
9th of March, 2008 Håvard
Not all goods are treated equal by consumers, some goods are valued in good times while others are completely useless in bad times. These are exceptions to the law of demand as we have defined it.
Giffen goods
Giffen goods are named after the nineteenth century economist Sir Robert Giffen, who observed that at the time, people in Ireland bought more potatoes as the price increased. A Giffen good is an inferior good for which a rise in its price makes people buy even more of the product as a consequence of the substitution effect and the income effect for that good.
So potatoes were an example of an inferior good, meaning that demand falls as real income rises, the income effect of a price change was so great it overcame the substitution effect.
When the price of a Giffen good rises, the substitution effect will of course reduce the quantity demanded as consumers switch away from it and over to normal goods like meat (in case of the Irish example).
Ostentatious consumption / Veblen goods
Some goods are luxurious items where satisfaction comes from knowing the price of the good. A higher price may be a reflection of quality and people on high incomes are prepared to pay for the "snob value effect". Examples would include perfumes, designer clothes, fast cars and some brand name watches. Such goods are called Veblen goods after the American economist Thorstein Veblen.
Income effect
In short; when there is a rise in the overall welfare, consumption increases.
Substitution effect
The shift in consumption at any given level of welfare, making the economy consume less of good A and more of good B.
 

manmachine85

New member
Re: managerial economics notes

hi................................................ .................................................. ............................ thanks a lot for the wonderful notes they are goood thanks again..........................
 

giridhar

New member
Re: managerial economics notes

Hi

Does anyone having notes for the below topics (Managerial Economics)

Scarcity, choice and allocation problems in business. Basic factors in business decision making: Marginalism, Equi-marginalism, and Opportunity cost principle, Risks and uncertainties, Time value of money. Use of quantitative techniques in managerial economics: Mathematical functions, derivatives, optimization principles and statistical techniques

Please post it here

Thank you

Giridahr
 

ashish09

New member
Re: managerial economics notes

dont have notes .... but do have some ppt's if they can help ......



ppt on balance of payments

:) Aashish
 

ashish09

New member
Re: managerial economics notes

dont have notes .... but do have some ppt's if they can help ......



ppt on balance of payments

:) Aashish
 

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chittyanusha

New member
Re: managerial economics notes

hi................
thanks for the note u provided.It is very use full for non B.Com students who r pursuing MBA.Thanks once again
 

Sumeet Dhawan

New member
Re: managerial economics notes

Hey these notes are complete. Managerial economics (sometimes referred to as business economics), is a branch of economics that applies microeconomic analysis to decision methods of businesses or other management units. As such, it bridges economic theory and economics in practice. It draws heavily from quantitative techniques such as regression analysis and correlation, Lagrangian calculus (linear). If there is a unifying theme that runs through most of managerial economics it is the attempt to optimize business decisions given the firm's objectives and given constraints imposed by scarcity, for example through the use of operations research and programming.
 

thunderboy

New member
Re: managerial economics notes

Nice post.thanks for the note u provided.It is very use full for non B.Com students who r pursuing MBA.
 
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