SUMMARY SHEET MANAGEMENT

FRINGE TOPIC OF PEOPLE MANAGEMENT

PERSONALITY DEVELOPMENT
PERSONNEL MANAGEMENT
PERFORMANCE MANAGEMENT

27 Final Selections in RBI Grade B 2017

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Contents
1 Personnel Management .............................................................................................................................. 3
Functions of Personnel Management: ................................................................................................. 3
The Operative Functions ............................................................................................................... 3
Differences between Personnel Management & Human Resource Management ............................. 4
2 Human Resource Management .................................................................................................................. 4
Human Resource Management (HRM) - Definition and Concept ....................................................... 4
Scope of Human Resource Management ............................................................................................ 5
Processes in Human Resource Management....................................................................................... 5
Human Resource Planning ................................................................................................................... 6
HR Planning Process ...................................................................................................................... 6
Strategic Human Resource Management ............................................................................................ 7
HR Scorecard ................................................................................................................................. 8
3 Performance Management ......................................................................................................................... 9
Performance Management - Meaning ................................................................................................. 9
Objectives of Performance Management .......................................................................................... 10
Evolution of Performance Management............................................................................................ 10
Components of Performance Management System ......................................................................... 11
Benefits of a Performance Management System .............................................................................. 12
Performance Appraisal and Performance Management ................................................................... 12
Techniques for Assessment of Performance and the Factors Affecting Assessments ...................... 13
Performance Improvement Programs (PIP) and Their Implications for Organizations ..................... 14
Performance Reviews......................................................................................................................... 15

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1 Personnel Management

Personnel management can be defined as obtaining, using and maintaining a satisfied workforce. It is a
significant part of management concerned with employees at work and with their relationship within the
organization.

Functions of Personnel Management:

Functions of personnel management are categorized under:

The Managerial Functions: 1. Planning 2. Organising 3. Directing 4. Co-Ordinating and Controlling

Already discussed in detail under general management section. No need to learn it here in detail, again.

The Operative Functions: 1. Procurement 2. Development 3. Compensating 4. Maintenance 5. Integrating

and 6. Separation.

The Operative Functions

1. Procurement: This operative function of personnel management is concerned with the obtaining of
the proper kind and number of personnel necessary to accomplish organization’s goals.
2. Development: Development function has to do with the increase of skill, through training, that is
necessary for proper job performance.
3. Compensation: Compensation function is defined as securing the adequate and equitable
remuneration of personnel for their contribution to attain organization objectives.
4. Integration: After the employee has been procured, his skills and abilities developed, and monetary
compensation reasonably determined, the most important task of personnel management is to
integrate the individuals with organization.
5. Maintenance: Maintenance function deals with sustaining and improving the conditions that will
perpetuate a willing and able work force. The maintenance of willingness is heavily affected by
communication with employees.

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 6. Separation: If the first function of personnel management is to secure the employee, it is logical that
the last should be the separation and return of that person to society.

Differences between Personnel Management & Human Resource Management

• Personnel mean employed persons of an organization. Management of these people is personnel
management (PM). Human resource management (HRM) is the management of employees’
knowledge, aptitudes, abilities, talents, creative abilities and skills/competencies.
• PM is traditional, routine, maintenance-oriented, administrative function whereas HRM is
continuous, on-going development function aimed at improving human processes.
• PM is reactive, responding to demands as and when they arise. HRM is proactive, anticipating,
planning and advancing continuously.
• PM is the exclusive responsibility of the personnel department. HRM is a concern for all managers in
the organization and aims at developing the capabilities of all line managers to carry out the human
resource related functions.

2 Human Resource Management

Human Resource Management (HRM) - Definition and Concept

The process of defining HRM leads us to two different definitions.

1. The first definition of HRM is that it is the process of managing people in organizations in a structured
and thorough manner.
2. The second definition of HRM encompasses the management of people in organizations from a macro
perspective i.e. managing people in the form of a collective relationship between management and
employees.
To put it in one sentence, unlike personnel management which is essentially “workforce” centred, human
resource management is “resource” centred.
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 Scope of Human Resource Management
The scope of HRM is extensive and far-reaching. Therefore, it is very difficult to define it concisely.
However, we may classify the same under following heads:

1. HRM in Personnel Management:

• This is typically direct manpower management that involves manpower planning, hiring
(recruitment and selection), training and development, induction and orientation, transfer,
promotion, compensation, layoff and retrenchment, employee productivity.
2. HRM in Employee Welfare:
• This particular aspect of HRM deals with working conditions and amenities at workplace.
• This includes a wide array of responsibilities and services such as safety services, health services,
welfare funds, social security and medical services.
3. HRM in Industrial Relations:
• Since it is a highly sensitive area, it needs careful interactions with labour or employee unions,
addressing their grievances and settling the disputes effectively in order to maintain peace and
harmony in the organization.

Processes in Human Resource Management

The following are the various HR processes:

1. Human resource planning (Recruitment, Selecting, Hiring, Training, Induction, Orientation, Evaluation,
Promotion and Layoff).
2. Employee remuneration and Benefits Administration
3. Performance Management
4. Employee Relations

1. Human Resource Planning: Generally, we consider Human Resource Planning as the process of
people forecasting. It also involves the processes of Evaluation, Promotion and Layoff.

▪ Recruitment: It aims at attracting applicants that match a certain Job-criteria.

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 ▪ Selection: The next level of filtration. Aims at short listing candidates who are the nearest match
in terms qualifications, expertise and potential for a certain job.
▪ Hiring: Deciding upon the final candidate who gets the job.
▪ Training and Development: Those processes that work on an employee onboard for his skills
and abilities upgradation.

2. Employee Remuneration and Benefits Administration: The process involves deciding upon salaries
and wages, Incentives, Fringe Benefits and Perquisites etc.
3. Performance Management: It is meant for training, motivating and rewarding the employees. It also
ensures that the organizational goals are met with efficiency.
4. Employee Relations: Employee relations include Labour Law and Relations, Working Environment,
Employee health and safety, Employee- Employee conflict management, Employee- Employee
Conflict Management, Quality of Work Life, Workers Compensation, Employee Wellness and
assistance programs, Counselling for occupational stress.

Human Resource Planning

Human Resource Planning (HRP) is the process of forecasting the future human resource requirements of
the organization and determining as to how the existing human resource capacity of the organization can
be utilized to fulfil these requirements. It, thus, focuses on the basic economic concept of demand and supply
in context to the human resource capacity of the organization.

HR Planning Process
1. Current HR Supply: Assessment of the current human resource availability in the organization is the
foremost step in HR Planning. It includes a comprehensive study of the human resource strength of
the organization in terms of numbers, skills, talents, competencies, qualifications, experience, age,
tenures, performance ratings, designations, grades, compensations, benefits, etc.

2. Future HR Demand: Analysis of the future workforce requirements of the business is the second step
in HR Planning. All the known HR variables like attrition, lay-offs, foreseeable vacancies, retirements,
promotions, pre-set transfers, etc. are taken into consideration while determining future HR demand.
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 3. Demand Forecast: Next and third step is to match the current supply with the future demand of HR,
and create a demand forecast.

4. HR Sourcing Strategy and Implementation: After reviewing the gaps in the HR supply and demand,
the HR Consulting Firm develops plans to meet these gaps as per the demand forecast created by
them. This may include conducting communication programs with employees, relocation, talent
acquisition, recruitment and outsourcing, talent management, training and coaching, and revision
of policies.

5.

Strategic Human Resource Management

Strategic Human Resource Management is the process of linking the human resource function with the
strategic objectives of the organization in order to improve performance.

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The aim of SHRM is to ensure that the culture, style, and structure of the organization and the quality,
commitment and motivation of its employees contribute fully to the achievement of business objectives.

HR strategies combine all people management activities into an organized and integrated program to meet
the strategic objectives of an enterprise.

Given the increasingly significant role of human resources in an organization, HRM has become strategic in
nature. Strategic human resource management (SHRM) is concerned with the relationship between HRM and
strategic management in an organization.

Benefits of SHRM

1. Identifying and analysing external opportunities and threats that may be crucial to the company's
success.
2. Provides a clear business strategy and vision for the future.
3. To supply competitive intelligence that may be useful in the strategic planning process.
4. To recruit, retain and motivate people.
5. To develop and retain of highly competent people.
6. To ensure that people development issues are addressed systematically.
7. To supply information regarding the company's internal strengths and weaknesses.
8. To meet the expectations of the customers effectively.
9. To ensure high productivity.
10. To ensure business surplus thorough competency

HR Scorecard
HR Scorecard is recent concept which is related to SHRM. We will know about it in brief.

The HR Scorecard argues that HR measurement systems must be based on a clear understanding of
organizational strategy and the capabilities and behaviors of the workforce required to implement that
strategy. Thus, an HR Scorecard is a mechanism for describing and measuring how people and people
management systems create value in organizations, as well as communicating key organizational objectives
to the workforce.

It is based on a strategy map – which is a visual depiction of “what causes what” in an organization,
beginning with people and ending with shareholder or other stakeholder outcomes.

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The HR Scorecard has five key elements:

1. The first element is what we called Workforce Success. It asks: Has the workforce accomplished the
key strategic objectives for the business?
2. The second element is we called Right HR Costs. It asks: Is our total investment in the workforce (not
just the HR function) appropriate (not just minimized)?
3. The third element we describe as Right Types of HR Alignment. It asks: Are our HR practices aligned
with the business strategy and differentiated across positions, where appropriate?
4. The fourth element is Right HR Practices. It asks: Have we designed and implemented world class
HR management policies and practices throughout the business?
5. The fifth element is Right HR Professionals. It asks: Do our HR professionals have the skills they need
to design and implement a world-class HR management system?

3 Performance Management

Performance Management - Meaning

Performance management is a much broader and a complicated function of HR, as it encompasses activities
such as joint goal setting, continuous progress review and frequent communication, feedback and coaching
for improved performance, implementation of employee development programmes and rewarding
achievements.

The process of performance management starts with the joining of a new incumbent in a system and ends
when an employee quits the organization.

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A performance management process sets the platform for rewarding excellence by aligning individual
employee accomplishments with the organization’s mission and objectives and making the employee and the
organization understand the importance of a specific job in realizing outcomes.

Objectives of Performance Management

The major objectives of performance management are discussed below:

1. To enable the employees towards achievement of superior standards of work performance.

2. To help the employees in identifying the knowledge and skills required for performing the job
efficiently as this would drive their focus towards performing the right task in the right way.
3. Boosting the performance of the employees by encouraging employee empowerment, motivation
and implementation of an effective reward mechanism.
4. Promoting a two-way system of communication between the supervisors and the employees for
clarifying expectations about the roles and accountabilities, communicating the functional and
organizational goals, providing a regular and a transparent feedback for improving employee
performance and continuous coaching.
5. Identifying the barriers to effective performance and resolving those barriers through constant
monitoring, coaching and development interventions.
6. Creating a basis for several administrative decisions strategic planning, succession planning,
promotions and performance-based payment.
7. Promoting personal growth and advancement in the career of the employees by helping them in
acquiring the desired knowledge and skills.

Evolution of Performance Management

The performance management process evolved in several phases:

1. First Phase: During early 1960’s, Annual Confidential Reports (ACR’s) which was also known
as Employee service Records were maintained for controlling the behaviours of the employees and
these reports provided substantial information on the performance of the employees.
2. Second Phase: Whatever adverse remarks were incorporated in the performance reports were
communicated to the employees so that they could take corrective actions for overcoming such
deficiencies.
3. Third Phase: In this phase the term ACR was replaced by performance appraisal.
4. Fourth Phase: This phase started in mid-1970’s in India as great business tycoons like Larsen &
Toubro, followed by State Bank of India and many others introduced appreciable reforms in this field.
• In this phase, the appraisal process was more development driven, target based (performance
based), participative and open instead of being treated as a confidential process.
5. Fifth Phase: This phase was characterized by maturity in approach of handling people’s issues.
• It was more performance driven, emphasis was on development, planning and improvement.
• Utmost importance was given to culture building, team appraisals and quality circles were
established for assessing the improvement in the overall employee productivity.

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 Components of Performance Management System
Any effective performance management system includes the following components:

1. Performance Planning:
• Performance planning is the first crucial component of any performance management process
which forms the basis of performance appraisals.
• Performance planning is jointly done by the appraisee and also the reviewee in the beginning
of a performance session.
2. Reviewing and Performance Appraisal:
• The appraisals are normally performed twice in a year in an organization in the form of mid
reviews and annual reviews which is held in the end of the financial year.
3. Coaching & Feedback: Feedback on the Performance followed by personal counselling:
• Feedback and counselling are given a lot of importance in the performance management
process.
• This is the stage in which the employee acquires awareness from the appraiser about the areas
of improvements and also information on whether the employee is contributing the expected
levels of performance or not.

4. Recognising and Rewarding Performance:

• This is a very vital component as it will determine the work motivation of an employee.
• During this stage, an employee is publicly recognized for good performance and is rewarded.
• This stage is very sensitive for an employee as this may have a direct influence on the self-
esteem and achievement orientation.

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Apart from above components, following 2 components also considered a part of PMS:

5. Performance Improvement Plans:

• In this stage, fresh set of goals are established for an employee and new deadline is provided
for accomplishing those objectives.
• The employee is clearly communicated about the areas in which the employee is expected to
improve and a stipulated deadline is also assigned within which the employee must show this
improvement.
• This plan is jointly developed by the appraisee and the appraiser and is mutually approved.

6. Potential Appraisal:
• Potential appraisal is a future – oriented appraisal whose main objective is to identify and
evaluate the potential of the employees to assume higher positions and responsibilities in the
organizational hierarchy.

Benefits of a Performance Management System

An effectively implemented performance management system can benefit the organization, managers and
employees in several ways as depicted in the table given below:

Organization’s Benefits Improved organizational performance, employee retention and loyalty,

improved productivity, overcoming the barriers to communication, clear
accountabilities, and cost advantages.

Manager’s Benefits Saves time and reduces conflicts, ensures efficiency and consistency in
performance.

Employee’s Benefits Clarifies expectations of the employees, self-assessment opportunities

clarify the job accountabilities and contributes to improved performance,
clearly defines career paths and promotes job satisfaction.

Performance Appraisal and Performance Management

The traditional performance appraisal system did not suffice the needs of the changing scenario as it was
mainly used as a tool for employee evaluation in which the managers were impelled to make subjective
judgments about the performance and behaviour of the employees against the predetermined job
standards.

A table depicted below shows a comparison between performance appraisal and performance management:

Performance Appraisal Performance Management

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 Focus is on top down assessment Stresses on mutual objective setting through a
process of joint dialogue

Performed annually Continuous reviews are performed

Usage of ratings is very common Usage of ratings is less common

Focus is on traits Focus is on quantifiable objectives, values and

behaviours

Monolithic system Flexible system

Are very much linked with pay Is not directly linked with pay

Techniques for Assessment of Performance and the Factors Affecting

Assessments
The different techniques which may be adopted for assessing the performance of employees in an
organization are:

Note: Various methods of performance appraisal is discussed in detail, under HRD Chapter, kindly refer to it.
1. A holistic analysis of performance:
• The proponents of this approach believe that performance management is all about analysing
performance instead of assessing it.
• This technique aims at reaching an agreement for future action or development after carefully
analysing the strengths or possible weaknesses.
• Few organizations like BP Amoco implement this method of performance assessment for
providing a feedback to the staff where they are good at.

2. Narrative Assessment:
• This is in the form of a written summary of views about different levels of performance
achieved and is normally prepared by the managers.
• This technique lacks consistency in the criterion used for assessments as different managers
will consider different aspects of performance.

3. Ratings:
• Many organizations like ICICI Bank and GE use ratings for assessing the performance of their
employees for making pay related decisions.

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 • Through this method the quality of performance or the competence level achieved by an
employee in a particular skill can be assessed by evaluating it on a scale against certain
parameters which may be qualitative (behavioural) or quantitative.
• Since, performance is a subjective concept; it is difficult to achieve consistency in the ratings
which are offered by different managers.
• Regular trainings and peer reviews may help in promoting consistency in the ratings.

4. Forced Distribution:
• Most commonly, the employees fall into excellent, good or poor categories, which can be
expanded by the organisation to a 5-point scale as well
• The forced distribution method is also called bell-curve rating or stacked ranking
• This method of performance management typically chooses the normal distribution curve to
represent the performance distribution.
• This ensures that a small fraction of the entire workforce is to be placed at the extremes, which
is the outstanding performers and poor performers.
• A relatively large section of the workforce falls in the middle of the distribution.
• This is illustrated in the image below:

• For example, a manager of XYZ corporation evaluating 30 employees can be instructed to put
5 employees each in the ‘outstanding’ and the ‘poor’ category, whereas 20 will fall in the range
of average performers. In this manner, the ratee (manager) has forced the distribution of level
of performance of each of the 30 employees into one of the three categories.
• This technique rests on the basic assumption that the employees’ performance levels fall under
a normal statistical distribution.

Performance Improvement Programs (PIP) and Their Implications for

Organizations
Performance improvement plans or programs are monitored, structured, and result based activities
wherein employees who are performing below the average demanded by the organization are expected

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to do better under the PIP, which is when the line managers in conjunction with the HR managers monitor
the performance of the employees.

Though this is an undesirable situation for the employees to find themselves in a PIP, it is a fact of life that
organizations implement these PIPs for employees at all levels.

• The placement of the employee in a PIP takes place after due consultation between the
employee, the manager, and the HR manager.
• In many cases, employees are placed on watch without the PIP if their performance is deemed
unsatisfactory.
• Often, employees are observed for two consecutive performance cycles and if their
performance does not improve or worsens, then the decision to place the employee under PIP
are taken.

Performance Reviews

Review of performance is a part of PIPs in particular, and of PMS in general. It is conducted once or twice
in a year provides an objective or a sense of focus on the key performance or development issues.

Some of the crucial objectives of performance reviews are as follows:

1. Performance planning
2. Employee motivation and empowerment
3. Learning and Development
4. Acts as a two-way channel for communication for discussing the roles, expectations, relationships and
work problems.

Performance review meetings should focus on two major areas:

• Firstly, on performance improvement measures and
• Secondly, the meeting should be forward looking in nature rather than backward looking.

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