1b.human resource planning

Tilak Education Society’s S.K College of Science & Commerce

Seawoods, Navi Mumbai. Phone – 27711481/27710033

I.B. Human Resource Planning

1. Definition of Human Resource Planning

Human Resource Planning, as the name suggests, is the process of identification/ forecasting a firm’s future

requirement of type and number of people in order to meet the organisational goals and objectives. It is a continuous

process either due to fresh requirement of manpower owing to change/growth/diversification of business or due to

attrition of manpower due to retirement, termination, death, disability or resignations.

Ø Coleman has defined Human Resource Planning as “The process of determining manpower requirements

and the means for meeting those requirements in order to carry out the integrated plan of the organization”

Ø “HRP is a Process, by which an organization ensures that it has the right number of right kind of people at

the right place, at the right time, capable of effectively and efficiently completing those tasks that will help

the organization achieve its overall objectives.”

2. Importance of Human Resource Planning

1. Determining the future personnel needs:

Planning is significant as it helps determining future personnel needs. Surplus or deficiency in staff is the result of

absence or defective planning.

2. Coping with change

HRP enables an enterprise to cope with changes in competitive forces, markets, technology, products and

government regulations. Such changes generate changes in job content, skills demands and number and type of

personnel.

3. Creating highly talented personnel

HRP helps the enterprise determine the sources to attract good talent and methods to retain good personnel through

management succession planning.

4. Protection of weaker sections

A well conceived personnel planning programme would protect the interests of SC/ST candidates, physically

handicapped and children of socially backward citizens.

5. International Strategies

With the growing trend towards global operations, the need for HRP is very important as there is a need to fill key

jobs with foreign nationals and to integrate them with the company’s global plans.

6. Foundation for Personnel Functions

Manpower planning provides essential information for designing and implementing personnel functions such as

recruitment, selection, transfers, promotions, layoffs and training & development.

7. Increasing Investments in Human Resources

Human resources as opposed to physical assets can increase in value. Because an organization makes investments in

its personnel either through training or jobs assignments, it is important that the employees are properly utilized

through proper planning.

8. Resistance to change and move

There is a lot of resistance of employees to change and move their work location. There is a need for the

organization to plan the changes in advance and give the employees enough time to adjust and prepare for the

changes.

9. Other Benefits

1. Top level management has a better view of the HR dimension of business decisions

2. Personnel costs are less cause management has planned for imbalances in advance

3. More time is provided to locate talent

4. Better planning of assignments



3. Human Resource Planning Process

HRP essentially involves forecasting personnel needs, assessing personnel supply and matching demand supply

factors through personnel-related programmes. The planning process is influenced by overall organizational

objectives and environment of business. The various steps are shown below.

I. Organizational objectives and policies

Ø The objectives of HR plan must be derived from organizational objectives. Specific requirements in terms

of number and characteristics of employees should be derived from the organizational objectives.

Ø Organizational objectives are defined by the top management and the role of HRP is to ensure that the

overall objectives are met by ensuring availability and utilization of human resources.

Ø Once the organizational objectives are specified, communicated and understood by all concerned, the HR

department must specify its objectives with regard to HR utilization in the organization.

II.HR Demand Forecast

Ø Demand forecasting is the process of estimating the future quantity and quality of people required. The

basis of forecast must be annual budget and long-term corporate plan, translated into activity levels for each

function and department.

Ø There are several good reasons to conduct demand forecasting

• Quantifies the jobs necessary for producing a given number of goods

• Determines what staff-mix is required

• Assess appropriate staffing levels in different parts of the organization

• Prevents shortages of people

• Monitors compliance with legal requirements with regard to reservation of jobs



III. Demand Forecasting Techniques

Forecasting techniques vary from simple to sophisticated ones. Some of the most commonly used techniques are:

Ø Managerial Judgment

Ø Ratio-trend analysis

Ø Work study techniques

Ø Delphi techniques

Ø Flow models

Ø Others

Managerial Judgment

• This is the simplest and commonly used technique where managers sit together and arrive at a figure that

would be the future demand for labour

• The technique may involve a ‘bottom-up’ or a ‘top-down’ approach depending on whether the proposal is

made by the line manager or the top level manager

• Based on the final data the HR manager will prepare the company forecasts which would be reviewed and

finalized by the top management

Ratio-Trend Analysis

• This is the quickest forecasting technique

• The technique involves studying past ratios for example between the number of workers and production in

an organization. It forecasts future ratios, making some allowance for changes in the organization or its

methods.

Work-Study Techniques

• Work study techniques can be used when it is possible to apply work measurement to calculate the length

of operations and the amount of labour required.

• Using the production budget, the planned volume output for the year is calculated. This multiplied by the

standard hours per unit gives us the planned hours for the year. This figure when divided by the actual

working hours per employee gives the number for employees required for the entire year.

e.g



• Allowances need to be made for absenteeism and idle time. Work-study techniques for direct employees

can be combined with ratio-trend analysis to forecast for indirect workers.

Delphi Technique

• Delphi forecasting is a non-quantitative technique for forecasting. It draws its name from the Oracles of

Delphi, which in Greek Antiquity advised people based on intuition and common sense.

• It solicits estimates of personnel needs from a group of experts, usually managers

• The HRP experts act as intermediaries, summarize various responses and report the findings back to the

experts. Summaries and surveys are repeated till the experts agree.

• The agreement reached is the forecast of the personnel needs.

• The key feature of Delphi technique is the absence of interaction among the experts

Flow Models

• Flow models are frequently associated with forecasting personnel needs. The simplest one is called Markov

Model.

• Based on this concept, a flow model of human resources has been developed which can be applied to the

organization as a whole or to any of its subsystems

• In this model, the forecast of human resources supply is calculated as follows:

a. Determination of period for which HR flows are to be measured

b. Establishment of categories/states to which an individual is assigned

c. Counting of annual flows of individuals among the categories for several time periods

d. Estimating the probability of transactions from one category to another category based on past trend

• Markov analysis is easy to apply and is widely used. However its drawbacks are its heavy reliance on past

data which might not always be accurate. Secondly, probabilities in Markov analysis will be reliable only

when there are at least 50 people in each job.

Other Forecasting Techniques

Descriptive models help understanding complex data on personnel flow / movements. This is attempted through

mathematical techniques that present a simplified and abstract view of complex and often contradictory empirical

data on personnel flows, surpluses and shortages relative to needs.

One of the widely used mathematical techniques for calculating demand is:

En = (Lagg + Gn)1/x

_____________

y

En is the estimated level of personnel demand in n planning periods

Lagg is the overall or aggregate level of current business activity in rupees

Gn is the total growth in business activity anticipated through period n in today’s rupees

x is the average productivity improvement anticipated through the planning period

y is the conversion figure relating to today’s overall activity to personnel required



IV.HR Supply Forecasting:

The logical step after demand forecasting is to determine whether it will be able to procure the required

number of personnel and sources for such procurement. This is provided by supply forecasting.

Supply forecasting is done so that:

1. Helps quantify number of people and positions expected to be available in future to help organization

meet its plans and objectives

2. Helps clarify likely staff mixes that will exist in future

3. Assess existing staffing levels in different parts of the organization

4. Prevents shortage of people where and when needed

5. Monitors expected future compliance with legal requirements of job reservations

In order determine the supply of personnel, the company has to analyze:

1. Existing human resources

2. Internal sources of supply

3. External sources of supply

1. Existing Employees

The analysis of present employees is facilitated by HR audits.HR audits summarize each employees skills

and abilities. The audits of non-managers are called skill inventories and those of management are called

management inventories.

The skill and management inventories give planners a comprehensive summary of the capabilities found in

the workforce and helps in transfers across departments or promotions.

All this data regarding employees is computerized through Human Resource Information System (HRIS)

2. Internal Source of supply

The techniques used to determine internal supply are:

a. Inflows and outflows

b. Turnover rate

c. Conditions of work and absenteeism

d. Productivity level

e. Movement among jobs

a. Inflows and Outflows

The simplest way to forecast internal supply is the inflow and outflow method. This is illustrated below

where an analysis of gains and losses for a particular job, that of a word processor in a hypothetical

organization is shown.



b. The turnover rate is the traditional method of forecasting internal supply. Algebraically, it is

Number of separations during the year

___________________________________________ X 100

Average number of employees during the year

c. Conditions of Work and Absenteeism:

Changes in conditions of work such as normal weekly working hours, overtime policies, length of timing and

holidays, retirement policies, policy for employing part-time and shift systems need to be assessed.

d. Productivity level

Any change in productivity would affect the number of person required per unit of output. Increase in productivity

will reduce the requirement and decrease would have the opposite effect.

e. Movement among Jobs

Over the years in a company, there would be promotions, transfers and retirements. Based on these factors and

average development time for a particular job profile, we can estimate the number of personnel who would be

available for that profile in future.

3. External Supply

In addition to internal supply, the organization needs to lookout for prospective employees from external sources

External sources are important for specific reasons:

a. New blood and new experience will be available

b. Organization needs to replenish lost personnel

c. Organization growth and diversification create the needs to use external sources to obtain additional number and

type of employees.

Sources of external supply vary from industry to industry, organization to organization and from one geographic

location to another. Some organizations have found that their best source of further employees are colleges and

universities while others achieve excellent results from consultants, competitors or unsolicited applications.

V.HR PROGRAMMING

Once an organization’s personnel and supply are forecast, the two must be reconciled or balanced in order that

vacancies can be filled by the right employees at the right time.

VI.HR PLAN IMPLEMENTATION

Implementation requires converting an HR plan into action. A series of action programmes are initiated as apart of

HR plan implementation.

a. Recruitment, Selection and Placement – after the job vacancies are known, efforts must be made to identify

sources and search for suitable candidates. The selection programme should be professionally designed.

b. Training and Development – The training and development programme should cover the number of trainees

required and programmes necessary for existing staff

c .Retraining and Redeployment – new skills are to be imparted to existing staff when technology changes

d. Retention Plan – retention plan covers actions which would help reduce avoidable separations of employees.

e. Downsizing – where there is surplus employee, trimming of labour force will be necessary

f. Managerial Succession Planning- Notwithstanding the expansion or contraction of the total workforce in the

organization, systematic grooming is required to produce effective managers.

VII. CONTROL AND EVALUATION

Control and evaluation represents the fifth and the final phase in the HRP process. The HR plan should include

budgets, targets and standards. It should also clarify responsibilities for implementation and control, and establish

reporting procedures, which will enable achievements to be monitored against the plan.



Factors Affecting HRP

Human Resource Planning is influenced by various factors like:

1. Type and strategy of the organization

2. Organization growth cycles and planning

3. Environmental uncertainties

4. Time horizons

5. Type and quality of forecasting information

6. Nature of jobs being filled

7. Off-loading the work

1. Type and Strategy of Organization

The type of organization is an important consideration because it determines the production processes involved,

number and type of staff needed and the supervisory and managerial personnel required. Manufacturing

organizations are more complex in this respect than those that render services. The strategic growth plan of the

organization, type of plan ie formal or informal, the nature of HR ie proactive or reactive, the scope of the plan and

the organization flexibility are some of the choices that the organization has to make.

2. Organization growth cycles and planning

The stage of an organization growth can have considerable influence on HRP.Small organizations in the initial

stages may not have personnel planning. A mature organization experiences less flexibility and growth. The need for

planning here is vital and needs to be formal and innovative.

3. Environmental Uncertainties

Political, social and economic changes affect all organizations. Personnel planners deal with environmental

uncertainties by carefully formulating recruitment, selection and T&D programmes.

4. Time Horizons

Plans can be short term spanning six months to one year or long term spread across three to twenty years. The exact

time span depends on the degree of uncertainty prevailing in an organization’s environment.

5. Type and Quality of forecasting information

The information used to forecast personnel needs originates from multitude of sources. There are different levels of

information like

a. strategic information related to product mix, geographic limits of the market etc

b. Organization information regarding org structure, budget, production schedules etc

c. HRP specific information like job analysis ,recruitment sources, skills inventory etc

The quality and accuracy of the information depends on the clarity with which the organization decision makers

have defined their strategy, org structure and HRIS.

6. Nature of jobs filled

Personnel planners must consider the nature of jobs being filled in the organization. Job vacancies arise because of

separation, promotions and expansion strategies. It is necessary to provide the personnel department to anticipate

vacancies as far in advance as possible to provide sufficient lead time to ensure suitable candidates are recruited.

7. Off-loading the Work

Several organizations off-load part of their work to outside parties either in the form of sub-contracting or

ancillarization. Most organizations have surplus labour and they do not want to worsen the problem by hiring more

people.



Human Resource Information System (HRIS)

A human resource information system (HRIS) is a systematic procedure for collecting, storing, maintaining,

retrieving and validating data needed by an organization about its human resources. The HRIS is usually a part of

the organization’s larger management information system (MIS). The HRIS need not be complex or even

computerized. But computerization has its own advantage of providing more accurate and timely data for decision

making.

The steps in implementing an HRIS

As with any major change, proper planning is an absolute necessity for successful implementation of an HRIS. The

steps outlined below describe the specific procedures involved in successfully developing and implementing an

HRIS.

Step 1. Inception of idea. The idea for having an HRIS must originate somewhere. The originator of the idea

should prepare a preliminary report showing the need for an HRIS and what it can do for the organizations.

Step 2. Feasibility study. Feasibility study evaluates the present system and details the benefits of an HRIS. It

evaluates the costs and benefits of an HRIS.

Step 3. Selecting a project team .Once the feasibility study has been accepted and the resources allocated,a project

team should be selected. The project team should consist of an HR representative who is knowledgeable about the

organisation’s HR functions and activities and about the organization itself and representatives from both

management information systems and paytoll. As the project progresses, additional clerical people from the HR

department will be needed to be added.

Step 4. Defining the requirements. A statement of requirements specifies in detail exactly what the HRIS will do.

A large part of the statement of requirements normally deals with the details of reports that will be produced.

Naturally, the statement also describes other specific requirements. This typically includes written descriptions of

how users collect and prepare data, obtain approvals, complete forms, retrieve data and perform other non technical

tasks associated with HRIS use.

Step 5. Vendor analysis. This step determines what hardware and software are available that will best meet the

organizations needs for the lowest price. This is a difficult task. The best approach is usually not to ask vendors if a

particular package can meet the organizations requirements but how it will meet those requirements. The results of

this analysis will determine whether to purchase and “off –the-shelf” package or develop the system internally.

Step 6. Package contract negotiation. After a vendor has been selected, the contract must be negotiated. The

contract stipulates the vendors responsibilities with regard to software, installation, service maintenance, training

and documentation.

Step 7. Training. Training usually begins as soon as possible after the contract has been signed. First, the members

of the project team are trained to use the HRIS. Towards the end of the implementation, the HR representative will

train managers from other departments in how to submit information to the HRIS and how to request information

from it.



Step 8. Tailoring the system. This step involves making changes to the system to best fit the needs of the

organization. A general rule of thumb is not to modify the vendor’s package because modifications frequently cause

problems an alternative approach is to develop programs that augment the vendors program rather than altering it.

Step 9. Collecting the data. Prior to start-up of the system data must be collected and entered into the system.

Step 10. Testing the system. Once the system has been tailored to the organizations needs and the data entered a

period of testing follows. The purpose of the testing phase is to verify the output of the HRIS and to make sure it is

doing what it is supposed to do. Al reports should be critically analysed for accuracy.

Step 11. Starting up. Start-up begins when all the current actions are put into the system and reports are produced.

It is wise to attend start-up during a lull period so that maximum possible time can be devoted to the HRIS. Even

though the system has been tested some additional errors often surface during start-up.

Step 12. Running in parallel. Even after the new HRIS is tested it is desirable to run the new system in parallel

with the old system for a period of time. This allows for the comparison of outputs of both the system and

examination of any inaccuracies.

Step 13. Maintainance. It normally takes several weeks or even months of the HR people to feel comfortable with

the new system. During this stabilization period any remaining errors and adjustments should be handled.

Step14. Evaluation. After the HRIS has been in place for a reasonable lengthy of time the system should be

evaluated. Is the HRIS right for the organization and is it being properly used?

Following the above steps when implementing an HRIS will not guarantee success but it will increase the

profitability.

Organization Downsizing

Downsizing of an organization means reducing the excess employees by suitable measures and adjusting them as per the need of the organization. Such downsizing is necessary when market demand reduces or when new technology is introduced or when certain activities are closed down. In India downsizing was introduced in nationalized banks and in organizations such as SAIL, Fiat India, Motorola, and Hyundai etc.

For reduction, suitable “trimming downsizing plan” must be prepared which indicates:

1. Who is to be made redundant and where and when 2. Plans for retraining of employees. 3. Steps to be taken to help redundant employees find new jobs. 4. Policy for declaring redundancy and making redundancy payments. 5. Programme for consulting with unions and informing those affected.

For downsizing, following other methods can also be used:

1. Retain all existing employees but reduce the work hour for reduction in the total wage payment. 2. Transfer employees in other parts of organization where additional employees are needed. 3. Offer incentives for early retirement in the form of VRS 4. Declare lay-off for dealing with surplus staff.



Separation

Ø Separation involves cessation of services of personnel from an organization.

Ø The employment relationship between an organization and its employee comes to end.

Ø A person retires at the age of 60 ,this is one type of separation

Ø Separation also could be through VRS, termination or discharge

Ø Layoff is a form of temporary separation while Retrenchment is a form of permanent separation

Voluntary retirement scheme (VRS)

• Voluntary retirement scheme (VRS) is a type of separation. Mainstream economists perceive voluntary

retirement as a measure to shed the workforce whose marginal productivity is zero.

• VRS could be introduced in an industrial organization for maintaining its cost effectiveness in an

increasingly competitive world. Technological modernization improves the productivity of existing

workforce so much so that a section of the existing workforce becomes again redundant .The workforce

that becomes redundant in this process has to retire or be retrenched.

• VRS is one of the strategies introduced in the early 1980s in central public sector undertakings (PSUs) to

reduce the so-called surplus or redundant workforce. It gained publicity after the introduction of new

economic policy in 1991.

• The rationale behind the introduction of voluntary retirement scheme (VRS) in India is that any organized

industrial organization has to operate within the existing legislative framework, which does not allow the

organization to shed the redundant workforce without adequate compensation

• VRS is a scheme whereby the employee is offered to voluntarily retire from his services before his

retirement date. Subject to certain conditions the company offers VRS to its employees It is the golden

route to cut the excess flab.

• Under VRS, handsome compensations are paid to those who opt to leave/retire. The incentives are in the form of

Ø Pension and lump sum gratuity Ø Loyalty bonus Ø Employee Stock Ownership Plan(ESOPS) Ø Prizes and rewards for long term service

• Employers refer to VRS as 'golden handshake', trade unions call it 'voluntary retrenchment scheme', and for

the government, it is 'unstated exit policy' which means that an exit policy which may not exist on paper.

• This process should convince them that the posts in the organization have become redundant and not the

person and the organization still values the person. Since this process involves emotions and feelings, every

care must be taken by the management that the process must be carried out in such a manner that it keeps

the dignity of the employees but at the same time achieves the objective in a tactful manner.

• Trade unions play a crucial role in introducing the VRS in any organized sector firm.

• The response to VRS in India has been mixed. In SAIL as well as banks, the schemes have proved to be

very successful. However it failed in HLL and few other organizations cause the incompetent employees

did not opt for VRS as they felt they would not get better jobs outside while the competent ones opted for

this scheme.

Outsourcing

Outsourcing is often viewed as involving the contracting out of a business function - commonly one previously

performed in-house - to an external provider.

Two organizations may enter into a contractual agreement involving an exchange of services and payments. Of

recent concern is the ability of businesses to outsource to suppliers outside the nation, sometimes referred to as off

shoring or offshore outsourcing



The advantages of outsourcing are:

• Cost savings — The lowering of the overall cost of the service to the business. This will involve reducing

the scope, defining quality levels, re-pricing, re-negotiation, and cost re-structuring

• Focus on Core Business — Resources (for example investment, people, and infrastructure) are focused on

developing the core business. For example often organizations outsource their IT support to specialized IT

services companies.

• Cost restructuring —Makes variable costs more predictable.

• Improve quality — achieve a steep change in quality through contracting out the service with a new service

level agreement.

• Knowledge — Access to intellectual property and wider experience and knowledge.

• Operational expertise — Access to operational best practice that would be too difficult or time consuming

to develop in-house.

• Access to talent — Access to a larger talent pool and a sustainable source of skills, in particular in science

and engineering.

• Risk management — An approach to risk management for some types of risks is to partner with an

outsourcer who is better able to provide the mitigation

• Tax Benefit — Countries offer tax incentives to move manufacturing operations to counter high corporate

taxes within another country.

• Scalability — The outsourced company will usually be prepared to manage a temporary or permanent

increase or decrease in production.

• Liability — Organizations choose to transfer liabilities inherent to specific business processes or services

that are outside of their core competencies.

The disadvantages of outsourcing are:

• Outsourcing leads to loss of jobs in an organization. Large scale outsourcing can affect a country’s

economy as it might lead to unemployment within the country

• Outsourcing can bring in privatization within public sector organizations

• Difficulty in determining how much to outsource and which functions

• Dependence on supplier for vital components is undesirable and may prove dangerous to the main

organization where outsourcing is substantial

• Difficulties in managing new relationships with outsourcing agencies

All HRM functions cannot be outsourced as HR service outsourcing is not like product outsourcing. This is because

HRM functions require certain confidentiality. Confidentiality and criticality are two important functions to be

considered while deciding on outsourcing

Third world countries like India have been hubs of outsourcing due factors like language skills, low cost labour and

comparatively less stringent labour norms. However due to recent recession in USA and Europe, there was been an

unfavorable view to large scale outsourcing.

Contracting and Sub- Contracting

Along with outsourcing, contracting and sub-contracting are two methods/techniques used for transferring certain jobs to outside agencies on contract basis.

The purpose is to reduce cost and to get the routine and simple type of work done for other agencies so that the firm can concentrate on the more important aspects rather than routine activities

In building construction, contacting and sub-contracting is quite common. Suppose a builder has planned to construct a big complex consisting of 20 buildings. He might give the contract of plumbing to a contractor. The contractor may in turn appoint a sub-contractor for 10 buildings and another sub-contractor for the rest of the buildings. The contractor/sub-contractor has to work as per the instructions of the builder and meet his specifications. A fixed amount is paid for the work to the contractor which is turn is passed on to the sub-contractor. This practice can be extended to other areas like electrification, plastering, tiling etc.



This practice reduces cost, brings division of work and specialization and speeds up work. It gives the builder the convenience avoiding the difficulty of giving to each and every work of the building complex.

Similarly in automobile or manufacturing sector, the main company does not manufacture each and every product. It gives the contract to another company to manufacture products as per its requirements. All terms and conditions are clearly defined in the contract. The contracting agency or company might further sub-contract the requirement to smaller parties.

Contractors may operate as independent contractor, general contractor or sub-contractor

Ø Independent Contractor-They work dependently and not for a specific company. They are paid on freelance basis. They operate through a limited company which they normally own.

Ø General Contractor-Consists of a group or individuals that normally contracts with a fixed set of organizations or organization and undertake specific work related to construction, renovation, demolition etc. They are normally specialized in a particular field and operate through sub-contractors.

Ø Sub-contractor-A sub-contractor is hired by a general contractor who performs a specific part of the project assigned to the general contractor.

Pink Slip/Termination/Dismissal/Discharge

When the dismissal of the employee is initiated by the employer it is called termination or discharge.

This is a drastic step which is taken after careful thought. A dismissal needs to be supported by just and sufficient

reasons.

The following reasons can lead to the dismissal of an employee

Ø Excessive absenteeism

Ø Serious misconduct

Ø False statement of qualification at the time of employment

Ø Theft of company’s property

A "pink slip" is a notice of dismissal or termination from one's job, also known as one's "walking papers."

The term "pink slip" dates from the early 20th century, and originally referred to the practice of including a pink-

colored slip of paper in an employee's weekly pay envelope notifying the worker of his or her termination. There

does not seem to be any particular significance to the use of the color pink aside from the fact that it made the notice

stand out from any other papers that might be in the envelope.

Though the "pink slip" in the pay envelope has probably been superseded by e-mail these days, "to be pink slipped"

is still very much in use as shorthand for "to be fired."

Retrenchment

Retrenchment refers to termination of services of employees because of replacement of labour by machines or

closure of department due to continuing lack of demand for product manufactured by a particular department of the

organization.

If the plant itself is closed, the management and employees have to leave for good.

Retrenchment like layoff entitles the employees to compensation which is term of section 25(f) of the Industrial

disputes act, 1947 equivalent to 15 days pay for every completed year of service

However retrenchment differs from layoff as in case of layoff, the employee continues to be in the employment of

the organization and is sure to be recalled after the end of the period of layoff but in retrenchment the employee is

send home for good.

Retrenchment differs from dismissal as well. An employee is dismissed because of this or her own fault.

Retrenchment on the other hand, is forced on both the employer and employees. Retrenchment involves termination

of an entire process involving services of several employees. But dismissal involves services of one or two

employees.

The closure of Binny Mills in Madras resulting in retrenchment of both the management and the employees.



Layoff

A layoff is a temporary separation of employees from his or her employer at the instance of the later without any prejudice to the former.

Section2 (KKK) of the Industrial Disputes Act,1947 defines layoff as the failure ,refusal or inability of employer to give employment to a worker whose name is present on the rolls but who is not retrenched

A lay-off may be for a definite period on the expiry of which employee will be recalled by the employer for duty. It may extend to any length of time with the result the employer is unable to estimate when he or she can recall his or her employees.

A layoff maybe is occasioned by one of the following reasons:-

1. Shortage of coal, power or raw materials 2. Accumulation of stocks 3. Breakdown of machinery 4. For any other reason.

As the employees are laid off at the instance of the employer, they have to be paid compensation for the period they are laid off. Section 25 of Industrial Disputes Act, 1947 makes it mandatory on the part of the employer to pay compensation for all the days of the layoff. The compensation must be equal to half the normal wages of the employee would have earned, if he or she was not laid off.

When a part of department is laid off, the management shall define the basis of laying off on merit or seniority. However in unionized companies, it is very difficult for the management to lay-off based on competence.

Promotion

Promotion means an improvement in pay, prestige, position and responsibilities of an employee within his organization. A mere shifting of an employee to a different job which has better working hours, better location and more pleasant working conditions, does not amount to a promotion. The new job is a promotion for the employee only when it carries increased responsibility and enhanced pay.

Issues relating to employee promotion often figure in the negotiations between employers and union leaders. But promotional matters rarely lead to a major confrontation between them.

Purposes of Promotion

The purpose of promotion may be outlined as follows:

1) To motivate employees to higher productivity. 2) To attract and retain the services of qualified and competent people 3) To recognize and reward the efficiency of an employee 4) To increase the effectiveness of the employee and of the organization. 5) To fill up higher vacancies from within the organization. 6) To build loyalty, morale, and a sense of belongingness in the employee. 7) To impress upon others that opportunities are available to them too in the organization, if they perform

well. A promotion represents the ultimate accomplishment for some employees

Promotion Policy

The usual policy is to take merit into consideration. Sometimes length of service, education, training courses completed, previous work history, etc., are factors, which are given weight while deciding on a promotion. Although promotions are made on the basis of ability, hard work, co-operation, merit, honesty, many informal influences are powerful determinants of a promotion policy.

For higher posts, persons are picked by the top executives:

i. Who think and feel just as he does; ii. Who value loyalty to him and to the organization; and iii. Who have social, political, economic and religious interests similar to his own.

Top executives tend to choose those who are carbon copies of themselves.



Seniority versus Merit:

“Seniority” refers to length of service in the company or its various plants, or in its departments, or in a particular position. Under straight plant wise seniority in all jobs, promotions go to the oldest employee, provided that he is fit for the job. Occupational seniority may be within a department, within a division or in the entire plant.

Seniority offers certain rights and benefits. These are:

a) Some rights are based on competitive seniority among employees. Rights to promotion, transfer lay-off, and recall are such examples.

b) Other benefits have nothing to do with one man relative to another, e.g. a man may be entitled to have 15 days casual leave in a year, a pension after thirty years and a certain amount of sick leave after six months service.

There is a great controversy on the question of whether promotions should be given on the basis of seniority or ability. Trade unions are of the view that the promotions should be given on the basis of seniority while managements favor promotions on based on merit and ability.

If a promotion is given to a qualified man in recognition of his performance or with a view to creating an incentive for him, then it should be based on his ability.

If on the other hand, promotion is given to recognize and reward senior employees, then it should be based on the basis of seniority.

The most widely used basis for promotion combines both ability and seniority. The best policy would be to ensure that whenever there are two employees of the equal seniority, ability or merit should be the deciding factor in a promotion. However there are two employees of the most equal competency, seniority should be the decisive factor. Such a policy would satisfy the management, which prefers ability, and trade unions, which prefer seniority.

Transfers

A transfer involves a change in the job (accompanied by a change in the place of the job) of an employee without a

change in responsibilities or remuneration. A transfer differs from a promotion in that the latter involves a change in

which a significant increase in responsibility, status and income occurs, but all these elements are stagnant in case of

a transfer. Another difference is that transfers are regular and frequent, as in banks and other government

establishments, but promotions are infrequent.

Reasons for transfers

The reasons for transfers vary from organization to organization and from individual to individual within an

organization. Broadly speaking, the following are the reasons for transfers:

§ There is a shortage of employees in one department or plant because of a heavy demand, which

necessitates a requirement of more employees. In another department or plant, employees may be

surplus because of slackened demand for the products manufactured by the company. This will

lead to workers being idle and wastage of manpower. Workers are thus transferred from the

surplus department to another department or plant where there is shortage of staff.

§ Incompatibilities between the worker and his or her boss or between one worker and another

worker.

§ Correction of a wrong initial placement of an employee.

§ A change has taken place in the interests and capacities of an individual, compelling him to

transfer to a different job.

§ Over a period of time, the productivity of an employee may decline because of the monotony of

his or her job. To break this monotony, the employee is transferred.

§ The climate may be unsatisfactory for an employee’s health. He or she may request a transfer to a

different place where his or her health will not be affected by the climate.

§ Family related issues cause transfers, especially among female employees like when they get

married and want to join their husbands.



Types of transfers

1) Production transfers – as mentioned earlier, a shortage or surplus of the labour force is common in

different departments in a plant or several plants in an organization. Surplus employees in a department

have to be laid off, unless they are transferred to another department. Transfers effected to avoid such

imminent lay-offs are called production transfers.

2) Replacement transfers – replacement transfers are too intended to avoid imminent lay-offs, especially of

senior employees. A junior employee may be replaced by a senior employee to avoid laying off the senior

one. A replacement transfer usually takes place when all the operations are declining and it is carried out to

retain long-service employees as long as possible.

3) Versatility transfers – versatility transfers are done to make employees versatile and competent in more

than one skill. Clerical employees in banks, for example are transferred from one section to another so that

they acquire the necessary skills to attend to the various activities of the bank. Versatile transfers may be

used as a preparation for production or replacement transfers.

4) Shift transfers – generally speaking, industrial establishments operate more than one shift. Transfers

between shifts are common, such transfers being made mostly on a rotation basis. Transfers may also be

effected on special requests from employees. Some request a transfer to the second shift or the night shift in

order to avail the free time during the day to take up part time jobs.

5) Remedial transfers – remedial transfers are effected at the request of employees and are therefore called

personal transfers. Remedial transfers take place in instances like

ü the initial placement of an employee may have been faulty or

ü the worker may not get along with his or her supervisor or with other workers in the department

ü he or she may be getting too old to continue in his or her regular job or

ü the type of job or working conditions may not be well adapted to his or her personal health

ü if the job is repetitive, the worker may stagnate and in all such instances

the employee would benefit by transfer to a different kind of work.

1b.human resource planning

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