Module 6:

Changes in Personnel Status

• Internal mobility is the process of movement of
employees which takes place between the jobs in
sections, departments or divisions of the organization.
• Internal Mobility is necessary to match the employee’s
skill and requirements with the requirements of the job
and those of the organization continuously.
 Bases of Promotion
• Seniority based promotion
I. PROMOTION Advantages
 It is easy to administer.
• Promotion is an upward  It is easy to measure the length of service and judge the seniority.

movement of employee in the  With the base of seniority there is no scope for favoritism,
discrimination and subjective judgement.
organization to another job,  By seniority everyone is sure of getting promotion one day.
 Subordinates are more willing to work under an older boss who has
higher in organisation’s given many years of service to the company.
Disadvantages
hierarchy.  The learning capabilities of senior (older) employees may
diminish.
• change in salary, status,  It de-motivates the younger and more competent employees and it
results in more employee turnover.
responsibility and grade of job or  The organisation is deprived of external talent which is very
necessary due to technological advancements and multi-culture
designation organisation.
 Judging the seniority is highly difficult as the problems like job
seniority, company seniority, regional seniority, service in different
organizations, trainee experience, research experience etc., will
crop up.
• Merit or competence based promotion Merit Disadvantages
based promotion occur when an employee is  It is not easy to measure merit. Personal
promoted because of superior performance in the
prejudices, biases, and union pressures may
current job.
come in the way of promoting the best
Advantages performer.
• Promotion by merit is a reward to encourage those  When young employees get ahead of senior
employees who make a successful effort to increase employees in the organization this creates
their knowledge or skill and who maintain a high frustration among senior employees .They feel
level of productivity. insecure and may also quit the organization.
• It helps the employer to focus on talented employees
 The past performance may not guarantee future
recognize their talent and reward their
contributions. success of an employee.
• Efficiency is encouraged, recognized and rewarded.  Loyalty and length of service is not properly
• Competent people are retained as better prospects rewarded
are open to them.
• It inspires other employees to improve their
standards of performance through active
• participation in all activities and putting in more
efforts.
II.DEMOTION Causes for demotion
• The employee may be unable to meet
• It is the downward movement of
the challenges posed by a new job.
an employee in hierarchy with • He may have low administrative skills.
lower status, salary and decreased • Due to poor business conditions and
responsibilities. continuous losses, a firm may decide to
• It is generally used as a punitive layoff some and to downgrade others.
measure for incompetence or a • It is sometimes used as a disciplinary
preliminary step to dismissal. tool against offending employees.
• It is a downgrading process
where the employees suffer
considerable emotional and
financial loss.
III.Transfer
• A transfer implies a lateral movement of
an employee in the hierarchy of positions
Permanent transfers may be
with the same pay and status. due to:
• Transfers may be either company • shifts in the workload
initiated or employee initiated. In fact, a
transfer is a change in job assignment. • vacancies requiring the
• It may involve a promotion, demotion or special skill of the transferred
no change at all in status and
responsibility.
employee
• Transfers from one job to another may • ill-health of the employee
be either temporary or permanent.
Temporary transfers may be due to
temporary absenteeism shifts in the
workload vacations .
Types of Transfers Problems with transfers
• Production transfer
• Replacement transfer
• Inconvenient to employees.
• Versatility transfer • Employees may or may not
• Remedial transfer fit in the new location
Benefits of transfers • Shifting of experienced
• Improve employee skills
• Remedy faulty placement decisions
hands may affect
• Prepare the employee for challenging productivity
future • Discriminatory transfer may
• Improve employee satisfaction
affect employee satisfaction.
• Improve employee-employer relations.
IV. EMPLOYEE SEPARATION Common methods of employer
Employee separation occurs when sponsored separations:
employees cease to be a member of an • Discharge or Dismissal
organization. • Layoff
Voluntary Separations: • Retrenchment
• Quits
• Voluntary retirement scheme
• Retirements
• Resignation
Involuntary Separations :
• Organization is passing through lean
period and is unable to maintain the
existing labour
• Initial faulty hiring resulting in mismatch
between job and employee.
• Employee exhibits unusual behavior
making the environment ineffective.
 Module 7:

Compensating Human Resources

• Compensation is what employees Objectives of Compensation
receive in exchange for their work. 1. It must attract and maintain employees
• Compensation administration, a term of the right quality and mix.
related to compensation refers to the 2. It must continually motivate employees
process of managing a company’s to attain the desired level output.
compensation program. 3. It must be maintained at the desired
• Strategic compensation is a pattern competitive level.
planned compensation programs 4. It must be fair and equitable.
intended to enable an organization to 5. It must be cost efficient, i.e., producing
achieve its goals. the desired outputs at the lowest
• Pay performance is a system that possible costs.
rewards employees based on their 6. It must comply with legal requirements.
performance. 7. It must be acceptable to the employees.
The Bases for Compensation Types of Compensation
1. Time • Pay, also known as base salary, refers
• This may be either be hourly or to standard salary that an employee
salaried. receives for doing a job.
• Incentives on the other hand are
2. Productivity
rewards given to employees for
• according to output.
performing beyond the standard
• The two types of productivity-based requirements.
compensation are commission and • Benefits are rewards given to an
piece rate.
employee or group of employees for
3. Combination of time and productivity. maintaining membership in the
There are times when employees are organization.
paid base salaries in addition to a
percentage of the amount of output
produced.
Determining Rewards 2.The Internal Factors
1.The External Factors • Employer’s Compensation Policy. One
• Labor Market Conditions. The price of any factor, which may be considered in
commodity, including labor, depends much on determining rewards, is the value or
supply and demand. worth of specific jobs. To determine
• Area Wage Rates. Organizations within a given
the values of the various jobs, an
area compete with one another in attracting
qualified manpower. activity called job evaluation is
• Cost of Living. In implementing adjustments to undertaken.
compensation, the consumer price index has • Employee’s Relative Worth. Since
become an important reference. performance makes organizations
• Collective Bargaining. When labor unions
effective, it maybe used as a basis for
exist, collective bargaining becomes a routine
rewarding employees. This means
activity jointly undertaken by labor and
management. better performers must be rewarded
properly.
• Employee’s Ability to Pay.
Components of a Compensation Program Job Evaluation Systems
• Job analysis which will specify skills,
responsibilities, hazards, and work 1.The Ranking Method
complexity pertaining to each job. 2.The Classification Method
• Job evaluation which determines the worth of
each job to the organization. 3.The Factor Comparison Method
• Salary survey which is used to determine the 4.The Point Method.
competitive position of the organization
within the industry in terms of compensation. The Compensation Factor
• Performance evaluation which is used to These decisions may be classified
determine the performance level of every
employee.
as follows:
• Pay for performance which indicates the 1.Pay-level decision
relationship between performance and
increase in pay, as well as the desired 2.Pay-structure decision
behavior of the employee. 3.Individual pay decision