Personnel Management [4 Hours]

10.1 Management Principles: Administration & Organization 207920712069

What is Management?

Management may be defined as a process by which a responsible person in an organization gets things done through the efforts of other people in grouped activities. It involves the coordination of human and material resources towards objective accomplishment.

Four basic elements: Towards objective; through people; via technique; and in an organization.

Five M's of Management: Men (Human), Machines, Methods, Money, Markets.

Five core components: Planning, Organizing, Staffing, Directing, and Controlling — for the effective use of resources.

Organization

Derived from Greek word 'organon' meaning tool or instrument. A good organization has high efficiency.

Key features:

• Coordination of efforts: Individual divisions are linked to each other for goal-focused coordination
• Hierarchy of authority: Jobs arranged in a ladder-like hierarchy based on responsibility, accountability, and skill demands. Makes supervision and coordination easier and more effective
• Division of work: Dividing large tasks into manageable packages of work handled by one person
• Social control: Organization maintains control over members' behavior through rules, norms, and standards

Management by Objective (MBO): A comprehensive technique of goal setting where both top and operational level managers jointly identify common goals, define individual responsibilities in terms of expected results. Four basic steps: collaborative goal setting, action plan development, periodic review, and performance appraisal.

Fayol's 14 Principles of Administrative Management 2079 2069

1. Division of work: Specialization increases output by making employees more efficient
2. Authority: Managers must be able to give orders; authority gives them this right
3. Discipline: Employees must obey and respect rules. Good discipline is clear understanding between management and workers
4. Unity of command: Every employee should receive orders from only one superior
5. Unity of direction: A group of organizational activities with the same objective should be directed by one manager using one plan
6. Subordination of individual interests: Interests of any one employee or group should not take precedence over interests of the organization as a whole
7. Remuneration: Workers must be paid a fair wage for their services
8. Centralization: Refers to the degree to which subordinates are involved in decision making. The problem is to find the optimum degree
9. Scalar chain: The line of authority from top to bottom management
10. Order: People and materials should be in the right place at the right time
11. Equity: Managers should be kind and fair to their subordinates
12. Stability of tenure: Management should provide orderly personnel planning
13. Initiative: Employees allowed to originate and carry out plans will exert high levels of effort
14. Esprit de corps: Promoting team spirit builds harmony and unity within the organization

Difference between Administration and Management 2071

10.2 Centralization & Decentralization 208020792074

Centralization 2074

Reservation of decision-making power at the top level of the organization. Authority remains with the top management.

Characteristics: Top-down control, leadership vision, authoritarian/visionary decision-making, execution directed by top management vision.

Advantages:

• Facility for personnel administration
• Equitable distribution of resources
• Uniformity of activities
• Specialization
• Quick decision
• Greater flexibility
• Standardization and training
• Effective control
• Fixing of responsibility is easy

Disadvantages:

• Delay in work
• Bureaucracy
• Distinctive to subordinates
• No loyalty
• Lack of secrecy

Decentralization 2080 2079

The process of transfer of power, authority, etc. from central to local government. It is the dispersion or distribution of functions and powers. It is a systematic delegation of authority at all levels of management and organization.

Types of Decentralization:

• Political Decentralization
• Administrative Decentralization
• Fiscal Decentralization
• Market Decentralization

Implications of Decentralization:

1. Fewer burdens on the Chief Executive
2. Subordinates get a chance to decide and develop skills and capabilities
3. Easily implemented
4. Divisional heads can be set up
5. Motivation through independence

10.3 Supervisory & Leadership Styles 2079207820752073207220712070

Leadership is a process by which an executive can direct, guide, and influence the behavior of others towards the fulfillment of goals. It denotes confidence and zeal.

Characteristics of Leadership

• Includes intelligence, maturity, and personality
• It is a group process — people interacting with each other
• A leader is involved in shaping behavior of the group
• Leadership is situational — it depends on the situation

Functions of a Leader

• Initiates action: Communicating policies and plans to workers from where work actually starts
• Motivation: Motivates employees with economic and non-economic rewards
• Guidance: Supervises and guides subordinates
• Building morale: Builds confidence, creates a winning attitude

Types of Leadership Styles 2079 2075 2073 2072 2071 2070

1. Autocratic/Authoritarian Leadership

Leader has full command and hold over employees/team. Team members cannot put forward views even if they are best for the team. Leader himself sets things and gets them done.

• Advantage: Leads to speedy decision-making and greater productivity under leader's supervision
• Drawback: Leads to greater employee absenteeism and turnover. Works only when the leader is best performing

2. Democratic/Participative Leadership

Leader encourages the team in the decision-making process. Team/employees can provide suggestions and take interest.

• Suitable when the team is skilled, loyal, and experienced
• Drawback: Time-consuming

3. Laissez-faire (Free-Rein) Leadership

Leader assists in setting the best out of people. Subordinates get full freedom in decision-making.

• Leader concentrates on his own work and does not focus on others
• Team provides suggestions and takes interest
• Suitable when employees are skilled, loyal, experienced, and self-motivated

4. Bureaucratic Leadership

Leaders strictly adhere to organizational rules and policies. Employees must also follow rules and procedures. Promotions are based on ability to adhere to organizational rules.

• More suitable when safety, work conditions, and quality are required
• Drawback: Discourages creativity, does not make employees fully contented

10.4 Information System & Decision Making 2072

Decision Making

Decision making is an indispensable component of the management process. It is also known as the heart of management. Decision making is the process of selecting the best course of action out of many available alternatives — defining the problems, developing alternatives, evaluating them in terms of possible consequences, choosing among them, and implementing the decision effectively.

Importance of Decision Making

• Pervasive function
• Indispensable component
• Evaluation of managerial function
• Selection of best alternative
• Establishment of plans and policies

Types of Decisions

• Programmed decisions: Routine in nature, taken on the basis of policies, procedures, and rules
• Non-programmed decisions: Unique in nature, made by top management, involving new situations
• Basic decisions: Taken for day-to-day operations (e.g., maintenance of machines)
• Strategic decisions: Taken for survival of the business (e.g., replacement of machines)
• Organizational decisions: Formal/official decisions (appointment, promotion, transfers)
• Personal decisions: Informal/individual decisions (voluntary retirement, reject promotion)
• Individual decisions: Single person engaged (CEO/Boss)
• Group decisions: Group of persons engaged (BODs, management team)
• Policy decisions: By top-level managers with long-term impact
• Operational decisions: By lower-level managers for day-to-day activities

Steps in Decision Making

1. Step I: Observe
2. Step II: Formal recognition
3. Step III: Interpretation and Diagnosis
4. Step IV: Definition
5. Step V: Set Objectives
6. Step VI: Determine the Options
7. Step VII: Evaluate Options
8. Step VIII: Select Option
9. Step IX: Implement the option
10. Step X: Monitor

Information Systems

An effective information system helps managers make quality decisions by providing accurate, timely, and relevant data. The four major types of information systems used in organizations are:

1. Transaction Processing Systems (TPS): First computerized form adopted by business organizations to handle routine and recurring transactions
2. Management Information Systems (MIS): Gathers comprehensive data and summarizes it in a form valuable for functional managers to anticipate future needs
3. Decision Support Systems (DSS): Automatically manipulates and summarizes information necessary for a specific decision. Managers need knowledge of computer software
4. Executive Information Systems (EIS): Information processing specially designed for top managers. No broad knowledge of software required — only basic computer knowledge is sufficient

10.5 Motivation 20812078207620702069

What is Motivation? 2078

The term motivation is derived from 'movere' which means 'to move'. In simple words, it is the will to work. Motivation represents those psychological processes that cause the arousal, direction, and persistence of voluntary action that are goal-directed.

Performance is the function of ability, motivation, and opportunity:
P = f(A + M + O)
From the managerial point of view, motivation is more important than ability because ability never can be zero or negative, but motivation can be zero or even negative.

Types of Motivation

• Positive (incentive) motivation and negative motivation
• Extrinsic vs. intrinsic motivation
• Self-motivation and individual motivation

A. Content Theories of Motivation 2081 2076 2069

Content theories explain what motivates people — why people have different needs at different times. Important content theories include:

1. Maslow's Need Hierarchy Theory

One of the most popular theories of motivation. Based on a priority model (clinical study). Once a lower-level need is satisfied, it no longer serves to motivate. Only after lower-order needs are satisfied can higher-order needs become sources of motivation.

1. Physiological Needs: Starting point for motivation — food, clothing, shelter, medicine, sex, and other necessities. Must be at least partly satisfied before higher-level needs emerge. These relate to survival and maintenance of human life
2. Safety Needs: After first-level needs are satisfied — job security, security of income source, provision for old age, insurance, etc. Also includes desire to know the limits of behavior. Also called security needs
3. Social/Belongingness Needs: Become important after satisfying lower needs. Humans are social beings — interested in sociability, exchange of feelings and grievances, companionship, belongingness
4. Ego/Esteem Needs: Two types:
   • Internal esteem: Self-confidence, achievement, competence, self-respect, independence, and freedom
   • External esteem: Status, recognition, attention, and appreciation
5. Self-actualization Needs: Need for self-fulfillment — potential personal growth, perception of self into reality. Once activated, they can never be fully satisfied. "What a man CAN be, he MUST be"

2. Herzberg's Two-Factor Theory (Motivation-Hygiene Theory)

Also called dual-factor theory. An extended work of Maslow — the specific content theory of motivation. Herzberg conducted a study on about 200 accountants and engineers, using a critical incident method by asking two questions: "When did you feel particularly good about a job — what turned you on?" and "When did you feel exceptionally bad about your job — what turned you off?"

Extrinsic/Hygiene Factors (Factor 10):

• Related to the conditions under which the job is performed
• Associated with negative feelings — they do not improve motivation
• They prevent dissatisfaction but do not motivate
• Examples: Company policy and administration, relationship with supervisor, relationship with peers, relationship with subordinates, work conditions, salary, status, security, and supervision

Intrinsic/Motivator Factors (Factor 6):

• Associated with positive feelings of employee satisfaction
• Related to the content of the job itself
• They affect satisfaction and encourage superior performance
• Examples: Achievement, recognition, work itself, responsibility, advancement, growth

3. Alderfer's ERG Theory

Extension of Maslow's hierarchy. Classifies human needs into three categories:

• E — Existence needs
• R — Relatedness needs
• G — Growth needs

Unlike Maslow, this theory demonstrates: (a) More than one need can operate at the same time; (b) If satisfaction of a higher need is blocked, the desire to satisfy a lower-order need increases.

4. McClelland's Theory of Learned Needs

Classified human needs into three: Achievement, Power, and Affiliation. This is a content-level theory of motivation. A manager who is having willingness to perform is the one who craves for achievement, and achievement can be prepared through training programs.

B. Process Theories of Motivation 2076

Process theories do not directly explain how needs emerge. They describe the process through which needs are translated into behavior.

1. Equity Theory (Stacy Adam)

People scan for equity in their inputs vs. outputs. Categories: underpayment inequity and overpayment inequity. Four referent comparisons: Self-inside, Self-outside, Other-inside, Other-outside. Based on this theory, employees can: change outcomes, alter inputs, and leave the situation.

2. Expectancy Theory (Victor Vroom)

Major concepts: Valence, Expectancy, and Instrumentality. Implications: employee emphasizes payoffs, rewards should be tied to performance, rewards should be equitable, minimize individual differences.

3. Reinforcement Theory (B.F. Skinner)

Also called operant conditioning theory. Behavior of people is largely determined by its consequences.

10.6 Personnel Selection, Testing & Training 2078207720732072

Recruitment 2078 2077 2073 2072

Recruitment is a process to discover the sources of manpower to meet requirements of the staffing and to apply effective measures for attracting that manpower in adequate numbers to facilitate effective selection. It is regarded as the most important function of HR management.

Recruitment Process: Before sending a requisition, a manager must consider:

1. Whether the post is vacant or not
2. Whether there is an alternative solution (part-time, transfer, outsourcing)
3. Whether there is budgetary provision or not
4. Whether the qualification is according to job specification or not

Selection

Selection involves rejecting unsuitable applicants and finally choosing the most suitable one who possesses the necessary skills, knowledge, and personality to successfully fill specific jobs in the organization.

Major activities in selection:

• Establishing selection policies
• Identifying and choosing selection criteria
• Gathering information about potential employees
• Evaluating the information and assessing applicants
• Making decisions to select or reject
• Communicating decision (selected or rejected)

Types of Selection Tests

1. Achievement tests (Proficiency tests): Measure skill or knowledge acquired from training and on-the-job experience. Two types: (a) Test for measuring job knowledge (b) Work sample tests
2. Aptitude/Potential Ability Tests: Measure talent to learn a new job or skill. Detect peculiarities or defects in sensory or intellectual capacity. Three types: (a) Mental tests (b) Mechanical aptitude tests (c) Psychomotor/skill tests
3. Personality tests: Discover clues to value systems, emotional reactions, maturity, motivation, ability to adjust to stress, and capacity for interpersonal relations
4. Interest tests: Designed to discover areas of interest and identify kind of work that will satisfy the person
5. Psychomotor (skill) tests: Test ability to do specific work requiring motor ability and skill — speed, movement, control, and coordination
6. Graphology tests: Analyze handwriting of applicant
7. Polygraph test: Detect truthfulness of information given — a lie detector machine measuring blood pressure and breathing rate

Training

Training is the process of learning — a sequence of programmed behavior. It seeks a relatively permanent change in an individual to improve ability to perform on the job. It gives people awareness of rules and procedures to guide their behavior.

Need for Training: Performance Gap = Expected Performance − Actual Performance. Gap can be due to lack of skill/knowledge (need training), lack of motivation (need motivating), or other reasons.

Major issues and challenges of training:

• Lack of management commitment
• Attention and help from trade parties and training institutes
• Lack of closer ties between organizations and training institutes
• Existence of vocational guidance systems
• Budgetary provision
• Poaching and the traditional role of the HR department

Training Methods:

• On the Job Training (OJT): Job instruction training, coaching, mentoring, job rotation, apprenticeship, committee assignment
• Off the Job Training: Lectures, simulation exercises, programmed instruction, vestibule training

10.8 Effective & Timely Communication 2077207420732072

Importance of Communication 2079 2074 2073 2072

• Motivation: Communication clarifies what is to be done, how well they are doing, and what can be done to improve performance
• Decision-making information: Provides necessary information for decision-making
• Attitude formation: Helps in forming attitudes through information exchange
• Socializing: People need communication for social interaction
• Controlling function: Helps in controlling organizational activities

Communication Process

The communication process involves the following elements:

1. Source: The originator of the message
2. Encoding: Converting the idea into a transmittable form
3. Transmission: Sending the encoded message
4. Medium: The channel through which the message travels
5. Decoding/Receiver: The receiver interprets the message
6. Feedback: The receiver's response back to the sender
7. Noise: Any interference that distorts the message

Barriers to Communication 2077

• Physical barriers: Distance, physical structures that create barriers through certain obstructions. Personnel may have possible distractions
• Stereotyping: People become involved emotionally and lose rationality — they only hear what they want to hear
• Prejudice: Barriers to interpretation. When both physical and individual barriers combine, material information gets distorted differently
• Linguistic barriers: Language complexity — words, phrases, and idioms may vary from country to country. Similarly, meaning of words may vary from person to person depending on context

10.7 Trade Unions & Industrial Relations

Industrial Relations (IRS / LRS)

Industrial relations deals with the relationship that exists between the employer and the employees.

Old concept: Relations that exist in industry between management and workers.

Modern concept: Covers not only employer-employee relations but also the relations between employer, employee, and government. Includes gainful employment, services, and activities under the state.

IRS/LRS encompasses:

• Freedom of association and protection of the right to organize
• Application of the principle of the right to organize and collective bargaining
• Collective agreements, conciliation, and arbitration
• Machinery for cooperation between authorities and occupational organizations at various levels

Objective of IRS/LRS:

• Safeguard the interests of workers
• Avoid industrial conflict
• Continue productivity
• Establish and maintain growth
• Establish government control system

Three components of IRS: Workers (represented by trade union), Employers (represented by employer association), and Government.

Trade Union

A union is an organization of workers, acting collectively, seeking to promote and protect its mutual interests through collective bargaining.

Characteristics of Union: Organization, Permanency, Collectivity, Mutual interests, Collective bargaining.

Why people join unions:

• Better compensation
• Security
• Better working conditions
• Influence workplace
• Obtain political power

Process of Unionization:

1. Legal basis
2. Organizing drive
3. Registration
4. Election
5. Recognition
6. Negotiation

Collective Bargaining

An important function of the union. It is the negotiation, administration, and interpretation of a written agreement between two parties. The union represents workers as bargaining agent, while employer associations represent employers.

Two aspects:

1. Defines employer-employee relations on the job through a collective agreement
2. Interprets and administers the collective agreement

Provisions in collective bargaining agreements:

• Union recognition & security
• Wage rates
• Conditions of employment
• Benefits, Strikes and lockouts
• Seniority clause, Discipline
• Grievance procedure, Management rights

Importance of Collective Bargaining:

• Promotes and protects interests of both parties and empowers them economically
• Establishes uniform terms and conditions of employment to prevent disputes
• Helps in amicable settlement of disputes
• Provides guidelines and norms for favorable environment
• Promotes participation and democratic leadership
• Decisions are implemented effectively
• Helps increase productivity and motivates workers

Labor Disputes

Disputes can be between employers and workers, between employers, between workers, or between workers/employers and governments.

Types of Disputes

• Right disputes: Concerned with interpretation and application of work standards
• Interest disputes: Conflict of interests related to pay, conditions of work, and working environments

Consequences of Labor Disputes

• Loss of production due to work stoppage and lock-outs
• Loss of profit due to loss of production
• Loss of market share due to better performance of competitors
• Poor motivation and low morale of employees
• Closure of the organization

Causes of Disputes

1. Economic causes: Compensation demands, bonus, working conditions, conditions of employment, industrial sickness
2. Managerial causes: Non-recognition of labor union, lack of consultation in recruitment, job security, disciplinary actions, lack of communication
3. Political causes: Political interference, union rivalry, collective bargaining, multiplicity of labor law

Dispute Settlement Procedures (Nepalese Context — Labor Act 2078)

1. Written complaint to employer: Filed in written form, about 51% of workers must sign, complaint through authorized trade union. Bilateral discussions held — if not settled within 21 days, next step follows
2. Written complaint to labor office: Filed to government labor office, labor officer plays conciliation role, disputes tried to settle within 15 days
3. If not settled, possible outcomes:
   • Strike: Workers go on strike with 30 days' notice to management, labor office, Department, and DAO
   • Lockout: Management can resort to lockout with government approval
4. Appointment of mediator/tribunal: Mediator appointed with mutual consent. If no agreement, tribunal constituted with equal representation from all parties (labor, management, government)
5. Appeal to government: Either party can file appeal within 35 days of tribunal award. Government adjudicates within 60 days. If decisions not given in specified time, workers can go on strike

Process of LRS

1. Legal existence of trade unions
2. Formation of unions
3. Problem identification
4. Collective Bargaining
5. Negotiation
6. Implementation and Monitoring

Important Things to Consider