CHAPTER 10

Human Resource Management–Policies and Practices

CHAPTER OBJECTIVES

After reading this chapter, you should be able to:

1. Understand the meaning and objectives of employee promotion
2. Delineate the criteria for promotion policies
3. Explain the meaning and types of separation
4. Enumerate the meaning, objectives and types of discipline
5. Understand the meaning and sources of Grievances
6. List the techniques of grievance identification
7. Describe the meaning and objectives of industrial relations
8. Understand the meaning and features of employee welfare practice
9. Define the characteristics of strategic HRM
10. List the prerequisites for the success of workforce diversity Management
11. Trace the emerging trends in Human Resource Management
12. Provide an overview of Green HR initiatives

India’s Inspirational Managers

Anand Mahindra is the chairman and managing director of Mahindra & Mahindra Ltd. (M&M)—a USD 14 billion (2018) multinational group with more than 39276 employees (2016) in over 100 countries across the globe. Anand Mahindra won the Global HR Excellence Award instituted by the World HRD Congress in the category of best CEO of the year 2007–2008 for his outstanding HR practices. He believes in the culture of collaboration and meritocracy and always insists on fairness, trust and transparency in employer and employee relations. The strong belief of Mahindra companies is that recognition plays an important role in motivating employees to demonstrate superior performance. Mahindra companies also believe that job rotation is a crucial process that helps individuals to improve their technical, behavioural and managerial Keeping the HR practices of Mahindra group in the background, we shall now see the important HR policies and practices.

Introduction

The last phase of HRM process is called maintenance function. Through this function, managers look to maintain employees’ commitment and loyalty with the organization. The HR maintenance activities normally focus on the employee satisfaction and organizational performance. Success in employee maintenance initiatives calls for effective and creative HR practices and policies. These HR policies and practices must focus on the development of positive work environment, unbiased employee promotion policies, continuous employee feedback, impartial disciplinary actions and effective mechanism for grievance handling. In this regard, managers must ensure that the employees are satisfied with the policies relating to both HR maintenance and industrial relations. Certainly, maintaining healthy industrial relations in an organization is a pre-requisite for successful HR maintenance. In this context, we shall now discuss about the role and relevance of different techniques of employee mobility like promotion, demotion and, transfer.

Employee Promotion

Promotion is the advancement of an employee from one position to another, resulting in his financial benefit. Promotion may be defined as an employee’s upward mobility in the organizational structure accompanied by increased authority, responsibility, compensation and social status. Promotion is certainly a good and effective motivator for employees. Organizations employ promotion as a tool to recognize and reward the merit and sincerity of the employees. Internal promotions for filling the job vacancies in an organization can increase the loyalty and morale of the employees. Promotions fulfil both the economic and social needs of the employees. In fact, the promise of a promotion acts as an incentive to many employees.¹

Objectives of Promotion

Promotion plays an important role in providing socio–economic and psychological satisfaction to the employees. Employees often view promotion as recognition of their hard work and loyalty. Certainly, the absence of adequate promotional opportunities for employees can affect work quality, employee discipline and cooperation, and can cause acute skill shortages.² We shall now look at the objectives of promotion.

• Promotion helps the management to fill the job vacancies available within the organization by upgrading the employees.
• Organizations seek to encourage efficiency and loyalty among the employees through promotion.
• Promotion aims at attracting and retaining the competent employees in the organization.
• Organizations use promotions to develop constructive competition among group members to improve their performance and productivity.
• Through promotion, organizations aim at providing the employees a sense of growth within the organization.
• Organizations look to accomplish the long-term organizational goals effectively with the promise of promotion to the employees.
• Organizations develop the culture of continuous learning among the employees by linking promotion to employee competence and knowledge.
• Through promotion, organizations seek to fulfil the career growth aspirations of the employees and shape up the succession plans of the organization.

Promotion Policy and Criteria

Promotion is one of the highly sensitive tasks performed by the managers. This is because the employees who fail to get promotion may blame the system if it is not transparent. Therefore, an organization needs to be careful about its promotion policy and criteria. As shown in Figure 10.1, organizations generally use either merit or seniority, or both as criteria for employee promotion. We shall now briefly discuss these general promotion criteria.

• Merit as a criterion—When merit is the basis for promotion, the job positions in an organization are filled with the most talented persons available within the organization. In this category of promotion, merit is given appropriate consideration, while other factors, such as seniority, become insignificant in the promotion decision. In this category, the selection of candidates for promotion will be based only on job-related criteria.
• Seniority as a criterion—In case of seniority-based promotion, the length of service of the employees is considered for promotion. The other factors such as competence and commitment are normally overlooked. Herein the job positions available within the organization are filled with persons who have the maximum number of years of service in the organization. The length of service becomes the sole criterion in promotion decisions. The seniority-based system is normally followed in public sector organizations. In organizations where the seniority is the sole basis, promotions are usually time-bound and also a formality.
• Seniority as well as merit as a criterion—In this method, an organization considers both merit and seniority for determining the promotion of an employee. The primary purpose of this method is to include the positive features of both the promotion criteria. An organization may decide the weights for merit and seniority on the basis of its HR and promotion policies. For instance, it may decide to have the proportion of merit and seniority in the ratio of 70 and 30 in order to evaluate the potential candidates. The promotion policy of a public-sector organization is given in Box 10.1.

Demotion

Demotion is just the reverse of the term, promotion. It means the transfer of employees to lower positions in the organizational structure. Demotion may be defined as an employee’s downward mobility in the organizational structure. Demotion is normally accompanied by reduced authority, responsibility, compensation and social status. It is often used as a punishment for employees for serious violation of rules and regulations and for consistent performance deficiency. However, a demotion can also be effected by the organization on the request of the employee concerned. The essence of demotion is a decrease in the job status of the employee.

Transfer

Horizontal shifting of an employee from one job to another without any job-related increase in the pay, benefits and status of the employee is called a transfer. Transfer can broadly be classified into two categories, namely, imposed transfers and requested transfers. In case of the imposed transfer, an employee is transferred for administrative convenience with or without his concurrence. For instance, an organization may carry out transfers for better utilization of skills and knowledge of the employees. It may also transfer employees as a part of on-the-job training process. Transfers may also be used to see whether an employee is fit for permanent placement in that position as a part of promotion. In case of requested transfers, an employee is transferred to another job or place because he/she has requested for the transfer. Transfers are often requested by employees for personal reasons.

Transfer may be defined as an employee’s lateral mobility in the organizational structure without any significant change in the authority, responsibility, compensation and social status. An organisation may transfer an employee to fill a vacancy caused by death, retirement or resignation of an employee in another job. We shall now discuss about employee separation practices like resignation, retirement, etc.

Employee Separation Practices

Employee separation is a sensitive issue for any organization. Usually, an employee leaves the organization after several years of service. Thus, the permanent separation of employees from the organization requires careful handling and a great deal of planning. An employee may be separated as a consequence of resignation, removal, death, permanent incapacity, discharge or retirement. The employee may also be separated due to the expiry of employment contract or as a part of downsizing of workforce.

Employees can provide wealth of information to the organization at the time of separation. Exit interviews can be conducted by the managers or HR department to ascertain the views of the leaving employees on different aspects of the firm including the efficacy of the organizational policies. We shall now see the different types of separations.

Types of Separation

Depending upon the reason, an organization may initiate voluntary or involuntary separation of employees. As illustrated in Figure 10.2, important forms of separation are retirement, resignation, removal, retrenchment and lay-off. We shall discuss these various forms of separation.

Retirement—This is a common form of separation of employees from the organization. Depending upon the retirement policy, an organization would initiate the necessary steps to separate the employees upon attaining the specific age. In addition to regular retirements, an organization may also adopt Voluntary Retirement Scheme (VRS) and Compulsory Retirement Scheme (CRS) to separate employees from the organization. In case of VRS, organizations usually offer large sums of money over and above the actual retirement benefits to encourage the employees to willingly leave the organization before their retirement age. Organizations can also go for a CRS after completing due formalities such as issuing necessary notice to the employees.

Resignation—When an employee seeks to resign from the job for personal or professional reasons, the organization may initiate the separation process. The specific employment contract, the resignation rules of the organization or the relevant provisions of the statutory acts guide the resignation process.

Removal (including dismissal or discharge)—An organization may dismiss or discharge employees from the services for reasons like behavioural problems, including unethical behaviour and violations of the code of conduct. In case of dismissal, an employee is not entitled to get terminal benefits such as provident fund, gratuity and so on, whereas a discharged employee is eligible for all the terminal benefits. In any case, both dismissal and discharge are always viewed as extreme punishments and challenged in various legal forums.

Retrenchment—Retrenchment is a kind of involuntary separation which an organization adopts to downsize its labour force. The purpose of retrenchment is to reduce the expenditure of the business especially during the difficult times of the organization. The need for retrenchment may arise due to the closure of unprofitable business operations, the automation of operations, and shifting business from one region to another.

Layoff—A layoff is similar to retrenchment except that it is a temporary separation of employees from the organization. Organizations usually prefer layoffs to overcome the problems of business slowdown and other temporary business interruptions. Since a layoff is a temporary separation, the employees would be called back once the business prospects improve.

Employee separation is normally a painful process for both the employer and employees, especially if it is an involuntary separation. Often, discipline related issues become the reason for involuntary separation of employees. Let us now discuss about discipline and disciplinary policies of organisations.

Discipline and Disciplinary Policy

Discipline refers to employees’ observance of standards of behaviour set by the organization. The disciplinary action refers to punishing the employees who fail to meet those standards of behaviour. Managing employees’ behaviour and performance is one of the important tasks of the managers. In this regard, many organizations maintain a disciplinary policy or system to regulate the behaviour of the employees and to deal with acts of indiscipline. Some organizations conduct discipline management training for its managers to help them understand the tactics of effectively managing discipline among the employees. The purpose of such training is to ensure that when the superiors discipline their subordinates they do so in a just and fair manner. This is important to avoid the charges of bias and prejudice and also the legal problems at a later stage. Managers must also be made to understand that the purpose of disciplinary action is not just punishing the erring employees but also ensuring that the same act of indiscipline is not repeated by any employees in the organisation.

The disciplinary proceedings and actions produce emotional situation for both the superiors who conduct the proceedings and the employee who faces the disciplinary actions. It is therefore essential for an organization to have comprehensive policies and guidelines. These polices must clearly tell the superiors how they should conduct the proceedings and how it should be concluded.

Objectives of Discipline

The major objectives of discipline are:

Accomplishing the goal—Achieving the corporate objectives is an important aim of employee discipline. All efforts directed towards the maintenance of discipline must end with the accomplishment of organizational goals; otherwise, the imposition of discipline will be of no use.

Developing a responsive workforce—Organizations use discipline to make employees conform to the standards of behaviour. Discipline ensures that employees avoid reckless and insubordinate behaviour.

Changing employee behaviour—Organizations aim at bringing in the desired behaviour among the employees through discipline. The presence of a disciplinary policy can help employees check their behaviour against the standards and change their behaviour if necessary. For instance, discipline may caution the low performers and can compel them to modify their behaviour to meet the performance standards.

Improving morale and motivation—Organizations attempt to improve employee motivation and morale through a fair disciplinary system. When the employees see an act of indiscipline getting a fair and quick punishment, they feel proud of their disciplined behaviour. This feeling provides a sense of satisfaction, motivation and commitment to the employees.

Exercising better control over employees—Discipline helps managers to exercise effective control over subordinates. Since the authority to take disciplinary action is given to the managers and supervisors, it arouses fear in the minds of the employees and forces them to follow the instructions of their superiors.

Ensuring consistency in action—Discipline aims at ensuring consistency in the disciplinary actions of different managers while dealing with acts of indiscipline of similar nature. They also aim at ensuring consistency in the disciplinary actions of the managers in different periods of time.

Promoting industrial relations—One of the objectives of discipline is to promote good industrial relations in the organization. Discipline issues often cause a lot of strain in the union–management relations. However, through objective and transparent disciplinary process, organizations can convince the unions about the fairness of the process and get their continued cooperation in the future.

Substituting personal supervision—Another objective of discipline is to reduce the need for close supervision in the organizations. Discipline system and policies develop self-discipline among the employees. Thus, through discipline, organizations can aim at reducing the cost of supervision without compromising on its quality.

Types of Discipline

The general purpose of discipline is to bring about positive changes in an employee’s performance, attendance or behaviour. There are many disciplinary systems available for an organization to fulfil the objectives of discipline goals. The important ones are positive discipline, negative discipline and progressive discipline. We shall now briefly discuss these different types of disciplines.

Positive Discipline

Positive discipline, aims at seeking the willing cooperation of employees in observing the disciplinary code of the organization. The two important aspects of positive discipline are: (i) personal responsibility of employees for maintaining discipline and (ii) independent decision making by them to eliminate their undesirable behaviour. In this method, the responsibility of the organization is to create a positive environment that encourages the employees to follow the organizational code of conduct. In the event of indiscipline, “remind rather than reprimand” is the approach in positive discipline.³

Negative Discipline

It is a traditional form of discipline followed by a conservative management. In this method, fear is the key to the maintenance of discipline. For instance, the fear of punishment will be the driving force for the employees to avoid misconduct. It also forces them to obey the rules and regulations of the organization. This form of discipline never seeks the willing cooperation of the employees in ensuring discipline within the organization. The prime aim of the employees in this method is escaping punishment and not cooperating with the management. The intention here is to escape punishment and not extending cooperation. The consequences of negative discipline are: distrust in management−labour relations, low employee morale and motivation, high labour turnover, and lack of self-belief.

Progressive Discipline

Progressive discipline is any employee disciplinary system that provides a graduated range of responses to employee performance or behaviour problems.⁴ Progressive discipline requires an organization to adopt a step-by-step approach to deal with the problems of indiscipline of an employee. While dealing with the disciplinary problems involving employees, this method suggests that the organization begins the disciplinary action process moderately and then increases the degree of severity gradually and ends up with the most severe punishment. For instance, the disciplinary process may begin with an oral reprimand to a person with performance indiscipline and may end up in his dismissal, if all the efforts to correct his behaviour fail. The extent of punishment depends on the frequency and severity of the performance and behaviour problem and the length of service of the employee.

Employee Grievances and Grievance Handling Practices

Every organization tries hard to create a work environment in which employees feel satisfied and relaxed. But organizations often face situations where employees feel dissatisfied by the actions and policies of the managers. Usually, this feeling of dissatisfaction in an employee is treated as a complaint, if it is orally expressed, and a grievance, if it is in a written form.

A grievance is a written complaint by an employee, which is about unfair treatment. This grievance may be real or imaginary, serious or trivial but it should arise out of a person’s employment in the organization. Generally, grievances arise due to the presence or absence of certain factors. For example, salary and perquisites, working conditions, working hours, policies relating to promotion and transfers, code of conduct, personality factors like the superior’s attitude,⁵ technological development and innovations, can cause grievances among employees.

Sources of Grievances

Grievances generally arise from the following sources:

1. Contract terms, which are too general, contradictory or ambiguous.
2. Working conditions and pay arrangements, which are in some manner unsatisfactory to employees.
3. Managers who fail to properly abide by the contract.
4. Employees who fail to adhere to the terms of the contract.⁶

In simple terms, grievance may arise out of management policies and practices, working conditions, style of supervision, collective bargaining agreements and work-adjustment difficulties.

Techniques of Grievances Identification

Every manager must have the ability to identify, analyse and correct the causes of potential employee dissatisfaction before they become grievances. In this, the organization must perfect a system to identify the trouble in advance and solve it before it gets out of control. In this regard, an organization may adopt any one of the methods shown in Figure 10.3, to identify employee dissatisfaction.

Exit interview—When employees quit an organization for any reason, an exit interview may be conducted to obtain information about job-related matters. It will be natural for those quitting their jobs to speak freely and frankly about their experience in the job. This can provide the employer with an insight into the problems and anxieties bothering the employees. In any exit interview, the organization will attempt to find out from the quitting employee the reason for leaving the organization, the HR policies that require improvement, and the positive and negative aspects of his job.

Gripe-box system—Under this system, employees can drop their written complaints in the boxes kept by the organization. The purpose of this system is to enable the employees to secretly express their complaints without the fear of being victimized. Gripe boxes are usually kept at prominent places in the office for receiving anonymous complaints pertaining to any aspect of work. This method is more effective than suggestion boxes, if the complaints are serious and sensitive in nature.

Opinion surveys—While a gripe box is an impersonal way of collecting complaints, an opinion survey is the direct and personal way of gathering information from the employees about their grievances. Group meetings, periodical interviews, and collective bargaining sessions are the various forums available for the employers to get to know the employee’s grievances.

Open-door policy—This is a progressive style of gathering complaints from the employees. In this system, the workers are encouraged to call on the relevant manager at any time, to freely share their feelings and complaints with him. This method will be effective only when there is mutual trust in the relationship between the managers, and the employees.

Observation—In this grievance identification technique, grievances are not heard from the aggrieved employee directly. Instead, the manager constantly tracks the behaviour of the employees working under him/her. When an employee exhibits an indifferent attitude, experiences difficulties in inter-personal relationship, mishandles or damages equipment or materials due to carelessness, or frequently abstain work, then the manager infers that the employee has some serious grievances. Once the manager notices such an unusual behaviour, he/she should report this to the higher authorities promptly.

Once the grievances are brought to the notice of the management it must make every possible effort to prevent these grievances from developing into full-fledged disputes. It must begin the process of redressing the grievances at the earliest. In the absence of effective grievance redressal mechanism, even a small issue could go out of control quickly to affect the employer-employee relations.

Industrial Relations Practices

The social relationship between the management and employee is usually referred to as industrial relations. Industrial relation is a process through which an organization controls the employer–employee relations in the organization. This process may involve continuous communication and consultation between employer and employee. The employer−employee relationship is a highly sensitive and complex aspect influenced by a variety of factors. These factors may include among others organizational culture, condition of employment, nature of grievance handling system and dispute settlement procedure.

The chief actors in industrial relations are employers, managers and employees and their unions. Compensation-related issues, workload problems, retrenchment, lay-off and similar issues can determine the degree of cordiality in the employer-employee relationship.

Objectives of Industrial Relations

Developing mutual respect and tolerance is the primary objective of both the employers and the unions in the industrial relations exercise. However, this calls for systematic efforts on the part of the organization. We shall now discuss the other objectives of industrial relations.

Building cordial relationships with the employees—Organizations aim at achieving warmth and friendliness in their relationship with the employees through industrial relations.

Maintaining connectedness—Organizations look to remain connected with the employees through the industrial relations exercise. In fact, industrial relations try to expand on the first connectedness created between the employer–employees.⁷

Safeguarding mutual interests—Through industrial relations, organizations attempt to protect the interests and the well-being of the employers and the employees. This is done by ensuring a free and frank exchange of feelings, opinions and grievances between employer and employees on a regular basis.

Preventing industrial conflicts—“Conflict is the motive force of the industrial relations system.”⁸ This is because an important purpose of industrial relations is to avoid industrial conflicts, which normally result in the loss of man-days.

Promoting industrial democracy—Through the industrial relations system, organizations attempt to promote industrial democracy by involving the employees and their unions in policy formulation.

Avoiding exploitation—Employees, as individuals, cannot bargain effectively for their economic and social rights. In contrast, industrial relations facilitate employees in using their collective strength in getting fair compensation and other benefits.

Providing a dynamic role for the government—Industrial relations enable the government to take an active part in the deliberations involving the employers and the unions as a third party in the event of industrial dispute.

The level of harmony in the industrial relations of organization is often decided by the employee welfare measures undertaken by the management. We shall now discuss about the employee welfare practices of the organizations.

Employee Welfare Practices

Employee welfare refers to the facilities provided to the employees in excess of the statutory requirements. The basic objective of welfare measures is to ensure the physical and mental well-being of the employee. Further, employee welfare measures aim at earning and retaining the goodwill and loyalty of the employees and their unions. Organizations often use it as an effective means to control the employee attrition and the related HR cost.

Features of employee welfare—The salient features of employee welfare measures are as follows:

• Employee welfare is provided voluntarily by the organization to show its interest in the general well-being of the employees.
• It is usually provided over and above the statutory and contractual obligations of the organization relating to compensation.
• Organizational objectives and strategies provide the broad outline for determining the employee welfare policies of the firm.
• Since employee welfare measures are not linked to the performance of the employees, they have direct impact on the profits of the firm.
• Employee welfare measure look to enhance the mental, physical, intellectual and moral well-being of the employees.
• Employee welfare measures extend beyond the job and organization to take care of the personal life of the employees.
• It is an ongoing process and not a one-time activity of the organization.
• Employee welfare measures are normally paid during the good times of the organization.
• Employees, employers, trade unions and the government are the stakeholders of employee welfare measures.

Welfare measures undertaken to improve the well-being of the employees can broadly be classified into two categories. They are statutory welfare facilities and non-statutory welfare facilities. When welfare facilities are undertaken as per the requirements of the laws, then these facilities are called statutory facilities. These are facilities offered by organizations in compliance with the central and state government regulations. Alternatively, when welfare facilities are undertaken voluntarily by the employers, they are called non-statutory welfare facilities. Non-statutory facilities normally include transport facilities, housing facilities, education facilities, recreation facilities, canteen facilities, insurance facilities, e-commuting and flexi-time facilities. Box 10.3 shows the employee benefit programmes of a software company.

The welfare facilities offered to employees usually differs from one organization to another depending upon the philosophy, policies, and objectives of the organization. The welfare facilities normally entail significant expenditure for the organisations. Due to its impact on revenue and profit, the welfare decisions relating to HR are now considered as strategic decisions. Many Austrian companies like to view HR functions as part of strategic HRM and also as a core activity of HRM department.⁹ HR strategies formulated at the top levels of the management and implemented across the entire organization constitute strategic HRM. We shall now discuss it in detail.

Strategic Human Resource Management (SHRM)

SHRM is the process of aligning HR strategies with the business strategy for effective accomplishment of organizational goals. SHRM looks to develop highly committed, competent and motivated employees for achieving high level of individual and organizational effectiveness. It aims at adopting a proactive HR management in which HR strategies play a crucial role in shaping the overall corporate strategies and goals.

In SHRM, management attempts to develop an organizational culture that promotes creativity, flexibility and business performance on a sustained basis. SHRM focuses more on the development of strategic HR decisions that have long-term implications for the future of the organization.

Characteristics of SHRM

The important characteristics of SHRM are as follows:

• SHRM is performed at the higher levels of management due to its vital role in organizational goal-setting and resource allocation process.¹⁰
• In SHRM, line managers play a more prominent role in strategy formulations than the HR managers.¹¹
• It focuses more on estimating and fulfilling the long-term HR requirements of the organization.
• In SHRM, HR strategies and business strategies remain interconnected and interdependent.
• It attempts to gain competitive advantage by achieving the best possible customer satisfaction through its well-diversified and, efficient loyal human resources.
• The presence of mixed group of employees with different background and characterstics makes HR Management a challenging job for managers. We shall now see the importance of workforce diversity.

Workforce Diversity Management

The term diversity stands for differences among the background of individuals. Workforce diversity refers to the varieties in the demographic profile of an organization’s workforce. Both individual and group differences contribute to diversity in workforce. Diversity may arise on account of differences in religion, gender, culture, nationality and educational levels of the workforce.

Workforce diversity typically affects the communication pattern, change management strategies and adaptability of the organization. However, an effective management of such diversity can help in promoting the organizational interest in terms of business innovation, newer perspectives and faster expansions. Diversity management can be defined as a strategic organizational approach to workforce development, organizational culture change and empowerment of workforce.¹²

Workforce diversity can bring several benefits to organizations. They are:¹³ (i) better scope for recruitment and retention of talented workforce, (ii) better corporate image, (iii) strong cultural values among the members of the organization, (iv) improved workforce creativity and innovation, (v) better customer satisfaction, (vi) better chances to solve labour shortage, (vii) avoidance of employee absenteeism and turnover, (viii) improved knowledge on new markets and customers, and (ix) effective management of global operations. However, the managerial commitment to diversity initiatives is important for the success of workforce diversity programmes.

Prerequisites for the Success of Workforce Diversity Management

Workforce diversity is a comprehensive managerial process for developing an environment that suits all employees.¹⁴ Managers may introduce diversity initiatives voluntarily on a proactive basis to obtain the benefits of workforce diversity. They may also introduce them compulsorily to fulfil the legal requirements. In any case, diversity requires managers to learn new ways of dealing with their work and workers. Diversity management can be approached at three levels, namely, individual, interpersonal and organizational levels. Effective diversity management requires managers to:

• Acknowledge the differences in the culture and characteristics of individuals and groups in the organization.
• Recognize workforce differences as unavoidable and desirable.
• Promote the policy of inclusiveness at all levels of the organization.
• Avoid all forms of discrimination in their dealings with the employees.
• Enhance the knowledge, skills and abilities of the employees for effective goal accomplishment.
• Understand the role and relevance of workforce diversity in developing new ideas, perspectives and approaches.
• Secure the support of the top management for diversity planning and implementations.
• Build work environments that acknowledge the contributions of diversified workforce.
• Make suitable and need-based changes in HR policies and practices so that the variety of differences in workforce is productively utilized.

To be effective, organizations need to modify their HR practices to reflect the new realities of a diversified workforce. Diversity programmes usually demand higher ethical quotients in decision making.

Ethical Issues in Human Resource Management

Ethics refers to ethical principles and practices that influence and guide the behaviour of individuals and groups. A written statement of ethical principles and practices is described as the code of ethics. The HR policies and practices of a management can indicate the extent of importance of ethical values in the decision-making process of that organization.

Usually, employees learn ethical behaviour from their superiors. They often view their managers as role models for determining their own behaviour in the organization. It is therefore important for managers to consider their decisions from the ethical perspective too. They should conduct themselves in a just, fair, moral and ethical manner. When employees perceive absence of fairness and ethics in the actions of their managers, they may develop negative attitude towards their work life and the management. For instance, absence of justice and fairness in performance evaluation, promotion and compensation fixation can affect employees’ performance, and satisfaction.

It is hence important for managers to establish ethical standards for evaluating the behaviour of their employees and also their own actions. Employees must be constantly encouraged to follow the ethical principles and practices in all their actions. In this regard, an organization can adopt the following measures for instilling ethical values among its workforce:

• Training the workforce on ethical values by regularly organizing meetings, presenting case studies, and so on.
• Displaying the organization’s code of ethics in all prominent places such as rest room, dining room and recreation room through posters and exhibits.
• Taking serious view of the incidents involving ethical violations and dealing sternly with the violators.
• Encouraging managers to strictly adhere to ethical behaviour so that their subordinates follow them voluntarily.

Emerging Trends in Human Resource Management

Increased competition among the business organizations has dramatically changed the way they do their business to remain competitive. The last few decades witnessed tremendous innovations in different elements of organizations such as human resource management systems, management techniques, organizational structure and communication to improve business efficiency.¹⁵ The role of managers has also changed from being the protector of employees to being the strategists of organizations. Consequently, HRM now has become more complex, and specialized. We shall now see the important changes seen in the field of HRM.

People-centric quality measures—Unlike the traditional organizational policies, which focused mainly on the financial capital, modern day policies focus more on efficient utilization of intellectual capitals. Even quality management standards, such as ISO 9001 and ISO 9004 of 2000, focus mainly on HR issues in organizations. This has brought about new importance to HR issues like training, employee health and safety and workforce satisfaction. As a result, managements are forced to spend time and resources towards people-centric activities.

Declining employee loyalty—There is a general decline in the “sense of belonging” and loyalty among the employees of present generation. This can be better understood through the employee attrition details of different industries in India. The BPO industry in India is a classic example of the decreasing loyalty of employees, as this industry witnesses approximately 50% attrition every year.¹⁶ Similarly, financial services, retailing, biotechnology, aviation and higher education sectors also face high employee attrition rates. This declining employee loyalty towards organizations compelled the management to develop long-term, innovative career plans and prospects for employees to retain them in organizations.

Enlightened workforce—Due to increased access to information and education the present day workforce is more knowledge diversified and gender-balanced. The proportion of educated persons, women, religious minorities, and socially backward to the total workforce has significantly increased in the recent decades. Many HR policies are revised and updated to serve the needs and aspirations of these well-informed and diversified workforce. At present, the trend in HRM is to have, gender-specific and clear HR policies that serve the present and future requirements of the organizational members.

Global mobility—Global mobility refers to the job related movement of employees across geographical boundaries. Employee mobility is almost unavoidable for organizations operating in a globalized environment. Managers are now recognizing the need to look globally to develop and retain talent. Further, there is an increasing trend among organizations to send their employees on overseas assignments to: (i) accomplish the company objectives and (ii) develop their global skills.¹⁷ Employees accept the foreign assignments to get international experience.

Advent of Human Resource Information System (HRIS)—Many large organizations are now using HRIS for efficient coordination of different HR operations and also to save the time of HR staff. HRIS is defined as “interrelated components working together to collect, process, store and disseminate information to support decision making, coordination, control, analysis, and visualization of an organization’s human resource management activities.”¹⁸ HRIS can now do even the routine HR activities. These tasks include HR planning, application processing, payroll and benefit maintenance, work scheduling, employee training management, grievance identification and handling, employee personal information management, etc.

Individual bargaining—It refers to negotiation between the organization and individual employees to decide on the latter’s employment contract and wage benefits. In recent times, employees prefer to have individual bargaining with their management to determine their wages and other benefits. This is in contrast to the earlier practice of bargaining between management and trade unions, which collectively represented the employees’ interests. Individual bargaining is better suited for industries which witness acute labour shortages. In India, employees in most private-sector organizations, especially those in IT and BPO industries usually work in an individual bargaining environment. However, individual bargaining involves more work for the managers as they have to deal with employees on a one-to-one basis in wage negotiations. Individual bargaining can be best for rewarding merit and efficiency but it can also become a basis for favouritism, nepotism, gender bias, etc.

Human Resource Outsourcing (HRO)—It refers to the transfer of a few or all HR functions of an organization to external HR providers. HRO typically means engaging third party service providers on a continuing basis to look after the administration of HR activities.¹⁹ Organizations usually outsource HR functions when they do not have adequate time or resources to manage them on their own. Once delegated, the external HR experts become responsible for managing the outsourced HR activities. Generally, the HR functions like recruiting, training and development, health and safety management, payroll administration, employee welfare schemes and risk management are outsourced by organizations. HR outsourcing normally relieves the line managers from routine HRM tasks and also enables them to focus more on their core activities.

E-commuting

E-commuting (also called telecommuting) is a kind of work system in which the distance barrier is overcome by means of telecommunication. It facilitates employees to perform their jobs without being present in office. It is a facility available to select number of employees to work from home for a relatively longer period of time. For instance, e-commuting can be extended to employees who are pregnant, sick and are on long tour.

Flexi-time Work

Flexi-time work is another alternative work practice followed by organizations to achieve better cooperation from employees. Flexi-time scheme is actually a work design in which employees are allowed to work during pre-determined work hours.

In this method, employees have the freedom to choose their flexible starting and ending time of work within the scheduled working hours of the organization. The individual working hours are determined as per the convenience of each employee. An employee may follow his own working hours or his team’s working hours depending upon his requirements. It is absolutely essential for an employee to record his time of each entry and exit.

Green HR Practices

Green HR practices is concerned with the protection and preservation of natural resources through HR functions such as recruitment, training and development, performance management, and compensation management. Green HRM looks to promote the sustainable use of resources available with organization and protect the environment. HR people now believe that green HR practices can have positive impact on commitment, morale, quality of work life, engagement, and the retention of employees in the organization.

As part of Green HRM, managements carry out environment-friendly HR initiatives like electronic filing, car-sharing, teleconferencing and virtual interviews, recycling, telecommuting and online training. The purpose here is to reduce the usage of consumables like paper, plastic, envelope, ink toner, etc that have negative environmental impact. We shall now see the possible green practices in different HR functions.

Green Recruitment initiatives-Green Recruitment implies an eco-friendly and paper-free recruitment process. The green recruitment involves

1. Inviting Applications through online mediums like e-mail and filling of online application form by candidates.
2. Conducting virtual interviews like telephonic, online and video interviews. Virtual interviews reduce recruitment related travelling by the candidates and paper works.
3. Choosing competent people who believe in green initiatives.

Green training initiatives - Green training involves the integration of environmental training into the overall training programme. During training, the importance of environment can be emphasized as follows:

1. Training employees in the principles of sustainable development. Training employees to develop knowledge in environment management and green skills.
2. Employing online and web-based training modules and interactive media as training tools to train employees. In this regard, internet, intranet, web-sites, blogs and email can be extensively used to reduce the paper work.
3. Familiarizing the new employees with green aspects of the organization during the induction stage. Induction programmes can discuss the green issues like green working conditions, employee health and safety, energy efficiency, waste management and recycling.
4. Forming green teams with environment friendly employees to suggest measures to improve green initiatives in training and other HR functions.

Green Compensation initiatives

Organizations can also use their compensation policies and practices to protect and preserve environment. The reward system of these organizations should have features to attract and retain eco-friendly candidates. In this regard, management can try the following measures.

1. Organizations can offer rewards to the managers who cultivate green habits or practices among employees.
2. Management can provide rewards to employees who practice green initiatives like use of bicycles and pollution-free vehicles for commuting to and from office.
3. Organizations can give green rewards to units, departments or individual employees for suggestions relating to waste reduction, nature-friendly workplace, etc.

Green Performance Evaluation Initiatives

Organizations can make use of performance evaluation measures to reinforce the importance of green management among managers and employees. This can be done through the following:

1. Introducing green standards in performance evaluation process. Green targets, goals and responsibilities should be established for employees and managers.
2. Communicating clearly the roles and responsibilities of every employee in promoting green initiatives and achieving green-outcomes.
3. Conducting environmental audit to determine whether employees comply with the relevant green values and practices.
4. Introduction of e-evaluation system for evaluating the performance of employees.

Other green Initiatives

Besides the abovementioned green HR activities, organizations can also undertake green initiatives like (i) giving donations to green causes (ii) encouraging employees to plant trees inside and outside the office premises (iii) organising entertainment programmes which highlight the importance of green issues among employees and their family members and the general public (iv) posters with green slogans can be displayed at all vantage points inside the office and factory premises of the organizations and (v) conducting green propaganda to create awareness about the impact of environment degradation.

Summary

1. Promotion is an employee’s upward mobility in the organizational structure accompanied by increased authority, responsibility, compensation and social status. The three criteria for employee promotion policies are merit, seniority and seniority cum-merit.
2. Demotion is defined as an employee’s downward mobility in the organizational structure, which is normally accompanied by reduced authority, responsibility, compensation and social status. The purposes of demotion are administrative convenience, inefficiency, disciplinary action and voluntary demotion.
3. Horizontal shifting of employees from one job to another without any job-related increase in the pay, benefits and status of the employees is called transfer. The purposes of transfers are: optimum utilization of skills, training of employees, enforcing disciplinary action, fulfilling an employee’s request and being a motivational tool.
4. Separation is basically classified into two types. They are voluntary separation and involuntary separation. Voluntary separation refers to the separation of employees on their own request, while involuntary separation means their separation for organizational reasons which are beyond their control.
5. The types of separation are retirement, resignation, removal (including dismissal or discharge), retrenchment and lay-off.
6. Discipline refers to employees’ observance of standards of behaviour set by the organization. The objectives of discipline are accomplishing goals, developing a responsive workforce, changing employee behaviour, improving morale and motivation, exercising better control over employees, ensuring consistency in action, promoting industrial relations and substituting personal supervision.
7. The three types of disciplines are positive discipline, negative discipline and progressive discipline
8. A grievance is a written complaint by an employee, which is about unfair treatment. The techniques of grievance identification are exit interview, gripe-box system, opinion surveys, open door policy and observation.
9. Industrial relation is a process through which an organization controls the employer–employee relations in the organization and this process may involve continuous communication and consultation between them.
10. The objectives of industrial relations are building cordial relationships with the employees, connectedness, safeguarding mutual interests, utilizing collective wisdom, preventing industrial conflicts, fostering industrial democracy, avoiding exploitation and providing a dynamic role for the government.
11. Employee welfare means the facilities provided to the employees in excess of the statutory requirements and with the intention of enhancing their general well-being.
12. SHRM is the process of aligning HR strategies with the business strategy for effective accomplishment of organizational goals.
13. Characteristics of SHRM are: (i) it is performed at the higher levels of managements, (ii) line managers play a more prominent role in strategy formulations, (iii) it focuses more on estimating and fulfilling the long-term HR requirements, (iv) HR strategies and business strategies remain interconnected and (v) it attempts to gain competitive advantage.
14. Workforce diversity refers to the varieties in the demographic profile of an organization’s workforce
15. Ethics refers to ethical principles and practices that influence and guide the behaviour of individuals and groups. A written statement of these ethical principles and practices is described as a code of ethics.
16. Emerging trends in HRM include people-centric quality measures, declining employee loyalty, enlightened workforce, global mobility, advent of HRIS, individual bargaining and human resource outsourcing, E-commuting and Flexi-time work.
17. Green HRM is concerned with the protection and preservation of natural resources through people management functions such as recruitment, training and development, performance management, and compensation management.

Review Questions

Short-answer questions

1. Mention the objectives of promotion.
2. What is meant by the term demotion?
3. State the meaning of transfer.
4. Explain the meaning of the term separation.
5. Define the term industrial relations.
6. What do you mean by discipline? Why is it necessary?
7. Write a short note on employee grievance.
8. State the meaning and feature of employee welfare?
9. Mention importance of workforce diversity.
10. What is meant by Green HRM?

Essay questions

1. Critically examine the various criteria for conducting promotion selection.
2. Separation is a sensitive issue and hence requires utmost care and caution. Discuss.
3. Discuss the meaning and objectives of industrial relations.
4. Evaluate critically the different types of discipline with suitable examples.
5. Disciplining an employee is the most complex task for the management of a company. Discuss.
6. Explain clearly the sources of grievance using examples
7. Describe the meaning and characteristics of strategic HRM?
8. Discuss in detail the prerequisites for the success of workforce diversity management.
9. Enunciate the emerging trends in HRM.
10. Critically evaluate the role and relevance of Green HRM in the present scenario.

Case Study

Can perks withdrawl address recession?

Natco Car Limited is a popular company in the passenger car segment of the automobile industry. It has a significant market share. It offers five popular brands of cars to its customers. The major philosophy of this company is “customer satisfaction through employee satisfaction”. It strongly believes in the HR principle of “happy employees are productive employees’: This company offers one of the best and most friendly environments for the employees to grow in their organizational and personal lives.

It has many novel incentive schemes and attractive fringe benefit schemes to attract and retain the best talents. This company’s incentives and fringe benefits package alone accounted for nearly 7.6 per cent of its cost of production. In fact, the excellent cordiality in labour-management relations and the high employee productivity coupled with high product quality were viewed by the company as an outcome of this generous incentive and benefits schemes.

However, recent developments in the economy and the industry in particular suddenly made the company vulnerable in the market. These developments are (i) recessionary conditions gripping the economy, (ii) the entry of low-cost budget cars in the market, and (iii) its high health- care cost due to die recent spurt in the reimbursement requests for medical and hospital expenses. Recessionary trends led to a free fall of the prices in the market and automobile goods, being a luxury item, were obviously the worst affected. Besides, the introduction of low-cost cars by the competitors compelled the company to think seriously about cost-cutting measures. To add to its woes, in the recent past, the company received an unusually high number of medical reimbursement bills as more and more employees reported major health problems. This apparently pushed up the HR cost and caused anxiety in the company about the deteriorating conditions of the general health of the employees. As a combined effect of all these developments, the company began to lose its price advantage fast and its market share began to shrink gradually.

The top management of the company insisted on reviewing its HR cost in order to withdraw some of the benefits offered to its employees. Understandably, the fringe benefits, particularly the health -care benefits, received top priority for cost reduction after the reviews. The management was now determined to impose stiff restrictions on the reimbursement of medical bills, thereby making it virtually impossible for the employees to get ant medical benefits.

However, the HR department was ranged against such moves. It insisted on continuing with the health-care schemes, perhaps with some minor modifications. Interestingly, it came up with an alternative proposal which suggested that the employees must be educated continuously and made aware about the health problems affecting them.

It also proposed periodic medical tests at the factory premises to diagnose their health problems at an early stage. This preventive approach, the HR people believed, could help the employees attend to their health problems at the right time and avoid major health crisis and the resultant huge medical bills for the organization. The HR department emphasized that any drastic measures, like the withdrawal of health benefits, could discourage the employees, thereby jeopardizing the employee retention strategies of the organization. The suggestions of the HR department were forwarded to the top management and its response was awaited.

Questions

1. How do you assess the situation of Natco Car Limited from the HR perspective?
2. What will be likely response of the top management to the suggestions made by the HR department?
3. If you were to be in charge of the HR department, what would your suggestions be to solve the problems of the company?

Note: The solution for the above case is available at www.pearsoned.co.in/duraipom2e

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