Managing Business

Table of ContentsIntroduction............................................................................................................................................1

LO1- Understand the importance of business processes in delivering outcomes based upon business goals and objectives...............................................................................................................................2

LO1-1.1: Evaluate the interrelationship between the different processes and functions of the organisation........................................................................................................................................2

LO1-1.2: justify the methodology to be used to map processes to the organisation’s goals and objectives............................................................................................................................................3

LO1-1.4: Impact of the legal and regulatory framework on Human Resource Management:.................4

LO2-2.1: Analyse the reason for Human Resource Planning in Organisation:.......................................7

LO2-2.2: Stages of Human Resource Planning in Organisation:............................................................9

LO2-2.3: Compare Recruitment and Selection Process in Two Organisation:......................................10

LO2-2.4: Effectiveness of Recruitment and Selection Process in Two Organisation:...........................18

LO3-3.1: Link between motivational theory and reward:.....................................................................20

LO3-3.2: Process of Job evaluation and other factors determining pay:...............................................25

LO3-3.3: Effectiveness of reward system in different context:.............................................................27

Recent changes to reward.............................................................................................................29

Reward objectives.........................................................................................................................29

Views on reward system effectiveness..........................................................................................30

LO3-3.4: Methods that used by organization to monitor performance:................................................30

Reference:.............................................................................................................................................33

Introduction

An organization is driven by human capital and the quality and effectiveness of the

organisation is determined by the quality of the people that are employed. the resources

of men money material and machine are collected and coordinated through people.

Without people organisation cannot exist. Success for most organisations depends on finding

the employees with the skills to successfully perform the tasks required to attain the

company’s strategic goals. Management decisions and processes for dealing with employees

are critical to ensure that the organisation gets and keeps the right staff.

Personnel management refers to the managerial function of estimating and classifying of

human resources requirements for meeting organisational goals. It involves strategies that

ensure sufficient staff, a right combination of talent and performance in jobs.

Human resource management (HRM) is the governance of an organization’s employees.

HRM is sometimes referred to simply as human resources (HR).

A company’s human resources department is responsible for creating, implementing and/or

overseeing policies governing employee behaviour and the behaviour of the company toward

its employees.

Human resources are the people who work for the organization; human resource management

is really employee management with an emphasis on those employees as assets of the

business. In this context, employees are sometimes referred to as human capital. As with

other business assets, the goal is to make effective use of employees, reducing risk and

maximizing return on investment (ROI).

Areas of HRM oversight include – among many others -- employee recruitment and retention,

exit interviews, motivation, assignment selection, labor law compliance, performance reviews,

training, professional development, mediation, and change management.

Managing Business Activities to Achieve Results Page 1

LO1- Understand the importance of business processes in delivering outcomes based upon business goals and objectives

Business Process

A collection of related, structured activities/tasks that produce a specific service or product for

a particular customer is referred to business process/business method.

Process evaluating of any organization is an important task. By doing so we can understand

how well or how poorly a process is running, it also depicts how the internal and external

processes work to meet the ultimate objectives of the organization. Without this process

evaluation we cannot decide whether the process is suited with the company objectives or not,

or whether there is any need for modification or full change. We cannot also decide in which

direction the organization will be in future days.

LO1-1.1: Evaluate the interrelationship between the different processes and functions of the organisation

A business service represents the added value that an organization delivers to its stakeholders.

We can make a difference between internal and external services that a business provides:

Internal services mean the added value that is delivered within the domain in which the

service belongs to. External services represent the added value that is delivered to other

stakeholders (i.e. customers). A business function is an area that the organization wants to pay

attention to (e.g. by putting energy into, structurally committing resources to etc) in order to

support its business goals. A business function can therefore be positioned as a grouping of

internal behavior based on a certain criteria (for example location (same department),

communication, required skills, shared resources and shared knowledge). A business function

represents a part of the added value of on organization.


A collection of related, structured activities/tasks that produce a specific service or product for

a particular customer is referred to business process/business method. A business process can

be constructed from sub processes or activities. A business process is triggered by one or

more business events. Every activity is part of a business function.

A typical organization has its functions as Administration, Production, Finance & Accounts,

Human Resources, Sales and Marketing, Research and Development etc. Each of these

functions needs to work together so that the whole organisation every departments possess

same aims and objectives and contributes towards achieving organizational goal.

As we have defined process as an activities or set of activities of an organization, it is clear

from the definition that process of an organization and functions are related. And each

functions of the organization are also related to each other. For example finance prepares a

budget for the organization with the consultation of all functional managers then each

department has its own target for the year. Based on the target production unit produces the

services or goods, after that marketing department has the responsibility to sell the targeted

products or services as desired. And human resource department employ personnel to meet the

organizational goal. So from here also we can see that every department is somewhat linked

with each-other.

LO1-1.2: justify the methodology to be used to map processes to the organisation’s goals and objectives

Process Map

A process map is an instrument to visually describe how the work flows. It can also be

referred as a communication tool or planning tool that helps to manage the organization.


Inputs, Outputs, Activity steps, Decision points, and Functions are the tool for mapping a

process. It gives us certain answers like: what is happening, where it is happening, when it is

happening, who is doing it and how inputs and outputs are handled and distributed. So process

mapping basically is a flow chart of an organizational activity. With the help of process

mapping we can readily identify what is going on within the organization at a given point of

time and if necessary we can modify the course of action based on the organizational goal and

objectives.

Process mapping means creating a model that shows the relationships between different

activities, people, data and objects involved in the production of a specified output. I normally

document business processes using the IDEF methodology (The Integrated DEFinition

methodology is a suite or family of methods that supports a paradigm capable of addressing

the modeling needs of an enterprise and its business areas) that was developed in 1994 by the

US air force. It is simply is an accepted industry standard, the advantages of using IDEF are

that it is a well published standard that customers can get from the internet. This methodology

is easily assessable and proven as a strong industry standard supported by most process

modeling tools.

LO1-1.3 evaluate the output of the process and the quality gateways

This type of evaluation is performed while a project is being implemented, with the aim of

improving the project design and functioning while in action. An example given in monitoring

and evaluating urban development programs, a handbook for program managers and

researchers by Michael bamberger, describes a monitoring study that, by way of rapid survey,

was able to determine that the amount of credit in a micro credit scheme for artisans in Brazil

was too small. The potential beneficiaries were not participating due to the inadequacy of the

loan size for their needs. This information was then used to make some important changes in

the project. Bamberger defines it as an internal project activity designed to provide constant

feedback on the progress of a project, the problems it is facing, and the efficiency with which

it is being implemented.

An evaluation studies the outcome of a project changes in income, housing quality, benefits

distribution, cost-effectiveness with the aim of informing the design of future projects. An


example from monitoring and evaluating organizational process for its performance describes

an evaluation of a cooperative program in El Salvador that determined that the cooperatives

improved the lives of the few families involved but did not have a major impact on overall

employment.

Bamberger describes evaluation as “mainly used to help in the selection and design of future

projects. Evaluation studies can assess the extent to which the project produced the intended

impacts increases in income, better housing quality, and the distribution of the benefits

between different groups, and can evaluate the cost-effectiveness of the project as compared

with other options”

LO2-2.1: Analyse the reason for Human Resource Planning in Organisation:

A general human resource plan (HRP) is done by Human Resource Manager or Department. Although

there are two categories that HRP may be divided into: ‘hard’ and ‘soft’. Hard ones are only

undertaken by HR specialists. The latter one usually involves HR specialists, line managers and

possibly other staff (Beardwell and Claydon, 2007).

Numerous factors that influence the company are out of its control. However, there are factors that

affect directly how companies recruit new employees. Human resource planning analyses these factors

to make sure that the business recruits the most talented candidates when they are needed.

Importance of Planning

Planning is not as easy as one might think because it requires a concerted effort to come out with a

programme that would easy your work. Commencing is complicated, but once you start and finish it

you have a smile because everything moves smoothly.

Planning is a process that have to be commenced form somewhere and completed for a purpose. It

involves gathering information that would enable managers and supervisors make sound decisions.

The information obtained is also utilized to make better actions for achieving the objectives of the

Organization. There are many factors that you have to look into when deciding for an HR Planning

programme.

HR Planning involves gathering of information, making objectives, and making decisions to enable the

organization achieve its objectives. Surprisingly, this aspect of HR is one of the most neglected in the


HR field. When HR Planning is applied properly in the field of HR Management, it would assist to

address the following questions:

1. How many staff does the Organization have?

2. What type of employees as far as skills and abilities does the Company have?

3. How should the Organization best utilize the available resources?

4. How can the Company keep its employees?

HR planning makes the organization move and succeed in the 21st Century that we are in. Human

Resources Practitioners who prepare the HR Planning programme would assist the Organization to

manage its staff strategically. The programme assist to direct the actions of HR department.

The programme does not assist the Organization only, but it will also facilitate the career planning of

the employees and assist them to achieve the objectives as well. This augment motivation and the

Organization would become a good place to work. HR Planning forms an important part of

Management information system.

HR have an enormous task keeping pace with the all the changes and ensuring that the right people are

available to the Organization at the right time. It is changes to the composition of the workforce that

force managers to pay attention to HR planning. The changes in composition of workforce not only

influence the appointment of staff, but also the methods of selection, training, compensation and

motivation. It becomes very critical when Organizations merge, plants are relocated, and activities are

scaled down due to financial problems.

Inadequacy of HR Planning

Poor HR Planning and lack of it in the Organization may result in huge costs and financial looses. It

may result in staff posts taking long to be filled. This augment costs and hampers effective work

performance because employees are requested to work unnecessary overtime and may not put more

effort due to fatigue. If given more work this may stretch them beyond their limit and may cause

unnecessary disruptions to the production of the Organization. Employees are put on a disadvantage

because their live programmes are disrupted and they are not given the chance to plan for their career

development.


The most important reason why HR Planning should be managed and implemented is the costs

involved. Because costs forms an important part of the Organizations budget, workforce Planning

enable the Organization to provide HR provision costs. When there is staff shortage, the organization

should not just appoint discriminately, because of the costs implications of the other options, such as

training and transferring of staff, have to be considered.

LO2-2.2: Stages of Human Resource Planning in Organisation:

Steps in HR Planning

Forecasting

HR Planning requires that we gather data on the Organizational goals objectives. One should

understand where the Organization wants to go and how it wants to get to that point. The needs of the

employees are derived from the corporate objectives of the Organization. They stern from shorter and

medium term objectives and their conversion into action budgets (eg) establishing a new branch in

New Dehli by January 2006 and staff it with a Branch Manager (6,000 USD, Secretary 1,550 USD,

and two clerical staff 800 USD per month. Therefore, the HR Plan should have a mechanism to

express planned Company strategies into planned results and budgets so that these can be converted in

terms of numbers and skills required.

Inventory

After knowing what human resources are required in the Organization, the next step is to take stock of

the current employees in the Organization. The HR inventory should not only relate to data concerning

numbers, ages, and locations, but also an analysis of individuals and skills. Skills inventory provides

valid information on professional and technical skills and other qualifications provided in the firm. It

reveals what skills are immediately available when compared to the forecasted HR requirements.

Audit

We do not live in a static World and our HR resources can transform dramatically. HR inventory calls

for collection of data, the HR audit requires systematic examination and analysis of this data. The

Audit looks at what had occured in the past and at present in terms of labor turn over, age and sex

groupings, training costs and absence. Based on this information, one can then be able to predict what

will happen to HR in the future in the Organization.

HR Resource Plan

Here we look at career Planning and HR plans. People are the greatest asserts in any Organization. The

Organization is at liberty to develop its staff at full pace in the way ideally suited to their individual


capacities. The main reason is that the Organization’s objectives should be aligned as near as possible,

or matched, in order to give optimum scope for the developing potential of its employees. Therefore,

career planning may also be referred to as HR Planning or succession planning.

The questions that should concern us are:

a) Are we making use of the available talent we have in the Organization, and have we an

enough provision for the future?

b) Are employees satisfied with our care of their growth in terms of advancing their career?

Assignment of individuals to planned future posts enable the administration to ensure that these

individuals may be suitably prepared in advance.

Actioning of Plan

There are three fundamentals necessary for this first step.

1) Know where you are going.

2) There must be acceptance and backing from top management for the planning.

3) There must be knowledge of the available resources (i.e) financial, physical and human

(Management and technical).

Once in action, the HR Plans become Corporate plans. Having been made and concurred with top

management, the plans become a part of the company’s long-range plan. Failure to achieve the HR

Plans due to cost, or lack of knowledge, may be a serious constraints on the long-range plan

LO2-2.3: Compare Recruitment and Selection Process in Two Organisation:TESCO

“The number and categories of people required should be specified in the recruitment. Program which

is derived from Human resource plan…” (A Handbook of Human Resource Management Practice

page409- 410) .It means that recruitment is linked with planning.

“Is the process of developing a pool of qualified applicants who are interested in working for the

organization and from which the organization might reasonably. Select the best individual or

individuals to hire for a job.” (International Students Edition Managing Human Resource Edition 13

page 183)

To select that kind of individual attraction needed. Ways of attracting right person for the correct

job

Walk-ins


Employee referrals

Advertising

Websites

Professional/ Educational/Association

E- recruitment

Word of mouth

Factors considering setting recruitment plan.

Cost

Time taken

Labor market

Mobility of labor

Legislation on gender, race, disability discrimination.

Methods of recruiting

I. Internal

Job posting

Promoting & transfer

Union through assigning

Retired employees & dependents of deceased

Employee referrals

II. External

Advertising

Employment agencies

College recruits

Employee referrals

Walk-ins

E-recruitment

III. Alternative ways

Leasing employees

Overtime

Part time workers

Temporally workers

Out sourcing

Selection is the process of picking individuals who have relevant qualification to fill jobs in an

organization.

Selection Process


Concerned with identify the best candidates or candidates for job form among the pool of qualified

applicants developed during recruiting process.

Steps in selection

Medical exam/drug test

Supervisor/team interview

Back ground investing

Employment testing aptitude ,achievement

Initial interview in HR department

Completion of application


When we considering about the recruitment process Tesco’s the process of recruiting depends on the job that available and mostly internal recruiting method.

1. As first Tesco looks for Internal Talent plan to fill the vacancies. 2. This process that lists current employees that looking for a move either at same level or on

promotion.3. If there isn’t any suitable person internal management develop a training and development

program.4. And use internal E-recruitment method to advertises post in Tesco’ intranet.5. If external recruitment methods used the advertise in their public web site www.tesco-

careers.com6. External vacancy board.7. Made applicant online for managerial positions.8. Chosen applicants must have an interview followed by attendance centre.9. People interested in store-based jobs with Tesco can approach store with their CV / register

through job centre.10. The store prepares a waiting list of not selected applicant to make a pool of suitable recruits in

order to call if another vacancy occurs.11. For harder to fill or more specialist jobs, such as bakers and pharmacists external recruitment

methods used. Like its public web site & offline media, television, radio or advertising Google or in magazines such as appointment journal.

Uniliver


Compensation

Training & development

Performance appraisal

Basis line management function

Job analysis

Selection processHuman Resources planning.

Recruiters qualification

Recruiting is the process of finding & attracting capable applicants for employment. The process begins

when new recruits are required & ends when their applications are submitted. The result is a pool of

applicants from which new employees are selected.

Manager becomes involves in this process. However in large organization, like the Unilevers Specialists

are often used to find & attract capable analyst they are called recruiters.

First, Unilever is such a big organization that requires huge man power every year for its always boosting

operations in various level and arena. However for common business operations they need

Three type of manpower

1. Fresh graduates as knowledge worker,

2. Specialist experienced people for special purpose

3. People for Skilled and labor based events

So in our discussion we will focus on all the three types.

Fresh graduates as knowledge worker

Commonly we discuss and learn major about this level recruitment and selection. The fresh graduates’

recruitment is in fact the main and major recruitment event for Unilever.

From across the country they get people for their recruitment. The universities in the country provide the

people to be knowledge worker in big organizations like unilever and such. For this they highly suit the

business graduates Passed from reputed business school or institutes both from country and from abroad.

The discussion is now designed as to the following four terms:

1. Personnel planning and vacancy announcement

2. Nature of Application form

3. Recruiters qualification

4. channels of recruitment

5. Recruitment- Constraints and challenges

Personnel planning and vacancy announcement

Human Resource department headed by The HRM, receives data about need of personnel, the vacancy

information is then analyzed by HRM in collaboration with the finance department with financial


feasibility of the recruitment. After judging the feasibility the approved number of vacancies is informed

to the job market through strong mass media. As means of media they use

• The internet,

• Online based job portals

• English and bangla news paper

• On campus recruitment

• From Intern inventory.

Recruiters’ qualification

Recruitment qualification for entry-level employees:

• You must be graduated within less than three years, or will graduate within the next 12 months form a

reputable university.

• You must be within 28 years of age.

Recruitment qualification for labor based task:

• You must physically fit and skilled in the particular task.

Methods of recruitment

Recruitment channel

Normally we know about two types of recruitment channel those are

1. External recruitment channel

2. Internal recruitment channel

1. External recruitment channel

When job openings cannot be filled internally, the HR department must look outside the

organization and basically for UBL, recruitment of fresh graduates is done through this means. There are

8 ways for external recruitment in the UBL, which occurs in direct or indirectly for various level of

recruitment. Those are-

1. Employee referrals

2. Advertising

3. Educational institutions & Professional associates

International recruitment

Employee referrals

For lower level workers, Unilever follow the employee referrals procedures. This is the procedures when

existing employees refer one new and the new is considered to be further judgment.

Advertising


UBL next to employee referrals in fact for fresh graduates majorly follow the advertisement procedure for

recruiting purposes. They advertise in the reputed English and Bengali National papers. They also use the

internet for online application.

Educational institutions & Professional associates

More over the organization takes its manpower from the universities and educational institutions across

the country. The nationwide universities and its important institutes provide the potential graduates as the

employee of the organization.

International recruitment

Sometimes, especially in importance of cases international recruitment occurs in ULB. However such

rare events happen if the candidate stays in abroad or are working in international company on foreign

land.

Internal recruitment channel

Current employees are a major source of recruits for all but entry- level positions of unilever Bangladesh

ltd.. Whether for promotions or for lateral job transfers, internal candidates already –know the already

informal organization and have detail information about its formal policies. In fact for unilever this short

of recruitment is occurred only with especial purpose experienced employee recruitment.

Recruitment : constraints and challenges

Recruiters face such common constraints which are:

a. Biasness:

Most of the time, the organization’s employers try to appointment their relatives, familiar person.

b. Competition of talent

There is a lack of vast talent people in Bangladesh for the special task. The potential job applicants most

of the time can’t meet up Unilever requirement. Few talent guys who has already appointed with other

multinational company

d. Job requirement

People with greater experience usually require a higher level of job. In our country, there are vast

population but they are not so skilled in working with hard labor.

SELECTION PROCESS IN UNILEVER

Selection is the process of select the best candidates for the job by using various tools and techniques. In

our country, recruitment and selection process work simultaneously. Those are joined term as


employment function of the organization and this employment function is stated here for Unilever’s

practices.

Reception of application

After accomplishing the recruitment process, Unilever go to the selection process where they start the

process with the reception of application form filled up through internet online form. After scrutinizing

the data, they select applications for written test.

Employment test

This written test measures the candidates

1. Analytical ability

2. Computation ability

3. Verbal skill

4. Written skill

5. General knowledge

More above 65% marks ensures applicants pass.

Assessing candidate through interview

Mainly three steps are followed in the selection procedure. In the first stage the candidates are invited for

a viva with sales and training manager, Dhaka in his Gulsan office.A human resource manager also exist

there. In this viva the candidates situation handle ability is measured.

Second phase:

It is the viva with the general sales and operation manager ( GOSM), and trade marketing manager .in this

stage individual skill is measured. The question tries to measure out the fitness of the candidate for the

post.

Third phase:

In this stage the applicant face the HRD customer development team (CDT) this phase

measure the applicability of the applicants’ potential for the jobs. In these stage why the

applicant prefers the Unilever and why it would like to join the expected team.

Physical ability test

The physical test is administered by Apollo Hospital Dhaka to measure the HIV, Hepatitis B, C or such

many diseases in its applicant’s health and fitness for job effort.


Work samples

For some technical jobs Unilever follows the work sample test on particular employee like the one of

Finance and IT.

Hiring decision

Finally the every step success ensures an applicant join in the Unilever family.

LO2-2.4: Effectiveness of Recruitment and Selection Process in Two Organisation:

In the external management recruitment selection process they use few uniform stages.


Unsuccessful candidates sent letter

Successful candidates invited for interview

Successful candidates from screening attend Assessment Centre

Vacancies advertised on website and other media, such as national press

Interview means “Face to face conversations between prospective job applicant and representatives of the

organization” (International Students Edition Managing the Human Resources -Page230).Techniques of

handling interviews. They are

Situational interviews- applicant is questioned about a particular incident and asks how he reacts.

Structured interviews-interview to collect information about beliefs, facts attitude and behaviors.

It can present one to one, may be through Internet or telephone. Been directed before and scripted

the questions what staging standardized interview method so they can evaluate the candidate.

Unstructured interview- interview to explore wide range the candidate and its non-directive, non-

structured and responded led which cover variety of topics through open questions.

Semi Structured interview- combination of both unstructured and structured to collect qualitative

information about views opinions and experiences by asking open ended and close ended

questions.

Thus Tesco use two interview on screening process there are benefits like

Provide opportunities for interviewers to ask probing questions about the candidate’s experience

and to explore his suitableness

Enable interviewers to describe the job (a ‘realistic job preview’) and the organization in more

detail, suggesting some of the terms of the psychological contract;

Provide opportunities for candidates to ask questions about the job and to clarify issues

concerning training, career prospects, the organization and terms and conditions of employment;

enable a face-to-face encounter

Give the candidate the same opportunity to assess the organization, the interviewer and the job.

(A Handbook Of Human Resource Management Practice page 440-441)

Using assessment Centre for screening is another effective method that Tesco use.


Assessment Centre is used in selecting the applicants who choose from first interview. The

assessment centre takes place in store and run by managers. They help to provide constancy in the

selection process. Applicants are given various exercises, including team work problem solving

exercises like critical incident analysis etc. Candidates approve by the internal assessment centre then

face to the last interview to find out whether candidate has job requirement. Advantages in this

method are

Can observe candidates in the problem solving process and predict their future

performance fulfill the requirements to handle the job.

Can understand new recruits strengths and weaknesses before recruiting.

Can make a pool of employees that reject in selection this time but up to the level of

employee need to recruit future employee vacancies.

Identify the skills, knowledge, and attributes that employee shows and the job he

should be assign to.

Minimize the induction cost.

LO3-3.1: Link between motivational theory and reward:

Motivation in simple words may be understood as the set of forces that cause people to behave in certain

ways. It is a process that starts with a physiological deficiency or need that activities behaviour or a drive

that is aimed at a goal or an incentive.

The concept of motivation occupies a central place in the discipline of Organizational Behaviour. It is a

concept, which has received the maximum attention from the academicians and researchers alike. Since a

motivated employee is highly productive and highly quality oriented, the managers are also interested the

concept of motivation.

Most people understand the concept of intrinsic satisfaction or intrinsic motivation, i.e. when an activity

is satisfying or pleasurable in and of itself. Naturally, these activities are things we like and want to do.

For most of us, intrinsically enjoyable activities are things like eating, resting, laughing, playing games,

winning, creating, seeing and hearing beautiful things and people, being held lovingly, having sex, and so

on. To do these things we don't need to be paid, applauded, cheered, thanked, respected, or anything--

commonly we do them for the good feelings we automatically and naturally get from the activity.

Intrinsic rewards also involve pleasurable internal feelings or thoughts, like feeling proud or having a

sense of mastery following studying hard and succeeding in a class.

Many, maybe most, activities are not intrinsically satisfying enough to get most of us to do them


consistently, so extrinsic motivation needs to be applied in the form of rewards (positive reinforcements),

incentives, or as a way to avoid some unpleasant condition ("negative reinforcement" or punishment).

Examples: You work doing an ordinary job for pay. You study for good grades or to avoid failing or to

prepare for a good future. You do housework to get a clean, organized house and/or a spouse's

appreciation or to avoid her/his disapproval. A teenager comes home from a date on time in order to avoid

being grounded. These are all activities that are commonly sustained by external pay offs, not because

you love working, studying, cleaning, and coming home early.

Are rewards, particularly money rewards, really motivators? The answer to this question is YES and

NO.

Money is understood to be powerful motivator for more than one reason. In the first place, money is

fundamental for completion of a task. The employee takes pay as the reward for his or her work, and the

employer views it as the price for using the services of the employee. Second, as a medium of exchange.

Third, money is one of the hygiene factors, and improving maintenance factors is the first step in efforts

directed towards motivation. Fourth, money also performs the function of a score card by which

employees assess the value that the organization places on their services and by which employees can

compare their values to others. Fifth, reinforcement and expectancy theories attest to the value of money

as a motivator. Sixth, money acts as a punctuation in one’s life. It is an attention getting and effect

producing mechanism. Money, has therefore tremendous importance in influencing employee behaviour.

Seventh, money is easily vulnerable to manipulation. Finally, money will be a powerful motivator for a

person who is tense and anxious about lack o money. But behavioural scientists think otherwise. They

downgrade monetary rewards as a motivator. They prefer, instead, other techniques such as challenging

jobs, goals, participation in decision-making and other non-monetary rewards for motivating employees.

Types of Reward Systems

The financial rewards are basically of three types:

profit sharing;

job evaluation; and

merit rating.

Profit Sharing

Profit sharing could be on a macro basis or on a micro basis. The former relates to the entire company as

a whole and the latter to a particular section or group dealing with a particular activity and/or product. On

a macro level, it would be difficult to identify and reward outstanding performance. This is possible on a

micro level by treating the particular activity as a cost and profit center by itself. This is easier said than


done, since overheads and other common services have to be charged and this cannot be done completely

objectively. The cost allocation in such cases is somewhat arbitrary and the profit will therefore not be a

true reflection of the performance of that particular group or activity.

Job Evaluation

In case of job evaluation, the various component factors have to be isolated and evaluated for purposes of

inter-job comparison. Each factor is assigned a rating on the basis of a scale agreed beforehand by the

union and the management joint committee. The total rating for each job then forms the basis of wage

structure. However, there must be a base level, representing, in effect, the 'minimum wage', depending on

the nature of work and the geographical area. In some cases and in some countries these are stipulated by

law. A typical, though somewhat broad, list of job factors is as follows:

working environment;

physical characteristics;

mental characteristics;

extent of responsibility;

training and experience.

In case of managers, the factors are:

responsibility;

expertise;

human relations.

Merit Rating

Merit rating has been used as an indicator of performance. Each employee is rated, typically as excellent,

good, average or poor, in respect of the following abilities:

communication;

human relations, including leadership and motivation;

intelligence;

judgment;

knowledge.

The rating, unfortunately, tends to be carried out purely mechanically and it carries a heavy bias of the

rater who may be too lenient, may not be objective and may also have favorites or otherwise in the group

being rated.


Financial Rewards

These rewards in organizations help employees to be more committed and motivated to their job and

working environment:

System rewards are automatically given to all employees for merely being members of their organisation.

System rewards can be defined as being the basic wage rates.

• Individual rewards are given to employees based on the quality and quantity of their performance.

Performance related pay (PRP) is seen as an individual reward policy, where pay is rewarded in relation

to the volume of output. PRP can cause divisions amongst workers, where employees become more

worried about the fact that their colleagues are being paid more than them.

• Growth rewards are received by employees for job innovation, learning and improvement.

The key to managing performance through rewards is linking the desired performance with the

appropriate reward.

Non-financial Rewards

In an ever more competitive environment, the aim of organizations must now be to focus on increasing

the added value of their employees. This is achieved, by encouraging employees to increase their effort

and performance higher than the average standards. This has been carried out using employee appraisals

and motivational methods.

Employers have become increasingly aware of the rich potential for good constructive ideas that exist

from the employees on the job experiences. One method for using this knowledge is through suggestion

schemes, these are becoming highly recognized, as they allow for improvements in all areas of work.

These schemes are very flexible and can be readily adapted to meet all kinds of working conditions.

Suggestion schemes can be seen as a means of increasing profit and worker participation.

Suggestion schemes aim to improve employee attitudes by directing their attention to the positive and

progressive aspects of their jobs. This helps to boost employee morale and increase job satisfaction. It can

be identified that if an employee is unhappy in his/her job it reflects on a negative attitude on his/her

performance and also with other people.

Experience in many companies has shown low employee morale reflects on low productivity and

increasing costly errors. Suggestion schemes play a useful role in increasing and maintaining morale.


Another method which is not related to pay is the performance appraisal system. This method is used as a

means of raising individual performance and identifying development needs. Appraisal systems today are

becoming part of the management culture, where managers feel it necessary to appraise and be appraised.

Self Rating, this is a form of appraisal where the employee takes a look at themselves, avoiding any

negative feedback from traditional appraisals. Self rating is an effective way of trying to get the employee

to look at what their roles are in relation to business needs.

It is fair to state that employees are not motivated by money alone. Paying different wage rates to

employees doing the same jobs can cause more problems than benefits.

There are other incentives to reward employees, other than financial such as appraisals. Appraisals can

prove to be an effective means for looking at human resources, as they allow us to:

Ensure that the abilities and energies of individuals are being used effectively.

Allow employers to identify better uses of individuals talents and experience.

Training needs can also be identified.

Future decision making as data of abilities can be kept on file for future reference.

Other examples of incentives/motivators include:

Team briefings - Management tell sub-ordinates what needs to be achieved, this opens up the lines of

communication, and makes everyone aware of what needs to be done.

Team buildings - Employees are taken on outings to pursue some systematic group exercises led by a

trainer or time spent on social activities. The logic is to enthuse a team working ethic.

Quality circles - Regular meeting sessions where a group of employees discuss quality related issues.

It can be said that if managers are to be successful, they must focus on strategies that improve the overall

performance of the business by using employees as a vital resource which needs to be nurtured and not

just developing and implementing control systems to fix short term problems.


LO3-3.2: Process of Job evaluation and other factors determining pay:

Pay determination

In formulating salary offers for employees in new positions (both those new to Brown and those who are

transferred or promoted from within the University), the following considerations are taken into account:

departmental budget; external equity; internal equity and relevant education, experience and skills.

Routinely, salary offers fall within the first quartile of the applicable salary range for the position's grade

level. Recommended salaries must be authorized by the appropriate Human Resources Representative or

Compensation Services prior to discussing with the candidate. No offer or promise of an offer can be

made without authorization by Human Resources.

External Equity is the term used to describe comparative salaries paid in the marketplace where

Brown competes to hire and retain similar types of employees. Compensation Services

participates in various salary surveys to determine competitive pay practices.

Internal Equity is the term used to describe the comparison of salaries paid to employees working

in the same grade or level within the University (both within the department and University-

wide).

Brown recruits in various markets to fill positions, depending upon the requirements and level of

the position. They are usually as follows:

o Department head level positions and above: national markets

o Professional and administrative positions below department head level: regional markets

o Support staff and entry level exempt positions: local markets

Job Evaluation

The job evaluation process established the relative value of jobs throughout the university. There are two

steps involved in this process:

1. Job Analysis and Job Description - Using a "job profile," the content of each job is analyzed to

identify key duties, responsibilities, and qualification necessary to perform the job. Written job

descriptions are then prepared to contain this information.

2. Job Evaluation - A computer assisted job evaluation plan, measuring 17 dimensions of

nonexempt work and 28 dimensions of exempt work, is used to evaluate the relative worth of

staff positions. This evaluation process focuses on valuing the content of each position in terms of

a series of well-defined compensable factors.


The factors for clerical, service, technical, and administrative support positions include:

a. Knowledge: Minimum required level of specialized training, education, and previous

related work experience.

b. Skill: The manual and physical skills required to perform the duties of the position.

c. Work Complexity: The degree and amount of judgment, initiative and ingenuity

involved in accomplishing work.

d. Contact with Others: The extent to which the work entails dealing with others in the

course of one's regular duties, including the frequency and nature of contacts and the

likely results of such contacts.

e. Property Protection and Use: The extent to which the position has responsibility for

university property, including funds, vehicles and confidential information.

f. Work Leadership: The responsibility for directing, instructing and training personnel;

and for planning controlling and assigning work.

g. Working Environment: The physical conditions encountered during a typical work day.

Conditions such as heat, cold, dirt, fumes, hazards, etc. are considered.

h. Student Relations: The responsibility for dealing with students, including the nature and

frequency of contacts.

The factors for professional, administrative, and managerial positions include responsibility for:

i. Programs, Projects or Operations: The level in the organization, scope of activities

performed, parameters of authority, complexity or nature of responsibilities, and the

minimum credentials required to perform the job upon hire.

j. Supervision: The number and variety of employees supervised.

k. Employee Relations: Promoting and maintaining satisfactory human relations, morale

and effectiveness or subordinates.

l. External Contacts: Personally dealing with individuals or organizations outside the

university.

m. Internal Contacts: Personally dealing with individuals within the university, but outside

the direct line of authority of the position, to coordinate activities and task

accomplishment.

n. Investigation or Fact Finding: Activities undertaken to identify facts, and develop

ideas, designs or processes.

o. Scheduling, Planning and Forecasting: The complexity, variety and nature of the

activities involved in determining and carrying out plans and reports.


p. Establishing Objectives, Policies, Standards, Procedures, and Practices: The degree

of authority to establish standards, and the scope, nature and complexity or these

standards.

q. Effects of Decisions: Making decisions and commitments which impact the university's

resources.

r. Student Relations: Personally dealing with students from routine exchanges of

information to more complex activities such as counseling.

At the conclusion of the job evaluation process, the compensable factors are weighted. A numerical total

is then derived and each position is assigned a salary grade which has a salary range A salary range

consists of a:

MINIMUM: The lowest wage paid to a new employee with limited or no experience in this specific position.

MIDPOINT: The "market" (or average) wage paid to one who is fully qualified.

MAXIMUM:The highest wage paid for jobs in the salary grade.

LO3-3.3: Effectiveness of reward system in different context:

Reward Systems are a critical part of any organization's design. How well they fit with the rest of the

systems in an organization has an important impact on how effective the organization is and on the

quality of life that people experience in the organization. Over the past decade, some new reward systems

practices have become popular in order to align reward systems with the important changes that are

occurring in the way organizations are designed and managed (Lawler, 1990; Schuster and Zingheim,

1992).

TYPES OF FINANCIAL REWARD

These rewards in organisations help employees to be more committed and motivated to their job and

working environment:


System rewards are automatically given to all employees for merely being members of their

organisation. System rewards can be defined as being the basic wage rates.

Individual rewards are given to employees based on the quality and quantity of their performance.

Performance related pay (PRP) is seen as an individual reward policy, where pay is rewarded in

relation to the volume of output. PRP can cause divisions amongst workers, where employees

become more worried about the fact that their colleagues are being paid more than them.

Growth rewards are received by employees for job innovation, learning and improvement.

The key to managing performance through rewards is linking the desired performance with the

appropriate reward.

NON-FINANCIAL REWARDS NON-FINANCIAL REWARDS

In an ever more competitive environment, the aim of organisations must now be to focus on increasing

the added value of their employees. This is achieved, by encouraging employees to increase their effort

and performance higher than the average standards. This has been carried out using employee appraisals

and motivational methods.

Employers have become increasingly aware of the rich potential for good constructive ideas that exist

from the employees on the job experiences. One method for using this knowledge is through suggestion

schemes, these are becoming highly recognised, as they allow for improvements in all areas of work.

These schemes are very flexible and can be readily adapted to meet all kinds of working conditions.

Suggestion schemes can be seen as a means of increasing profit and worker participation.

Suggestion schemes aim to improve employee attitudes by directing their attention to the positive and

progressive aspects of their jobs. This helps to boost employee morale and increase job satisfaction. It can

be identified that if an employee is unhappy in his/her job it reflects on a negative attitude on his/her

performance and also with other people.

Experience in many companies has shown low employee morale reflects on low productivity and

increasing costly errors. Suggestion schemes play a useful role in increasing and maintaining morale.

Another method which is not related to pay is the performance appraisal system. This method is used as

a means of raising individual performance and identifying development needs. Appraisal systems today

are becoming part of the management culture, where managers feel it necessary to appraise and be

appraised.


Self Rating, this is a form of appraisal where the employee takes a look at themselves, avoiding any

negative feedback from traditional appraisals. Self rating is an effective way of trying to get the employee

to look at what their roles are in relation to business needs.

A survey was Conducted in mid-2009 by the e-reward survey, undertaken in partnership with the Institute

for Employment Studies, produced up-to-date and revealing information from senior HR and reward

practitioners in 173 UK-based organisations employing around two million people. It examines all the

main aspects of reward effectiveness and the process of evaluation, shedding light on this relatively little

understood area.

Recent changes to reward

Before considering reward effectiveness in more detail, respondents were asked the related

question of whether they had made changes to any of their key areas of reward in the last three

years. The most widespread changes have been made in three areas: reward strategy; bonus and

incentive plans; and benefits, allowances, flexible benefits and/or voluntary benefits.

By far the most prominent reason given for such moves is to align with changes in business

strategy/reflect business needs, mentioned by almost seven in ten respondents (68 per cent). This

was followed by three other pressures for change, each mentioned by around half of respondents:

cost/financial pressures, changes driven by the need to reflect/match market practice and to

address identified weaknesses/shortfalls/ineffectiveness.

Linked to this, respondents were also asked whether their reward function is under greater

pressure to demonstrate the value which they and their reward systems deliver. As many as 83 per

cent say they are, with 24 per cent of the whole sample claiming that such pressure is quite

substantial.

Reward objectives

To provide further context, respondents were asked to outline their most important reward goals.

The three most notable objectives are to align with business strategy; external competitiveness to

recruit and retain; and to pay for performance and contribution.

Considering all reward objectives, most respondents feel that they are only achieving these

‘reasonably effectively’ (71 per cent), compared with just 2 per cent who say they are ‘highly

effective’ at realising their aims.


In addition, mirroring a trend found in many replies, those in the public sector tend to be less

satisfied than their private sector counterparts, giving lower ratings to the delivery of most of

their reward objectives.

Views on reward system effectiveness

Underpinning actual reward goals are the systems designed to deliver the various components of

reward and most survey participants believe their arrangements can only be described as

‘average’.

Nevertheless, while most replies are clustered around a middling assessment, responses are

somewhat skewed. A greater proportion of those replying believe their reward systems are

superior to their competitors, although a significant minority report that they consider their

systems to have some key weaknesses or worse.

On a further slight note of optimism, however, 54 per cent of survey respondents say that their

reward systems have improved over the last 12 months, with only 4 per cent believing that they

have worsened. The other 42 per cent reckon that effectiveness remains unchanged. When asked

about the effectiveness of reward systems relating to their main employee groups, there was not a

great deal of difference from the results relating to the whole sample.

Nevertheless, some small differences emerged. Reward systems for executives and senior

managers are considered marginally more effective than those used for other groups, while those

relating to sales and manual workers are slightly less effective.

Taking a list of 11 specific reward areas – everything from reward communications to share plans

– ratings for their current effectiveness, when expressed on a scale of between 1 and 10, are

clustered around the middle. Overall, however, rankings are skewed towards the less effective

end.

A number of patterns more generally did emerge. Most notably, reward systems are more likely

to be effective in delivering benefits, especially pensions, while systems relating to reward

communications and recognition plans tend to be less successful.

LO3-3.4: Methods that used by organization to monitor performance:

Once an annual ritual, performance appraisal has become a continuous process by which an employee’s

understanding of a company’s goals and his or her progress toward contributing to them are measured.

Performance measurement is an ongoing activity for all managers and their subordinates.


Performance measurement uses the following indicators of performance, as well as assessments of those

indicators.

1. Quantity: The number of units produced, processed or sold is a good objective indicator of

performance. Be careful of placing too much emphasis on quantity, lest quality suffer.

2. Quality: The quality of work performed can be measured by several means. The percentage of work

output that must be redone or is rejected is one such indicator. In a sales environment, the percentage of

inquiries converted to sales is an indicator of salesmanship quality.

3. Timeliness: How fast work is performed is another performance indicator that should be used with

caution. In field service, the average customer’s downtime is a good indicator of timeliness. In

manufacturing, it might be the number of units produced per hour.

4. Cost-Effectiveness: The cost of work performed should be used as a measure of performance only if

the employee has some degree of control over costs. For example, a customer-service representative’s

performance is indicated by the percentage of calls that he or she must escalate to more experienced and

expensive reps.

5. Absenteeism/Tardiness: An employee is obviously not performing when he or she is not at work.

Other employees’ performance may be adversely impacted by absences, too.

6. Creativity: It can be difficult to quantify creativity as a performance indicator, but in many white-

collar jobs, it is vitally important. Supervisors and employees should keep track of creative work

examples and attempt to quantify them.

7. Adherence to Policy: This may seem to be the opposite of creativity, but it is merely a boundary on

creativity. Deviations from policy indicate an employee whose performance goals are not well aligned

with those of the company.

8. Gossip and Other Personal Habits: They may not seem performance-related to the employee, but

some personal habits, like gossip, can detract from job performance and interfere with the performance of

others. The specific behaviors should be defined, and goals should be set for reducing their frequency.

9. Personal Appearance/Grooming: Most people know how to dress for work, but in many

organizations, there is at least one employee who needs to be told. Examples of inappropriate appearance

and grooming should be spelled out, their effects upon the employee’s performance and that of others

explained, and corrective actions defined.


Performance indicators must be assessed by some means in order to measure performance itself. Here are

some of the ways in which performance is assessed from the aforementioned indicators.

10. Manager Appraisal: A manager appraises the employee’s performance and delivers the appraisal to

the employee. Manager appraisal is by nature top-down and does not encourage the employee’s active

participation. It is often met with resistance, because the employee has no investment in its development.

11. Self-Appraisal: The employee appraises his or her own performance, in many cases comparing the

self-appraisal to management's review. Often, self-appraisals can highlight discrepancies between what

the employee and management think are important performance factors and provide mutual feedback for

meaningful adjustment of expectations.

12. Peer Appraisal: Employees in similar positions appraise an employee’s performance. This method is

based on the assumption that co-workers are most familiar with an employee’s performance. Peer

appraisal has long been used successfully in manufacturing environments, where objective criteria such as

units produced prevail. Recently, peer appraisal has expanded to white-collar professions, where soft

criteria such as “works well with others” can lead to ambiguous appraisals. Peer appraisals are often

effective at focusing an employee’s attention on undesirable behaviors and motivating change.

13. Team Appraisal: Similar to peer appraisal in that members of a team, who may hold different

positions, are asked to appraise each other’s work and work styles. This approach assumes that the team’s

objectives and each member’s expected contribution have been clearly defined.

14. Assessment Center: The employee is appraised by professional assessors who may evaluate

simulated or actual work activities. Objectivity is one advantage of assessment centers, which produce

reviews that are not clouded by personal relationships with employees.

15. 360-Degree or “Full-Circle” Appraisal: The employee’s performance is appraised by everyone with

whom he or she interacts, including managers, peers, customers and members of other departments. This

is the most comprehensive and expensive way to measure performance, and it is generally reserved for

key employees.

16. MBO (Management by Objectives): The employee’s achievement of objective goals set in concert

with his or her manager is assessed. The MBO process begins with action statements such as, “reduce


rejected parts to 5 percent.” Ongoing monitoring and review of objectives keeps the employee focused on

achieving goals. At the annual review, progress toward objectives is assessed, and new goals are set.

There are as many indicators of performance as there are companies and jobs. The various assessment

methods can be used in combinations. It is important to choose indicators that align with your company’s

goals and assessment methods that effectively appraise those indicators.

Reference:

http://smallbusiness.chron.com/methods-used-companies-monitor-employees-computers-64671.html

http://www.williamscollege.co.uk/hnd_business_human_resource_mngt.html

Denison, D. R. Corporate Culture and Organizational Effectiveness, New York: Wiley, 1990.

Devries, D. L., Morrison, A. M. Shullman, S. L. and Gerlach, M. L., Performance Appraisal on the Line, New York: Wiley-Interscience, 1981.

Frost, Carl F., Wakely, John H. and Ruh, Robert A. The Scanlon Plan for Organization and Development: Identity, Participation, and Equity, Michigan State University Press, 1974.

Galbraith, J. R. and Nathanson, D. A., Strategy Implementation: The Role of Structure and Process, St. Paul: West, 1978.


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Managing Business