Chapter 3: Literature Review: Performance /Employees …

[Pages:111]Chapter 3: Literature Review: Performance /Employees Productivity Management

3.1. Performance Management 3.2. Performance Management ? Process 3.3. Employees / Labour Productivity 3.4. Performance Appraisal 3.5 Performance Appraisal Process and Methods

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Chapter 3.1: Performance Management

1. Introduction 2. Human Resource or Employees 3. Definition of Employee under Various Acts 4. Main Characteristics 5. Employee Performance 6. Advantages of Higher Employees' Performance 7. Performance Management 8. Functions of Performance Management 9. Concerns of Performance Management 10.Benefits of Performance Management 11.Performance Management and Performance Appraisal 12.Principles of Performance Management Plan

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Chapter 3.1: Performance Management

1. Introduction

Every organization performs its task with the help of resources as men, machine, materials and money. Except manpower other resources are non-living but manpower is a live and generating resource. Manpower utilizes other resources and gives output. If manpower is not available then other resources are useless and cannot produce any thing. Out of all the factors of production manpower has the highest priority and is the most significant factor of production and plays a pivotal role in areas of productivity and quality. In case, lack of attention to the other factors those are non-living may result in reduction of profitability to some extent. But ignoring the human resource can prove to be disastrous. In a country where human resource is abundant, it is a pity that they remain under-utilized. In wording of Oliver Sheldon "No industry can be rendered efficient so long as the basic fact remains unrecognized that is human." The people at work comprise a large number of individuals of different sex, age, socio-religious group and different educational or literacy standards. These individuals in the work place exhibit not only similar behaviour patterns and characteristics to a certain degree but also they show much dissimilarity. Technology alone, however, cannot bring about desired change in economic performance of the country unless human potential is fully utilized for production. The management must therefore be aware not only organization but also employees and their needs.

The human resource is critical and difficult to manage. It is because human behaviour is highly unpredictable. It differs not only from individual to individual but often on the part of same individual at different points of time. In spite of biological and cultural similarities, human beings not only differ in their appearance but also in their capabilities based on their background, training and experience. Human resource or a person at work is the most important component of the undertaking. Management cannot afford to ignore human resource at any cost. Management is the process of efficiently getting activities completed with and through other people. The management process includes planning. Organizing, leading and controlling activities those take place to accomplish objectives. Being a branch of management, personnel management also performs the same functions towards the

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achievement of objectives. Different terms are used for personnel management. The different terms are labour management, labour administration, labour management relations, employeeemployer relations, personnel administration, human assets management, human resources management etc. In simple sense, human resource management means employing people, developing them, utilizing, compensating and maintaining their services in tune with the job and organizational requirements.

2. Human Resource or Employees

The principal component of an organisation is its human resources or `People at work'. Human resources have been defined from the national point of view as, "the knowledge, skills, creative abilities, talents and aptitudes obtained in the population: whereas from the view point of the individual enterprise, they represent the total of the inherent abilities, acquired knowledge and skills as exemplified in the talents and aptitudes of its employees". Jucius calls these resources `human factors' which refer to "a whole consisting of inter-related, inter-dependent and interacting physiological, psychological and ethical components.

It is this human resource which is of paramount importance in the success of any organisation because most of the problems in organigational settings are human and social rather than physical, technical or economic. Failure to recognise this fact causes immense loss to the nation, enterprise and to the individual. In the words of Olivery Sheldon, "No industry can be rendered efficient so long as the basic fact remains unrecognized that it is principally human. It is not a mass of machines and technical processes but a body of men. It is not a complex of matter, but a complex of humanity. It fulfils its function not by virtue of some impersonal force, but by human energy."

People at work comprise a large number of individual of different sex, age, socio-religious group and different educational or literacy standards. These individuals in the work place exhibit not only similar behaviour patterns and characteristics to a certain degree but they also show much dissimilarity. The term `human resources' at the macro level spells out the total sum of all the components possessed by all the people, where as the term `personnel' even at the macro level is limited to all the employees of an organisation. Human resources even at

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the organisational level include all the component resources of all employees like managing director, board of directors, persons who work on honorary basis, experts drawn from various organisations and those people influencing the human resources of all the former groups. In short, it includes the resources of all the people who contribute their services in the attainment of organisational goals and others who contribute their services in the attainment of organisational goals.

The concepts of human resource, personnel, employees, labour force and manpower are interchangeable. We frequently use these terms one in place of the others. The term employee is most widely used and it has been defined by different authors and laws as follows:

(a) A person who is hired to provide services to a company on a regular basis in exchange for compensation and who does not provide these services as part of an independent business.

(b) Individual who works part time or full time under a contract of employment, whether oral or written, express or implied, and has recognized rights and duties is called a worker.

(c) Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as: "A person in the service of another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed." (Black's Law Dictionary, 1979).

(d) An employee contributes labor and expertise to an endeavour. Employees perform the discrete activity of economic production. Of the three factors of production, employees usually provide the labor.

(e) Specifically, an employee is any person hired by an employer to do a specific "job". In most modern economies, the term employee refers to a specific defined relationship between an individual and a corporation, which differs from those of customer, or client. Most individuals attain the status of employee after a job interview with a company. If the individual is determined to be a satisfactory fit for the position, he or she is given an official offer of employment within that company for a defined starting salary and position. This

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individual then has all the rights and privileges of an employee, which may include medical benefits and vacation days. The relationship between a corporation and its employees is usually handled through the human resources department, which handles the incorporation of new hires, and the disbursement of any benefits which the employee may be entitled, or any grievances that employee may have.

(f) Employee is a person who is hired for a wage, salary, fee or payment to perform work for an employer. This is important to determine if one is acting as employee when injured (for worker's compensation) or when he/she causes damage to another, thereby making the employer liable for damages to the injured party.

3. Definition of Employee under Various Acts

Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 -2B Any person who is employed in an establishment to do any work for remuneration

(a) Employee's Provident Fund and Miscellaneous Provisions Act, 1952 -2F Any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer, and includes any person- (i) employed by or through a contractor in or in connection with the work of the establishment; (ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961, or under the standing orders of the establishment.

(b) Employees Provident Fund Scheme, 1952 2F Excluded (i) an employee who, having been a Member of the fund, withdrew the full amount of his accumulations in the Fund under clause (a) or (c) of sub-paragraph (1) of Paragraph 69; (ii) an employee whose pay at the time he is otherwise entitled to become a Member of the Fund, exceeds five thousand rupees per month; Explanation.-"Pay" includes basic wages with dearness allowance, retaining allowance (if any) and cash value of food concessions admissible thereon (iii) (iv) an apprentice; Explanation.-An apprentice means a person who, according to the certified standing orders applicable to the factory or establishment, is an apprentice, or who is declared to be an apprentice by the authority specified in this behalf by the appropriate Government.

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(c) Employee State Insurance (General Provident Fund) Rules, 1950 2(e) "Employee means a person appointed to or borne on the cadre of the staff of the Corporation, other than persons on deputation".

(d) Employee State Insurance Act, 1948, 2(10) Exempted Employee: An employee who is not liable under this Act to pay the employee's contribution; 2(9) Employee Any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and- (i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or (ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or (iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service; and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment; but does not include- (i) any member of the Indian naval, military or air forces; or (ii) any person so employed whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government a month: Provided that an employee whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government a month at any time after and not before the beginning of the contribution period, shall continue to be an employee until the end of the period;

(e) Minimum Wages Act, 1948. 2I Any person who is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled employment in respect of which minimum rates of wages have been fixed; and includes an out-worker to whom any articles or materials are given out by another person to be made up, cleaned, washed, altered, ornamented,

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finished, repaired, adapted or otherwise processed for sale for the purposes of the trade or business of that other person where the process is to be carried out either in the home of the out-worker or in some other premises not being premises under the control and management of that other person; and also includes an employee declared to be an employee by the appropriate Government; but does not include any member of the Armed Forces of the Union.

(f) Payment of Bonus Act, 1965. 2(13) Any person (other than an apprentice) employed on a salary or wage not exceeding three thousand and five hundred rupees per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work of hire or reward, whether the terms of employment be express of implied

(g) Payment of Gratuity Act, 1972. 2E Any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semiskilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.

(h) The Sales Promotion Employees (Conditions Of Service) Act , 1976 2D Sales promotion Employees Any person by whatever name called (including an apprentice) employed or engaged in any establishment for hire or reward to do any work relating to promotion of sales or business, or both, but does not include any such person- (i) who, being employed or engaged in a supervisory capacity, draws wages exceeding sixteen hundred rupees per mensem; or (ii) who is employed or engaged mainly in a managerial or administrative capacity Explanation.--For the purposes of this clause, the wages per mensem of a person shall be deemed to be the amount equal to thirty times his total wages (whether or not including, or comprising only of, commission) in respect of the continuous period of his service falling within the period of twelve months immediately preceding the date with reference to which the calculation is to be made, divided by the number of days comprising that period of service

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