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ii) Projective Tests: In these tests, a candidate is asked to project his
own interpretation onto certain standard stimuli. The way in which he responds
to these stimuli depends on his own values, motives and personality.
iii) Situation Tests: These measure an applicant’s reaction when he is placed in
a peculiar situation, his ability to undergo stress and his demonstration of
ingenuity under pressure. These tests usually relate to a leaderless group situation,
in which some problems are posed to a group and its members are asked to
reach some conclusions without the help of a leader.

INTERVIEW [STAGE 4]
Personal interview is the most universally used tool in employee selection process.

Meaning and Purpose:
Definition of interview is the process of interaction between two parties who are
interviewer/interviewers and interviewee. Interviewer is a person/employer who
does interview to candidates seeking job. Interviewee is a person who gets
interviewed by the interviewer/interviewers. The very purpose of calling the
candidates for interview is to see candidates face-to-face and to know his or her
attitude, behaviour, communication skills, personal/family details, work
experience, interests and hobbies, subject knowledge. Sometimes interview might
be platform to negotiate salary and other benefits offered to candidate if got
selected. In stage of an interview, candidate may not be stressed on questions
related to various related subjects because the candidate has been already passed
through those tests and proved, hence called for interview.

The most common interview mistake that job candidates make is talking too much
during the interview, according to a recent survey of recruiters conducted by
executive search firm Korn/Ferry International. Other common mistakes cited by
recruiters include lack of knowledge about the company or position, over-inflated
ego and appearing overly confident.

BACKGROUND AND REFERENCE CHECKS [STAGE 5]
The applicant is asked to mention in his application the names and addresses of
three such persons who usually know him well. These may be his previous

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employers, friends, or professional colleagues. They are approached by mail or
telephone and requested ta furnish their frank opinion, without incurring any
liability, about the candidate either on specified points or in general. They are
assured that all information supplied would be kept confidential. Yet, often either
no response is received or it is generally a favorable response.

SELECTION DECISION OR SUPERVISORY APPROVAL [STAGE
6]
To make a selection decision, all the valuable information that have been collected
from different sources, including the interview, background checks and any other
supplementary methods used to evaluate candidates need to be integrated.

A weighting or quantitative value to each of the assessment methods used during
the selection process will be given.

At the end of this stage in the process, list of candidates will be ranked. After all of
the interviewers discuss the integrated results, HR manager will be able to decide
which candidate is most suitable and is the first choice to fill the position.

MEDICAL EXAMINATION [STAGE 7]
Applicant who get over one or more of the preliminary hurdles are sent for a
physical examination either to the organization’s physician or to a medical officer
approved for the purpose.

Purposes: A physical examination serves the following purposes:
It gives an indication regarding fitness of a candidate for the job concerned.

 It discovers existing disabilities and obtains a record thereof,
which may be helpful later in deciding the campany’s
responsibility in the event of a workman’s compensation
claim. It helps in preventing employment of those suffering
from some type of contagious diseases.

 It helps in placing those who are otherwise employable but
whose physical handicaps may necessitate assignment only
to specified jobs

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Physical examination covers the following:
 The applicant’s medical history.
 His physical measurements—height, weight, etc.
 General examination—skin, musculature and joints.
 Specia1 senses—visual and auditory activity.
 Clinical examination—eyes, ears, nose, throat and teeth.
 Examination of chest and lungs.
 Check-up of blood pressure and heart.
 Pathological tests of urine, blood etc.
 X-ray examination of chest and other parts of the body.
 Neuro-psychiatric examination, particularly when medical
history or a physician’s observations indicate an adjustment
problem.
 You would realize that the importance of these
characteristics varies from job to job and, therefore, different
weightages have to be given to each far an overall evaluation.

EMPLOYED INDIVIDUAL [STAGE 8]
Sometimes a particular person is selected for a given job. Often more
than one person may be selected for the jobs of similar nature. In
the second case, individual employees have to be put under
individual supervisors with the approval of the latter. In the first case
also his approval is also necessary but it should be done early in the
selection process. A proper placement reduces employee turnover,
absenteeism and accident rates and improves morale.

JOB INTERVIEW
METHODS OF INTERVIEW

Group Interview: This is designed to see how the candidates react to and against
each other. All the candidates may be brought together in the office and they may
be interviewed. The candidates may, alternatively, be given a topic for discussion
and be observed as to who will lead the discussion, how they will participate in

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the discussion, how each will make his presentation and how they will react to
each other’s views and presentation.

Panel Interview: This is done by members of the interview board or a
selection committee interview one candidate. This is done usually for supervisory
and managerial positions. It pools the collective judgement and wisdom of
members of the panel. The candidate may be asked to meet the panel individually
for a fairly lengthy interview.

One-to-one Interview: Individual, face-to-face interviews are by far the most popular
and efficient form of assessment. Candidate meets one-on-one with an interviewer.
It alowing interviewer to get up close and personal with each candidate while keeping
an eye on their body language.

Stress Interview: It is used by an employer to put a candidate under intense
pressure, to assess how a candidate handles work overload, how they deal with
multiple projects, and how good they are at handling workplace conflict. For
example, the interviewer may not make eye contact, will roll their eyes or sigh at
the candidate's answers, interrupt, turn their back, take phone calls during the
interview, or ask questions in a demeaning or challenging style. The goal is to assess
how the interviewee handles pressure or to purposely evoke emotional responses.
The key to success for the candidate is to remain unemotional during the process.

Behavioural Interview: A job interviewing technique whereby the candidate is
asked to describe past behavior in order to determine whether she is suitable for a
position. For example, an interviewer may ask "Tell me about a time when you dealt
with a disruptive customer". Responses are expected to give an indication of an
applicant's professional conduct.

TYPES OF INTERVIEW
Structured job interview: Structured job interview techniques rely on pre-
established questions and answers based on job descriptions and requirements. Job
candidate responses to questions are rated against the pre-established answers,
producing comparable interviews across all candidates. Structured job interviewing

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also keeps job interviews on track in terms of time and subject matter. This held in
a more formal atmosphere in the employment office by the employment officer
with the help of well-structured questions. The time and place of the interview are
stipulated by the employment office.
Unstructured job Interview: is an interview in which questions are not
prearranged, allowing for spontaneity and for questions to develop during the
course of the interview. It is not planned and is used widely when the labour market
is tight and you need workers very badly. A friend or a relative of the employer may
take a candidate to the house of the employer or manager where this type of
interview may be conducted.
JOB INTERVIEW PROCESS (PLANNING, CONDUCTING AND AFTER THE INTERVIEW)

Planning the interview:
Before a recruitment officer begins to interview candidates, he must plan the
timing, the venue and the topics to be discussed.

i. The timing: How long each interview is to take should be put
into deciding and setting up a timetable accordingly. The
length of the interview will depend on the level of the
vacancy and whether there is to be an interview panel or only
a single interviewer.

ii. The venue: The place chosen for the interview must be quiet
and in a location where the interviewer will not be disturbed.
It is wise to examine the room setting from the viewpoint of
the interviewee. Where is he to be seated? If he is too far
away from the interviewer, he will have to speak unnaturally
loudly to be heard, if he is too closed, he may feel
embarrassed, if the sun is shining directly into his eyes, he will
not be able to see the interviewer which will make the
candidate feel uncomfortable, if the air-conditioning is on
‘high’, the candidate may end up shivering throughout the
interview. Fundamentally, the purpose of planning the
interviewer room’s layout and requirements is to ensure the
applicant is able to give his best during the interview.

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iii. The topics for discussion: The interviewer must have a
thorough understanding of the job description and
specification, and have read the candidate’s application form
before he begins the interview. This will allow him to develop
a list of subjects to be explored during the interview. Some
form of checklist should be prepared to be accompanied by a
rating system so that a group of candidates can be compared
on equal terms.

Conducting the interview:
The task of the interviewer is to ask questions and listen to the answers. From the
information gathered, the interviewer should be able to assess the candidates. This
is only possible if the interviewer avoids stress techniques, asks the right questions
and listens carefully to be answers.

i. Avoid stress techniques: Some managers believe that the
more the interview resembles a police interrogation, the
more accurate the information given by the candidate is.
Thus, the interviewer sets up many little traps to upset,
discomfort and increase the stress levels of the applicant.
However, such techniques nearly always leave a negative
impression on the applicant who may prefer to look for a job
elsewhere.

ii. Establish rapport: A better approach to interviewing is for
the interviewer to establish a comfortable atmosphere in
which the job applicant can relax and answer the questions
put to him to the best of his ability. Thus a smile, a
handshake, some simple conversational questions to warm
up and skilful use of non-verbal signals will help to establish
rapport between the candidate and the interviewer.

iii. Ask the right questions: Open-ended questions should be
used by interviewers to gain more insightful information
from the interviewee. These are questions which ask ‘How?’
or ‘Why?’ or they are phrased as a request such as ‘Tell me

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about…’ or ‘What is your opinion on…?’ Such questions will
ensure that the interviewee is doing most of the talking.

After the interview:
The recruitment officer will need to compare the applicants and, based on the
information collected, make his final choice of candidate. Most applicants will be
rejected outright at this stage. The selected few, which may consist of four or five
people, will be ranked according to their suitability of the job. The candidate at the
top of the list will be offered the job and the remainder will be kept aside in case
the referred applicant declines the job offer.

INTERVIEWER’S CHECKLIST
An interviewer checklist will be useful in ensuring the above principles are followed.
The following is an example of such a checklist.

Interviewer’s Checklist
Prepare
 Study job description and person specification
 Prepare interview timetable
 Study application form and note areas of

discussion
 Prepare interview assessment form
 Ensure suitable interviewing room is booked
Interview
 Welcome applicant
 Ask relevant questions
 Listen, listen and listen
 Do not argue or criticize
 Invite questions
 End politely

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Summarize
Define recruitment in organization
The basic process of recruitment

- Requirement from human resource planning and managers requisition
- Evaluate alternatives to recruitment
- Determine sources and methods of recruitment

o Internet recruitment
o External recruitment
- Recruited individual
Advantages and disadvantages of internal and external recruitment
Define selection in organization
The basic process of selection
- Preliminary screening
- Review of application form and resumes
- Selection test
o Cognitive aptitude test
o Physical abilities test
o Work sample test
o Personality test
- Employment interview
o Types of interview
o Methods of interview
o Job interview process
- Background and reference check
- Selection decision or supervisory approval
- Medical examination
- Employed individual
Apply the most appropriate selection process based on situational needs

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5.0 HUMAN RESOURCE DEVELOPMENT

CONCEPT OF EMPLOYEE ORIENTATION

An introductory stage in the process of new employee assimilation, and a part of
his or her continuous socialization process in an organization. Major objectives of
orientation are to :

(1) gain employee commitment,
(2) reduce his or her anxiety,
(3) help him or her understand organization's expectations, and
(4) convey what he or she can expect from the job and the organization.
It is commonly followed by training tailored to specific job positions. See also
acculturation and company orientation.
----www.businessdictionary.com

ORIENTATION is the planned introduction of new employees to their jobs,
coworkers, and the organization. However, orientation should not be a mechanical,
one-way process. Because all employees are different,
orientation must incorporate a sensitive awareness of the anxieties, uncertainties,
and needs of the individual. Orientation in one form or another is offered by most
employers.

The orientation is meant to educate new employees about the goals and
responsibilities of the position and company, as well as to answer any questions
they may have about HR, benefits and payroll information.

Orientation Responsibilities
Orientation requires cooperation between individuals in the HR unit and

other managers and supervisors. In a small organization without an HR department,
such as a machine shop, the new employee’s supervisor or manager has the total
responsibility for orientation. In large organizations, managers and supervisors, as
well as the HR department, should work as a team in employee orientation.

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ORIENTATION
Orientation is a socialization process that is carried out by organizations to help new
workers adapt to new working environment and organization as well as a new
friend to their new workers. Duration of the orientation programs is normally
between one day to one week.
STAFF ORIENTATION PROCESS
Orientation to a new job should give a staff member the basic information about
the organization, her position, the target population, and the community, so she,
too, can understand how to get where she wants to go. All or most of an
orientation, therefore, should best take place before the job starts.

PURPOSE OF EMPLOYEE ORIENTATION
To reduce anxiety
Any employee, when put into a new, strange situation, will experience
anxiety that can impede his or her ability to learn to do the job. Proper
orientation helps to reduce anxiety that results from entering into an
unknown situation, and helps provide guidelines for behavior and conduct,
so the employee doesn’t have to experience the stress of guessing.

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To reduce employee turnover
Employee turnover increase as employees feel they are valued, or are put
in positions where they can’t possibly do their jobs. Orientation shows that
the organization values the employee, and helps provide tools necessary for
succeeding in the job.
To save time for supervisor & co-workers
Simply put, the better the initial orientation, the less likely supervisors and
co-workers will have to spend time teaching the employee.
To develop realistic job expectations, positive attitudes and job
satisfaction
It is important that employees learn early on what is expected of them and
what to expect from others, in addition to learning about the values and
attitudes of the organization. While people can learn from experience, they
will make many mistakes that ate unnecessary and potential damaging.
Fewer mistakes, faster productivity
The benefits of orientation are clear and visible to both the new employee
and the organization. The organization benefits form such factors as
reduced turnover or improved productivity as a few of the benefits of a
systematic orientation. Employees benefit from feeling valued and “fitting
in” to the new job more easily and quickly. Fewer mistakes are made by the
new employees who are more relaxed.

FORM OF EMPLOYEE OREINTATION

A. FORMAL ORIENTATION
The management has a structured program which is executed when new
employees join the organization.

a. ORGANIZATIONAL LEVEL
Informs the new employee about the organization’s objectives,
history, philosophy, procedures and rules.
Tour of organization’s work facilities.
Present topic relevance and interest to all employee and normally
given by HRD.

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b. DEPARTMENTAL OR UNIT LEVEL
Familiarizes employee with goals of work unit, contribution to the
unit’s goals, and introduction to co-workers.
Cover topics unique to the new employee’s specific department and
job.
Usually handled by the new employee’s manager.

B. INFORMAL ORIENTATION
In informal orientation, new hires are directly put on the job and they are
expected to acclimatize themselves with the work and the organization.
Informal programmed promotes innovative ideas. The choice depends on
management’s goals.

THE IMPORTANCE OF ORIENTATION

Employers have to realize that orientation isn't just a nice gesture put on by the
organization. It serves as an important element of the recruitment and retention
process. Some key purposes are:

1. To Reduce Startup Costs Proper orientation can help the employee get "up
to speed" much more quickly, thereby reducing the costs associated with
learning the job.

2. To Reduce Anxiety Any employee, when put into a new, strange situation,
will experience anxiety that can impede his or her ability to learn to do the
job. Proper orientation helps to reduce anxiety that results f rom entering
into an unknown situation, and helps provide guidelines f or behavior and
conduct, so the employee doesn't have to experience the stress of guessing.

3. To Reduce Employee Turnover Employee turnover increases as employees
feel they are not valued, or are put in positions where they can't possibly do
their jobs. Orientation shows that the organization values the employee,
and helps provide the tools necessary for succeeding in the job.

4. To Save Time For Supervisor & Co-Workers Simply put, the better the initial
orientation, the less likely supervisors and co workers will have to spend
time teaching the employee.

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5. To Develop Realistic Job Expectations, Positive Attitudes and Job
Satisfaction It is important that employees learn as soon as possible what is
expected of them, and what to expect from others, in addition to learning
about the values and attitudes of the organization. While people can learn
from experience, they will make many mistakes that are unnecessary and
potentially damaging.

CONCEPT OF TRAINING AND DEVELOPMENT

Training and development is a function of human resource management concerned
with organizational activity aimed at bettering the performance of individuals and
groups in organizational settings.

Human Resource Development (HRD) is the framework for helping employees
develop their personal and organizational skills, knowledge, and abilities. Human
Resource Development includes such opportunities as employee training,
employee career development, performance management and development,
coaching, mentoring, succession planning, key employee identification, tuition
assistance, and organization development.

Training and development are closely interrelated terms that aim to help in
achieving the objectives of the company while at the same time increasing the
efficiency and productivity of the employees. Though similar in a broader sense,
there are many differences between training and development that will be
highlighted in this article.

Traditional Approach – Most of the organizations before never used to believe in
training. They were holding the traditional view that managers are born and not
made. There were also some views that training is a very costly affair and not worth.
Organizations used to believe more in executive pinching. But now the scenario
seems to be changing.

Modern approach - of training and development is that Indian Organizations have
realized the importance of corporate training. Training is now considered as more

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of retention tool than a cost. The training system in Indian Industry has been
changed to create a smarter workforce and yield the best results.

TRAINING, EDUCATION AND DEVELEOPMENT OF EMPLOYEE

Training

Training of a new employee is an integral part of his induction and orientation.
Training is imparted so that he understands his roles and responsibilities and learns
to perform the tasks entrusted to him with ease and with efficiency. It is only after
a brief training period that a new employee is able to perform his job at a
satisfactory level. Training makes an employee more productive for the
organization and is thus concerned with his immediate improvement.

Development

Development of an employee is an ongoing process which continues well beyond
training. The focus of development process is the person himself where the focus
of training is the organization. Development concerns with making the employee
efficient enough to handle critical situations in future. So while training
concentrates on short term needs of the organization, development looks after long
term goals of the organization.

Education

Consists of activities designed to prepare employee for future jobs

Human resource development

Organizations have many opportunities for human resources or employee
development, both within and outside of the workplace.

Human Resource Development can be formal such as in classroom training, a
college course, or an organizational planned change effort. Or, Human Resource
Development can be informal as in employee coaching by a manager. Healthy
organizations believe in Human Resource Development and cover all of these
bases.

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IMPORTANCE OF TRAINING AND DEVELOPMENT TO THE ORGANIZATION

1. HRD Develops Competent HR

HRD develops the skills and knowledge of individual, hence, it helps to provide
competent and efficient HR as per the job requirement. To develop employment's
skill and competencies, different training and development programs are launched.

2. HRD Creates Opportunity for Career Development

HRD helps to grasp the career development opportunities through development of
human skills and knowledge. Career development consists of personal
development efforts through a proper match between training and development
opportunities with employee's need.

3. Employer Commitment

Trained and efficient employees are committed towards their jobs which is possible
through HRD. If employees are provided with proper training and development
opportunities, they will feel committed to the work and the organization.

4. Job Satisfaction

When people in the organization are well oriented and developed, they show
higher degree of commitment in actual work place. This inspires them for better
performance, which ultimately leads to job satisfaction.

5. Change Management

HRD facilitates planning, and management of change in an organization. It also
manages conflicts through improved labor management relation. It develops
organizational health, culture and environment which lead to change management.

6. Opportunities for Training and Development

Trainings and development programs are tools of HRD. They provide opportunity
for employee's development by matching training needs with organizational
requirement. Moreover, HRD facilitates integrated growth of employees through
training and development activities.

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7. Performance Improvement
HRD develops necessary skills and abilities required to perform organizational
activities. As a result of which, employees can contribute for better performance in
an organization. This leads to greater organizational effectiveness.
8.0 Addressing Weaknesses
A training programs allows you to strengthen those skills that each employee needs
to improve. Through training, upgrading of skills and competencies of employees
also contribute to the reduction of accidents, waste and damage to equipment’s.
9.0 Consistency
A robust and structured training and development program ensures that
employees have a consistent experience and background knowledge.
The consistency is particularly relevant for the company’s basic policies and
procedures. All employees need to be aware of the expectations and procedures
within the company.
10. Increased Innovation
Ongoing training and upskilling of the workforce can encourage creativity. New
ideas can be formed as a direct result of training and development.

TRAINING NEED ANALYSIS
Definition
A training need is a shortage of skills or abilities, which could be reduced or
eliminated by means of training and development. Training needs hinder
employees in the fulfilment of their job responsibilities or prevent an organization
from achieving its objectives. They may be caused by a lack of skills, knowledge or
understanding, or arise from a change in the workplace.

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Training needs analysis identifies training needs at employee, departmental or
organizational level in order to help the organization to perform effectively. The
aim of training needs analysis is to ensure that training addresses existing problems,
is tailored to organizational objectives, and is delivered in an effective and cost-
efficient manner.

Training needs analysis involves:

 monitoring current performance using techniques such as observation,
interviews and questionnaires

 anticipating future shortfalls or problems
 Identifying the type and level of training required and analyzing how this

can best be provided.

A. ORGANIZATION ANALYSIS
An analysis of the business needs or other reasons the training is desired.
An analysis of the organizations strategies, goals and objectives.
Assist the organization with its primary objective by bringing individual
effectiveness.

B. INDIVIDUAL ANALYSIS
Analysis dealing with potential participants and instructors involved in the
process.
The importance questionnaire being answered by this analysis are who will
receive the training.
Help employees in achieving their personal goals, which in turn, enhances
the individual contribution to an organization

C. TASK ANALYSIS
Analysis of the tasks being performed.
This is an analysis of the job and the requirement for performing the work.

Training and development is the field concerned with organizational activity aimed
at bettering the performance of individuals and groups in organizational settings. It
has been known by several names, including employee development, human
resource development, and learning and development.

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Training and development encompasses three main activities: training, education,
and development. Garavan, Costine, and Heraty, of the Irish Institute of Training
and Development, note that these ideas are often considered to be synonymous.

There are some other reasons also for which this training becomes necessary.
Explained below are various factors, giving rise to the need for training.

• Employment of inexperienced and new labour requires detailed
instructions for effective performance on the job.

• People have not to work, but work effectively with the minimum
of supervision, minimum of cost, waste and spoilage, and to
produce quality goods and services.

• Increasing use of fast changing techniques in production and
other operations requires training into newer methods for the
operatives.

• Old employees need refresher training to enable them to keep
abreast of changing techniques and the use of sophisticated
tools and equipment.

• Training is necessary when a person has to move from one job to
another because of transfer, promotion or demotion.

•
TRAINING APPROACH AND METHODS

Different tasks performed will require different set of tools to be used. Therefore,
HR needs needs various methods of training programmes. In same case, it is not
easy to learn while at the same time performing the jobs.

Even an increasing amount of training takes place on the job at the time the
employee needs the training, and many other programms occur away from the
work setting.

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OFF THE JOB TRAINING

Definitions:

Employee training at a site away from the actual work environment. It often
utilizes lectures, case studies, role playing, simulation, etc. See also on the job
training.......www.businessdictionary.com

Employee training at a site away from the actual work environment. It often utilizes
lectures, case studies, role playing, simulation, etc. See also on the job training.

Conducted in a location specifically designated for training.

It may be near the workplace or away from work, at a special training center or a
resort

Conducting the training away from the workplace minimize distractions and allows
trainees to devote their full attention to the material being taught.

However, off-the-job training programs may not provide as much transfer of
training to the actual job as do on-the-job programs.

ADVANTAGES OF OFF-THE-JOB DISADVANTAGES OF OFF-THE-JOB

TRAINING TRAINING

Trainers are usually experienced It is not directly in the context of job
enough to train

It is systematically organized It is often formal

Efficiently created programs may add It may not be based on experience.
lot of value

It is expensive.

Trainees may not be much motivated

It is artificial in nature.

Many people equate off-the-job training with the lecture method, but in fact a
very wide variety of methods can be used.

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A. LECTURES AND CONFERENCE
Are the traditional and direct method of instruction? Every training
programmed starts with lecture and conference. It’s a verbal presentation
for a large audience.

B. INSTRUCTOR-LED
Instructor-led training, or ILT, is the practice of training and learning
material between an instructor and learners, either individuals or groups.
Instructors can also be referred to as a facilitator, who may be
knowledgeable and experienced in the learning material, but can also be
used more for their facilitation skills and ability to deliver material to
learners. ILT is an effective means of delivering information, as it allows for
real-time feedback, questions and answers, manipulation and changeable
delivery to suit the needs of learners in a real-time environment, and a
learning environment can be created by the instructor's style. Instructors
may deliver training in a lecture or classroom format, as an interactive
workshop, as a demonstration with the opportunity for learners to practice,
or even virtually, utilizing video-conferencing tools; and the instructor may
have facilitation and teaching skills, in which they can utilize different
methods to engage learners and embrace different learning styles.

C. SIMULATION EXERVICE
Simulation is any artificial environment exactly similar to the actual situation

D. VESTIBULE TRAINING
Is a term for near-the-job training, as it offers access to something new
(learning?)
In vestibule training, the workers are trained in a prototype environment on
specific jobs in a special part of the plant

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ON THE JOB TRAINING

When an employee learns the job in actual working site in real life situation, and
not simulated environment, it is called OJT. Employee learns while working. Take
the instance of roadside mechanics. Small boys working there as helpers learn while
helping the head mechanic. They do not learn the defect analysis and engine
repairing skills in any classroom on engine models.

This type of training, also known as job instruction training, is the most
commonly used method. Under this method, the individual is placed on a regular
job and taught the skills necessary to perform that job. The trainee learns under the
supervision and guidance of a qualified worker or instructor. On-the-job training
has the advantage of giving firsthand knowledge and experience under actual
working conditions. While the trainee learns how to perform a job, he is also a
regular worker rendering the services for which he is paid. The problem of transfer
of trainee is also minimised as the person learns on-the-job. The emphasis is placed
on rendering services in the most effective manner rather than learning how to
perform the job. On-the-job training methods include job rotation, coaching, job
instruction or training through step-by-step and committee assignments.

Informal approach to training that oermits an employee to learn job tasks by
actually performing them.

Most commonly used as sometimes firm may have no choice. This can help to
transfer knowledge from a highly skilled and experience worker to a new employee
while maintaining the productivity of both workers. Staff be more highly motivated
to learn as it is clear to them. Can feel pressure also The trainer normally are
supervisors/ peer which must have good work ethic and correctly model the desired
behaviors.

ADVANTAGES OF ON-THE-JOB DISADVANTAGES OF ON-THE-JOB

TRAINING TRAINING

It is directly in the context of job Trainer may not be experienced
enough to train or he may not be so
inclined

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It is often informal It is not systematically organized

It is most effective because it is Poorly conducted programs may create

learning by experience safety hazards

It is least expensive Off-the-job training is conducted in a
location specifically designated for
training.

Trainees are highly motivated

It is free from artificial classroom
situations

A. COACHING

Considered as responsibilities of the immediate boss, provide assistance much as
mentor,

Coach has greater experience/ expertise that the protégé and is in the position to
offer wise advise.

In coaching the trainee is placed under a senior manager who acts as a guide or
coach and teaches job knowledge and skill to the trainee. He instructs him what he
wants him to do, how it can be done etc., and helps him to correct errors and
perform effectively. It is just as track coaches who observe, analyses and attempt
to improve the performance of their athletes. This technique of development is
quite rewarding. As the managers learn by doing. It also creates the opportunities
for high level interaction and rapid feedback on performance. But this has a
limitation also as we cannot expect that alt excellent managers will be effective
coaches.

Thus, the effectiveness of this technique relies on the ability of the concerned
'coach'.

The trainee is placed under a particular supervisor who functions as a coach in
training the individual. The supervisor provides feedback to the trainee on his

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performance and offers him some suggestions for improvement. Often the trainee
shares some of the duties and responsibilities of the coach and relieves him of his
burden. A limitation of this method of training is that the trainee may not have the
freedom or opportunity to express his own ideas.

”Experience is simply the name we give our mistakes." - Oscar Wilde.

According to a survey conducted by International Coach Federation (ICF), more
than 4,000 companies are using coach for their executives. These coaches are
experts most of the time outside consultants.

A coach is the best training plan for the CEO’s because:

1. It is one-to-one interaction
2. It can be done at the convenience of CEO
3. It can be done on phone, meetings, through e-mails, chat
4. It provides an opportunity to receive feedback from an expert
5. It helps in identifying weaknesses and focus on the area that needs

improvement This method best suits for the people at the top
because if we see on emotional front, when a person reaches the
top, he gets lonely and it becomes difficult to find someone to talk
to. It helps in finding out the executive’s specific developmental
needs. The needs can be identified through 360 degree performance
reviews.

B. MENTORING

Approach to advice, coach, nurturing for creating a practical relationship to
enhance individual career, personal and professional growth and development.

Focus on skills to develop protégés to perform to their highest potential, leading to
career advancement

Mentor may be anywhere in the organization/ firm

Mentoring is an ongoing relationship that is developed between a senior and junior
employee. Mentoring provides guidance and clear understanding of how the
organization goes to achieve its vision and mission to the junior employee.

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The meetings are not as structured and regular than in coaching. Executive
mentoring is generally done by someone inside the company. The executive can
learn a lot from mentoring. By dealing with diverse mentee’s, the executive is given
the chance to grow professionally by developing management skills and learning
how to work with people with diverse background, culture, and language and
personality types.

Executives also have mentors. In cases where the executive is new to the
organization, a senior executive could be assigned as a mentor to assist the new
executive settled into his role. Mentoring is one of the important methods for
preparing them to be future executives. This method allows the mentor to
determine what is required to improve mentee’s performance. Once the mentor
identifies the problem, weakness, and the area that needs to be worked upon, the
mentor can advise relevant training. The mentor can also provide opportunities to
work on special processes and projects that require use of proficiency.

Some key points on Mentoring

• Mentoring focus on attitude development.
• Conducted for management-level employees.
• Mentoring is done by someone inside the company.
• It is one-to-one interaction.
• It helps in identifying weaknesses and focus on the area that

needs improvement
C. JOB ROTATION

A job design technique in which employees are moved between two or more jobs
in a planned manner. Employees move from one job to another to boraden their
experience.

The objective is to expose the employees to different experiences and wider variety
of skills to enhance job satisfaction and to cross-train them.

Higher level tasks often require this breath of knowledge

Help new staff understand a variety of jobs and their interrelationshop.

Job rotation is also a control to detect errors and frauds.

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Job rotation also helps in business continuity as multiple people are equally
equipped to perform a job function. If an employee is not available other can handle
his/her position with similar efficiency.

D. APPRENTICESHIP

Apprenticeships give employers the opportunity to shape inexperienced workers to
fit existing and future jobs. It allows trainers to immediately determine whether a
trainee has learned the new skill or procedure.

Summarize
Define employee orientation
The purpose of employee orientation
Forms of employee orientation and its information

- Formal orientation
o Organization level
o Department or unit level

- Informal orientation
Distinguish training, education and development of employee
The importance of training and development to the organization
Training needs analysis

- Organizational analysis
- Individual analysis
- Task analysis
Training approach and its common methods
- Off the job training

o Lectures and conferences
o Instructor-led
o Simulation training
o Vestibule training
- On the job training
o Coaching
o Mentoring
o Job rotation
o Apprenticeship

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6.0 PERFORMANCE APPRAISAL

DEFINE PERFORMANCE APPRAISAE FOR EMPLOYEE
The performance appraisal is the process of assessing employee performance by
way of comparing present performance with already established standards which
have been already communicated to employees, subsequently providing feedback
to employees about their performance level for the purpose of improving their
performance as needed by the organization.
As said above the very purpose of performance uprising is to know performance of
employee, subsequently to decide whether training is needed to particular
employee or to give promotion with additional pay hike. Performance appraisal is
the tool for determining whether employee is to be promoted, demoted or sacked
(remove) in case of very poor performance and no scope for improvement.
Every corporate sector uses performance appraisal as a tool for knowing about the
employee and take decisions about particular employee. For the purpose of
performance appraisal of employees there are different methods under the
category of traditional methods and modern methods which are discussed in
following chapters.
A performance appraisal is a systematic and periodic process that assesses an
individual employee's job performance and productivity in relation to certain pre-
established criteria and organizational objectives.

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According to Newstrom, “Performance appraisal is the process of evaluating the
performance of employees sharing that information with them and searching for
ways to improve their performance

PURPOSE OF PERFOEMANCE APPRAISAL
STRATEGIC PURPOSE (MOTIVATION)
Strategic performance management helps you apply your strategy throughout your
organization to ensure that all your goals are being met.
Performance appraisal can have a profound effect on levels of employee motivation
and satisfaction - for better as well as for worse.
Performance appraisal provides employees with recognition for their work efforts.
The power of social recognition as an incentive has been long noted. In fact, there
is evidence that human beings will even prefer negative recognition in preference
to no recognition at all. If nothing else, the existence of an appraisal program
indicates to an employee that the organization is genuinely interested in their
individual performance and development. This alone can have a positive influence
on the individual's sense of worth, commitment and belonging.
The strength and prevalence of this natural human desire for individual recognition
should not be overlooked. Absenteeism and turnover rates in some organizations
might be greatly reduced if more attention were paid to it. Regular performance
appraisal, at least, is a good start.

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ADMINISTRATIVE PURPOSE

Under administrative use, performance appraisal provides a basis for a decision
about the employee's work conditions, promotions, terminations, and rewards.

Administrative uses of performance appraisal comprise the following aspects:
 Promotion
 Transfers
 Remuneration Administration
 Training And Development
 Supervision

Appraisal data can be used to monitor the success of the organization's recruitment
and induction practices. For example, how well are the employees performing who
were hired in the past two years?

Appraisal data can also be used to monitor the effectiveness of changes in
recruitment strategies. By following the yearly data related to new hires (and given
sufficient numbers on which to base the analysis) it is possible to assess whether
the general quality of the workforce is improving, staying steady, or declining.

DEVELOPMENT PURPOSE

Performance appraisal offers an excellent opportunity - perhaps the best that will
ever occur - for a supervisor and subordinate to recognize and agree upon individual
training and development needs. During the discussion of an employee's work
performance, the presence or absence of work skills can become very obvious -
even to those who habitually reject the idea of training for them. Performance
appraisal can make the need for training more pressing and relevant by linking it
clearly to performance outcomes and future career aspirations. From the point of

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view of the organization as a whole, consolidated appraisal data can form a picture
of the overall demand for training. This data may be analysed by variables such as
sex, department, etc. In this respect, performance appraisal can provide a regular
and efficient training needs audit for the entire organization.
To identify individual employee training needs
To help the employee strengthen current performance and prepare for
promotional opportunities
To identify situations in which reassignment can be used to develop potential

SOURCE OF PERFORMANCE APPRAISAL

A. IMMEDIATE SUPERVISORS
Supervisor’s ratings are the heart of most appraisal and the best position to
observe and evaluate the subordinate’s performance.
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Managers can determine the appropriate form of feedback with the
employee evaluation whether employees are required to attend training
and development programs, getting a promotion or get a more attractive
compensation package.
B. PEERS AND TEAM MEMBERS
The appraisal of an employee by his/her peers
Suitable to evaluate the performance of the workers who regularly interact
with each other as they know to each other and know their strengths and
weaknesses of each.
Arise logrolling that all employees conspired together to give high marks to
all employees.
C. SUBORDINATES

This method is effective because the subordinates are the best source to
observe the effectiveness of the managers.

The evaluation is more for the manager’s self-development so that they able
to rectify their weaknesses.

Subordinates may give a good evaluation on their manager if they have a
good working relationship, and may evaluate the manager poorly if they are
at odds with each other.

D. SELF-EVALUATION
Employees qualified to evaluate themselves if they understand the
objectives that must be achieved and is involved in the development of
performance standards.
Employees know what has to be done and how to carry out the task
effectively.

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Employees are keener to illustrate their strength and try to cover up their
weaknesses.
E. CUSTOMER APPRAISAL
Most organization feels that they should obtain employees’ performance
input from the customers because customer satisfaction determines the
success of an organizations.
Internal customer: employees from a certain department who depend on
the output/other employees’ work result for their input.
External customer: people who the product/ services produced by the
organization.

METHODS OF PERFORMANCE APPRAISAL

RANKING

Ranking methods compare one employee to another, resulting in an ordering of
employees in relation to one another. Rankings often result in overall assessments
of employees, rather than in specific judgments about a number of job
components. Straight ranking requires an evaluator to order a group of employees
from best to worst overall or from most effective to least effective in terms of a
certain criterion. Alternative ranking makes the same demand, but the ranking
process must be done in a specified manner (for example, by first selecting the best
employee in a group, then the worst, then the second-best, then the second-worst,
etc.).

All employees from group ranked in order of overall performance

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Comparison is based on single criterion, such as overall performance

How do we use the ranking method?

Under the ranking method, the manager com-pares an employee to other similar
employees, rather than to a standard measurement. An offshoot of ranking is the
forced distribution method, which is similar to grading on a curve. Predetermined
percentages of employees are placed in various performance categories, for
example, excellent, above average, average, below average, and poor,. The
employees ranked in the top group usually get the rewards (raise, bonus,
promotion), those not at the top tend to have the reward withheld, and those at
the bottom sometimes get punished. In Self-Assessment and Skill Builder 8-1, you
are asked to rank the performance of your peers.

Why and when do we use the ranking method?

Managers have to make evaluative decisions, such as who is the employee of the
month, who gets a raise or promotion, and who gets laid off. So when we have to
make evaluative decisions, we generally have to use ranking. However, our ranking
can, and when possible should, be based on other methods and forms. Ranking can
also be used for developmental purposes by letting employees know where they
stand in comparison to their peers—they can be motivated to improve
performance. For example, when one of the authors passes back exams, he places
the grade distribution on the board. It does not in any way affect the current
grades—but it lets students know where they stand, and he does it to motivate
improvement.

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FORCED DISTRIBUTION

A rating system used by companies to evaluate their employees. The system
requires the managers to evaluate each individual, and rank them typically into one
of three categories (excellent, good, poor). The system is thought to be relatively
widely-used, but remains somewhat controversial due to the competition it
creates, and also the reality that not all employees will fit neatly into one of the
categories and might end up in a category that does not reflect their true
performance. One of the first companies to use this system was General Electric, in
the 1980s. --------Businessdictionary.com

Forced ranking is a method of performance appraisal to rank employee but in order
of forced distribution.

For example, the distribution requested with 10 or 20 percent in the top category,
70 or 80 percent in the middle, and 10 percent in the bottom.

The top-ranked employees are considered “high-potential” employees and are
often targeted for a more rapid career and leadership development programs.

In contrast, those ranked at the bottom are denied bonuses and pay increases. They
may be given a probationary period to improve their performance.

Rater assigns individual in workgroup to limited number of categories similar to
normal distribution

Assumes all groups of employees have some distribution

Also called a rank-and-yank system

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GRAPHIC RATING SCALE

Rating Scales Method

Creating Scales Method is commonly used method for assessing the performance
of the employees and well-known traditional method of performance appraisal of
employees. Many corporations and companies example in the country India,
telecommunications company likely Airtel and US IT companies like Dell
Corporation are using this method for evaluating the employees and subsequently
take decisions on concerned employee.

Depending upon the job of employee under this method of appraisal traits like
attitude, performance, regularity, accountability and sincerity etc, are rated with
scale from 1 to 10. 1 indicates negative feedback and 10 indicates positive feedback
as shown below.

Attitude of employee towards his superiors, colleagues and customers

1 23 4 5 6 7 8 9 10

Extremely Excellent

Poor

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Regularity in the job

1 23 4 5 6 7 8 9 10

Extremely outstanding

poor

Under this method of performance appraisal, employee may be assessed by his
superiors, colleagues, subordinates or sometimes by his customers which all
depends on nature of the company or job which is added where the employee.
Appraiser is a person who appraises employee will give rating for every trait given
by marking or choosing number basing on his observation and satisfaction.
Ultimately all numbers chosen or marked will be added to determine highest score
gained by employee. Employee who scored more points will be treated as top
performer following descending scored employees will be treated as low performer
and the least scored employee will be treated as non-performers. Rates according
to defined factors. Judgments are recorded on a scale. Many employees are
evaluated quickly.

CRITICAL INCIDENTS METHODS

This technique of performance appraisal was developed by Flanagan and Burns.
The manager prepares lists of statements of very effective and ineffective behavior
of an employee. These critical incidents or events represent the outstanding or poor
behavior of employees on the job. The manager maintains logs on each employee,
whereby he periodically records critical incidents of the workers behavior. At the
end of the rating period, these recorded critical incidents are used in the evaluation
of the workers’ performance. An example of a good critical incident of a sales
assistant is the following:

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July 20 – The sales clerk patiently attended to the customer’s complaint. He is
polite, prompt, and enthusiastic in solving the customers’ problem.

On the other hand the bad critical incident may appear as under:

July 20 – The sales assistant stayed 45 minutes over on his break during the
busiest part of the day. He failed to answer the store manager’s call thrice. He is
lazy, negligent, stubborn and uninterested in work.

This method provides an objective basis for conducting a thorough discussion of an
employee’s performance. This method avoids regency bias (most recent incidents
get too much emphasis). This method suffers however from the following
limitations:

• Negative incidents may be more noticeable than positive incidents.
• The supervisors have a tendency to unload a series of complaints about

incidents during an annual performance review session.
• It results in very close supervision which may not be liked by the

employee.
• The recording of incidents may be a chore for the manager concerned,

who may be too busy or forget to do it.

Written records of highly favorable and unfavorable work actions. Appraisal more
likely to cover entire evaluation period. Does not focus in last few weeks or months

BEHAVIOURS ANCHORED RATING SXALE (BARS)

Behaviorally Anchored Rating Scales (BARS) is a relatively new technique which
combines the graphic rating scale and critical incidents method. It consists of
predetermined critical areas of job performance or sets of behavioral statements

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describing important job performance qualities as good or bad (for e.g. the qualities
like inter-personal relationships, adaptability and reliability, job knowledge etc.).
These statements are developed from critical incidents. In this method, an
employee’s actual job behavior is judged against the desired behavior by recording
and comparing the behavior with BARS. Developing and practicing BARS requires
expert knowledge

A behaviorally anchored rating scale is an employee appraisal system where raters
distinguish between successful and unsuccessful job performance by collecting and
listing critical job factors. These critical behaviors are categorized and appointed a
numerical value which is used as the basis for rating performance. Combines
traditional rating scales and critical incidents method

Job behaviors derived from critical incidents described more objectively.

An Example of Behaviorally Anchored Rating Scale (BARS)

Performance Points Behavior
Extremely good 7 Can expect trainee to make valuable suggestions for
increased sales and to have positive relationships
Good 6 with customers all over the country.
Above average 5 Can expect to initiate creative ideas for improved
Average 4 sales.
Below average 3 Can expect to keep in touch with the customers
Poor 2 throughout the year.
Extremely poor 1 Can manage, with difficulty, to deliver the goods in
time.
Can expect to unload the trucks when asked by the
supervisor.
Can expect to inform only a part of the customers.
Can expect to take extended coffee breaks and
roam around purposelessly.

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360-DEGREE FEEDBACK EVALUTION METHODS
360-degree is a process that involves gathering feedback on employee performance
from multiple sources, rather than just the employee’s line manager.
These multiple sources generally include a range of other people within the
business, such as colleagues and co-workers, or even people from different
departments.
360-degree feedback will generally include three, or sometimes four, different
angles for assessing an employee’s performance:

1. Line Manager Evaluation
2. Peer Evaluation
3. Self-Evaluation
4. Direct Report Evaluation (if the employee manages other people)
Focuses on skills needed across organizational boundaries
More objective measure of performance
Process more legally defensible

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ERRORS IN PERFORMANCE APPRAISAL

A. RECENCY EFFECT
Focusing only on recent performance within the evaluation period is a
common error in performance evaluations.
Ignore earlier work which may have been better or worse than work carried
out closer to the appraisal time.
The phenomenon that when people are asked to recall in any order the
items on a list, those that come at the end of the list are more likely to be
recalled than the others. The rates generally remember the recent actions,
of the employee at the time of rating and rate on the basis of these recent
actions favorable or unfavorable than on the whole activities.

B. CENTRAL, LENIENCY AND STRICTNESS TENDENCY
Central tendency - Error occurs when employees are incorrectly rated near
average or middle of scale
Leniency – giving undeserved high ratings
Strictness – being unduly critical of employee’s work performance
Worst situation is when firm has both lenient and strict manager and does
nothing level inequities

C. PREJUDICE AND STEREOTYPING
Many people are prejudice whether knowing or unknowingly.
They hold negative opinions about particular group of people.
Prejudice can be racial, religious, or sex- or age-based

D. HALO AND HORNS EFFECTS
Halo error – occurs when manager generalizes one positive performance
feature or incident to all aspects of employee performance, resulting in
higher rating
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Horn error – evaluation error occurs when manager generalizes one
negative performance feature or incident to all aspects of employee
performance, resulting in lower rating.

Summarize

Define performance appraisal
The purpose of performance appraisal

- Strategic purpose
- Administrative purpose
- Development purpose
Source of performance appraisal
- Immediate supervisors
- Peers and teams members
- Subordinates
- Self-evaluation
- Customer appraisal
Methods of performance appraisal
- Ranking
- Forced distribution
- Graphic rating scale
- Critical incidents methods
- Behavioral anchored rating scale (BARS)
Demonstrate 360-Degree feedback evaluation method
Errors in performance appraisal
- Recency effect
- Central, leniency and strictness tendency
- Prejudice and stereotyping
- Halo and horns effects

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7.0 COMPENSATION MANAGEMENT

DEFINE THE CONCEPT OF COMPENSATION FOR EMPLOYEE
Compensation management is one of the most challenging human resource areas
because it contains many elements and has a far-reaching effect on the
organization’s goals. The purpose of providing compensation is to attract, retain
and motivate employees. There are two main types of financial compensation.

Purpose = to attract, retain and motivate employees.

CLASSIFY COMPONENTS OF COMPENSATION

FINANCIAL COMPENSATION
COMPENSATION
Total of all rewards provided employees in return for services
DIRECT FINANCIAL COMPENSATION
It is most widely known and recognized form of compensation. Most sought after
by workers, direct compensation is the money which is paid directly to employees
in exchange for their labor. This include everything from hourly wages, to set
salaries, bonuses, tips and commissions.
INDIRECT FINANCIAL COMPENSATION
It is includes all monies paid out to an employee that are not included in direct
compensation. This form of compensation is often understood as the portion of an

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employee’s contract that covers items such as temporary leaves of absence, benefit
and retirements plans.

NON FINANCIAL COMPENSATION

It is differs from direct and indirect pay as it is has no monetary value. Non-financial
incentives are the types of rewards that are not a part of an employee’s pay. Non-
monetary incentives are typically effective for employees who are comfortable with
their salaries or have been in the position for a long time. Compensation if this
nature can include:

 Achievement awards
 Team leadership opportunities
 Personal days
 Paid training
 Gift cards
 New office
 Workspace upgrade
 Paid parking
 Transit passes

THE COMPONENT OF COMPENSATION

Employee compensation refers to the benefits (cash, vacation, etc.) that an
employee receives in exchange for the service they provide to their employer.
Employee compensation is generally one of the largest costs or expenses for any
organization. There are many different types of compensation paid to employees.

The following are a few examples of the compensation paid to employees:

•Cash compensation consisting of wages or salaries

•Retirement plans (employer contributions)

•Employer-paid health insurance

•Life insurance

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•Paid leave for vacation and sick days
•Disability insurance

MALAYSIAN LEGISLATIONS RELATED TO COMPENSATION

EMPLOYMENT ACT 1955
THE SABAH LABOUR ORDINANCE
THE SARAWAK LABOUR ORDINANCE
WORKMEN’S COMPENSATION ACT 1952

DESCRIBE MALAYSIAN MINIMUM WAGES CONCEPTS
 Minimum Wages Order 2016
 Minimum wage has been implemented in 2013 and has been closely
observed thereafter.
 Minimum wages is basic wages, excluding any allowances or other
payments.

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MINIMUM WAGES RATE (as per Minimum Wages Order 2016)
Regional areas Monthly Hourly Daily
Number of days worked in a week 6 5 4
Peninsular Malaysia RM1, 000.00/ RM4.81 RM38.46 RM46.15 RM57.69
Sabah, Sarawak and Labuan RM920 RM4.42 RM35.38 RM42.46 RM53.08
• The Minimum Wages Policy also applies to employees who are paid on piece-
rates, tonnage, trip- or commission-based. Employers are required to supplement
the wages of these employees if their income does not meet RM1, 050.00 per
month for Peninsular Malaysia and RM920 for Sabah, Sarawak and Labuan.
Malaysia: Section 2 of the National Wages Consultative Council Act 2011 (Act 732)
"minimum wages means basic wages"
under section 2 of the Employment Act 1955, the term "wages" means basic wages
and all other payments in cash payable to an employee for work done in respect of
his contract of service but does not include-

a) the value of any house accommodation
b) employer's contribution to any retirement scheme
c) any travelling allowance or the value of any travelling concession
d) any sum payable to the employee to defray special expenses entailed on
him by the nature of his employment
e) any gratuity payable on discharge or retirement
f) any annual bonus or any part of any annual bones

DETERMINE BENEFIT PROVIDED TO EMPLOYEE
INTERPRET STATUTORY BENEFITS

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Some small employers may wonder what employee benefits they're legally
required to provide. Believe it or not, the only legally required benefit employers
are obligated to maintain is workers' compensation insurance — or be self-insured.

Although most employee benefits are provided at the employer’s discretion, others
are required by law. Legally required benefits include Social Security,
unemployment compensation, and workers’ compensation.

EMPLOYEE PROVIDENT FUND

The Employees Provident Fund Act 1991

Employees' Provident Fund (Malay: Kumpulan Wang Simpanan Pekerja) commonly
known by the acronym EPF (Malay: KWSP) is a Malaysian government agency under
the Ministry of Finance. It manages the compulsory savings plan and retirement
planning for private sector workers in Malaysia. Membership of the EPF is
mandatory for Malaysian citizens employed in the private sector, and voluntary for
non-Malaysian citizens.

The EPF is a social security institution established under the Malaysian Law, the
Employees Provident Fund Act 1991 (Act 452) which provides retirement benefits
to its members through efficient and reliable storage of their savings. The EPF also
provides an efficient and easy system to ensure employers fulfil their legal
obligations and moral obligations to contribute to the EPF on behalf of their
employees.

Contribution is the money credited to the member's individual account at EPF. The
amount comprises employee contributions and employer's contribution and is
calculated based on the employee's monthly salary. The current contribution rate
is based on monthly wages / salary. For employees receiving monthly wages /
salaries of RM5, 000.00 and below, 11% of employees' contributions are deducted
from their monthly wages, while the employer's share contribution is 13%. For
employees who receive wages / salaries exceeding RM5, 000.00, the employee's
contribution remains at 11% while 12% is contributions by employers.

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Who are our Members?
Private Sector Workers and Unpensed Employees of the Public Sector. As of
September 2017, the EPF has a total of 13.72 million members. The number of
active and still contributing members is 7.05 million. The number of active
employers is 493,229.

SOCSO was mandated to administer and enforce the Employee Social Security Act
1969 and Employee Social Security General Rules 1971. Through the Act and
Regulations, SOCSO is able to provide free medical treatment, facility for physical
or vocational rehabilitation, and financial assistance to employees if they have lost
their abilities due to accidents or diseases that have reduced their abilities to work
or rendered them incapacitated. If an employee has died, their dependents are
provided for financially through pensions.
SOCSO in fulfilling its responsibilities is guided by three core principles as follows:
i) Solidarity Fund
Solidarity is the cardinal value of social protection. In practice, it is a series of
mechanisms for the redistribution of income towards people who are disabled or
invalid and families with dependent children. Generally, contributions made by its
members to SOCSO is channeled to the solidarity fund. The determining factor
when calculating the quantum for an employee to contribute is based on an

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employee’s monthly salary. Through this understanding, employees share the same
level of exposure and risk sharing regardless of industry in which they operate in.

Sharing of risk in this context brings the understanding that all contributors agreed
and united in allowing SOCSO to use the solidarity fund to pay benefits to
employees who suffer disability or invalidity and pension to dependents in the case
of death.

For employees who have not received any benefits until retirement, they actually
helped other employees who suffer disabilities or invalidity and help families who
have lost members due to death. In the long term, this may also be happening to
their families. At that time with the same concept in which the retiree contributions
and other contributors also been used to help their families based on the core
principles of 'solidarity fund'.

ii) Replacement of Income

This principle applies when determining the amount of benefit payments. It is
related to the amount of contributions paid based on the employees' salary. This
concept is to ensure that the employees do not feel financially affected if they have
disabilities or invalidity. In the case of death of an insured person, replacement of
income is provided to dependents through monthly pensions.

iii) Equality

The fundamental basis of this principle is within the Act and Regulation itself. By
virtue of the concept of social justice, the coverage of the scope must encompass
all employers and employees registered to SOCSO.

Through this concept, prevention of accidents with the objective of zero accident
and foster a culture of healthy lifestyle should be implemented because the real
definition of social security is keeping employees in the workforce until retirement.
If this can be done, the real income of an employee would be higher, in line with
the new economic model that focuses on high income society. This concept also
provides space and opportunity for a motivated employee to return to work.
Rehabilitation is also given to employees who suffer disability and invalidity.

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In conclusion, payment of benefits made to eligible employees or dependents
under the Employees’ Social Security Act 1969 and Employees’ Social Security
(General) Regulations 1971. This is to ensure that fairness and equality to all
employees are achieved to those that have contributed to the solidarity fund. In
the spirit of fairness, service is rendered with the aim to delight the customer and
to go beyond their expectations. To this end, SOCSO endeavors to execute benefit
payments as fast and accurate as possible.

 The Employees Social Security Act 1969
• Enforced by the Social Security Organization (SOCSO)
• To provide protection to workers who may be involved in an
accident at work or who contract some occupational disease
• For employees in the private sector who earns less than RM3000 per
month
• An employee must be registered with the SOCSO irrespective of the
age.
• The principle “once in, always in”
• SOCSO provides coverage to eligible employees through 2 schemes
namely:

 Employment Injury Insurance Scheme
 Invalidity Pension Scheme.

• These schemes are classified into 2 categories:
i. Employment Injury Insurance Scheme and Invalidity Pension

Scheme.
ii. The contribution payment is made by both the employer and

employee

ii. Employment Injury Insurance Scheme Only.

The contribution is paid by the employer only. An employee who is not
eligible for coverage under the Invalidity Pension Scheme is protected under
this category. These schemes provide the benefits of invalidity pension, invalidity
grant, survivor’s pension, rehabilitation, funeral benefit, constant attendance
allowance and educational loan.

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MATERNITY PROTECTION

Maternity protection is covered under Part IX of the Malaysia Employment Act
1955. Under section 37(1) of the Act, female employees are entitled to maternity
leave for a period of not less than 60 consecutive days in respect of each
confinement and she shall be entitled to receive maternity allowance in respect of
the eligible period. By virtue of the new section 44 (A), after amendments on 1st
April 2012, section 44 (A) state that notwithstanding paragraph 1 of the first
schedule, this part extends to every female employee who is employed under a
contract of service irrespective of her wages.

In this Employment Act 1955 also clearly define confinement as a parturition
resulting after at least 22 weeks of pregnancy in the issue of a child or children,
whether alive or dead, and shall for the purposes of this Act commence and end on
the actual day of birth and where two or more children are born at one confinement
shall commence and end on the day of the birth of the last-born of such children
[Sec 2(1)].

Therefore, based on current legislation (After amendments on 1st April 2012), if a
female employee deliver her child on weeks 24 (6 months) either dead or alive,
maternity protection will be accorded to her.

When a female employee is entitled to maternity leave , she shall not commence
earlier than a period of 30 days from the date of confinement and if she unable to
perform her duties satisfactorily, an employer however may ask the female
employee to take such leave 14 days earlier [Sec 37 (1) (b)].

The female employee who is entitled to 60 days maternity leave may not be entitled
to maternity allowance. A female employee is entitled to receive maternity
allowance only if she fulfilled all the requirements as follows;

a) A female employee must have served the company with at least 90 days
during her pregnancy period and;

b) Female employees must have work at least 1 day in the last 4 months
before the confinement period.
i. Here are some examples of this scenario for the (a) & (b) - [sec.
37(2)(a)];
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I. Employee has 5 years of service and has worked until the day she
gives birth.

II. Employee has 5 years of service but for the past 1 year, employee
is on unpaid leave

III. Employee has worked for the 88 days and on the 89th day, the
employee give birth

ii. Based on the scenario provided, only the scenario i the employee
will be entitle to maternity allowance, while the scenario ii & iii failed
the requirement as per (a) & (b).

c) A female employees also at the time of her confinement she do not have
five or more surviving children [Sec 37(1)(c)]. Thus if at the confinement
she has five or more surviving children, she would not entitled to the
maternity leave. However if during the confinement she has less than five
surviving children, due to the death of her child/children on previous birth,
she shall be entitle to maternity allowance. Also if she giving the birth for
twins or more, such confinement shall be deemed as one (1) confinement.
For the purpose of this part, children means all natural children,
irrespective of age [1(d)(i)].

d) She has notified her employer of her pregnancy before leaving her
employment if she knows or believe that she will be confined within 4
months before the date of leaving her employment (resign) [Sec 40(1)].

e) She has notified her employer of her expected date of confinement and the
date from which she intends to commence her maternity leave within a
period of 60 days immediately before her expected date of confinement (if
she still in employment/ service) [sec. 40(2)].

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