Succession planning in HRM goes beyond simply filling roles; it’s about nurturing leadership, retaining top talent, and fostering a culture of advancement. This guide explores into why succession planning is essential, the best practices for creating effective plans and the step-by-step process to design a robust succession framework.

What is Succession Planning in HRM?

Succession planning is the systematic approach of identifying, mentoring, and preparing employees to fill high-impact positions within an organization. This planning prioritizes roles crucial to organizational performance and continuity—such as executive or senior management positions—and aims to ensure a seamless transition when a vacancy arises.

Key Aspects of Succession Planning:

• Critical Role Focus: Succession planning should target roles that directly impact organizational success, such as the CEO, senior managers, and specialized positions that drive key functions.
• Talent Identification and Development: Identifying high-potential employees and offering them leadership and development opportunities.
• Continuity Assurance: Ensuring that talent is ready to step into essential roles immediately, minimizing the disruption of sudden leadership transitions.

Why Succession Planning Matters in HRM

A well-designed succession plan brings multiple benefits to an organization:

• Business Continuity: Prevents disruptions by ensuring ready candidates for critical roles.
• Knowledge Retention: Captures institutional knowledge, reducing the loss of expertise when senior leaders depart.
• Employee Engagement and Retention: Clearly defined career paths boost motivation and loyalty among high-potential employees.
• Risk Management: Reduces the risks associated with leadership gaps, such as decreased productivity, team morale, and loss of stakeholder confidence.

Role of HR in Succession Planning

The Human Resources or HR department is pivotal in designing and executing succession plans. Here’s how HR contributes:

• Talent Mapping and Development: HR identifies talent across departments and maps them to future leadership roles.
• Alignment with Organizational Goals: HR ensures the succession plan aligns with the company’s long-term objectives.
• Facilitating Learning Opportunities: From leadership training to mentorship, HR implements programs to groom potential successors.
• Monitoring and Feedback: HR tracks progress and provides feedback to future leaders, ensuring they are equipped to handle leadership roles.

Risks of Neglecting Succession Planning

Failing to establish a robust succession plan exposes an organization to several significant risks:

• Loss of Critical Talent and Knowledge: Key employees hold valuable experience and expertise. When they leave unexpectedly, an organization risks losing vital knowledge that can’t easily be replaced.
• Increased Recruitment and Training Costs: Without a succession plan, organizations may face sudden demands of recruitment of vital employees, leading to higher recruitment expenses and extended training times to bring new hires up to speed.
• Employee Uncertainty and Low Morale: A lack of clarity around future leadership can create uncertainty, leading to reduced morale and potential turnover among high-potential employees who might seek career growth elsewhere.
• Operational Disruptions: Without prepared successors, transitions can disrupt productivity, impacting daily operations and potentially damaging relationships with clients and stakeholders.
• Decreased Organizational Adaptability: Companies without succession plans often struggle to respond to change, limiting their ability to stay competitive in rapidly shifting markets.

Addressing Common Challenges in Succession Planning

While succession planning brings numerous benefits, organizations often face obstacles in implementing an effective process. Here are some of the most common challenges and strategies to overcome them:

• Lack of Leadership Buy-In: Without commitment from top leadership, succession plans may lose priority. HR can overcome this by highlighting the business risks of unprepared transitions and demonstrating the long-term value of proactive planning.
• Inadequate Resources and Training: Some organizations lack the budget or resources for comprehensive leadership development. Solutions include leveraging low-cost mentorship programs, creating cross-functional projects, and utilizing online training resources.
• Resistance to Change: Employees or leaders may resist succession planning due to uncertainty about new roles. Clear communication about the process and how it benefits employees’ career progression can alleviate concerns and increase engagement.
• Insufficient Diversity: Many companies overlook the importance of diversity in succession planning, leading to homogenous leadership. Establishing diversity goals within the succession planning framework can help organizations address this issue.
• High Potential Turnover: Retaining high-potential employees is critical to succession planning. Ensure employees see clear growth opportunities through transparent development plans and regular check-ins to boost retention.

Succession Planning Framework

Building an effective succession plan requires a structured framework. Here’s a breakdown of the key elements:

1. Identify Critical Roles: Focus on roles that have a significant impact on the organization’s operations and long-term strategy, such as executives, department heads, or technical experts.
2. Select High-Potential Candidates: Using performance evaluations, 360-degree feedback, and skills assessments, HR identifies employees with the potential to succeed in critical roles. Consider diversity and inclusiveness to ensure a variety of perspectives in future leadership.
3. Develop Future Leaders: High-potential employees should receive tailored development plans, including mentorship, training and leadership development programs.
4. Create a Succession Matrix: Map key roles alongside potential successors and their readiness level, allowing for an easy visual reference that informs leadership decisions.
5. Implement and Track Progress: Execute development plans, monitor progress, and make adjustments as needed to keep successors on track for future roles.

This framework not only ensures that the organization has a steady pipeline of qualified candidates but also aligns leadership development with broader business goals.

Succession Planning Table with Key Details

This table offers a well-rounded view of succession planning, allowing decision-makers to see both readiness levels and development needs at a glance.

Note

• Readiness Level: Indicates how prepared the successor is to step into the role (High, Medium, Low).
• Development Focus: Specific areas for development to prepare successors for their future roles.

Step-by-Step Succession Planning Process

Creating a succession plan requires a clear, phased approach. The following steps guide HR teams in developing a practical, adaptable plan:

1. Conduct Talent Assessment and Gap Analysis
   • Start with a comprehensive assessment of the current talent pool. Identify high-potential employees, analyze their skills, and evaluate their readiness for potential roles.
   • Perform a gap analysis to understand where current skills fall short and what development areas need attention.
2. Define Succession Criteria for Key Roles
   • Outline specific criteria for each critical position, such as required competencies, years of experience, and any specialized skills.
   • Define how candidates will be evaluated for these roles, ensuring alignment with organizational values and long-term goals.
3. Develop Individual Development Plans (IDPs)
   • Create customized development plans that include training, mentorship, job rotation, and cross-functional project experience to prepare successors.
   • IDPs should address specific skill gaps identified in the talent assessment phase and include measurable milestones.
4. Implement Developmental Activities
   • Begin implementing activities outlined in each successor’s Implement Development Plan. Options include:
     • Mentorship Programs: Pair potential successors with experienced mentors for guidance.
     • Leadership Training: Provide formal leadership courses to develop managerial skills.
     • Stretch Assignments: Assign projects that challenge employees and expose them to new areas of responsibility.
   • Track progress to ensure successors meet their development milestones.
5. Create and Maintain a Succession Matrix
   • Develop a succession matrix that visually maps each critical role with at least two potential successors, noting their current readiness levels.
   • This matrix should be regularly reviewed and updated based on changing business needs and employee development progress.
6. Review and Adjust the Succession Plan Regularly
   • Conduct quarterly or biannual reviews to assess the effectiveness of development activities and make necessary adjustments.
   • Reassess key roles and successors as business priorities evolve to ensure alignment with strategic objectives.

Key Tools for Succession Planning

To enhance the effectiveness of succession planning, consider using tools such as:

• Performance Management Systems: Track employee performance, skills assessments, and feedback.
• 360-Degree Feedback Tools: Gather insights from peers, subordinates, and supervisors to evaluate leadership potential.
• Talent Management Software: Use software to monitor employee progression and match skill sets with future roles.

These tools streamline the succession planning process, providing valuable insights and data-driven support for HR and leadership teams.

Best Practices in Succession Planning

To maximize the success of a succession plan, organizations should integrate the following best practices:

• Adopt a Long-Term Perspective: Succession planning should be an ongoing process rather than a one-time effort. Taking a long-term approach allows organizations to prepare leaders who are fully aligned with company values and goals.
• Foster a Culture of Leadership Development: Encourage a company-wide mindset that supports continuous learning and growth. Leaders should be actively involved in mentoring and developing high-potential employees, creating a strong internal pipeline.
• Focus on Diversity and Inclusion: Ensure that succession planning processes incorporate diversity to foster varied perspectives at the leadership level. Diverse leadership has been shown to improve decision-making and drive innovation.
• Integrate Succession Planning with Talent Management: Aligning succession planning with talent management efforts creates a seamless approach to employee growth and retention. For example, use employee development programs to prepare high-potential employees for future roles.
• Regularly Monitor and Evaluate: Track the progress of successors and adjust plans as necessary. Key performance indicators (KPIs) such as high-potential turnover, bench strength, and internal promotion rates help in evaluating the effectiveness of succession planning.

Real-World Examples of Succession Planning in Action

Studying successful succession planning strategies from various companies provides valuable insights:

1. IBM: IBM has long been recognized for its structured approach to leadership transitions. When former CEO Ginni Rometty transitioned out, IBM’s succession planning ensured that her successor, Arvind Krishna, was well-prepared. The process included mentoring, progressive leadership responsibilities, and cross-functional experience, which positioned Krishna to continue IBM’s strategic direction with minimal disruption.
2. Disney: Disney’s CEO succession strategy is a well-known example of effective planning. Bob Iger, who served as CEO for many years, identified and mentored his successor, Bob Chapek. Disney’s approach included involving Chapek in high-stakes projects and strategic decisions, ensuring he was equipped to maintain Disney’s creative and operational direction. This structured process allowed for a seamless transition when Iger stepped down.
3. Procter & Gamble (P&G): P&G is another example of meticulous succession planning. The company invests heavily in leadership development at all levels. Before stepping down, former CEO A.G. Lafley worked closely with his successor, David Taylor, providing him with insights and ensuring continuity. P&G’s long-term focus on developing internal candidates for senior roles has allowed the company to sustain consistent leadership transitions over the years.

Conclusion

Effective succession planning is essential for sustaining organizational growth, retaining critical knowledge, and ensuring leadership continuity. The succession planning process equips companies with a structured approach to developing future leaders while fostering a resilient workforce ready to navigate future challenges.

By implementing the mentioned steps in succession planning process, organizations can build a robust succession plan that not only secures leadership continuity but also supports a vibrant, future-ready workforce.

This guide will provide a deeper understanding of Human Resource Planning, outline its critical steps and offer best practices to make it more effective and aligned with organizational goals.

In today’s rapidly evolving business environment, effective HRP plays a key role in staying competitive, managing risks, and adapting to market changes. By aligning workforce capabilities with long-term strategic goals, HRP not only improves operational efficiency but also enhances employee satisfaction and retention.

Key Features and Importance of Human Resource Planning (HRP)

• HRP is a critical tool for aligning human resources with business goals: It ensures that businesses have the right talent in place to meet their strategic objectives.
• Main stages of HRP include analysis, forecasting, and gap identification: Accurate assessment of current resources and future needs allows for better planning and talent management.
• HRP enhances organizational agility and competitiveness: By proactively managing resources, businesses can respond to changes more effectively, mitigating risks and optimizing costs.

What is Human Resource Planning – Complete Guide

Human Resource Planning (HRP) is a systematic process used by organizations to ensure they have the right employees, with the necessary skills and capacity, to meet their future goals. It involves forecasting an organization’s future workforce needs, identifying any potential skill gaps, and implementing strategies to recruit, train, and retain employees to fill those gaps.

However, HRP goes beyond just hiring. It’s about understanding the current workforce, identifying future demands based on strategic objectives, and ensuring the right balance of employees is maintained to drive business success. HRP covers various aspects such as workforce analysis, skills assessment, and long-term planning for talent acquisition and development.

Why is Human Resource Planning Critical

Human Resource Planning is more than just a tool for meeting staffing needs; it plays a vital role in ensuring business sustainability. Here are some of the critical reasons why organizations need effective HRP:

1. Anticipating Future Workforce Needs: By analyzing business goals, market trends, and operational changes, HRP helps predict future human capital needs, allowing for proactive hiring and training efforts.
2. Reducing Talent Gaps: Effective planning ensures that businesses do not face shortages of key skills or overstaffing in low-demand areas, creating a more balanced and cost-effective workforce.
3. Improving Organizational Agility: HRP ensures that organizations can quickly adapt to changes in technology, market conditions, or operational strategies, without disrupting business processes.
4. Enhancing Employee Retention: A well-planned HRP strategy fosters employee engagement by aligning their development with long-term company goals, reducing turnover and increasing job satisfaction.

Key Steps of Human Resource Planning

Human Resource Planning follows a structured process to ensure that an organization’s workforce is equipped to meet future demands. While the exact steps may vary depending on the organization’s size and industry, the following are the fundamental steps involved in effective HRP:

1. Workforce Analysis

Workforce analysis involves evaluating the current state of your workforce to determine its strengths, weaknesses, and overall capacity. It assesses key metrics such as:

• Employee productivity: How efficiently are employees meeting their performance targets?
• Skills inventory: What skills and competencies are available in the current workforce?
• Turnover and retention rates: How often are employees leaving, and what is the company’s retention strategy?
• Demographics and seniority: What is the age distribution, and how many employees are approaching retirement?

By gaining a clear picture of these factors, businesses can identify gaps in their current workforce and develop strategies to address them.

2. Demand Forecasting

Forecasting future workforce demand is crucial to determining how many employees will be needed in the coming years and what skills they must possess. This step involves considering various internal and external factors:

• Business growth and expansion plans: Is the company planning to expand into new markets or introduce new products?
• Technological advancements: How will technological changes affect the need for specific skills or job roles?
• Economic and industry trends: Are there external factors, such as market competition or economic downturns, that could impact workforce needs?

3. Gap Analysis

Once current capabilities and future needs are identified, the next step is conducting a gap analysis. This process compares the current workforce’s skills and capacities against the projected future demand. Key questions to consider include:

• Where are there shortages in skills or headcount?
• Are there departments that are overstaffed or under-resourced?
• What is the likely impact of upcoming retirements or employee exits?

Addressing these gaps is critical for ensuring business continuity and avoiding operational disruptions.

4. Strategy Development

Based on the findings from the gap analysis, organizations must develop specific strategies to close the identified gaps. This might involve:

• Recruitment plans: Identifying new talent to fill the gaps, either through hiring or partnerships with external agencies.
• Training and development programs: Effective Training and Development programs help upskilling current employees to ensure they can meet future challenges.
• Succession planning: Preparing current employees to move into leadership roles as part of long-term talent management.

5. Implementation and Monitoring

Once the strategies are in place, the final step is implementing them and regularly monitoring their effectiveness. Organizations should track Key Performance Indicators (KPIs) such as employee retention, engagement levels, and productivity to assess whether the HRP strategies are delivering results. This stage also involves making adjustments to the strategy as business goals evolve or new workforce trends emerge.

Benefits of Effective Human Resource Planning

Effective Human Resource Planning (HRP) can significantly improve a business’s ability to meet its strategic goals. By ensuring that the right people with the right skills are in place at the right time, HRP provides several benefits, including:

1. Maintaining a Competitive Advantage

In today’s fast-paced business environment, staying competitive means having a workforce that can adapt to changes quickly and efficiently. HRP allows organizations to anticipate talent needs, attract top talent, and develop the necessary skills within their existing workforce.

By ensuring that the organization is always well-staffed with skilled employees, HRP enhances competitiveness and helps businesses stay ahead of industry trends.

2. Cost Optimization

HRP helps businesses optimize workforce costs by avoiding overstaffing or understaffing. Through accurate demand forecasting, organizations can plan for the exact number of employees needed, thus reducing unnecessary labor costs.

This process also minimizes the need for expensive last-minute hiring or the costs associated with overtime work due to staffing shortages.

3. Risk Management

HRP is a proactive approach to managing risks related to workforce shortages or skill gaps. It allows businesses to create contingency plans for various scenarios, including:

• Leadership transitions: Preparing employees to fill leadership roles when senior employees retire or leave the company.
• Technological changes: Ensuring that employees are trained and equipped to handle new technologies and processes.

By identifying potential risks early, organizations can implement strategies to mitigate those risks and ensure smoother transitions during periods of change.

4. Improved Employee Engagement and Retention

Effective HRP fosters a work environment where employees feel valued and engaged. By aligning workforce planning with career development initiatives, such as upskilling, reskilling, and succession planning, organizations demonstrate their commitment to employee growth.

This leads to higher job satisfaction, improved retention rates, and a more motivated workforce.

Employee engagement also translates into better productivity and overall performance, as employees are more likely to contribute their best efforts when they see opportunities for career advancement.

5. Agility in Addressing Market Changes

HRP enables organizations to respond swiftly to changes in the market or internal operations. Whether the change involves new technology, a shift in customer demand, or economic fluctuations, having a well-planned and agile workforce allows businesses to pivot their strategies without major disruptions.

This flexibility is critical for maintaining a competitive edge and navigating uncertain environments.

Common Challenges in Human Resource Planning

While Human Resource Planning (HRP) offers many benefits, it’s not without its challenges. Businesses often face obstacles when trying to predict future workforce needs or align HR strategies with broader organizational goals. Here are some common challenges that organizations encounter during the HRP process:

1. Accurate Forecasting

One of the biggest challenges in HRP is forecasting future workforce needs accurately. Workforce demands can be influenced by many unpredictable factors, including market shifts, technological advancements, or sudden economic changes.

Without reliable data and the ability to anticipate these changes, companies may either overestimate or underestimate their staffing requirements. This can lead to either overstaffing (which increases costs) or understaffing (which causes operational delays).

2. Maintaining Workforce Flexibility

Another challenge is maintaining a flexible workforce that can easily adapt to changing needs. Balancing full-time, part-time, and contract workers while ensuring that everyone has the necessary skills and motivation can be tricky.

Additionally, organizations need to ensure that their employees are engaged in meaningful work, as overburdened or underutilized employees may experience dissatisfaction and burnout, leading to higher turnover rates.

3. Aligning HR Strategies with Business Goals

Keeping HR strategies aligned with evolving business goals is often a complex task. As organizations grow or pivot in new directions, the human resource needs can change dramatically. This requires constant communication between HR teams and other departments to ensure that the workforce strategy supports the overall business vision.

For example, if a business expands into new markets, the HR team must be prepared to recruit and develop employees with the right skill sets to support this expansion. Without proper alignment, businesses risk having a workforce that’s misaligned with its strategic objectives.

4. Talent Shortages and Skills Gaps

Many industries face persistent talent shortages and skills gaps, especially in areas requiring specialized technical knowledge or leadership skills. This shortage makes it difficult for HR teams to find qualified candidates, increasing competition for top talent and driving up recruitment costs.

Moreover, the rapid pace of technological change can make it challenging for organizations to keep their workforce’s skills up to date, requiring constant investment in training and development programs.

5. Adapting to Remote and Hybrid Work Models

The rise of remote and hybrid work models has added new complexities to HRP. Organizations now need to consider how to manage and support a geographically dispersed workforce while maintaining productivity and engagement. Additionally, businesses must rethink how they approach employee well-being, collaboration, and company culture in this new work environment.

Best Practices for Effective Human Resource Planning

To maximize the benefits of Human Resource Planning (HRP) and overcome its challenges, organizations need to implement best practices that align with their specific needs and goals. Here are some proven strategies for enhancing the HRP process:

1. Leverage Data and Analytics for Accurate Forecasting

One of the most effective ways to improve HRP is by leveraging data analytics to make more informed decisions. By analyzing historical data and trends, businesses can gain insights into workforce patterns, such as employee turnover rates, productivity levels, and the impact of market conditions on staffing needs.

This data-driven approach enhances the accuracy of demand forecasting and ensures better resource allocation.

2. Implement Talent Management Systems

Using integrated talent management systems allows businesses to streamline their HRP processes. These systems offer tools for recruitment, onboarding, performance management, and employee development, helping organizations align talent with strategic objectives.

Moreover, many systems include features for real-time data analysis, allowing HR teams to adjust their plans quickly based on current conditions.

3. Focus on Continuous Learning and Development

As the job market evolves, ensuring that employees have access to continuous learning opportunities is crucial for staying competitive. Organizations should invest in upskilling and reskilling programs to equip their workforce with the skills necessary to meet current and future demands.

Training and development initiatives not only improve workforce capabilities but also boost employee engagement and retention.

4. Promote Internal Mobility and Succession Planning

Encouraging internal mobility and succession planning is key to maintaining organizational agility. By identifying high-potential employees and preparing them for leadership or cross-functional roles, companies can mitigate the risks of talent shortages and leadership gaps.

A well-developed succession plan ensures that key roles are always filled with capable individuals, minimizing disruption to business operations.

5. Embrace Flexibility in Workforce Models

To adapt to the increasing demand for remote and hybrid work models, organizations must adopt flexible workforce strategies. This may involve rethinking traditional work arrangements, investing in collaboration tools, and providing employees with the support they need to thrive in different work environments.

Flexibility in workforce management can enhance employee satisfaction and ensure that businesses remain agile in responding to market changes.

Conclusion

Human Resource Planning (HRP) is a critical process for ensuring that businesses can meet their strategic goals by aligning workforce capacity with organizational needs. By understanding the key steps of HRP—workforce analysis, demand forecasting, gap analysis, and strategy implementation—companies can proactively manage their human resources to maintain competitiveness, optimize costs, and improve employee engagement.

Effective HRP requires overcoming common challenges such as accurate forecasting, maintaining workforce flexibility, and aligning HR strategies with business objectives. However, with the right best practices in place, including data-driven decision-making, continuous learning initiatives, and flexible work models, organizations can successfully navigate these challenges and create a resilient and agile workforce.

The Employee Code of Conduct defines acceptable behavior and social norms that individuals in an organization should adopt & practice on a day-to-day basis. It is a set of legal documents that provides guidelines on acceptable behaviors of individuals in an organization. Some Code of Conducts for employees are of similar nature for organizations. List of code of conducts may vary based on business nature, type of organization, country location of the company etc.

Purpose of the Code of Conduct for Employees Policy

The main purpose of code of conduct for employees policy is to provide guideline to the employees about  the most legal and ethical behavior expected from them during the tenure of his/her service in the company. It enhances the company’s core values, beliefs and sets the right behavioral culture in the organization.

Code of Conduct of a Company for the Employees

The below stated  Code of Conducts of the company shall have to be abide by  all the existing employees as well as new entrants of all  categories  as a commitment on their part during the tenure of their service with the company & even after job separation.

• All the employees have to follow & comply existing service rules & regulations of the company which may be amended & updated from time to time.
• During appointment all the employees have to submit correct & genuine documents according to the information provided in his/her CV. Upon joining or in course of doing job, if any information/ document / certificate is proved as fake, manipulated or not genuine, the concern employee will be held responsible for that and the decision/disciplinary action whatever deemed appropriate by the management of the company shall be binding upon him/her unconditionally.
• All the newly joined employees have to provide a declaration in writing that , his/her job separation with immediate past employer was smooth & there is no claim(s)  or allegation(s) relating to any financial and / or any issues pending and unsettled with him/her(this clause is not applicable for the fresher who does not have any previous job experience).
• However, if any claim(s) or allegation(s) are raised against any employee by immediate past employer, the concern employee  will be personally liable and held responsible for the same and it will be his/her sole responsibility to resolve the matter and the management of the company shall not be at all liable or responsible for any such claims and/ or allegations. In such event, the decision whatever deemed appropriate by the management , shall be binding upon the employee concern unconditionally.
• Employees are not allowed to take any full time or part time employment / consultancy job  with other company/institute , nor are allowed to directly or indirectly involve in any type of profitable business with the company, except otherwise approved by the top management.
• Employees have to maintain all company information with strict confidentiality and shall not disclose/ share/ provide to any person/ organization/ institution either in verbal or written form in full or in part.
• Employees will maintain all available company intellectual property, information, data, statistics etc. only for the purpose of performing his/her assigned duties and will take all possible care for maintaining confidentiality. All inventions, new work process developments, works of authorship (manuals, SOPs, policies, rules, procedures, guidelines etc.) etc. exclusively developed by any employee or in combination with others in the course of his/her employment with the company shall be the sole property of the company and the company shall have exclusive rights over the same.
• Employees will use the company materials, stationeries, equipment, energy etc. in a very economic & cost effective manner to avoid any kind of misuse.
• Employees have to take precautions while using of their Personal Computer/ Laptop by ensuring that others cannot view or access into their working information and provide password to prevent access by unauthorized users.
• Leakage / disclosure of any confidential information of the company by an employee as and when comes to anyone’s knowledge shall immediately bring to the notice of management to protect company interest.
• Employees will refrain from any type of activities which according to the management of the company / law of the country may be considered as insubordination or in-disciplined act.
• Employees have to maintain organization/department chain of command/hierarchy. Misbehavior/Improper attitude/personal verbal abusing towards the seniors will be treated as serious misconduct. The dishonored high official has to complain to Management/ HR Department stating the detail incident. Basing on the limit of misconduct, appropriate disciplinary action (like show cause, warning, salary deduction, job separation etc.) will be taken against the concern employee.
• Senior officials should not misbehave or maltreat their juniors. It is the prime responsibility of senior official to maintain professional harmonious relationship with their junior colleagues. In case of non-complying of behavioral norms by the senior(s), if complain raised through verbal or written mode and proved, management may take justified action which will be binding upon the concern senior official to comply.
•  If any employee is found & proved to be involved with misconducts like dishonesty, forgery, theft etc. s/he will be immediately dismissed from the company. In serious cases s/he maybe handed over to the law enforcing agency.
• In case of emergency situation if the job demands to work for extended hours or on weekly off day employees have to perform their jobs unconditionally.
• All employees have to treat everyone in the company equally irrespective of gender, color, religion etc. and show respect to all without making any discrimination on the basis of designation, religion, gender, biasness etc.
• Employees have to always show respect and comply with the professional norms & decorum, etiquettes, ethical values, dress code etc. as and when becomes binding upon them from time to time.
• Employees will not use any external pressure group to influence the management of the company for any benefit of self in terms of promotion, increment, transfer etc. or for managing job / business with the company for others.
• Employees will refrain themselves from conducting of any such activities which is considered as an act of sexual harassment. On occurrence of such event, disciplinary action will be taken against the concern employee as per management decision.
• Employees have to refrain themselves from taking & dealing with any kind of prohibited drugs both inside & outside the office. In this connection if any claim is raised and proved against someone, s/he will be personally liable and held responsible for the same. In such event the decision whatever deemed appropriate by the management shall be binding upon him/her unconditionally.
• While dealing with office issues, employees are not allowed to take anything in the form of monetary and/ or non-monetary, from any person/ official/ organization/ institution etc. for any personal gain which may be considered as bribe and / or unethical practice.
• If someone suffers from any serious & contagious disease which may affect others, s/he will not hide the information to the management and will take treatment immediately for recovery.
• Employees will not correlate their exclusively personal/ family matters/ problems with the official matters in the interest of maintaining congenial atmosphere in the office.
• During the tenure of employment or after separation from service with the company, employees shall never make any defamatory/ obnoxious/ harmful comments or statement etc. against the company or any official of the company to others either in writing or orally.
• Employees shall confirm that they will always refrain from disclosing any information pertaining to the company business, financial or business turnover, bank statements etc. to any person, organization, media (both print & electronic), etc.
• It will be binding upon the employee to declare about any criminal / civil case if pending before any court against him/her. Furthermore, during the tenure of his/her service with the company if any case of similar nature is lodged by anyone against the employee, s/he will not hide the information and immediately declare the same in writing to the management. In such case the decision whatever deemed appropriate by the management of the company shall be binding upon the concern employee unconditionally.
• In case of job separation through resignation, all the regular confirmed employees have to provide required notice period, (if the condition is not set otherwise in appointment terms).Failing to provide required notice period, Final Settlement  amount will be calculated and paid as per the company policy.
• At the time of separation from service each & every employee is required to  handover all company assets, materials,, equipment, documents (both soft & hard copy), stationeries and/ or any other item his/her possession to the concerned authority in tact without any reminder.

Approval of the Code of Conduct for Employees Policy

The above policy which has been created by HR department will be checked, amended(if required) and finalized by the relevant authorities and submit to the Chief Executive Officer/Managing Director of the company for getting approval and implementation.

Effective Date of This Policy

This policy will come into effect immediate after the approval of the management and will replace all previous policies, instructions, office orders in this regard until further order.

The management reserves the right to review/ amend/ discontinue/ withheld this policy fully or partially at its own discretion without assigning any reason whatsoever.

Final Words

Code of Conduct for employees policy should be well written by the professional Human Resources officials of all the companies and circulated among the employees effectively.

The employee code of conducts of an organization should be well briefed to the employees through conducting training or other effective means for getting desired behavioral & ethical result from the employees.

Benefits & Importance of Training and Development Programs

Training & Development Programs are very important for the organizations who wants to take competitive advantage of changes, techniques and improvements. Well planned, effectively designed and properly implemented Training & Development programs is widely important and beneficial for both the employees & the organization. Training & Development Programs gives a lot of benefits to the employees and the organizations which are listed below.

1. Identifying skill gaps & addressing employee weaknesses

Employees knowledge & skill gaps/lackings are identified through the process of training need analysis by the HR department. Accordingly, training topics and effective training & development programs are designed & implemented. By obtaining regular feedback from the outcomes of the training, necessary corrective actions is taken and these process continues till overcoming of skill gaps & weakness of employees to perform the assigned jobs. As a result most of the employees become able to minimize their job performance related weaknesses by acquiring required job skills.

2. Creating a highly Skilled & Competitive Workforce

Every organization is comprises of excellent/very good (A), good (B) and average/poor(C) category employees. It is the objective of the Training & Development programs to convert/transform C category employees to B category and B category employees to A category. In the process most of the employees develop their job performance grade by obtaining required skills. Job processes and requirements are changing on regular basis. To cope up with the changes company’s need to acquire competitive advantage over their competitors. Organizations which are conducting effective training & development programs throughout the year are ensuring availability of competent workforce to adapt with the changes successfully.

3. Utilization of Manpower in an optimized way

It is needless to say that skilled employees will perform jobs more accurately & efficiently than semi-skilled or unskilled employees. In some instances one employee can perform multiple jobs at a time. As such organizations those emphasizes on Training & Development programs may utilize their manpower in an optimized way and ended up in a cost effective Manpower Planning for them.

4. Increasing employee Performance & Productivity with Quality Assurance

Employees skill gaps & job performance weak areas are identified and reinforced through effective Training & Development Programs. After successful completion of T & D programs employees are aware about what to do & how to do their jobs most efficiently & effectively. As a result job performance, quality of job, accuracy of job and efficiency of the employees will increase significantly which certainly improve the overall productivity of the company significantly.

5. Building Team Spirit & supporting culture among the employees

When a group of employees become well skilled & knowledgeable for performing their assigned jobs, they become confident and eager to support others willingly to perform their job roles successfully. Thus cooperative/supportive culture prevails among the employees which boost up team spirit & results in higher productivity.

6. Ensuring Personal Growth of Employees with Career Progression

Most of the Human beings want to foresee their career progression path of the future life. Employees become skilled in performing their job roles through the effective Training & Development Programs. By providing better job performance, they get reward through increment of salary & promotion. In course of time properly trained & developed employees can ensure their career progression within the organization or in another organization by availing better job opportunity.

7. Promote Knowledge Sharing & Systematic Learning Culture

A specific job can be performed by different employees in different ways. When Training & Development Programs are implemented in a systematic way all of the employees become skilled to perform a particular job in the same process/way. As a result a particular job will be performed in a synchronized way by offering better output. In the systemic learning process most of the employees attain required knowledge & skills. So, if someone make any mistake, others can easily help him to make necessary correction. Thus, systematic learning & knowledge sharing culture develops with the organization which helps in team building & enhanced productivity.

8. Maintaining employee Code of Conduct effectively

An organization consists of different policies and employee code of conducts. Policies and Code of Conducts are set as per the Labor Law of the country, company’s own rules & regulations, different Buyers requirement and many other internal & external factors. Effective Training & Development Programs properly educate the employees about company’s policies & code of conducts. As a result employees get encouraged to obey/maintain code of conducts & policies properly my making minimum mistakes.

9. Improve Employee Morale & Satisfaction level

If someone has weaknesses & face difficulties to perform assigned job responsibilities properly s/he always feel uncomfortable and demotivated. Through effective Training & Development program when s/he become well skilled by overcoming the weaknesses, the concern employee is found more confident & satisfied. When an employee morale is high, s/he become fully confident, perform assigned job responsibilities with satisfaction level and the organization get optimum productivity from his/her end.

10. Reduce Employee Turnover & attract potential employees

Skilled& Knowledgeable employees found through Training & Development programs are usually satisfied with their job roles and performances. They get job comfort, better reward & recognition from the organization. As a result absenteeism from the job & employee turnover rate is significantly reduced. Potential employees who are in search of jobs when informed about the ongoing effective Training & Development programs of an organization are more eager to join in that organization to develop their job skills & ensure career progression.

11. Developing Managerial Skills & Creating Future Leaders

Employee development programs are usually designed to improve existing job skills of the mid to upper level management employees & also to initiate requisite learning programs for them to obtain new ideas/techniques/skills for supporting the organization to mitigate crisis situation in future. Development programs like leadership skills, decision making skills, crisis management skills, communication skills etc. improve employee self-confidence & develop their managerial skills. By acquiring these types of wider skills, the concern employees become capable to play leadership roles in the company in the near future.

12. Making the company competitive to address present and future challenges

Now a day’s business world is very much challenging, nothing is static, market demand is changing in every moment. For an organization to become successful with this challenging work environment, need to acquire competitive advantage over their competitors. Skilled workforce is one of the most vital component to achieve competitive advantage. If an organization implement proper training & development programs and educate their employees with the proper & timely skills/techniques/knowledge, it can easily achieve required competency level to address present and future challenges successfully.

13. Reducing operating cost through skilled workforce

Skilled & knowledgeable workforce not only improve productivity but also reduce the overall operating cost. Properly trained & skilled employees uses their machines & materials in most efficient & cost effective way. Due to their gathered knowledge wastages, accidents and damages reduces in the work process. As a result overall operational cost of the company in minimized.

14. Getting desired performances from newly joined employees quickly

Orientation program is a special type of training program which is designed & implemented for the newly joined employees. Employees know about the organization, departmental organograms, its policies/procedures, code of conducts and their individual job roles to play in the organization. When an employee get clear idea about the organization’s different activities and the details of his/her job responsibilities s/he will likely to provide desired successful job output within the quickest possible time.

15. Act as an Effective source of Internal Recruitment

Skilled & Knowledgeable employee are assets of the company. Through effective Training & Development programs some employees found so effective that they can perform multiple/ higher level jobs very successfully. In an organization employee joining & leaving is a common practice. Vacant positions are usually filled up through external sources of recruitment. If the in house employees possesses required skills of the vacant position, they can be promoted & assigned the job roles of the vacant positions. Thus properly skilled employees found through Training & Development programs, can be a useful cost effective internal source of recruitment.

16. Improving workplace Compliance, Safety & Hygiene

In the present business world Compliance play a vital role. Compliance associated different training & development programs are implemented in most of the organizations. Compliance emphasizes on work place security, safety & hygiene issues. When the employees are properly trained they will certainly maintain work place safety and health hygiene. So, machine life will increase, wastages & accidents in the workplace will reduce and employees will enjoy a comfortable & hygiene work environment.

17. Improving of Customer/Client Satisfaction Level

An organization which can successfully continue effective training & development programs throughout the year, will be able to get/maintain a large pool of skilled & knowledgeable employees. These employees improve the productivity with due consideration of quality. If the customers get their ordered products with desired flawless quality within the scheduled delivery date on regular basis, their satisfaction level become high and they are encouraged to establish a long time fruitful business relationship with the organization.

18. Enhances company reputation & profile in the market

Conducting regular Training & Development programs in an effective way is a very good practice for the organization. Through these programs organization develop skilled & satisfied workforce who directly improve the productivity of organization & help to achieve its sets goals. Company activities are regularly observed by the customers/clients, suppliers, competitors, government regulatory bodies, potential employees of the market etc. By implementing & sustaining Effective Training & Development programs a company can enhance its reputation in the market significantly.

I have discussed Training & Development related important topics in this segment. By going through my written contents the readers will get clear and organized concepts on the following issues:

• What is Employee Training & Development
• Importance/Benefits of Training & Development Programs
• Types of Training & Development Programs
• Types of effective Employee Training Methods
• How to build effective Training & Development Programs

What is Employee Training & Development

The terms “training” and “development” are sound similar but there are couple of differences between the two notions. The differences are related to the scope of their applications. Training is the action of teaching somebody a particular skill to perform a specific job effectively. Development is defined as the process of growth through learning new information or an event.

Jobs of the companies are of different natures. Some jobs like operating a machine or checking of quality of a product are performed by maintaining a systematic procedure. If some employees are not able to cope up with the set working process , they are identified by the HR department through Performance Management system and go through appropriate training program for enriching their skills and thus perform their assigned job successfully.

The best suited employees from the market are employed in an organization for performing specific jobs through Recruitment & Selection process. Employee development programs works to improve/ refine existing job skills & initiate development of new skills for the employees to support achieving company’s set goals. Development programs like communication skills, leadership skills, decision making skills etc. are initiated to improve employee confidence & acquire broader skills which can be applied in a wide range of situations.

Here I have highlighted two famous inspirational quotes on the benefit of training & development program.

Tell me and I forget, teach me and I may remember, involve me and I learn

Benjamin Franklin
Author
I hated every minute of training, but I said, ”Don’t quit. Suffer now and live the rest of your life as a champion

Muhammad Ali
Boxing Champion

Training and development programs are designed according to the requirements of the organization. Based on the employee skill & knowledge gaps training & development topics are selected. Accordingly in-house or outside trainers are chosen to conduct the training programs. Different training is given to employees at different levels. The training programs may be on the job or off the job type. The end goal of the training and development programs is to achieve the required skills by the trainees to perform specific jobs successfully.

Employees equipped with adequate knowledge and skills is one of the key factor of success for most of the companies of the world. Companies are evaluated based on their physical structure, intellectual capital & financial capability. The best way to develop and improve an organization’s intellectual capital is to conduct regular training and development programs.

Effective training and development programs address the weak links of the organization, ensure improvement in employee performance, boost up company reputation and facilitate to achieve set goal of the company. It is important for companies to be accommodative to the needs of their customers/clients. Effective training & development programs ensure creating well-balanced workforce, which has the skills to compete for new business opportunities for the organization.

We can summarize that a well-trained, knowledgeable, skilled and highly motivated workforce is very important for any organization. The best way to elevate employees to such standards is to invest in their ongoing development through implementing effective training & development programs. Achieved skills & knowledge through the training & development programs, improve employee morale & retention and ensure long term benefits to the organization, in terms of profitability and sustainability.

HR department of an organization is responsible for developing & sustaining an effective performance management system to evaluate actual delivered performance standard of the employees of the company and formulate rational competitive increment, promotion, reward, punishment, training & development programs from the performance outcomes.

By going through the below write up we will get detail information on the following topics:

• What is Employee Performance Management?
• Key elements for developing an effective Performance Management System
• What is the purpose/Objective of performance management?
• What are the methods of performance management?
• KPI Based Performance Management System

What is Employee Performance Management?

Employee Performance Management is the set of activities and processes that aim to identify, maintain and continuously improve employee performance in line with an organization’s set goals/objectives. Performance Management is strategic as well as operational, as its aim is to ensure that employees contribute positively to achieve the set business goals or objectives.

Following are some quotes about performance management:

“Performance Management starts from the top by tailoring strategies which can be translated into meaningful targets and trickles down to managers for setting goals & making this process effective by helping them understand the big picture and owning up careers of their team members.”

Colin Mendes
General Manager – HR & Admin. at Voltas Beko
“A performance management system is the foundation of performance excellence in organization and therefore it should be simple, straightforward, intuitive, aligned with organizational goals and have flavors of organization values.”

Kaustubh Sonalkar
CEO, Essar Corporate Services LLP

Objectives of Employee Performance Management is to align the organizational goals with the employees’ agreed measures, skills, competency requirements, development plans and the delivery of results. The emphasis is provided on improvement, learning and development in order to achieve the overall business strategy and to create a high performance workforce.

Employee performance management is controlled by establishing and practicing effective performance appraisal system. Performance Appraisal is a systematic approach to evaluate performance of the employees for understanding their capability of performing assigned job responsibilities, finding out strength & weakness and determining the training and development needs.

Performance Appraisals helps in improving employer-employee relations in the workplace. It initiates a continuous flow of communication between employee and employer in connection with achieving company goals.

What Are the Basic/Key Elements Necessary for Effective Performance Management?

Performance Management System should be developed and implemented in a very effective & systematic way to get desired output for both the organization & the employees. Performance Management is used to ensure employees’ activities and outcomes are fitting with the organization’s objectives and entails specifying those activities and outcomes that will result in the company successfully implementing the strategy.

Basic or Key elements for developing & sustaining an effective performance management system in step by step are as follows:

• Setting Goal aligned with organization objectives
• Effective communication & cooperation for achieving set goals
• Obtaining regular performance feedback, find out performance gap & take necessary development actions
• Initiate employee Training & Development program
• Ensure employee recognition & reward

Setting Goal aligned with organization objectives

Organization appoint employees to perform some specific jobs. Linking individual employee’s objectives with the organization’s goals is the most vital part for designing an effective performance appraisal system and getting best output from the employees. The employee should get a clear idea/concept on the job activities they need to perform to contribute for the achievement of overall business objective of the organization.

Goals should be set by discussing with the individual employee. Goals need to be mean­ing­ful and achievable. Employ­ees should have clear idea as to why these indi­vid­ual goals mat­ter and how they are linked with organizational objec­tives. Employ­ees will care much more about their roles and will be more engaged when they know and tru­ly understand how their job matters for the organization.

Goal set­ting should be a collaborative process. It should involve meet­ing with employ­ees and being trans­par­ent about com­pa­ny goals, direc­tion and obstacles. Furthermore, when employ­ees are put in the dri­vers’ seat and allowed to devel­op their own goals (prior approval by their line man­ag­er), employ­ees take own­er­ship over their work. Inevitably, this results in improved employ­ee performance.

Effective communication & cooperation for achieving set goals

Employee of a specific position are required to perform some major jobs those are aligned with company objectives. It is the responsibility of respective supervisor/line manager to make the concern employee thoroughly clarify about their roles to perform the assigned jobs. Managers should explain the employees how to execute the assigned jobs successfully.

Employ­ees expect their man­agers and lead­ers to be open and caring at all times. Often they may face difficulties to perform their job activities smoothly. In that instances, they should get necessary assistant from their supervisors to overcome the problematic situations. A professional cordial and harmonious relationship should be maintained within the team to get desired effective output.

Obtaining regular performance feedback, find out performance gap & take necessary development actions

Employees are performing their assigned jobs on regular basis. Respective supervisors are continuously monitoring employees’ job performances and providing guidelines to them as & when required. The more frequent and pre­cise the feed­back, the bet­ter indi­vid­ual perfor­mance is achieved. Proper & timely guided employ­ees provide better job performance.

Conducting regular monitoring & discussions throughout the performance cycle (which include coaching, mentoring, feedback and assessment) certainly improve employee performance. Through getting regular employee performance feedback, performance gap/lacking of the employees are identified. Accordingly necessary training & development programs are designed to minimize performance gap of the employees.

Initiate Employee Training & Development Program

Employee performance gaps are identified through performance appraisal process. Some gaps can be overcome through finding out and implementing effective training programs for the concern employees. After completion of the training programs, feedback need to be taken from the employees on their learning. Learning & training program should be continued till getting the desired improvement of employee performance.

Employee development needs also identified from the performance evaluation process. Careerist & ambi­tious top per­formers do not want to remain at a com­pa­ny for long term with­out having the scope of attaining develop­ing skills. Advance­ment and devel­op­ment are important to employ­ees. Com­pa­nies should identify potential brilliant employees, engage them in prospective development programs, and thus retain them in the company for a long term to get optimum output from them.

Ensure Employee Recognition and Reward

An organization find out good and bad performers through the performance appraisal process. An effec­tive per­for­mance man­age­ment sys­tem should prioritize employ­ee recog­ni­tion and reward. Employ­ees should feel val­ued and appre­ci­at­ed for the work they do and the effort they put in. If employ­ee recog­ni­tion is not given pri­or­i­ty, this will provide neg­a­tive impact to the better performers and provoked them on voluntary turnover from the organization.

Purposes/Objectives of effective performance management system

Performance management system aims to develop individuals with the required commitment, skills and competencies for working towards shared meaningful objectives within an organizational framework.

Performance management is about what the employee can do for the organization. It is equally about what the company can do for the employee, to keep them engaged, content and productive. The main purposes of an effective performance management system are as follows:

• Setting individual goal aligned with organization objectives
• Setting rational expectations for Appraiser and Subordinates
• To ensure effective communication, teamwork & employee engagement
• To provide actual regular Performance Feedback & take immediate corrective actions
• To Identify Training & Development Areas
• To Provide Employees Visible Career Path & reduce employee turnover
• To provide employee Recognition and Reward
• To improve overall Business growth

Setting individual goal aligned with organization objectives

Effective Performance Management System set & link individual employee’s goals with the organization’s objectives. When employees get clear idea on the importance of their performed job activities for the overall business growth of the organization, they become motivated & perform their jobs more enthusiastically.

Setting rational expectations for Appraiser and Subordinates

An efficient performance management system always tries to set clear and rational expectations for both managers and subordinates. As Managers/Supervisors are continuously monitoring job activities of their subordinates/juniors, they can easily set manageable expectations for their subordinate employees.

Once employees know their own achievable roles, responsibilities, and accountability they are more likely to be more consistent and productive. This facilitates better business performance and personal development of the employee.

To ensure effective communication, teamwork & employee engagement

Performance Management promotes a two way system of communication between the supervisors and the employees for clarifying expectations about the roles and accountability for achieving organizational goals.

Through the process of providing regular, actual and transparent feedback between the supervisor & subordinates an effective & amicable work environment sustains in the organization which certainly improves employee & organization performance.

In this process employees are willingly engaged with the assigned job responsibilities. When the employees are contended with their well-defined job roles and getting regular performance feedback they are likely to be more enthusiastic to perform in a better way and thus obtain the company objective.

To provide actual regular Performance Feedback & take immediate corrective actions

Through getting Real time performance feedback employee job performance is evaluated on regular basis. Concern Manager/ Supervisor can easily identify whether the employee is performing as per the set standard or not. Accordingly, s/he can guide the concern employee to overcome the performance gap and successfully.

Performance Feedback is more effective when delivered promptly. Effective Performance management system give emphasize to provide feedback regularly, regardless of whether it is positive or negative in nature.

Performance management system allows managers and HR to address performance gap issues at an early stage Poor performing employees can have a serious impact on the entire organization’s productivity and if performance issues are left unaddressed it can cause disaster for the organization. So, by getting regular performance feedback and taking required corrective actions employee performance is improved & organization’s objective is achieved.

To Identify Training & Development Areas

Through performance appraisal process performance gaps of the employee are identified. Accordingly, Training needs are identified for filling up the performance gap of the concern employees. By arranging effective training programs, employees become capable to perform their jobs as per the set job role.

Excellent Job performers are also identified through performance appraisal process. Career advancement and development are important for this group of employees. Company should engage the best employees in potential development programs and thus retain them for a long term to get maximum output from them.

To Provide Employees Visible Career Path & reduce employee turnover

Most of the potential employees are very focused about their career progression. A good performance management system engages managers to discuss a career plan with their employees by covering what the employee needs to do to get there.

If the career path is well defined & structured, employees are motivated to perform spontaneously to reach at the top ladder. If a company can ensure providing career progression as highlighted, top performers are more likely to remain in the company for a long period.

To provide employee Recognition and Reward

Through performance appraisal process, organization finds out performance standard of its employees. An effective performance management system prioritizes employee recognition and reward. Recognizing & rewarding employees is the simplest way to improve morale and employee engagement. Recognition is also positively linked with high performance.

Employees who are contributing significantly for attaining goal of the company are identified and rewarded by the company in the form of increment, promotion, appreciation letters etc.

To improve overall Business growth

Organization needs to take care of their employees to obtain its business objectives. By developing & implementing an effective performance management system, employees are truly judged for their provided job performance. Further, through this process best performance of the employees are also ensured.

When the employees provide their best output, obviously organization will be much more benefited. So, by implementing effective performance appraisal system, the employees become contented & continuously work for achieving overall business growth of the company.

By going through the below write up we will get detail information on the following topics:

• What is Employee Compensation & Benefits?
• Components/Elements of Employee Compensation
• Types of Employee Benefits
• Objective/ Importance of Employee Compensation & Benefits

What is Employee Compensation & Benefits?

Employee Compensation

The term Compensation can simply be defined as the financial return employees receive over a period of time in exchange of the services rendered by them in an organization. It includes all forms of financial returns and payments that employees receive as part of the employment terms & conditions.

So Compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits include basic salary, house rent allowance, conveyance, medical allowance, special allowances, bonus, incentives, commissions etc.

It is an important function of HR to structure/develop and implement an effective compensation package for attracting and retaining competitive workforce in the organization. Through developing effective Compensation packages company can provide adequate, equitable and fair remuneration to the employees.

Employee Benefits

Besides Compensation in the form of salary/wages, employee benefits are additional facilities/services and payments provided to an employee as part of the employment contract. Employee benefits may be required by law of the country or provided voluntarily by the employer.

According to Cockman, “employee benefits are those benefits which are supplied by an employer to or for the benefits of an employee, and which are not in the form of wages, salaries and time rated payments.”

Nowadays employee benefits are regarded as an important tool to retain employees and to improve the productivity and performance of employees in the organization. Due to increased competition for good candidates, the benefits an employer provides for a particular position play an important factor in attracting applicants.

From an employee’s point of view, a good package of benefits from the organization increase standard of their living and contribute to their own health and that of their family. From an employer’s point of view, benefits help staff remain happy and committed, reducing the chance of their leaving the organization.

Common employee benefits includes Free lunch or lunch at subsidized rates, medical facilities, Insurance facilities to employee & their family members, retirement benefits (provident fund, gratuity etc.),maternity leave, childcare, free education to employee’s children, housing accommodation, paid vacations ,subsidized gym memberships etc.

Components/Elements of Employee Compensation

Employee compensation is one of the most valuable and important function of human resource management.

Compensation is a payment made in cash to the employee in return of the contribution that he/she makes in the organization. Compensation package includes a base pay as well as variable pay components.

Major components of employee compensation are as follows:

1. Base Pay Structure(Wages & Salary) which includes

• Basic Salary
• House Rent Allowance
• Medical Allowance
• Conveyance Allowance
• Other Allowances

2. Variable Pay Packages which includes

• Overtime Payment
• Bonus
• Incentives/Reward
• Commissions
• Profit Sharing Payments
• Stock Options
• Travel/Meal/Housing Allowances
• Different Types of Benefits

Types of Employee Benefits

An organization provide various benefits to their employees to retain them in the company and maintain their living standard with that of others of same status in the society.

Major benefits offered by employers to employees are listed below:

• Retirement benefits such as Provident fund, Gratuity, Pension scheme etc.
• Free medical facilities to the employee and the close members of his/her family.
• Free lunch or lunch at subsidized rates offered to the employees.
• Group Term Life Insurance and Health Insurance premium is provided by the employer for their employees. Thus Employees are insured for life against accidents, illness or natural death.
• Leave Travel Allowance scheme is implemented by many organization for paid holidays to the employees.
• Different types of leave like Casual Leave, Sick Leave, Earn leave, Maternity leave (for female employees) and government holidays are provided to the employees for enjoyment & refreshment. Payment of un availed earned leave is paid after completion of the year.
• Employees are provided Paid Vacations once or twice in a year.
• Childcare facility is provided for getting effective job performance from a female employee( mother of the baby)
• Allowance for children education or Free education to the children of the employees are provided by the employers. Scholarships to the meritorious students of the employees are also given.
• In many organizations Full time Car/Transport facilities is provided to senior level employees. Company may bear all expenses associated with car like drivers salary & allowances, fuel cost, maintenance cost, car document renewal cost etc. Otherwise company provides a fixed amount to the concern official to bear all the expenses related with the Car.
• Free transport service is provided to the employees by the employers. This service is mainly provided to the employees for attending their duties in the office or factories. This service may be free or provided at subsidized rates.
• Corporate mobile SIM card is provided to the employees and the bill is paid by the company.
• Housing accommodation benefit is provided to the employees at free of subsidized rates.
• In some organizations study leave is granted. In some cases company sponsors the employee for higher studies and bears all the expenses of his education.
• Subscriptions for professional association is sometime borne by the employers.
• Employee Training related cost at home or abroad is borne by the company.
• Recreational facilities and programs like picnic, day long outing, family get together, leisure trip at home or abroad etc. are arranged by the employers.
• In relation to company business trip overseas travel allowance on daily basis is provided to the employees.
• Employees are provided salary advance from the company to meet urgent family requirement.
• Employees are provided loan facilities from the company for purchasing of flat, land, car etc. or meeting emergency family needs.
• Employees are provided Membership of social/cultural clubs
• To get much benefits from an employee for some specific job category company may allow Flexible office timing Schedules to the employeee.

Objective/ Importance of Employee Compensation & Benefits

Companies engage employees to achieve their organizational goals and people join companies to earn money & build their career. Apart from the company’s reputation and job outline, the compensation package offered to the employee is the key in attracting people to work for the organization. The more rational competitive compensation and benefit package offered to employees, the scope of getting more effective & efficient employees for a vacant position is increased.

Besides, for retaining good & effective employees in the organization a standard compensation and benefit packages need to be developed & sustained for different positions of the organization. An effective compensation & benefit package create value to the organization in the following ways:

Increasing motivation of the existing employees

Properly compensated employees certainly add value to the company. When employees are valued, they feel good about coming in to work joyfully and perform their assigned job responsibilities enthusiastically. Overall morale of the employees increases and they are self-motivated to perform jobs effectively.

Attracting & Appointing Top Talents from the Market

Most of the potential candidates are in search of jobs where they can be comfortable with compensation package. These types of really potential candidates knows their ability as a job performer and select the right company which can full fill their demand.

So, HR Managers of a professional company should make compensation package survey of similar nature business competitors and design their pay structure for different positions of the company as the best fit to attract the most potential candidate from the market. Hiring the perfect candidate through this process decreases recruiting budgets and helps the organization to make the job done for the specific position successfully.

Establishment/Creating of Employee Loyalty

If a company develop competitive compensation package and the workforces are being paid well and feel contended, they are likely to stay with the organization for a long period. Proper compensation is one of the major factor for which workforces remain with the employers. Employees don’t think of leaving the organization and provide their best effort to perform assigned jobs.

As a result employee turnover become very less and company needs to give less attention in recruitment related jobs and hiring cost is minimized. A loyal and dedicated workforce work as a team and provide best output for the betterment of the company.

Increase Employee Productivity

Satisfied/contended employees are the most productive group of employees of an organization. If an employee is properly compensated s/he will give maximum effort to perform assigned job responsibilities successfully. Appropriate compensation package is the main motivational factor for an employee to provide maximum productivity.