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Title: Human Resources Management


1
HUMAN RESOURCE MANAGEMENT
Dr. ANANDA KUMAR Professor, Department of
Management Studies Christ College of Engg.
Tech., Puducherry, India. Mobile 91 99443
42433 E-mail searchanandu_at_gmail.com
2
  • UNIT 1

3
Human Resource Management
  • HRM is the function performed in organizations
    that facilitates the most effective use of people
    to achieve organizational and individual goals.

4
Human Resource Management
  • Human resource or manpower management
    effectively describes the process of planning and
    directing the application, development and
    utilisation of human resources in employment
    - Dale Yoder
  • The personnel function is concerned with the
    procurement, development, compensation,
    integration and maintenance of the personnel of
    an organisation for the purpose of contributing
    towards the accomplishment of that organisations
    major goals or objectives Flippo

5
Functions of HRM

HRM FUNCTIONS
Managerial Functions
Operative Functions
Controlling
Planning
Directing
Organising
Maintenance
Compensation
Procurement
Integration
Development
6
  • A. Procurement

B. Development
  • Job Analysis
  • Human Resource Planning
  • Recruitment
  • Selection
  • Placement
  • Induction and Orientation
  • Internal Mobility
  • Training
  • Executive development
  • Career planning development
  • Succession Planning
  • Human Resource Development

7
D. Maintenance
  • C. Motivation Compensation
  1. Job Design
  2. Work Scheduling
  3. Motivation
  4. Job Evaluation
  5. Performance appraisal
  6. Compensation administration
  7. Incentives benefits
  1. Health
  2. Safety
  3. Employee welfare
  4. Social security measures

8
  • E. Integration Function
  1. Grievance redressal
  2. Discipline
  3. Teams and teamwork
  4. Collective bargaining
  5. Employee participation empowerment
  6. Trade unions
  7. Employers Association
  8. Industrial relations

9
Importance of HRM
  • 1. It helps the organisation to identify
    correctly its manpower needs
  • 2. It ensures that the organisation does not
    suffer from either surplus or shortage of
    manpower
  • 3. It facilitates the selection of the right man
    for the right job
  • 4. It focuses attention on the development of the
    skill of every individual in order to make him
    up-to-date
  • 5. It recognises the need for the appraisal of
    the employees performance
  • 6. It considers the need to provide incentives to
    the employees performing well

10
Importance of HRM
  • 7. It gives utmost importance to securing a
    favourable employee attitude
  • 8. It emphasizes the need for good human
    relations in every workplace
  • 9. It provides scope for collective bargaining

11
Objectives of HRM
  • 1. To make an optimum utilisation of the human
    resource of the organisation
  • 2. To ensure that the organisation has the
    required number staff
  • 3. To establish and maintain a sound organisation
    structure
  • 4. To reconcile personal and organisational goals
  • 5. To provide scope for the development of
    personnel
  • 6. To ensure that the employees have higher job
    satisfaction
  • 7. To provide scope for participation in
    decision-making

12
Difference b/w Personnel Mgt HRM
  • 1. Personnel management is a traditional approach
    of managing people in the organization.
    Human resource management is a modern approach
    of managing people and their strengths in the
    organization.
  • 2. Personnel management focuses on personnel
    administration, employee welfare and
    labor relation. Human resource management focuses
    on acquisition, development, motivation and
    maintenance of human resources in the
    organization.
  • 3. Personnel management assumes people as a input
    for achieving desired output. Human resource manag
    ement assumes people as an important and valuable
    resource for achieving desired output.

13
Difference b/w Personnel Mgt HRM
  • 4. Under personnel management, personnel function
    is undertaken for employee's satisfaction. Under
    human resource management, administrative
    function is undertaken for goal achievement.
  • 5. Under personnel management, job design is done
    on the basis of division of labour. Under
    human resource management, job design function is
    done on the basis of group work/team work.
  • 6. Under personnel management, employees are
    provided with less training and
    development opportunities. Under human resource
    management, employees are provided with more
    training and development opportunities.

14
Difference b/w Personnel Mgt HRM
  • 7. In personnel management, decisions are made by
    the top management as per the rules and
    regulation of the organization. In
    human resource management, decisions are made
    collectively after considering employee's
    participation, authority, decentralization,
    competitive environment etc. 
  • 8. Personnel management focuses on increased
    production and satisfied employees.
    Human resource management focuses on
    effectiveness, culture, productivity and
    employee's participation.

15
Nature / Scope of HRM
  • Control

Acquisition
HR Audit HR Accounting HR Information System
HR Planning Recruitment, Selection Placement.
Human Resource Management
Development
Maintenance
Training, Career Development, Organisation
Development, Internal Mobility.
Remuneration Motivation Health Safety Social
Security Industrial Relations Performance
Appraisal
16
Environment of HRM
  • Environment comprises all those forces which have
    their bearing on the functioning of various
    activities including human resource activities.
    Environment scanning helps HR manager become
    proactive to the environment which is
    characterised by change and intense competition.
  • Two types of environments
  • 1. Internal environment
  • 2. External environment

17
1. Internal Environment
  • These are the forces internal to an organisation.
    Internal forces have profound influence on HR
    functions. The internal environment of HRM
    consists
  • a. Unions
  • b. Organisational Culture Conflict
  • c. Professional Bodies

18
1. External Environment
  • External environment includes forces like
    economic, political, technological, demographic
    etc. these exert considerable influence on HRM.
    The external environment of HRM consists
  • a. Economic
  • b. Political
  • c. Technological
  • d. Demographic

19
Strategic HRM
  • Strategic human resource management is to ensure
    that human resource management is fully
    integrated into strategic planning, that HRM
    policies cohere both across policy areas and
    across hierarchies and that HRM policies are
    accepted and used by line managers as part of
    their every day work.
  • According to Donald F. Harvey, Strategic
    management is that set of managerial decisions
    and actions that determine the long-term
    performance of a corporation. It includes
    environmental scanning, strategy formulation,
    strategy implementation and evaluation and
    control.

20
People Management Indian Scenario
  • In the 50s there was a strong belief that
    employees were recruited not to question why
    but only to do and die. In the 60s, terms like
    manpower, staff and personnel came to be used and
    instead of controlling the employees, it became
    more and more acceptable to manage personnel as
    it was felt that the productivity of the workers
    could be improved, if they were organized for the
    work. While hierarchy, status, authority,
    responsibility and accountability are structural
    concepts, in the Indian context, emotions,
    feelings, empathetic perceptions, impressions
    influenced people more than anything else.

21
CASE STUDIESPERFORMANCE APPRAISAL POLICIES
  • Berkely Investments is a reputed finance company
    having 15 branches in different part of the
    country. In the home office there are more than
    200 employees. This company has a performance
    rating under which the employees are rated at six
    months intervals by a committee of two
    executives. Graphic scales have been used as
    means of appraisal. The qualities considered are
    responsibility, initiative, and interest in work,
    leadership potential, co-operative attitude and
    community activity. After the performance is
    evaluated, the ratings are discussed with the
    concerned employees by their immediate boss who
    counsels them. The ratings aroused to influence
    promotions and salary adjustments the employees
    and also as a criterion for assigning further
    rating for them.

22
PERFORMANCE APPRAISAL POLICIES
  • Recently three employees of the company called on
    the companys president to express their
    dissatisfaction with the ratings they had
    received. Their scores and composite ratings had
    been discussed with them. Because their ratings
    were comparatively low, they had been denied
    annual increments in salary. Approximately, two
    thirds of all the employees received such
    increments. The aggrieved employees argued that
    their ratings did not accurately represent their
    qualifications or performance. They insisted that
    community activity was not actually a part of
    their job and that what they do off the job is
    none of the companys business. They expressed
    their opinion that employees should organize
    union and insist that salary increase be
    automatic.

23
PERFORMANCE APPRAISAL POLICIES
  • The threat of a union caused concern to the
    officers of the company. This particular
    experience convinced the top officers that
    ratings may represent a serious hazard to
    satisfactory relationship with employees. Even
    the chief executive finds that performance
    appraisal is a dangerous source of friction and
    its hazards outweigh its values so it should be
    discontinued altogether.
  • Questions
  • 1. How far do you agree with the management that
    performance appraisal should be discontinued? 
  • 2. If you were the HR manager, how would you
    tackle the situation?
  • 3. What modifications would you suggest in the
    performance appraisal system of the company

24
  • UNIT 2

25
Human Resource Planning (HRP)
  • HRP includes estimation of how many qualified
    people are necessary to carry out the assigned
    activities, how many people will be available and
    what, if anything, must be done to ensure that
    personnel supply equals personnel demand at the
    appropriate point in the future.
  • - Terry L. Leap and Michael D. Crino
  • Human resource planning is a planning is a
    process of determining and assuming that the
    organisation will have an adequate number of
    qualified persons, available at the proper times,
    performing job which meet the needs of enterprise
    and which provide satisfaction for the
    individuals involved. - Beach

26
Objectives HRP
  • Ensure adequate supply of manpower as and when
    required.
  • Ensure proper use of existing human resources in
    the organisation.
  • Forecast future requirements of human resources
    with different levels of skills.
  • Assess surplus of shortage, if any, of human
    resources available over a specified period of
    time.
  • Anticipate the impact of technology on jobs and
    requirements for human resources.
  • Control the human resources already deployed in
    the organisation.

27
HRP Process
  1. Analysing Organisational Plans and Objectives
  2. Analysing Objectives of Human Resource Planning
  3. Forecasting Demand for Human Resources
  4. Forecasting Supply of Human Resources
  5. Matching Demand and Supply
  6. Monitoring and Control

28
Human Resource Information System (HRIS)
  • HRIS refers to a computerised system that aids
    the processing of information relating to human
    resource management. It is a system of gathering,
    classifying, processing, recording and
    disseminating the information required for
    effective management of human resources in an
    organisation. HRIS forms an integral part of the
    Management Information System (MIS). HRIS
    collects and analyses data relating to human
    resources of the organisation. The input of HRIS
    include the information relating to employees,
    their abilities, qualitifications,
    potentialities, creative instincts, age, sex,
    their jobs, pay scales, organisational
    objectives, policies and procedures, etc.

29
HRP Advantages
  1. It is both time saving and cheaper device.
  2. It gives accurate information relating to human
    resources.
  3. It makes information readily available as and
    when desired.
  4. It acts as a decision support system.
  5. It establishes strong management control.

30
Job Analysis
  • Job analysis is the process of getting
    information about jobs specially, what the
    worker does how he gets it done why he does it
    skill, education and training required
    relationship to other jobs, physical demands
    environmental conditions.
  • Jones and Decothis
  • Job analysis as the process of studying and
    collecting information relating to the operations
    and responsibilities of a specific job. The
    immediate products of this analysis are job
    descriptions and job specifications.
    - Edwin B. Flippo

31
  • Job Description Job description is a
    written statement showing job title, tasks duties
    and responsibilities involved in a job.
  • Job Specification Job specification
    also known as man or employee specification is a
    statement of minimum acceptable qualities
    required in a job incurrent for the effective
    performance of the job.

32
JOB ANALYSIS

Job Specification
Job Description
Job Title A Title of the Job Job Activities
Tasks performed, materials used. Working
Conditions Light, Heat, Noise. Social
Environment Size of work group members etc.
Personal Characteristics Age, Sex,
Education. Physical Characteristics Length,
Weight, Vision. Mental Characteristics General
intelligence, Memory, Judgment. Social
Psychological Characteristics Emotional
Stability, Initiative, Creativity.
33
Job Evaluation
  • Job evaluation is a comparative process of
    establishing the value of different jobs in a
    hierarchical order. It allows one to compare
    jobs by using common criteria to define the
    relationship of one job to another. This serves
    as basis for grading different jobs and
    developing a suitable pay structure for them. It
    is important to mention that job evaluation
    cannot be the sole determining factor for
    deciding pay structures because job evaluation is
    about relationships, and not absolutes.

34
Job Design
  • Job design as the process of deciding on the
    contents of a job in terms of its duties and
    responsibilities, on the methods to be used in
    carrying out the job, in terms of techniques,
    systems and procedures, and on the relationships
    that should exist between the job holder and his
    superiors, subordinates and colleagues.

35
Methods / Techniques Job Design
  1. Work Simplification
  2. Job Rotation
  3. Job Enrichment
  4. Job Enlargement

36
WORK DESIGN
Job Rotation (relief from boredom)
Job Enrichment (Increased responsibility)
Job Simplification (Breaking down into small
sub-parts)
Job Enlargement (Extension of work plus
additional tasks to obtain a complete unit)
37
Recruitment
  • Recruitment is the generating of applications or
    applicants for specific positions to be filled up
    in the organisation. In other words, it is a
    process of searching for and obtaining applicants
    for jobs so that the right people in right number
    can be selected.
  • Flippo has defined recruitment as a process of
    searching for prospective employees and
    stimulating and encouraging them to apply for
    jobs in an organisation.

38
  • Sources of Recruitment

Internal Sources
External Sources
  1. Employment Exchange
  2. Advertisements
  3. Employment Agencies
  4. Campus Recruitment
  5. Word-of-Mouth
  1. Present Employees
  2. Employee Referrals
  3. Former Employees
  4. Previous Applicants

39
Recruitment Process
  1. Recruitment Planning
  2. Strategy Development
  3. Searching
  4. Screening
  5. Evaluation and Control

40
Selection
  • Selection is the process of choosing from among
    the candidates from within the organisation or
    from the outside, the most suitable person for
    the current position or for the future position.
  • Selection is hiring the best candidate from the
    pool of applications. It refers to the process of
    offering jobs to one or more applicants/candidates
    from the applications received through
    recruitment. In other words, it is the process of
    picking the suitable candidates from the pool of
    job applications to fill various jobs in the
    organisation.

41
Selection Methods / Process
  1. Preliminary Interview
  2. Application Blank
  3. Selection Tests
  4. Selection Interview
  5. Reference Checks
  6. Physical Examination
  7. Final Selection

42
Placement
  • Placement is understood as assigning jobs to the
    selected candidates. Assigning jobs to employees
    may involve a new job or different job. Thus,
    placement may include initial assignment of job
    to new employee, on transfer, promotion or
    demotion of the present employees. In this
    section, placement refers to the assignment of
    jobs to new employees only.

43
Induction
  • Induction is welcoming a new employee to the
    organisation. In other words, it is a well
    orchestrated event to socialise the new entrant
    with the people and the work environment in a
    particular organisation.
  • According to Michael Armstrong, Induction is the
    process of receiving and welcoming an employee
    when he first joins a company and giving him
    basic information he needs to settle down quickly
    and happily and start work.

44
Performance Appraisal
  • Performance appraisal is the process of making an
    assessment of the performance and progress of the
    employees of an organisation. Once an employee
    has been inducted into the organisation and given
    the necessary training, the next step is to
    assess his performance periodically. Such an
    assessment would indicate whether he is efficient
    or not. Performance appraisal is also known as
    merit rating or efficiency rating.

45
Performance progress of employee
  1. Knowledge of work
  2. Extent of co-operation with colleagues and
    superiors
  3. Initiative
  4. Quality of work 10. Honesty
  5. Target attainment 11. Ambition
  6. Aptitude
  7. Degree of skill
  8. Discipline
  9. Punctuality

46
Objectives of Performance Appraisal
  1. Salary Increase
  2. Promotion
  3. Training and Development
  4. Feedback
  5. Pressure on Employees

47
360 Degree Appraisal
  • A 360 degree appraisal is a type of employee
    performance appraisal in which subordinates,
    co-workers, and managers all anonymously rate the
    employee. A 360 degree appraisal is a type of
    employee performance review, where a staffer's
    work for a specific period of time is discussed
    and critiqued. The 360 degree process is
    different in that it obtains feedback from
    co-workers and subordinates, instead of just from
    the direct supervisor. The goal of the process is
    to better understand how the employee is
    functioning as part of the team, and to improve
    the ways team members work together.

48
Potential Appraisal
  • The potential appraisal refers to the appraisal
    i.e. identification of the hidden talents and
    skills of a person. The person might or might not
    be aware of them. Potential appraisal is a future
    oriented appraisal whose main objective is to
    identify and evaluate the potential of the
    employees to assume higher positions and
    responsibilities in the organizational hierarchy.
    Many organisations consider and use potential
    appraisal as a part of the performance appraisal
    processes. 

49
Methods of Performance Appraisal
  1. Ranking method
  2. Graphic scale rating method
  3. Forced choice method
  4. Essay appraisal method
  5. Paired comparison method
  6. Field review method

50
  • UNIT 3

51
Training
  • The term training is used here to indicate the
    only process by which the aptitudes, skill and
    abilities of employees to perform specific jobs
    are increased.
  • - Jucius
  • Training is the organised procedure in which
    people learn knowledge and / or skill for
    definite purpose. - Dale S.
    Beach
  • Training is the act of increasing the knowledge
    and skills of an employee for doing a particular
    job. - Edwin B. Flippo

52
Need for Training
  1. To enable the new recruits to understand work
  2. To enable existing employees to update skill and
    knowledge
  3. To enable an employee who has been promoted to
    understand his responsibilities
  4. To enable an employee to become versatile
  5. To enable the employees to adapt to change in
    work methods

53
Importance of Training
  1. Improvement in skill and knowledge
  2. Higher production and productivity
  3. Job satisfaction
  4. Better use of resources
  5. Reduction in accidents
  6. Reduced supervision
  7. Reduction in complaints
  8. Adaptability
  9. Stability

54
Training and Development
  • Development is related to the all-round progress
    of an employee. A development programme enables
    executives to acquire skills in their present
    jobs and capabilities to perform future jobs
    better. Training is required to improve skills
    for performing a job. Development, on the other
    hand, is related to the all-round progress of
    executives. While training is job oriented,
    development is career oriented. Training is
    essential for operative workers. On the other
    hand, a development programme is required for
    executives.

55
Case Study
  • Amrit Electrical is a family owned company of
    approximately 250 employees. Mr. Rajesh Khaitan
    recently took over as president of the company. A
    short time after joining the company, he, began
    to following a discussion with the HR director
    that the pay of the salaried employees was very
    much a matter of individual bargaining. Factory
    workers were not a part of the problem because
    they were unionized and their wages were set by
    collective bargaining. An examination of the
    salaried payroll showed that there were 75
    employees ranging in pay from that of the
    president to that of receptionist. A closer
    examination showed that 20 of the salaried
    employees were females. Five of these were front
    time factory supervisors and one was the HR
    director. The other fourteen were non-management.

56
Case Study
  • This examination also showed that the HR director
    was underpaid and that the five female
    supervisors were paid somewhat less than any of
    the male supervisors. However, there were no
    similar supervisory jobs in which there were both
    male and female supervisors. When questioned, the
    HR director said that she thought that the female
    supervisors were paid at a lower rate mainly
    because they were women and because they
    supervised less skilled employees than did the
    male supervisors. However, Mr. Khaitan was not
    convinced that this was true. He decided to hire
    a compensation consultant to help him. Together
    they decided that all 75 salaried jobs should be
    in the same job evaluation cluster, that a
    modified job evaluation method should be used and
    that the job descriptions recently completed by
    the HR director were correct and usable in the
    study, the job evaluation also showed that the HR
    director and the five female supervisors were
    being underpaid in comparison with the male
    employees.

57
Case Study
  • Mr. Khaitan was not sure, what to do. If he gave
    these four female employees an immediate salary
    increase which may large enough to bring them
    upto where they should be, he was afraid the male
    supervisors could be upset and the female
    supervisors might comprehend the situation and
    demand arrears of pay. The Hr director agreed to
    take a sizeable salary increase with the no
    arrears of pay. So this part of the problem was
    solved. Mr. Khaitan believed that he had three
    choices relative to the female supervisors (1)
    To gradually increase their salaries (ii) to
    increase their salaries immediately (iii) to do
    nothing.
  • Questions1. What would you do if you were Mr.
    Khaitan?
  • 2. How do you think the company got into a
    situation like this in the first place?

58
Methods of Training
  • On-the job training

Off-the job training
  1. Lectures Conferences
  2. Role Playing
  3. Case study
  4. Management games
  5. Brain storming
  6. Sensitivity training
  • Induction Training
  • Apprenticeship Training
  • Refresher Training
  • Job Rotation
  • Placement as assistants
  • Vestibule Training

59
Evaluation of Training
  • Training evaluation refers to the process of
    collecting the outcomes needed to determine if
    training is effect.
  • Evaluation of training activity is defined as
    any attempt made to obtain information, or say,
    feedback on the effects of training programme and
    to adjudge the value or worth of the training in
    the light of that information. The time and money
    spent in training underlines the need for
    evaluation of training.

60
Reason for Evaluation of Training
  • Companies are investing millions of dollars in
    training programs to help gain a competitive
    advantage.
  • Training investment is increasing because
    learning creates knowledge which differentiates
    between those companies and employees who are
    successful and those who are not.
  • Because companies have made large dollar
    investments in training and education and view
    training as a strategy to be successful, they
    expect the outcomes or benefits related to
    training to be measurable.

61
Steps of training programme
  1. Identification of training needs
  2. Setting training objectives
  3. Designing training methods
  4. Administration of training programmes
  5. Evaluation of training

62
What is a Career?
  • A career can be defined as all the jobs held by a
    person during his working life. It consists of a
    series of properly sequenced role experience
    leading to an increasing level of responsibility,
    status, power, and rewards.
  • According to Flippo, a career is a sequence of
    separate but related work activities that provide
    continuity, order, and meaning in a persons
    life.

63
Career Planning
  • Career Planning can be defined as a systematic
    process by which one decides his/her career goals
    and the path to reach these goals. Career
    planning is a managerial technique for mapping
    out the entire career of employees from the
    employment stage to the retirement stage. It
    involves discovery, development, planned
    employment and reemployment.

64
Career Development
  • Career development is an ongoing process of
    gaining knowledge and improving skills that will
    help an individual to establish a career plan.
  • Career development consists of actions undertaken
    by the individual employee and the organisation
    to meet career aspirations and job requirements.

65
Promotion
  • Promotion may be defined as an upward movement of
    an employees position in the enterprise. An
    employee who has been promoted moves to a
    higher-level job that gives higher salary,
    greater authority and accountability as well.
  • A promotion is the advancement of an employee to
    a better job better in terms of greater
    responsibilities, more prestige or status,
    greater skill and especially, increased rate of
    pay or salary.

66
Promotion
  • Promotion has following three elements and must
    be present in promotion
  • Transfer of an employee to some higher job
    having more prestige, better status more benefits
    and privileges.
  • Reassignment of an employee to a position having
    increased responsibilities.
  • Higher job grade.

67
Types of Promotion
  1. Horizontal promotion
  2. Vertical promotion
  3. Dry promotion

68
Purpose of Promotion
  • To recognize an employees skill and knowledge
    and utilize it to improve the organisational
    effectiveness.
  • To reward and motivate employees to higher
    productivity.
  • To develop competitive spirit and inculcate the
    zeal in the employees to acquire skill, knowledge
    etc.
  • To promote employees satisfaction and boost
    their morale.
  • To build loyalty among the employees toward
    organisation.

69
Purpose of Promotion
  • To promote good human relations.
  • To retain skilled and talented people.
  • To attract trained, competent and hard working
    people.
  • To impress the other employees that
    opportunities are available to them too if they
    also perform well.

70
Transfer
  • A transfer refers to lateral movement of
    employees within the same grade, from one job to
    another.
  • According to Flippo, a transfer is a change in
    the job (accompanied by a change in the place of
    the job) of an employee without a change in
    responsibilities or remuneration.
  • Transfer differs from promotion in the sense that
    the latter involves a change of job involving
    increase in salary, authority, status and
    responsibility, while all these remain
    unchanged/stagnant in the case of the former.

71
Need for Transfer
  • To meet organisational needs
  • To satisfy employee needs
  • To better utilize employee
  • To make the employee more versatile
  • To adjust the workforce
  • To provide relief
  • To punish employee

72
Demotion
  • Demotion is just the opposite of promotion. It is
    the downward movement of an employee in the
    organisational hierarchy with lower rank/status
    and pay.
  • According to D.S.Beach, Demotion is the
    assignment of an individual to a job of lower
    rank and pay usually involving lower level of
    difficulty and responsibility.

73
Separation
  • Separation is a situation when the service
    agreement of an employee with his/her
    organisation comes to an end and employee leaves
    the organisation. In other words, separation is a
    decision that the individual and organisation
    part from each other.

74
Retirement
  • Retirement is the major cause of separation of
    employees from the organisation. It can be
    defined as the termination of service of an
    employee on reaching the age of superannuation.
    For example, at present the superannuation age
    for the teachers working in the Central
    Universities is 62 years and is case of some
    state government employees, it is 58 years.

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Resignation
  • Resignation is termination of service by an
    employee by serving a notice called
    resignation on the employer. Resignation may be
    voluntary or involuntary.
  • A voluntary resignation is when an employee
    himself/herself decides to resign on the grounds
    of ill health, marriage, better job prospects in
    other organisations, etc.
  • Resignation is considered involuntary or
    compulsory when the employer directs the employee
    to resign on grounds of duty and indiscipline or
    face the disciplinary action.

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Dismissal
  • Dismissal is termination of service of an
    employee as a punitive measure. This may occur
    either on account of unsatisfactory performance
    or misconduct. Presistent failure on the part of
    employee to perform upto the expectations or
    specified standard is considered as
    unsatisfactory performance.

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  • UNIT 4

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COMPENSATION
  • Compensation includes direct cash payments,
    indirect payments in the form of employee
    benefits and incentives to motivate employees to
    strive for higher levels of productivity.
  • Other names
  • Wage and Salary Administration
  • Remuneration Management
  • Reward Management

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COMPENSATION
  • Wage and Salary Administration refers to the
    establishment and implementation of sound
    policies and practices of employee compensation.
    It includes such areas as Job evaluation, surveys
    of wages and salaries, analysis of relevant
    organizational problems, development and
    maintenance of wage structure, establishing rules
    for administering wages, wage payments,
    incentives, profit sharing, wage changes and
    adjustments, supplementary payments, control of
    compensation costs and other related items.

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COMPONENTS OF COMPENSATION
  1. Wage and Salary
  2. Incentives
  3. Fringe Benefits
  4. Perquisites

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1. WAGE AND SALARY
  • Wage
  • Hourly-rated payment to workers.
  • Paid to Blue-collar employees.
  • Wages are paid to the direct labor, either in the
    form of time rate or piece rate.
  • International Labor Organization defines Wages
    as the remuneration paid by the employer for the
    service of hourly, daily, weekly and fortnightly
    employees.

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WAGE
  • Concept / Types of Wage
  • Minimum Wages
  • Living Wages
  • Fair Wages

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WAGE
  • Minimum Wages
  • Paid by the employer to his workers irrespective
    of his ability to pay
  • Fixed by government (Both by Central and State
    Government)
  • Takes into consideration the cost of living
  • This is the wage which must provide not only for
    bare sustenance of Life but for the preservation
    of efficiency of the worker Government
    Committee on Wages (1948)

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WAGE
  • 2. Living Wages
  • Highest among the three
  • Must provide basic amenities of life and social
    needs like medical, education, etc.
  • A Living wage is one which should enable the
    earner to provide for himself and his family not
    only the bare essentials of food, clothing and
    shelter but a measure of frugal comfort including
    education for his children, protection against
    ill-health, requirements of essential social
    needs and a measure of insurance against the most
    important misfortunes including old age.

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WAGE
  • 3. Fair Wages
  • Fixed by employer
  • At present, the concept of fair wages is followed
    by most of the business organization
  • Determined on the basis of
  • Productivity of labor
  • Prevailing wage rates in similar jobs
  • Level of national income and its distribution
  • Place of industry in the economy
  • The employers capacity to pay

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1. WAGE AND SALARY
  • Salary
  • Monthly-rated payment to workers
  • Paid to White-Collar employees.
  • Salary is defined as the remuneration paid to the
    clerical and managerial personnel employees on
    monthly or annual basis.
  • Both Wages and Salary are paid based on a fixed
    period of time.
  • They are not associated with productivity of an
    employee at a particular time

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2. INCENTIVES
  • 2. Incentives
  • Additional payment besides wage salary
  • Linked with productivity either in terms of
    higher production or cost saving or both.
  • Given on individual basis or group basis.

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3. FRINGE BENEFITS
  • Benefits provided for employees having long-term
    impact like PF, Gratuity, Pension etc
  • Occurrence of certain events life medical
    benefits, accident relief, health and life
    insurance
  • Like uniforms, canteens, recreation etc

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4. PERQUISITES
  • Provided to Managerial Personnel
  • It includes company car, club membership, free
    residential accommodation, paid holiday trips,
    Employee Stock Option Plan (ESOP) etc

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OBJECTIVES OF COMPENSATION MGT.
  • Attracting and retaining personnel
  • Motivating personnel higher productivity
  • Optimizing cost of compensation
  • Consistency in compensation Both internal
    consistency and external consistency

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TYPES OF COMPENSATION
  1. Primary Compensation
  2. Incentive Compensation

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1. Primary Compensation
  • It refers to the Basic Pay in the form of
    Wages/Salaries.
  • Dearness Allowance(DA), House Rent
    Allowance(HRA), City Compensatory Allowance(CCA),
    Travelling allowance, Provident Fund(PF),
    Gratuity, Leave Travel Allowance(LTA), Group
    linked insurance, medical benefits, etc

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2. Incentive Compensation
  • Any reward of benefit paid to employee over and
    above is wage/salary.
  • Includes both monetary as well as non-monetary
    rewards.
  • Wage incentives are extra financial motivation.
    They are designed to stimulate human effort by
    rewarding the person, over and above the
    time-rated remuneration, for improvements in the
    present or targeted results The National
    Commission of Labor

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INCENTIVE COMPENSATION
  • Classification of Incentives
  • Financial or pecuniary or wage incentives
  • Non-Financial incentives
  • Financial Incentives
  • Wages
  • Salary
  • Premium
  • Bonus

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INCENTIVE COMPENSATION
  • Non-Financial Incentives
  • Job Security
  • Recognition
  • Participation
  • Pride in job
  • Delegation of Responsibility
  • Quick Promotion

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Case Study Job Analysis
  • A large, well known Candian company had found
    full depreciation of the equipment which was used
    to make specialized automobile companies for
    north-American automobile producers. Although the
    equipment had been well maintained and worked
    well, it required to be handled by a large number
    of labourers. The result was the high labour
    costs that made the companys brake assemblies,
    manufacturer, and related products unprofitable.
    A decision was made to replace the equipment with
    more highly automated, numerically controlled
    machine tools. Since the economic value of the
    old equipment exceeded its value as scrap, the
    equipment was shipped to the companys Brazilian
    operations, where labour costs were considerable
    lower.

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Case Study Job Analysis
  • Upon arrival and after the setting up of a new
    facility, the company received numerous
    profitable orders from Brazils rapidly growing
    automobile industry. Though the labour hours per
    product remained about the same the lower
    Brazilian labour rates allowed the new facility
    to be profitable. Soon a second shift was added
    and with it problems began.
  • The equipment began to experience a growing
    downtime because of machine failures and
    quality- particularly on part dimensions-
    declined dramatically.At a staff meeting the
    Brazilian plant manager met his staff, including
    several industrial engineers who had been trained
    in Canada and the United States. The engineers
    argued that the problems were almost certainly
    caused by maintenance since the machinery had
    worked well in Canada and initially in
    Brazil. The HR director agreed that it was
    perhaps the old 

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Case Study Job Analysis
  • machinery but be also noted that many of the
    on-machine instructions and maintenance manuals
    had not been translated into Portuguese. He also
    observed that the problems began after the second
    shift was hired.
  • Questions
  • 1. From the discussion of job analysis
    information and job design, what actions would
    you recommend to HR department?2. Given the
    problems associated with the second shift, what
    differences would you look for between first
    shift and second shift workers?3. Since the
    Canadian workers had considerable experience with
    the equipment but the workers particularly in
    second shelf in Brazil had very little
    experience, what implications do you see for the
    job design?

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CONCEPT OF JOB EVALUATION
  • It is a systematic way of determining the value
    or worth of a job in relation to other jobs in an
    organization.
  • It tries to make a systematic comparison between
    jobs to assess their relative worth for the
    purpose of establishing a rational pay structure.

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CONCEPT OF JOB EVALUATION
  • Definition
  • Wendell French defines Job Evaluation as a
    process of determining the relative worth of the
    various jobs within the organization, so that
    differential wages may be paid to jobs of
    different worth. The relative worth of a job
    means relative value produced. The variables
    which are assumed to be related to value produced
    are such factors as responsibility, skill, effort
    and working conditions.

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METHODS OF JOB EVALUATION
  • Non-Quantitative Methods (Whole job is compared)
  • Ranking or Job Comparison
  • Grading or Job Classification
  • Quantitative Methods (Key factors of a job is
    compared)
  • Point Rating
  • Factor Comparison

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METHODS OF JOB EVALUATION
  • 1. Ranking method
  • As per this method, Jobs are arranged from
    highest to lowest, in order of their values or
    merit to the organization.
  • Jobs can also be arranged according to the
    relative difficulty in performing them.
  • The job at the top has the highest value and job
    at the lowest has the lowest value.
  • Jobs are arranged in each department and then
    department ranking are combined to develop an
    organization ranking.

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METHODS OF JOB EVALUATION
  • 2. Grading/Classification Method
  • Under this method, job grades or classes are
    established by an authorized body or committee
    appointed for this purpose.
  • A job grade is defined as a group of different
    jobs of similar difficulty or requiring similar
    skills to perform them.(ex-skilled and unskilled)
  • Job grades are determined on the basis of
    information derived from job analysis.
  • Different wage/salary rate is fixed for each
    grade.

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METHODS OF JOB EVALUATION
  • 3. Point Rating method
  • Jobs are expressed in terms of key factors.
  • Points are assigned to each factor after
    prioritizing each factor in order of importance.
  • The points are summed up to determine the wage
    rate for the job.
  • Jobs with similar points totals are placed in
    similar pay grades.

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METHODS OF JOB EVALUATION
  • 4. Factor Comparison method
  • Under this method, instead of ranking complete
    jobs, each job is ranked according to a series of
    factors.
  • These factors include mental effort, physical
    effort, skill needed, responsibility, working
    conditions, etc
  • Pay will be assigned in this method by comparing
    the weights of factors required for each job.
  • This system is used to evaluate white collar,
    professional and managerial positions.

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MORALE
  • Morale refers to the attitude of employees of an
    organization towards their job, the management,
    the fellow-employees, the superiors and the
    subordinates.
  • Such an Attitude may be positive or negative
  • If it is positive, then the morale of the group
    is said to be high
  • If it is negative, then the morale of the group
    is said to be low

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MORALE
  • Flippo Morale refers to a mental condition or
    attitude of individuals and groups which
    determines their willingness to co-operate. Good
    morale is evidenced by employee enthusiasm,
    voluntary conformance with regulations and
    orders, and willingness to co-operate with others
    in the accomplishment of an organizations
    objectives. Poor morale is evidenced by
    surliness, insubordination, a feeling of
    discouragement and dislike of the job, company
    and associates

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FACTORS AFFECTING MORALE
  • The following are the determinants/factors that
    influence Morale
  • Nature of work
  • Service conditions
  • Type of Managers
  • Inter-personal relationships
  • Work environment
  • Personal factors

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MORALE AND PRODUCTIVITY
  • There is no definite direct relationship between
    morale and productivity.
  • There can be two possible relationships between
    the two
  • High Morale and High Productivity
  • Low Morale and Low Productivity

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STEPS TO IMPROVE EMPLOYEE MORALE
  • Selection of right man for the right job
  • Conducive working environment
  • Proper superior-subordinate relationship
  • Provision of suitable incentives
  • Evaluation of employee performance
  • Job rotation
  • Sound promotion and transfer policy
  • Grievance redressal machinery
  • Workers participation in management

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MEASUREMENT OF MORALE
  • The following methods are usually followed for
    the purpose of measuring the level of morale of
    employees
  • Company records and reports
  • Observation
  • Attitude surveys

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1. COMPANY RECORDS AND REPORTS
  • Rate of absenteeism
  • Participation in strikes organized by employee
    unions
  • Complaints made against superiors and
    fellow-employees
  • Remarks of superiors about subordinates
  • Output produced
  • Target attainment
  • Loss to the organization due to the negligence of
    employees

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2. OBSERVATION
  • The Manager will probably assume that the morale
    of his subordinates is high, when they dont
  • Lag behind in their duties
  • Find their targets unattainable
  • Complain about the fellow-employees often
  • Blame the tools and equipment
  • Find fault with the managements policies

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3. ATTITUDE SURVEYS
  • Attitude surveys are often conducted in
    workplaces to ascertain the job attitudes of
    employees
  • Such surveys may be conducted with the help of a
    questionnaire and through interview method.

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Motivation
  • Motivation means a process of stimulating people
    to action to accomplish desired goals W.G.
    Scott.
  • Motivation is the process of attempting to
    influence others to do your will through the
    possibility of gain or reward. - Edwin B. Flippo

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Motivation
  • The important task before every manager is to
    secure optimum performance from each of his
    subordinates. The performance of the
    subordinate, in turn, is determined by his
    ability to work and the extent to which he is
    motivated. Motivation is the process of inducing
    and instigating the subordinates to put in their
    best. Motivation is influenced significantly by
    the needs of a person and the extent to which
    these have been fulfilled. To motivate the
    subordinates, the manager must, therefore,
    understand their needs.

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Importance of Motivation
  • 1. Inducement of employees
  • 2. Higher efficiency
  • 3. Optimum use of resources
  • 4. Avoidance of loss due to mishandling and
    breakage
  • 5. No complaints and grievances
  • 6. Better human relations
  • 7. Avoidance of strikes and lock-outs
  • 8. Reduction in labour turnover

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Nature Characteristics of Motivation
  • Motivation is a psychological concept
  • 2. Motivation is always total and not piece-meal
  • 3. Motivation may be financial or non-financial
  • 4. Method of Motivation may be positive as well
    as negative
  • 5. Motivation is a continuous process

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Motivation Content Theories
  1. Abraham Maslows Need Hierarchical Theory
  2. Herzbergs Two Factor Theory
  3. Douglas McGregors Theory X and Theory Y
  4. Alderfers ERG Theory
  5. David C. McClellands Three-Need Theory

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Motivation Process Theories
  1. Vrooms Expectancy Theory
  2. Porter and Lawlers Expectancy Theory
  3. Adams Equity Theory

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  • Abraham Maslow (1908-1970)

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Maslows Need Hierarchy Theory
  • Abraham H. Maslow, a psychologist, developed a
    theory called the Need Hierarchy Theory. It is
    one of the oldest theories on motivation. Maslow
    was of the view that human behaviour is directed
    towards the satisfaction of certain needs.
  • He classified all human needs into a hierarchical
    manner from the lower to the higher order. In
    essence, he believed that once a given level of
    need is satisfied, it no longer serves to
    motivate man. Then, the next higher level of
    need has to be activated in order to motivate the
    man.

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Maslows Need Hierarchy Theory

SELF- ACTUALIZATION
ESTEEM NEEDS
LOVE, AFFECTION, AND BELONGINGNESS NEEDS
SAFETY NEEDS
PHYSIOLOGICAL OR SURVIVAL NEEDS
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Maslows Need Hierarchy Theory

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1. Physiological Needs
  • These are the primary or the basic needs of a
    person that must be fulfilled. These include,
    among others, food, clothing and shelter that are
    vital for the survival of mankind. A person
    cannot think of recognition or status when he is
    not able to earn adequately to satisfy his basic
    needs.

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2. Safety Needs
  • The safety or security needs emerge once the
    basic or physiological needs of a person are
    fulfilled. Job security is one such need.
    People, generally, prefer secured jobs.
    Similarly, every employee wants to contribute to
    provident fund, insurance and such other schemes
    that protect his interest particularly in his old
    age when he cannot work and earn.

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3. Social Needs
  • At this stage, a person wants friendship,
    companionship, association, love and affection of
    particularly those with whom he mingles often.
    In the work place he may long for the association
    of the fellow employees. In fact, it is for this
    reason that informal groups are formed within a
    formal organisation. In the living place he may
    desire to have the friendship of his neighbours.

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4. Esteem Needs
  • These needs arise in view of a persons desire to
    have his ego satisfied. The satisfaction of
    these needs gives a person the feeling that he is
    above others. It gives a person self-respect,
    self-confidence, independence, status,
    recognition and reputation. Some people show
    preference for luxury cars, expensive jewels and
    so on not just because they can afford it but
    also due to the fact that possession of such
    goods satisfies their ego.

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5. Self-Actualisation needs
  • According to Maslow, a person, who reaches this
    stage, wants to achieve all that one is capable
    of achieving. In other words, a person wants to
    perform to his potentials. A professor may, for
    example, author books. A singer may compose
    music and so on. The desire to excel need not
    necessarily be in the filed one is attached to.
    It can be in some other sphere also. For
    example, an actor or actress may excel in
    politics.

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McGregors X and Y Theories
  • McGregor developed a philosophical view of
    humankind with his Theory X and Theory Y in 1960.
    He developed two theories on motivation that
    explain the positive and negative qualities of
    individuals. He gave the theories the names X
    theory and Y theory. His work is based upon
    Maslows Hierarchy of needs, where he grouped the
    hierarchy into lower order needs (Theory X) and
    higher order needs (Theory Y).
  • He suggested that management could use either set
    of needs to motivate employees, but better
    results would be gained by the use of Theory Y,
    rather than Theory X. These two views theorized
    how people view human behaviour at work and
    organizational life.

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(THEORY X)
  • McGregor looked at the way in which employers and
    employees traditionally viewed work The
    employer paid the money and gave instructions,
    and the worker did the job without asking
    questions
  • People, in general, dislike work. They shirk
    their duties and are basically lazy.
  • Most people are unambitious. They do not
    voluntarily accept any responsibility.
  • Most people lack creativity. They show no
    preference for learning anything new.

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(THEORY X)
  • 4. Satisfaction of physiological and safety needs
    along is important for most people. Workers in
    general are only bothered about their salary, job
    security and such other extrinsic factors.
  • 5. While at work, an employee needs to be closely
    supervised and watched.

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(THEORY Y)
  • Theory Y shows a participation style of
    management that is de-centralized. It assumes
    that employees are happy to work, are
    self-motivated and creative, and enjoy working
    with greater responsibility.
  • Theory Y workers
  • Enjoy their work
  • Will work hard to get rewards
  • Want to see new things happening
  • Will work independently
  • Can be trusted to make decisions
  • Are motivated by things other than money
  • Can work unsupervised

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  • Workers attitudes
  • Good worker Theory Y
  • Lazy worker Theory X
  • Skilled Theory Y
  • Unskilled Theory X

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Evaluation of X and Y Theories
  • The two theories X and Y bring out the two
    extreme qualities of a person. Theory X talks
    about the negative qualities along and theory Y
    talks only about the positive aspects.
  • Practically speaking, no person is either too
    good or too bad. Every person has his or her own
    strong and weak points. By providing the right
    kind of environment and with proper motivation
    any individual can be made to perform well.

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Herzbergs Two Factor Theory
  • Two factor theory states that there are certain
    factors in the work place that cause job
    satisfaction, while a separate set of factors
    cause dissatisfaction.

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Hygiene Factors
  • According to Herzberg, hygiene factors do not
    actually motivate a person but their absence will
    lead to dissatisfaction. These factors are also
    known as extrinsic factors or maintenance
    factors. They help to maintain a reasonable
    level of job satisfaction among the employees.
    These are
  • Company policies and Administration
  • Type of supervision
  • Inter-personal relationships
  • Working conditions
  • Salary
  • Job Security and
  • Status

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