Unit 3 links people management with strategy and law. Questions test models and their authors, OD interventions, collective bargaining concepts and, increasingly, the new Labour Codes.
1. Strategic HRM
- Harvard model (Beer et al., 1984): stakeholder interests and situational factors shape HR policy choices and outcomes.
- Michigan model (Fombrun, Tichy and Devanna, 1984): the HR cycle of selection, appraisal, rewards and development, aligned with strategy.
- Best fit vs best practice: HR practices matched to strategy, versus universally effective practices.
- Dave Ulrich’s HR roles (1997): strategic partner, administrative expert, employee champion and change agent.
- HR Scorecard (Becker, Huselid and Ulrich) applies the balanced scorecard idea to HR.
2. Competencies and Careers
- Competency: David McClelland’s 1973 paper argued for testing competence rather than intelligence.
- Iceberg model (Spencer and Spencer, 1993): skills and knowledge are visible; motives, traits and self-concept lie beneath.
- Career anchors (Edgar Schein): eight anchors, including technical competence, managerial competence, autonomy, security and entrepreneurial creativity.
3. Compensation
- Job evaluation methods: ranking and job classification (non-quantitative); point method and factor comparison (quantitative). The Hay plan is a widely used point-factor system.
- Wage theories: subsistence theory (Ricardo), wage fund theory (J.S. Mill), residual claimant theory (Walker), marginal productivity theory and bargaining theory.
- Pay components: basic pay, allowances, incentives and fringe benefits; ESOPs link pay to ownership.
4. Performance Appraisal
- Traditional methods: ranking, paired comparison, forced distribution, graphic rating scales, checklists, critical incidents and essays.
- Modern methods: BARS, MBO (Peter Drucker, 1954), 360-degree feedback and assessment centres.
- Rater errors: halo, horns, leniency, strictness, central tendency, recency and similar-to-me bias.
- Forced distribution places employees in fixed proportions, such as the bell curve; it is criticised for forcing ratings even in strong teams.
5. Organisation Development
- Kurt Lewin’s change model: unfreeze, change, refreeze. Force field analysis weighs driving forces against restraining forces.
- Kotter’s eight steps begin with creating a sense of urgency and end with anchoring change in the culture.
- OD interventions: sensitivity training (T-groups), survey feedback, process consultation (Schein), team building, grid OD, MBO and quality circles.
- Action research is the core method of OD: diagnose, act, evaluate and repeat.
6. Engagement and Contemporary HR
- Employee engagement: William Kahn (1990) described personal engagement at work; Gallup’s Q12 is a well-known measure.
- Talent management: attracting, developing and retaining high performers; succession planning.
- Green HRM: paperless processes, e-recruitment and environmental goals in appraisals.
7. Industrial Relations
- Dunlop’s systems approach (1958): actors (workers, management, government), context, ideology and a “web of rules”.
- Perspectives: unitary, pluralist and Marxist.
- Walton and McKersie (1965) identified four sub-processes of bargaining: distributive, integrative, attitudinal structuring and intra-organisational bargaining.
- Workers’ participation in management is supported by Article 43A of the Constitution, a Directive Principle.
8. Collective Bargaining, Grievances and Participation
- Levels of collective bargaining: plant level, industry level and national level.
- Grievance handling moves through steps, usually from the supervisor to department head, a grievance committee and finally voluntary arbitration.
- Forms of workers’ participation: works committees, joint management councils, shop-floor councils and worker directors on boards.
- Employee welfare may be statutory (required by law) or voluntary (offered by the employer).
9. The Labour Codes (Exam Alert)
- Four Codes replaced 29 central labour laws: the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020.
- Key provisions took effect on 21 November 2025 (BDO), and the central rules on 8 May 2026.
- The threshold for prior government approval for lay-off, retrenchment and closure rose from 100 to 300
- Fixed-term employees become eligible for gratuity after one year of continuous service.
- A uniform definition of “wages” applies across the Codes; if excluded allowances exceed 50% of pay, the excess is added back to wages.
- Exam trap: older material still cites the Trade Unions Act, 1926 and the Industrial Disputes Act, 1947 as current law.
10. International HRM
- Perlmutter’s EPRG framework: ethnocentric, polycentric, regiocentric and geocentric staffing orientations.
- Expatriate management: selection, cross-cultural training, expatriate failure and repatriation.
Common Exam Traps
- Job evaluation values the job; performance appraisal assesses the person.
- Kotter’s model has eight steps; Lewin’s has three. Do not mix them in sequence questions.
- Labour law questions may still use pre-Code terms; read the year in the question carefully.
Practice MCQs
- “Unfreeze–change–refreeze” was given by: (a) Kotter (b) Lewin (c) Schein (d) Argyris
- Which job evaluation method is quantitative? (a) Ranking (b) Job classification (c) Point method (d) Paired comparison
- Dunlop’s industrial relations system includes all EXCEPT: (a) Actors (b) Context (c) Ideology (d) Span of control
- Under the Industrial Relations Code, 2020, prior approval for retrenchment applies to establishments with at least: (a) 50 workers (b) 100 workers (c) 300 workers (d) 500 workers
- Which of Ulrich’s roles focuses on employee concerns? (a) Strategic partner (b) Administrative expert (c) Employee champion (d) Change agent
Answers: 1 (b); 2 (c); 3 (d); 4 (c); 5 (c).