Management Consulting/HRM


Q.1. Elaborate on the system of HR Planning. Outline the steps to be undertaken by organizations to effectively engage in HR planning.
Q.2. Discuss the various ways in which the commitment of errors in performance appraisal can be minimized.
Q.3. The nature and scope of the Human Resource Management Systems keeps on evolving with the changes in the external and internal environments of organizations. Elaborate on the same. { marks : 20 }
Q.4. what are some of the traditional and current sources of recruitment used by organizations? What are their pros and cons?
Q.5. How does HRM enable organizations to adapt to the dynamic changes in the environment? Illustrate with examples.
Q.6. As an HR executive, how would you go about devising HRIS for a mid – sized organization?
Q 7 . Discuss the various principles and purposes of promotion and types and purpose of transfers.


I  will send  the balance  asap.

Q.1. Elaborate on the system of HR Planning. Outline the steps to be undertaken by
organizations to effectively engage in HR Planning.


IS  A  process by which an organisation ensures that it has the right number & kind of people at the right place and at the right time, capable of effectively and efficiently completing those tasks that help the organisation achieve its overall objectives..


Importance  of  HR  PLANNING

•    1)   Each Organisation needs personnel with necessary qualifications, skills, knowledge, experience & aptitude .
•    2)   Need for Replacement of Personnel -  Replacing old, retired or disabled personnel.
•    3)   Meet manpower shortages due to labour turnover
•    4)   Meet needs of expansion / downsizing programmes
•    5)   Cater to Future Personnel Needs
•    6)   Nature of present workforce in relation with Changing Environment - helps to cope with changes in competitive forces, markets, technology, products and government regulations.
     Shift in demand from ERP to internet programming has increased internet programmers .

i)  quantify job for producing product / service    
ii) quantify people & positions required
ii) determine future staff-mix
iii) assess staffing levels to avoid unnecessary costs
iv) reduce delays in procuring staff
v) prevent shortage / excess of staff
vi) comply with legal requirements

Human resource planning is the process of anticipating and
carrying out the movement of people into, within, and out of
the organization. Human resources planning is done to achieve
the optimum use of human resources and to have the correct
number and types of employees needed to meet organizational
Thus, it is a double-edged weapon. If used properly, it leads
not only to proper utilization, but also reduces excessive labor
turnover and high absenteeism, and improves productivity.
It can also be defined as the task of assessing and anticipating
the skill, knowledge and labor time requirements of the
organization, and initiating action to fulfill or ‘source” those
requirements. Thus, if the organization as a whole or one of its
subsystem is not performing to the benchmark, in other words,
it is declining, it may need to plan a reduction or redeploys its
existing labor force.

On the other hand, if it is growing or diversifying, it might
need to find and tap into a source of suitably skilled labor .
That is why; we need to plan in advance even for procuring
human resources, which in contrast to a general myth are not
abundant!! Thus, in the same line, we propose that organization
can achieve its goals effective through effective contingencies
of all the HR functions; for example, the structure of an
organization and the design of the job within it affect an
organization’s ability to achieve only through the efforts of
people. It is essential therefore, those jobs within the organization
be staffed with the personnel who are qualified to perform
them. Meeting these staffing needs requires effective planning
for human resources

HENCE  “HR  planning is the process –
including forecasting, developing and controlling by which a
firm ensures that it has-
•The right number of people,
•The right kind of people,
•At the right places,
•At the right time, doing work for which they are
economically most useful”.
Why has HR planning increased in importance.



-economic  growth

-demand  for  skilled  workers

-mobility  of  workers

-need  for  productivity  improvements

-need  for   efficient  growth

-diversity  in  workforce

-forward  planning  of  resorces

-provides   a  planned  hr resources

-controls   wastage.

etc etc


Forecasting future manpower requirements, where we
use mathematical projections  to project trends in the
economic environment and development of the industry.

Making an inventory of present manpower resources
and assessing the extent to which these resources are
employed optimally.

** Procuring competent personnel
requires positive recruitment efforts and the development
of a variety of recruitment sources. These sources must
consider not only the nature and conditions of the external
labor market, but also the presence of qualified personnel
who are available to fill vacancies through internal
promotions or transfers.
Keep in mind the recruitment activities is integrated with
diversity and equal employment opportunity initiatives.
Staffing needs must be anticipated sufficiently in advance to
permit the recruitment and development of fully qualified

Anticipating manpower problems by projecting
present resources into the future and comparing them
with the forecast of requirements to determine their
adequacy, both quantitatively and qualitatively;

Planning the necessary programmes of requirement,
selection, training, development, utilization, transfer,
promotion, motivation and compensation to ensure that
future manpower requirements are properly met.

**It’s a systematic approach. because it ensures a
continuous and proper staffing. It avoids or checks on
occupational imbalances (shortage or surplus) occurring in
any of the department of the organization.

**There is a visible continuity in the process.

**There is a certain degree of flexibility. That is, it is subject
to modifications according to needs of the organization or
the changing circumstances. Manpower plans can be done
at micro or the macro levels depending upon various
environmental factors.

“ HRP is a kind of risk management. It involves realistically
appraising the present and anticipating the future (as far as
possible) in order to get the right people into right jobs at the
right time”.

**Ensures optimum use of man (woman, too nowadays?)
power and capitalize on the strength of HR. The
organization can have a reservoir of talent at any point of
time. People skills are readily available to carry out the
assigned tasks, if the information is collected and arranged

Forecast future requirements (this is done by keeping track
of the employee turnover.) and provides control measures
about availability of HR labor time. If, for example the
organization wants to expand its scale of operations, it can
go ahead easily. Advance planning ensures a continuous
supply of people with requisite skills who can handle
challenging jobs easily.

Help determine recruitment/induction levels.

To anticipate redundancies/surpluses/obsolescence.

To determine training levels and works as a foundation for
management development programmes

**Planning facilitates preparation of an appropriate manpower
budget for each department or division. This, in turn, helps in
controlling manpower costs by avoiding shortages/excesses in
manpower supply.
-it  takes  enormous  time.
-it  takes   resources.
-it  costs.


1.Corporate  VISION

2. Corporate  Mission

3. Corporate  Objective

4. Corporate  Strategy

5.Corporate  Organization  Policy/ Budget  Guidelines.

6. Corporate  HR  objective/ strategy

7. Corporate  Industrial  Relations   Policy

8. Corporate  Sales  forecasts  

9. Corporate  Product  Plans
10. Corporate  Production forecasts.
HR    Planning  includes


1.Assessment / Audit  of  the  current  manpower  profile

and  also

-normal turnover,
-staff  movements  planned
-succession planning








These  include

-Recruitment/ Selection  PLAN
-Induction / Orientation PLAN
-Training  / Developement  PLAN
-Compensation  PLAN
-Salary  administration  PLAN
-Payroll  Administration  PLAN
-Performance  Appraisal  PLAN
-Performance  Management  PLAN
-Industrial  Relations  PLAN
-Promotions  PLAN [ IF  ANY ]
-Terminations  PLAN
-Transfers  PLAN
-Staff  amenities. PLAN
-retraining  plan
-early retirement  plan
-redundancy  plan
-changes in  workforce utilization  plan
-career  path  plan
-succession  plan.
-personnel  and  career  plans


-as  the  economy  grows/declines, the  demand  for  HR resources
changes  not  only  in  quantity   but  also  in  quality/ types.

-social  pressure  to  provide the right environment  for  employees.

-political  pressure  to employ  local  population, irrespective
 of  skills/ knowledge.

-legal  challenges  to  recruitment /  compensation  on   
 discrimination .

-technology  changes  means  getting  right  type of  people
or  provide  the  right  type  of training.

-competitive  pressure  to  get  the  right  talent at the  right

-CORPORATE  strategic  planning  seeks  strategic  HR  planning.

-BUDGET  constraint  put  pressure  on  HR  to get  the
best  resources  for  the  least.

-sales / production  increases  in  business, puts  pressure
on  HR    to  recruit  more.

-sales / production  decreases  in  business, puts  pressure
on  HR    to  rationalise  recruitment.

-new  venture means  demand  for  new  type of  skills/ knowledge.

-acquisitions /  mergers  means  rationalization  of  HR.

-Organization  development   means  HR  implementing  new
structure, new  culture, new  systems  etc.

-Job  redesign  means  HR  implementing  new
 methods, new   process, new  systems  etc.

-Globalization  means   managing  HR  diversity, new  culture
change, new  training  etc.

-HR    challenges /  difficulties  include  
*managing  retirement
*managing  voluntary  retirement  schemes
*managing  terminations
*managing  leave  of  absence.
*managing  part time  workers/ causals.
*managing  layoffs


-staff  skills  inventories
-management  inventories
-replacements  requirements
-transition  requirements

-labor  market  supply
-community  attitude
-demographic  trends

-shorter  weeks
-virtual  organizations.
1.Corporate  VISION

2. Corporate  Mission

3. Corporate  Objective

4. Corporate  Strategy

5.Corporate  Organization  Policy/ Budget  Guidelines.

6. Corporate  HR  objective/ strategy

7. Corporate  Industrial  Relations   Policy

8. Corporate  Sales  forecasts  [  3 or 5  ]

9. Corporate  Product   Plans [ 3 or 5   ]
10. Corporate  Production forecasts. [ 3 or 5  ]

AS  PART  OF   HR  PLANNING ,   review the  following
1.The  impact  of  technological  change on task needs.
2. Variations in the  efficiency, productivity, flexibility  of  labor  as  a
result  of  training, work study  organizational change, new motivations, etc.

3. Changes  in  employment practices [ e.g. subcontractors  or  
    outsourcing  etc ]
4.Other  variations due to  new legislations like new health requirements,
   safety  requirements etc.

5.Changes  in  government policies   like  tax/ tariff etc
6. Labor  demand  and  supply .

7. Skills   levels   availability

What should  emerge from  this  analysis / reviews  is a   "thought out"   
and  logical  staffing  demand  schedule for  varying dates  in the future
which  can then  be  compared  with  the  crude  supply   schedule.
The  comparison will then  indicate  what steps must be taken to
achieve a balance.

-informal  internal  surveys.
managers  prepare  their  own estimates based  on  workload.
-formal  external  surveys.
planners  survey  managers, using  questionnaires  or  
or  focused  discussion.
-delphi  techniques
solicit  estimates from  a  group  of  managers, until  the
estimates   converge.
extending  past rates  of  change  into  the  future.
matching  employment  growth with , say,  sales.
-statistical  analysis
-planning  and  budgeting  systems  
based  on  strategic  and  corporate  plannings/ budgeting.
-new  venture  analysis
making  comparisons  with similar  operations.
-computer  models
using  multiple  variables.
In  THIS   company,  HRM  is part  of  senior management.
HRM  makes  contribution  to the  development  of
-corporate  mission  statement
-corporate  objectives
-corporate  strategy.

The senior management  team  or TOP management would
consists  of
-ceo  or  managing director
-corporate planning  manager
-finance manager
-marketing manager
-manufacturing manager
-sales manager
-supply chain manager
-HR  manager

STEP 1[a]
TOP  management  would
-evaluate  the  current  [ last 12 months] performance  against  the
objectives / target set previously, which includes  return on investment,
profitability , etc  and  also  the  performance of various  departments
like  marketing, sales, HR, manufacturing, etc etc.

STEP 1 [b]
TOP  management will  also  evaluate the current  mission,objectives,
strategies and  policies.
STEP   2[a  ]
MD  will take  the summary  of  the evaluation of the current
performance  to  the  board  for  review.

STEP  2 [ b  ]
Based  on  the  review  plus  the  external environmental  factors,
the  board  will  make decisions  on  
-new  mission  statement
-new corporate  objectives
-new corporate  governance

STEP   3 [ a   ]

TOP  management  will  scan  and  assess the  company's
external  environment  --political/ economic/social/ technology.
to  determine  the  strategic  factors  that  pose   as  

STEP   3 [   b  ]

TOP  management  will  scan  and  assess  the  company's
internal  environment  --structure/ culture/resources  etc     
to  determine  the  strategic  factors  that  pose   as  

STEP  3[ c ]
TOP MANAGEMENT  will  analyze  the  the  strengths / weaknesses
of  the  organization  and  pinpoint  the problems  areas that needs
attention  and  the  strengths  that  could  be exploited.

Based  on  the  above analyses, TOP management  will generate,
evaluate, and  select  the  best  strategic  factors.

STEP   5
TOP  management  will  review  and  revise [ if  necessary ] the
mission statement and  corporate objectives.

TOP  management  will  generate and  evaluate strategy alternatives
and  objectives.

This  final  corporate  mission statement, objectives and  strategies
becomes  the  foundation information  for  the  various  departments
to  work  out  their  departmental  objectives/strategies/plans.

After  working  out  their  respective  objectives/strategies/plans
and  the  budgets ,  the  departmental  managers send  their
respective  information  to  the  TOP  management  for

On  receiving   the  approved  package  from  the  TOP  management,
the  departmental  managers  develop  the  implementation plan.

STEP 10.

NOW  you  have  mission/objectives/strategies/plans/budget/schedules.



IN  case  of   HR,  which  is  a  department  by  itself,
MUST  discuss with  other  departments  of  their
expectations/ intentions  on  HUMAN  RESOURCES.

This  final  corporate  mission statement, objectives and  strategies
becomes  the  foundation information  for  the  HR  department
to  work  out  your  departmental  objectives/strategies/plans.

Discuss  with  the  various  other departments  like sales/ production/
distribution/accounting/  IT  etc  about  their  requirements
-for manpower
etc etc

Once  you  get  their  departmental  requirements,  HRM  develops

-staff  skills  inventories
-management  inventories
-replacements  requirements
-transition  requirements

-shorter  weeks
-virtual  organizations.


HR    Planning  includes


1.Assessment / Audit  of  the  current  manpower  profile

and  also

-normal turnover,
-staff  movements  planned
-succession planning








These  include

-Recruitment/ Selection  PLAN
-Induction / Orientation PLAN
-Training  / Developement  PLAN
-Compensation  PLAN
-Salary  administration  PLAN
-Payroll  Administration  PLAN
-Performance  Appraisal  PLAN
-Performance  Management  PLAN
-Industrial  Relations  PLAN
-Promotions  PLAN [ IF  ANY ]
-Terminations  PLAN
-Transfers  PLAN
-Staff  amenities. PLAN
-retraining  plan
-early retirement  plan
-redundancy  plan
-changes in  workforce utilization  plan
-career  path  plan
-succession  plan.
-personnel  and  career  plans

The elements  in  HR  department  budget  would  vary  with
-company  policy
-budget  process
-company  accounting  system
-nature of  the business operation

HERE  is  a  broad  set  of   guidelines.

-recruitment/ selection [ internal/ outsourcing ]
-PLACEMENT contractors [external ]
-salary/ wages
-training/ development [ includes  induction/ orientation]
-staff benefits
-staff  amenities
-workplace  facilities
-workplace safety [ OHS]
-salary  contingency
-workers  compensation
-staff  communication [ includes newsletter/ intranet ]
-labor relations [ legal/ investigations]
-HR administration
-HR travels
etc etc.
These   plans  will  help  to  bring  supply  and  demand  into  equilibrium,
not  just  as  a  one-off   but  as a  continual workforce  planning
exercise  the  inputs  to  which  will need  constant  varying  to reflect
the  actual  as  against  predicted  experience  on the  supply  side
and  changes in  production actually  achieved as  against  forecast
on the  demand  side.



1.Methods Based on Judgment

Unaided judgment   METHOD.
It is common practice to ask experts what will happen. This is a good procedure to use when
• experts are unbiased
• large changes are unlikely
• relationships are well understood by experts (e.g., demand goes up when prices go down)
• experts possess privileged information
• experts receive accurate and well-summarized feedback about their forecasts.

Prediction markets METHOD.
Prediction markets, also known as betting markets, information markets, and futures markets have a long history.

Some commercial organisations provide internet markets and software that to allow participants  to  predict.Consultants can also set up betting markets within firms to bet on such things as the sales growth of a new product. PREDICTIONS  can produce accurate sales forecasts when used within companies. However, there are no empirical studies that compare forecasts from prediction markets and with those from traditional groups or from other methods.

Delphi  METHOD.
The Delphi technique  helps to   capture the knowledge of diverse experts while avoiding the disadvantages of traditional group meetings. The latter include bullying and time-wasting.
To forecast with Delphi the administrator should recruit between five and twenty suitable experts and poll them for their forecasts and reasons. The administrator then provides the experts with anonymous summary statistics on the forecasts, and experts’ reasons for their forecasts. The process is repeated until there is little change in forecasts between rounds – two or three rounds are usually sufficient. The Delphi forecast is the median or mode of the experts’ final forecasts.
The forecasts from Delphi groups are substantially more accurate than forecasts from unaided judgement and traditional groups, and are somewhat more accurate than combined forecasts from unaided judgement.

Structured analogies METHOD.
The outcomes of similar situations from the past (analogies) may help a marketer to forecast the outcome of a new (target) situation. For example, the introduction of new products in the  markets can provide analogies for the outcomes of the subsequent release of similar products in other countries.
People often use analogies to make forecasts, but they do not do so in a structured manner. For example, they might search for an analogy that suits their prior beliefs or they might stop searching when they identify one analogy. The structured-analogies method uses a formal process to overcome biased and inefficient use of information from analogous situations.
To use the structured analogies method, an administrator prepares a description of the target situation and selects experts who have knowledge of analogous situations; preferably direct experience. The experts identify and describe analogous situations, rate their similarity to the target situation, and match the outcomes of their analogies with potential outcomes in the target situation. The administrator then derives forecasts from the information the experts provided on their most similar analogies.
Structured analogies are  more accurate than unaided judgment in forecasting decisions .

Judgmental Decomposition METHOD.
The basic idea behind judgemental decomposition is to divide the forecasting problem into parts that are easier to forecast than the whole. One then forecasts the parts individually, using methods appropriate to each part. Finally, the parts are combined to obtain a forecast.
One approach is to break the problem down into multiplicative components. For example, to forecast sales for a brand, one can forecast industry sales volume, market share, and selling price per unit. Then reassemble the problem by multiplying the components together. Empirical results indicate that, in general, forecasts from decomposition are more accurate than those from a global approach . In particular, decomposition is more accurate where there is much uncertainty about the aggregate forecast and where large numbers (over one million) are involved.

Expert systems METHOD.
As the name implies, expert systems are structured representations of the rules experts use to make predictions or diagnoses. For example, ‘if local household incomes are in the bottom quartile, then do not supply premium brands’. The forecast is implicit in the foregoing conditional action statement: i.e., premium brands are unlikely to make an acceptable return in the locale. Rules are often created from protocols, whereby forecasters talk about what they are doing while making forecasts. Where empirical estimates of relationships from structured analysis such as econometric studies are available, expert systems should use that information. Expert opinion, conjoint analysis, and bootstrapping can also aid in the development of expert systems.
Expert systems forecasting involves identifying forecasting rules used by experts and rules learned from empirical research. One should aim for simplicity and completeness in the resulting system, and the system should explain forecasts to users.
Developing an expert system is expensive and so the method will only be of interest in situations where many forecasts of a similar kind are required. Expert systems are feasible where problems are sufficiently well-structured for rules to be identified.
Expert systems forecasts are more accurate than those from unaided judgement.  

Simulated interaction METHOD
Simulated interaction is a form of role playing for predicting decisions by people who are interacting with others. It is especially useful when the situation involves conflict. For example, one might wish to forecast how best to secure an exclusive distribution arrangement with a major supplier.
To use simulated interaction, an administrator prepares a description of the target situation, describes the main protagonists’ roles, and provides a list of possible decisions. Role players adopt a role and read about the situation. They then improvise realistic interactions with the other role players until they reach a decision; for example to sign a trial one-year exclusive distribution agreement. The role players’ decisions are used to make the forecast.
Forecasts from simulated interactions were substantially more accurate than can be obtained from unaided judgement. Simulated interaction can also help to maintain secrecy. Information on simulated interaction is available from

Intentions and expectations surveys METHOD.
With intentions surveys, people are asked how they intend to behave in specified situations. In a similar manner, an expectations survey asks people how they expect to behave. Expectations differ from intentions because people realize that unintended things happen. For example, if you were asked whether you intended to visit the dentist in the next six months you might say no. However, you realize that a problem might arise that would necessitate such a visit, so your expectations would be that the event had a probability greater than zero.

Expectations and intentions can be obtained using probability scales . The scale should have descriptions such as 0 = ‘No chance, or almost no chance (1 in 100)’ to 10 = ‘Certain, or practically certain (99 in 100)’.
To forecast demand using a survey of potential consumers, the administrator should prepare an accurate and comprehensive description of the product and conditions of sale. He should select a representative sample of the population of interest and develop questions to elicit expectations from respondents. Bias in responses should be assessed if possible and the data adjusted accordingly. The behaviour of the population is forecast by aggregating the survey responses.

2.Methods requiring quantitative data

Extrapolation  METHOD
Extrapolation methods use historical data on that which one wishes to forecast. Exponential smoothing is the most popular and cost effective of the statistical extrapolation methods. It implements the principle that recent data should be weighted more heavily and ‘smoothes’ out cyclical fluctuations to forecast the trend. To use exponential smoothing to extrapolate, the administrator should first clean and deseasonalise the data, and select  reasonable smoothing factors. The administrator then calculates an average and trend from the data and uses these to derive a forecast
Statistical extrapolations are cost effective when forecasts are needed for each of hundreds of inventory items. They are also useful where forecasters are biased or ignorant of the situation .
Allow for seasonality when using quarterly, monthly, or daily data. Most firms do this . Seasonality adjustments led to substantial gains in accuracy in the large-scale study of time series .

Quantitative analogies METHOD.
Experts can identify situations that are analogous to a given situation. These can be used to extrapolate the outcome of a target situation. For example, to assess the loss in sales when the patent protection for a drug is removed, one might examine the historical pattern of sales for analogous drugs.
To forecast using quantitative analogies, ask experts to identify situations that are analogous to the target situation and for which data are available. If the analogous data provides information about the future of the target situation, such as per capita ticket sales for a play that is touring from city to city, forecast by calculating averages. If not, construct one model using target situation data and another using analogous data. Combine the parameters of the models, and forecast with the combined model.

Rule-based forecasting  METHODS
Rule-based forecasting (RBF) is a type of expert system that allows one to integrate managers’ knowledge about the domain with time-series data in a structured and inexpensive way. For example, in many cases a useful guideline is that trends should be extrapolated only when they agree with managers’ prior expectations. When the causal forces are contrary to the trend in the historical series, forecast errors tend to be large . Although such problems occur only in a small percentage of cases, their effects are serious.
To apply RBF, one must first identify features of the series using statistical analysis, inspection, and domain knowledge (including causal forces). The rules are then used to adjust data, and to estimate short- and long-range models. RBF forecasts are a blend of the short- and long-range model forecasts.
RBF is most useful when substantive domain knowledge is available, patterns are discernable in the series, trends are strong, and forecasts are needed for long horizons. Under such conditions, errors for rule-based forecasts are substantially less than those for combined forecasts . In cases where the conditions were not met, forecast accuracy is not harmed.

Neural nets METHODS
Neural networks are computer intensive methods that use decision processes analogous to those of the human brain. Like the brain, they have the capability of learning as patterns change and updating their parameter estimates. However, much data is needed in order to estimate neural network models and to reduce the risk of over-fitting the data .There is some evidence that neural network models can produce forecasts that are more accurate than those from other methods . While this is encouraging, our current advice is to avoid neural networks because the method ignores prior knowledge and because the results are difficult to understand.

Data mining METHODS
Data mining uses sophisticated statistical analyses to identify relationships. It is a popular approach.
Data mining ignores theory and prior knowledge in a search for patterns. Despite ambitious claims and much research effort, we are not aware of evidence that data mining techniques provide benefits for forecasting.

Causal models METHODS.
Causal models are based on prior knowledge and theory. Time-series regression and cross-sectional regression are commonly used for estimating model parameters or coefficients. These models allow one to examine the effects of marketing activity, such as a change in price, as well as key aspects of the market, thus providing information for contingency planning.
To develop causal models, one needs to select causal variables by using theory and prior knowledge. The key is to identify important variables, the direction of their effects, and any constraints. One should aim for a relatively simple model and use all available data to estimate it . Surprisingly, sophisticated statistical procedures have not led to more accurate forecasts. In fact, crude estimates are often sufficient to provide accurate forecasts when using cross-sectional data .


General principles
• Managers’ domain knowledge should be incorporated into forecasting methods.
• When making forecasts in highly uncertain situations, be conservative. For example, the trend should be dampened over the forecast horizon.
• Complex methods have not proven to be more accurate than relatively simple methods. Given their added cost and the reduced understanding among users, highly complex procedures cannot be justified.
• When possible, forecasting methods should use data on actual behaviour, rather than judgments or intentions, to predict behaviour.
• Methods that integrate judgmental and statistical data and procedures (e.g., rule-based forecasting) can improve forecast accuracy in many situations.
• Overconfidence occurs with quantitative and judgmental methods.
• When making forecasts in situations with high uncertainty, use more than one method and combine the forecasts, generally using simple averages.

Methods based on judgment
• When using judgment, rely on structured procedures such as Delphi, simulated interaction, structured analogies, and conjoint analysis.
• Simulated interaction is useful to predict the decisions in conflict situations, such as in negotiations.
• In addition to seeking good feedback, forecasters should explicitly list all the things that might be wrong about their forecast. This will produce better calibrated prediction intervals.

Methods based on statistical data
• With the proliferation of data, causal models play an increasingly important role in forecasting market size, market share, and sales.
• Methods should be developed primarily on the basis of theory, not data.

Finally, efforts should be made to ensure forecasts are free of political considerations in a firm. To help with this, emphasis should be on gaining agreement about the forecasting methods. Also, for important forecasts, decisions on their use should be made before the forecasts are provided. Scenarios are helpful in guiding this process.

Q.2. Discuss the various ways in which the commitment of errors in performance
appraisal can be minimized.
Ten Most Common Appraisal Errors of Performance Appraisals*
   Gut feeling (subjectiveness)
   Lack of follow-up
   Improper preparation; poor documentation
   Biases
   Similar to me assunption
   Positive leniency - want to give everyone high scores
   Negative leniency - want to give everyone low scores
   Halo effect - the employee is a "saint" so must have high scores
   Attribution - tending to see poor performance more within control of the individual and superior performance as more of an influence of external factors
   Stereotyping
   Contrast effect - contrasting one employee's accomplishments against another
   Unfair comparison - comparing one employee against another
   First impression
   Central tendency (forced bell curve) - expecting in any group that there will be some poor employees and some great employees
   Recency effect: over - emphasis on recent performance
   Inadequately defined and/or misunderstood standards/goals
   Lacking truth
   Poor interviewer (poor environment, poor use of time, domineering, poor listener, etc.)
   Conducting an "annual" review (as opposed to the ongoing review)
   Negative approach - catching them doing doing something wrong (as opposed to the One Minute Manager Approach of catching them doing something right)
*lack  of training  of  supervisors/ managers in  appraisals.
*lack  of  training  / orientation  of  employees  in  appraisal  systems/ self appraisal.
   Scoring Errors
   Scoring is inaccurate when the manager rates too many performance objectives on one part of the rating scale -- high, middle or low -- without basing the ratings on concrete data or knowledge. If a manager rates the employee in the middle of the scoring scale -- meets expectations -- on 90 percent or more of the objectives, the scoring is probably inaccurate, according to information from Western Washington University's performance manual. If more than 20 percent of your ratings are at the high end of the scale, you may be rating too easily. If more than 20 percent are located at the low end, you may be rating too harshly. Managers can avoid inaccurate scoring trends by basing ratings on their knowledge of an employee's actual performance gathered through recorded data or personal observations.
   Recency
   Focusing only on recent performance within the evaluation period is a common error in performance evaluations. For example, a manager should not consider only an employee's performance within the last three months during an annual evaluation. The entire period of employee performance must be evaluated or the evaluation risks inaccuracy.
   Similarity Errors
   Managers sometimes rate employees more favorably if the employees consistently perform job functions in the same style or by using the same process as they do. Instead, managers should focus on the outcome -- whether the employee was able to achieve the desired results in an acceptable way.
   Contrast Errors
   If a manager focuses on a stereotype -- due to race, religion, age or sexual orientation -- when rating, a contrast error results. Each employee's performance, not his background, characteristics or lifestyle, should be rated. Also, a contrast error can result when two employees with similar performances are compared. The error occurs when the manager rates one employee lower than the other because the manager likes the other employee better. Giving ratings based on an employee's traits or likability, rather than her performance, qualifies as job discrimination, which can lead to legal claims and other complications.
   Annual vs. Ongoing Reviews
   Many managers conduct annual reviews instead of investing the time in ongoing reviews. Annual reviews must cover 12 months of performance, while ongoing reviews focus on smaller blocks of time. A manager conducting an annual review can fail to address problematic issues that occurred 10 months prior to the review, which doesn't help the employee understand how to improve his performance in those areas. With ongoing reviews, managers can discuss performance goals and offer feedback in a timely manner to help improve the employee's performance on the fly.
   Insufficient Listening
   Not listening is a characteristic of poor interviewing skills -- one of the 10 most common errors of performance appraisals -- according to information on the Belmont University website. Not only is the manager's job to deliver feedback to an employee regarding performance, she should also listen. Employees have the right to respond to the information presented to them during a performance evaluation. They may have questions or concerns about the feedback you provide. After listening to an employee's response, you may find he was justified in his actions. You also may decide to alter the results of the evaluation. If you dominate the evaluations and don't stop and listen to what your employees have to say, the employee may feel undervalued and misunderstood.
   Negative Approach
   Sometimes managers begin a performance evaluation with a negative slant. Perhaps the employee has failed to apply managerial feedback. Or maybe her performance hasn't been as good as it was in the past. Even though you should address negative issues, don't start the review with them. Acting negative from the start can put the employee on the defensive.
   Positive Generalizations
   An employee who is always willing to volunteer for extra work and undesirable tasks may make your life easier. However, he may not perform well in some areas of his job. Managers who focus on the fact that an employee exceeds expectations in one single area can overgeneralize the true performance of the employee. This happens when a manager rates other areas of an employee's performance highly based on one thing the employee does well.
   Negative Generalizations
   Perhaps an employee ignores your advice and completes tasks her own way -- often with poor results. An employee's unprofessional behavior in one area can negatively influence unrelated areas during a performance evaluation. The key to success is to evaluate areas of performance separately.
Performance appraisals that contain errors or are constructed from a supervisor’s biased viewpoint can affect an employee’s working relationship. Employees whose performance is ranked incorrectly or inaccurately may be on the verge of losing their jobs, or they may become disillusioned and exhibit signs of low morale and poor job satisfaction. Eliminating bias and error in performance appraisals is a critical responsibility for supervisors, managers and human resources staff.
Step 1
Complete supervisor training on the fundamentals of performance management, including your company’s philosophy and practices. Leadership training on performance management also includes when and how to administer disciplinary warnings, corrective action and suspensions, how to provide employees with constructive feedback throughout the evaluation process and how to conduct annual employee evaluation meetings.
Step 2
Study the types of bias and errors most common in performance appraisals. Bias is not always negative -- supervisors have favorites whom they evaluate with especially high ratings for each annual appraisal. This is called the halo effect, suggesting the employee can do no wrong. When supervisors give unequal weight to employee job tasks, it can produce an inaccurate performance appraisal. Errors can occur when supervisors look only at employee performance for the most recent period instead of the full evaluation period. This is referred to as recency error.
Step 3
Review employee documents to gain a complete picture of past performance. Contact employees’ supervisors in other departments when it’s difficult to piece together work history and performance for long-term employees. Make note of discrepancies in earlier performance appraisals that may compound later performance issues.
Step 4
Obtain the correct appraisal forms from your human resources department. Supervisors and managers with small companies that don’t have dedicated human resources departments can check online sources for performance evaluation templates and forms.
Step 5
Read the performance standards for all the job duties and tasks for which the employee is responsible. Look at her performance throughout the entire evaluation period as objectively as possible. Gather documents that support performance, such as sales records, call logs, reports and other materials that measure the employee’s work quantitatively.
Step 6
Compare the performance standards to her actual work. For example, if performance standards for meeting company expectations require 12 closed sales per month, check her sales reports for every month during the entire evaluation period.
Step 7
Draft the performance appraisal form and attach supporting documentation. If possible, ask a colleague to review your draft or ask a member of the human resources staff to read the performance appraisal draft. Review it the next day with a fresh set of eyes. Read the evaluation from your perspective and then put yourself in the employee’s position, reading from his perspective.

Traits of the Best Performance Management Systems
   Performance management is a daily supervisory responsibility and integral to management.  If proper goal setting, coaching and feedback are done periodically, then the results of the performance evaluation will not be a surprise.
   Supervisors understand and communicate how the goals of the organization directly impact the employee's job and performance.
   Supervisors see performance appraisal, training and development and career pathing as interrelated and essential for the organization's success.
   High performance is rewarded appropriately.  Mediocre performance is not rewarded.
   Good managers are honest, fair and caring with all employees.  They remember to listen and promote 2-way communications.
   Good managers know that turnover costs are high. They know that to retain employees, development and training are essential.
   Supervisors understand that following the policies and guidelines for performance management is critical for successful defense in a legal setting.
   Supervisors use the same process for all employees.
   Job content is used in developing goals and evaluating performance.
   Evaluations are behavior oriented and not personality trait oriented.
   Employees are given  the right to respond to the evaluation in writing and both the supervisor and employee sign the final copy.
   Confidentiality is respected.


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Leo Lingham


management consulting process, management consulting career, management development, human resource planning and development, strategic planning in human resources, marketing, careers in management, product management etc


18 years working managerial experience covering business planning, strategic planning, corporate planning, management service, organization development, marketing, sales management etc


24 years in management consulting which includes business planning, strategic planning, marketing , product management,
human resource management, management training, business coaching,
counseling etc




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