Management Code 17 Notes Unit 1 (UGC NET Paper 2)

Click on the links below for the Notes on Management Functions

Planning – Meaning, Nature, Features, Types, Process and Barriers


Organizing – Concept of Organization and Organizing -Meaning, Definitions, Process and Theories

Promotion, Transfer, Demotion

Advancement within an organization is ordinarily labeled as promotion which involves a change from one job to another that is better in terms of status and responsibility. Ordinarily, the change to the higher job is accompanied by increased pay and privileges, but not always. The term ‘dry promotion’ refers to an increase in responsibility and status without any increase in pay.

Types of Promotion

On the basis of Factors involved

1. Horizontal promotion
This type of promotion includes an increase in responsibilities, pay and change in designation. However, the employee doesn’t shift the job classification. For example, a lower division clerk may be promoted as upper division clerk with same job assignment and responsibility.

2. Vertical promotion
In this type of promotion, an employee is moved to higher level in the hierarchy. This involves increase in pay, status and responsibilities.
For example, superintendent becomes departmental manager.

On the basis on which decision can be made

1. Merit
Management personnel generally prefer merit, as determined by job performance and by analysis of employee’s potential, for promotion. In this way, they ensure that competence shall be the fundamental determinant of progress. If promotion is to be an incentive, the best performing employee ought to be promoted. When merit is taken as base for promotion efficiency is ensured in the organization.

i. It motivates competent employees to work hard and acquire new skills.
ii. It helps to maintain the efficiency of the organization by recognizing talent and performance.
iii. It helps to attract and retain young and promising employees in the organization.

i. It is very difficult to judge merit and subjective judgment is involved.
ii. Merit indicates past achievement. It may not denote the future potential and past experience of an employee.
iii. When young employees are promoted over older employees, the old and experienced people may leave the organization.
iv. Old employees feel insecure.

2. Seniority
Distinguishing among persons on the basis of seniority is as old as civilization itself. Seniority is widely recognized in all types of organizations: military, government and business organization. However, the extent to which promotions should be based on seniority is always an area of dispute between employee’s unions and management. Seniority can be defined as the length of recognized service in an organization. Seniority and experience are not necessarily equivalent, although they may be generally associated. Experience measured in years has little value except as applied to particular individuals who make the experience meaningful in on-going situations.

i. It is relatively easy to measure length of service and thereby judge the seniority of an employee.
ii. It is an objective criteria owned there is no scope for favouritism. Therefore, it creates a sense of security among employees and avoids grievances and conflicts arising from promotion decisions.
iii. It provides a sense of satisfaction to senior employees and is in line with the India culture of respecting seniority in all walks of life.

i. The assumption that length of service indicates talent in not valid. Beyond a certain age a person may not learn. So oldest is not always the ablest.
ii. In this system the performance (worth) and potential of an individual s not recognized. Therefore it demotivates the youth employees who are talented.
iii. This system kills ambition and zeal to improve because everybody will be promoted without improvement.

It implies the assignment of an employee to a job of lower rank with lower pay. It refers to downward movement of an employee in the organizational hierarchy with lower status and lower salary. Demotion is just opposite of promotion. It is a degrading process and a serious type of punishment.

A horizontal shifting of employee form one job to another without any job related increase in the pay, benefits and status of the employee is called transfer.

Types of transfer

i. Inter-departmental versus Intra-departmental
Inter-departmental means transfer of employees form one department to another within same job classification.
Intra-departmental means transfer form one job to another within same department.
The salary range, responsibilities and duties are the same or similar for both the jobs.

ii. Voluntary(Requested) Versus Involuntary(Imposed)
When the employee himself applies for a transfer to some other position within the same job classification, it is called voluntary transfer. An employee may request for a transfer to another position within or outside the department. When employees are transferred by the organization for administrative or other reasons without their concurrence, it is called involuntary transfer.

iii. Replacement transfers
This type of transfer is made to retain long service employees. The long standing employee replaces a new employee and thereby gets relief from the heavy pressure of work.

iv. Versatility transfers
Also called rotation this transfer is made to develop all round employees by moving them form one job to another. This helps to reduce boredom and monotony.
v. Remedial transfer
Such a transfer is made to rectify mistakes in selection and placement. As a follow up, wrongly placed employee is transferred to a more suitable job. The employee may not be getting along with his supervisor or colleagues.
vi. Production transfer
Such transfers are made when labour requirements in one factory or branch are declining. The surplus employees who are efficient or trained might be adsorbed in other places to avoid layoff. Such transfers help to stabilize employment.
vii. Shift transfer
Employees may be shifted from one shift to another for personal reasons, e.g. marriage, infant care, old parents , etc.

Types of Separation

It is a voluntary separation initiated by the employee himself. An employee may resign on grounds of ill-health, marriage, pregnancy, better opportunities in other organisation etc.

This is the common form of separation of employees form the organization. There are three kinds of Retirement:
i. Compulsory Retirement
An employee must retire after attaining the specified age. The current retirement age for most government workers in India is 60.
ii Premature Retirement
An employee may retire before attaining the specified age due to bad health, physical disability, family problem etc. he gets the full benefit of retirement provided the management allows premature retirement.
iii. Voluntary Retirement
When an organization wants to cut down its operations or to close forever, it may give an option to its employees with a certain minimum service for voluntary retirement in return for a lumpsum payment. This type of retirement is also called Golden Hand Shake.

Layoff implies temporary removal of an employee from the payroll of the organization due to circumstances beyond the control of the employer. It may last for an indefinite period. But the employee is not terminated and is expected to be called back in future. The employer employee relationship does not come to an end but is merely suspended during the period of layoff. It is temporary denial of employment. The purpose of layoff is to reduce the financial burden on the organisation when the human resources cannot be utilized profitably. Under Section 2 (KKK) lay off is defined as
“the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or natural calamity or for any other connected reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched.
Layoff is resorted in seasonal and cyclic industries. In mines workers are laid off due to excess inflammable gas, flood, fire and explosion.

Retrenchment means permanent termination of an employee’s services for economic reasons in a going concern. Termination of services on account of disciplinary action, or prolonged illness or retirement and superannuation, or expiry of agreement or on closure of the establishment does not constitute retrenchment. It is termination due to redundancy of workforce.
The Industrial Dispute Act, 1947 lays down the following conditions for retrenchment:
i. The employee must be given one month’s notice in writing indicating the reasons for retrenchment or wages in lieu of such notice.
ii. The employee must be paid compensation equal to 15 days wages for every completed year of service. Notice in the prescribed manner must be served on the appropriate government authority.
iii. In the absence of any agreement to the contrary, the worker employed last must be terminated first.
iv. Retrenched workers must be given preference in future employment.
Establishments employing 100 or more workers are required to give 3 month’s notice and to seek prior approval of the Government.

Dismissal refers to terminating the service of an employee by way of punishment for misconduct or unsatisfactory performance. Unsatisfactory performance implies persistent failure of the employee to perform his job to th specified standards. Dismissal is a drastic step and should be used as a last step after all attempts to salvage the employee have failed. Before an employee is discharged he must be given the opportunity to explain his conduct and to show cause why he should not be dismissed. The principle of natural justice should be followed i.e. the punishment should not be out of proportion to the offence.

i. Conduct preliminary inquiry
ii. Issue charge sheet
iii. Appointment of disciplinary/inquiry authority
iv. Conduct detail inquiry
v. Passing order of termination as dismissal
vi. Hearing and disposal of appeals.
The biggest difference between layoff and retrenchment is that layoff is volatile in nature, i.e. employees are recalled, once the period of layoff is over while retrenchment is non-volatile i.e. that involves full and final termination of services.

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