Training, promotion, transfer and demotion; performance appraisal, retention and attrition

1. Training

Training is the act of increasing the knowledge and skill of an employee for doing a particular job (Edwin Flippo). It is job-oriented and short-term; development is wider and longer-term, preparing managers for future roles.

Benefits (importance)

• Higher productivity and quality of work.
• Less wastage, fewer accidents.
• Less supervision needed.
• Higher morale and job satisfaction; lower turnover.
• Prepares employees for promotion and for new technology.
• Standardises methods across the organisation.

Methods

On-the-job methods are cheap and realistic, but production may suffer and the trainer may be a poor teacher. Off-the-job methods allow concentration and expert teaching, but are costly and further from real work.

2. Promotion

Promotion is the upward movement of an employee to a job of higher status, responsibility and usually pay. Bases: seniority (length of service: objective, but ignores ability); merit (ability and performance: rewards competence, but open to bias); and seniority-cum-merit, the usual compromise. A sound promotion policy is written, uniform, known to staff, and allows a probation period in the new post.

3. Transfer

Transfer is a horizontal movement to another job, place or shift with no substantial change in status or pay. Types: production transfers (from surplus to deficit departments), replacement, rotation (to broaden experience), shift, remedial (to correct a wrong placement) and penal transfers. Transfers should follow a stated policy; a transfer made to punish without enquiry invites a grievance.

4. Demotion and penalties for misconduct

Demotion is the downward movement to a lower post, status or pay. It may follow unsatisfactory performance, reorganisation that abolishes the post, or misconduct. The syllabus objective refers to “penalties for dereliction”: the usual penalties are warning, censure, fine, withholding of increments, suspension, demotion, discharge and dismissal.

Because demotion and dismissal are serious, they should follow a fair procedure: a charge-sheet, an opportunity to reply, a domestic enquiry observing natural justice, a reasoned order, and a right of appeal. For industrial establishments with 300 or more workers, the Industrial Relations Code, 2020 (in force from 21 November 2025) requires standing orders that set out misconduct and the procedure for punishment.

5. Performance appraisal

Performance appraisal is the systematic evaluation of an employee’s performance on the job and his potential for development. It is used for promotion, pay increases, training needs, transfer, feedback and validation of selection.

Traditional methods

• Straight ranking — employees ranked from best to worst.
• Paired comparison — each employee compared with every other, one pair at a time; the number of times each is preferred gives the rank.
• Graphic rating scale — traits (quality, punctuality, initiative) rated on a scale, such as 1 to 5.
• Forced distribution — a fixed percentage must be placed in each grade (10% excellent, 20% good, 40% average, 20% fair, 10% poor).
• Checklist and forced choice statements.
• Critical incidents — a record of notably good and bad behaviour.
• Essay (free form) and confidential report, the method long used in government service.

Modern methods

• Management by objectives — appraisal against goals agreed in advance.
• Behaviourally anchored rating scales (BARS) — each point of the scale described by a specific behaviour.
• Assessment centre — candidates observed in exercises by trained assessors over one or more days.
• 360-degree feedback — appraisal by superiors, peers, subordinates, customers and self.
• Human resource accounting — the value of employees to the organisation in money terms.

Worked example: paired comparison

The number of pairs for n employees is n(n − 1)/2. For five employees A to E, 5 × 4 / 2 = 10 pairs. Suppose the results are: A preferred in 4 comparisons, B in 2, C in 3, D in 0, E in 1. The totals add to 10, one per pair. Ranking: A first, C second, B third, E fourth, D fifth. For 20 employees the method needs 190 comparisons, which is why it is used only for small groups.

Problems

The halo effect (one good trait colours the whole rating), leniency or strictness, central tendency (rating everyone average), recency (only recent events remembered), and personal bias.

6. Retention and attrition

Attrition (labour turnover) is the reduction in the workforce through resignation, retirement, death or dismissal. Retention is the organisation’s ability to keep its employees. High attrition raises the costs of recruitment and training, disrupts work and lowers morale.

Worked example

A firm has 200 employees on 1 April and 220 on 31 March. During the year 21 employees leave. Of the 200 on the rolls at the start, 180 are still employed at the end.

(Of the 21 who left, 20 were from the opening 200 and 1 was a new joiner who left within the year.)

Causes of attrition and retention measures

Causes: inadequate pay, poor working conditions, lack of growth, bad relations with supervisors, job mismatch, better offers outside, and personal reasons. Retention measures: competitive pay and benefits, career paths and promotion from within, training, recognition, flexible working, good supervision, a fair grievance system, and exit interviews to learn why people leave.

How this is examined

“Define training. Explain the various methods of training” (January 2026, 16 marks) and “Explain the methods of training” (April 2023, 10 marks); “benefits of training” (January 2025) and “importance of training” (August 2024) as 6-mark notes; “promotion and demotion” (August 2024); and “various methods of performance appraisal” (June 2025 and January 2025). In an appraisal answer, the paired comparison calculation and the forced distribution percentages show the method concretely.