MB0043 Set2

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Subject: MB0043 Human Resource Management
Assignment No: Set 2
Date of Submission at the Learning Centre:

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Q.1 Explain Wage Administration policy. What are the ways by which wages and
salaries are managed in India?

Answer:

Wage administration revolves around designing and managing policies and methods of
disbursing employee compensation. Traditionally it includes such areas as job evaluation,
maintenance of wage structures, wage surveys, incentives administration, wages changes
and adjustments supplementary payouts, profit sharing, control of compensation costs, and
other related pay items. Salaried often implies a status distinction, because those who are on
salary are generally white collar, administrative, professional, and executive employees,
whereas wage-earners in some organizations do receive full wage if they are absent for such
reasons as sickness, whereas salaried employees, especially at the lower levels, often
receive overtime pay when they work over the standard work week.

The following factors may be helpful to raise the effectiveness of the employees.

a. Signal to the employee the major objectives of the organizations

b. Attract and retain the talent an organization needs.

c. Motivate employees to perform effectively.

d. Create the type of culture the company seeks to engender

The main purpose of wage and salary administration is to establish and maintain equitable
wage and salary programs. The secondary objective is to design and implement an equitable
labour-cost structure. Therefore payout cannot be out-of-sync with the organizations ability
to pay it needs to be able to satisfy the employees as well as employers, profits maximized
and conflicts minimized.

Wages are commonly understood as price of labour. In ordinary parlance, any remuneration
paid for services is etymological wage. Benham defines wage as ‘ a sum of money paid
under contract by as employer to a worker for services rendered.

Subsistence theory: This theory also known as ‘ Iron law of wages” was propounded by
David Ricardo. (1772-1823) According to this theory, wages tend to settle at a level just
sufficient to maintain the workers and his family at minimum subsistence levels.

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Standard of living theory: This theory is a modified form of subsistence theory.

According to this theory, wages are determined not by subsistence level but also by the
standard of living to which a class of labourers becomes habituated.

Residual claimant theory: According to this theory there were four factors of
production/business viz. land, labour, capital and entrepreneurship. Wages represent the
amount of value created in the production which remains after payment has been made for
all these factors of production.

The wage fund theory: According to this theory, after rent and raw materials are paid for,
a definite amount remains for labour. The total wage fund and the number of workers
determine the average worker’s share in the form of wages.

Demand and supply theory: According to this theory, wages depend upon the demand and
supply of labour.

Marginal productivity theory: This is an improved form of demand and supply theory.
Wages are determined by the value of the net product of the marginal unit of labour
employed.

Purchasing power theory: According to this theory the prosperity productivity and
progress of industry depend on there being sufficient demand to ensure the sale of its
products and pocketing of reasonably profits.

The bargaining theory of wages: According to this theory wages are determined by the
relative bargaining power of workers or trade unions and of employers.

In India the tribunal and wage boards have generally followed the principles laid down in
the fair wages Committee’s report on fixing wages. The committee, in its report, has
focused on wage differentials and has identified the following factors for consideration for
fixation of wages.

a) The degree of skill

b) The strain of work

c) The experience involved

d) The training involved the responsibility undertaken

e) The mental and physical requirements

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f) The disagreeableness of the task.

g) The hazard attendant on the work and the

h) The fatigue involved.

In India, wages are classified as below:

a. Minimum wage

b. Fair wage

c. Living wage

Minimum: A minimum wage has been defined by the committee as the wage which must
provide not only for the bare sustenance of life, but for the preservation of the efficiency of
the worker. For this purpose the minimum wage must provide for some measure of
education, medical requirements and amenities.

Fair wage: According to the committee on fair wages, “ it is the wage which is above the
minimum wage but below the living wage. The lower limit of the fair wage is obviously the
minimum wage; the upper limit is set by the capacity of the industry to pay.

Living wage: This wage was recommended by the committee as a fair wage and as
ultimate goal in a w age policy. It defined a living wage as ‘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 this children, protection
against ill- health, requirements of essential social needs and a measure of insurance against
the more important misfortunes including old age.

Q.2 Texas is a medium size, plastic manufacturing company. In this Company,

workers have developed grievances against management. For past 2 years, in spite of
making Profit, Company is not paying bonus to the workers. It is expected that, if the
grievances are not dealt, it might lead to severe consequences. Imagine this situation
and explain the grievance handling procedure, list each steps of the procedure.
Suggest few measures to avoid grievances.

Answer:

The details of the grievance procedure vary from industry to industry and from trade union
to trade union because of the variation in the size of organizations, trade union because of

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the variation in the size of organization, trade union strength, the management philosophy,
the company traditions, industrial practices and in the cost factor. An important aspect of
the grievance machinery is the reassurance given to an individual employee by the mere
fact that there is a mechanism available to him which will consider his grievance is a
dispassionate and detailed manner, and that his point of view will be heard and given due
consideration.

Initial step: The greatest opportunity of the settlement of a complaint or grievance lies in
the initial step of the procedure. If there is no formal procedure and the firm announce an
open-door policy, and then it is possible that the manger may get bypassed by the worker
who would take is grievance directly to the higher levels of management. But such
bypassing not merely undermines the manager’s authority, who loses face, but also creates
an atmosphere of win-or- lose in which both the worker and manager will try to prove the
other wrong.

Intermediate step: As the figure indicates, the next step on the management side of the
procedure is to submit the dispute to middle management. Involving the manager’s middle
and senior-line managers I the grievance process help in two ways. Initially, the social
barriers between the various categories are to some extent, broken by personal contact and
mutual understanding. In most of the organizations, the business agent, a full-time
negotiations specialist of the union, takes over the intermediate and sometimes the final
step. The presence of a business agent may explain why management is often
outmaneuvered by the union.

Final company-union step: Usually, the final step to be undertaken by the company and
union is a discussion of the grievance between representatives of top management and top
union official. It is difficult to secure an integration of interests at this high level.

Few Steps to avoid grievance

Several studies indicate that there is a pattern in the topics/ categories that attract employee
discontent. These can be categorized as under following major headings.

1. Promotions, Super session, growth and internal job opportunities.

2. Compensation, increments and bonus

3. Amenities/office facilities, conditions of work.

4. Transfer/ job related relocation.

5. Disciplinary actions

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6. Acting promotion

7. Fines

8. Recovery of dues.

9. Safety appliance and

10. Victimization/ harassment.

Common sources of conflicting situations where the employee feels unfairly treated,
harassed, or overlooked in promotions, or are deserving of a pay hike, need to be redressed.
Justice systems that allow an employee to voice perceived conflicts serve the following
purpose:

a) Increase orainizational commitment and performance b treating employees fairly

and by indentifying problem areas.

b) Avoid expensive and long-drawn lawsuits, which also bring in negative employer
branding

c) Prevent unionism.

The key to employee well-being lies in communicating the process that is provided for
seeking such justice and the management remaining committed to it.

Q.3 Define competency. How competency is linked to Human resource system.

Answer:

Boyatiz, competency is defined as “As capacity that exists in a person that leads to a
behavior that meets the job demands within parameters of organizational and that in- turn
bring about the desired results”

Competency can be thought of a as a tool that can be used to map best-in- class
performance the best performer is always called the competent performer. Competencies
are based on Knowledge- information accumulated in a particular area of expertise, Skill-
demonstration of the expertise, Motive- the recurrent thought that drivers behavior, Attitude
self – concept, value and self image. Traits a general disposition to behave in a particular
way.

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There are two sets of competencies: Threshold competencies- they are the characteristics
that any job holder needs to have to do that job effectively, but do not differentiate between
average and superior performer; Differentiating competencies- are characteristics which
posses and there compensation and growth within the companies in modern companies.

Linking Competency to HR system:

One of the key benefits of the competency based management approach is its usage to
build all of the other HR systems such as recruitment, performance management, training
and development, career development compensation management and succession planning.

Recruitment and selection: The competency profile for a job serves as the reference for
the candidate hunt for the position. It is used at multiply stages in the recruitment and
selection process.

Performance Management: Increasingly the focus in most organizations using

competency frameworks is to build competency based performance assessment processes.

Training needs: The methodology used for competency improvement is usually action
learning based. Focus is on internalizing the learning by ensuring workplace application
projects and activities. Manager support in making competency training useful is important.

Career Planning: Competency assessments are popularly used for helping an employee
discover his strength competencies and therefore serve as effective means for the employee
to identify what roles/ jobs can be best for the competencies the employee possesses.

Compensating Philosophy: While there is significant work done in researching

competency based compensation, the practical application of competency based
compensation system is not as easy. The competency framework provides a common
benchmarking of all jobs across the organization on the competencies required and the
proficiency level for the competency.

Succession planning: Competency based management is most effective in succession

planning initiatives. Competency assessment is a widely used to identify and nurture talent
in organization.

Q.4 Think of a situation in which an employee is to be dismissed from the

organization, what will be the fair steps of dismissal followed by the organization?

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Answer:

According to Article 311 of the Indian Constitution, which states that ‘no person shall be
dismissed or removed from service until he has been given a reasonable opportunity to
show cause as to why the proposed action should not be taken against him?”

The following steps are followed for dismissal of an employee:

a) Charge sheet is framed and issued:

The first step in the procedure is to have in- place a written complaint against the
employee in question, and which contains details of the offence with which he is charged,
policy breach and the allegation of misconduct made against him, and indicating the time
limit within which a reply to the charge sheet should be submitted to the due authorities.
The employee is called to put forth his case why a disciplinary action should not be taken
against him.

b) Explanation Receipt:

The employee provides his explanation within the scheduled time allotted. He c an
also ask for an extension of time for its submission, all in good faith.

c) Issue of notice of Enquiry:

Upon receipt of explanation from the employee it is reviewed. If found

unsatisfactory, a notice of enquiry, mentioning the time, date and place, has to be given to
him in which the name of the person or officer conducting the enquiry would also be
mentioned. The employee is required to be present at the appointed time and place, together
with his witness, if he has any.

d) Conducting the enquiry:

On the appointed day and at the appointed place and time, the enquiry is held by the
Enquiry Officer in the presence of the employee. The contents of the charge sheet and an
explanation of the procedure to be followed at the enquiry are communicated to the worker.
If he pleads his innocence, the enquiry proceeds; but if he pleads guilty, unconditionally and
in writing, the enquiry is dropped.

e) Sharing findings:

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Once the enquiry is over, the enquiry officer has to give his findings, which should
invariably contain the procedure which was followed, the employee’s statements, all of the
documents produced and examined, the charges made and the explanations given and the e
evidence produced. The officer should then record his own findings, on each of the charges
and the grounds on which he has come to a particular conclusion. He should specifically
mention which charges have been proved and which have not been proved. He then submits
his findings to the authorities empowered to take the disciplinary action against the
employee.

Q.5 Suggest few measures to improve employee morale.

Answer:

There are a number of measures which can be used to control the warning signals of low
morale.

a) Creation of whole jobs - Under this method, complete jobs are assigned to the
employees. The complexity of a job should be increased so that it may appeal to their higher
epees.

b) Job enrichment - tries to deal with dissatisfaction by increasing job depth. Under this,
individual employees may be given responsibility for \setting their own work pace, for
concerning their own errors, and/ or for deciding on the best way to perform a particular
task.

c) Building responsibility into a job - Employees should be encouraged to participate and

if possible be half responsible for taking decisions.

d) Managerial effectiveness- This can be achieved by

i) Developing work groups.

ii) Improving the social contacts of the employees- time away from work in team
building and fun activities.

iii) Managerial coaching discussed above

iv) Employee stress management activities.

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e) Rotation of Jobs- This reduces employee’s boredom which arises out of monotonous
nature of his work.

f) Incentive and profit sharing plans - Morale can be improved by effective incentive and
profit- sharing schemes. Incentive schemes are effective in improving workplace morale.
They need to carefully designed (preferably by experts) well communicated and
implemented to be effective.

Q.6 Explain Victor Vroom’s Expectancy theory of motivation.

Answer:

The model is built around the concept of valence, instrumentality and expectancy and is
commonly called the VIE theory.

The effort and individual puts into a task or a activity depends on 3 key factor

a) The effort-> performance (E->P) expectancy,

b) Performance-> outcome (P->O) expectancy and

c) The outcome valences (V). This therefore impacts motivation.

If any of the 3 is low the motivation is low. The (->P Expectancy indicates the
employees’ perception that his or her effort will result in a particular level of performance.
Its best represented as a probability and ranges from 0.0 to 1.0. When the employee
perceives that probability that he/she perceives that the probability that he/she cannot
deliver the desired performance the effort expended is far lower. The P->O expectancy is
the perceived probability that a specific performance of behavior will result in a specific
outcome. When an employee perceives that the performance will benefit him with a
desirable outcome he will expand the effort directed towards the performance that will get
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him/her the desired outcome. The outcome valances are the third element in the expectancy
theory. It indicates the feeling of satisfaction/ dissatisfaction that an employee feels
towards the outcome. It is impacted by the perception about how much the outcome will
interfere or fulfill the person’s needs and drives. It ranges from negative to positive, -1 to
+1. It also is influenced by our personal values.

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