2015 November Human Resource Management HRM Solved Paper, B.Com 3rd Sem Old Course, Dibrugarh University

Dibrugarh University B. Com 3rd Sem Solved Question Papers
Human Resource Management 2015 (November)
COMMERCE (General/Speciality)
Full Marks: 80
Pass Marks: 24
Time: 3 hours
The figures in the margin indicate full marks for the questions

1. Answer as directed:
a)      Write down any two objectives of Human Resource Management.                  2
Ans: 1) Societal Objectives: seek to ensure that the organization becomes socially responsible to the needs and challenges of the society while minimizing the negative impact of such demands upon the organization. The failure of the organizations to use their resources for the society’s benefit in ethical ways may lead to restriction.
2) Organizational Objectives: it recognizes the role of HRM in bringing about organizational effectiveness. It makes sure that HRM is not a standalone department, but rather a means to assist the organization with its primary objectives. The HR department exists to serve the rest of the organization.
b)      Mention two points of distinction between ‘job analysis’ and ‘job enrichment’.                         2
Ans: 1) Job analysis tries to find out everything about a specific job including the role, responsibility, working conditions, skills required, demands and hazards associated with a job. Job enrichment refers to the vertical expansion of the jobs. It increases the degree to which the worker controls the planning, execution and evaluation of his work. 2) Job analysis is not a way to motivate employees but job enrichment is used to motivate employees.
c)       ‘Human Resource Management’ is same with ‘Personnel Management’.    1(Write True or False)
d)      Human Resource Planning is a continuous process.                  1                    (Fill in the blank)
e)      Write two external sources of recruitment.                                 2
Ans: External Sources: Every enterprise has to use external sources for recruitment to higher positions when existing employees are not suitable. More person are needed when expansion are undertaken. External methods are discussed as follows.
Advertisement: Advertisement is the best method of recruiting persons for higher and experienced jobs. The advertisements are given in local or national press, trade or professional journals. The requirements of jobs are given in the advertisement. The prospective candidates evaluate themselves against the requirement of jobs before sending their applications. Management gets a wider range of candidates for selection. The flood of applications may create difficulties in the process.
Employment Exchanges: Employment Exchanges run by the government are also a good source of recruitment. Unemployed persons get themselves registered with these exchanges. The vacancies may be notified with the exchanges, whenever there is a need. The exchange supplies a list of candidates fulfilling required qualification. Exchanges are a suitable source of recruitment for filling unskilled, semi-skilled, skilled and operative posts.
2. Write short accounts on the following (any four):                       4x4=16
a)      Scope of Human Resource Management.
Ans: Scope of HRM
The scope of HRM refers to all the activities that come under the banner of HRM. These activities are as follows
1. Human resources planning: Human resource planning or HRP refers to a process by which the company to identify the number of jobs vacant, whether the company has excess staff or shortage of staff and to deal with this excess or shortage.
2. Job analysis design: Another important area of HRM is job analysis. Job analysis gives a detailed explanation about each and every job in the company. Based on this job analysis the company prepares advertisements.
3. Recruitment and selection: Based on information collected from job analysis the company prepares advertisements and publishes them in the news papers. This is recruitment. A number of applications are received after the advertisement is published, interviews are conducted and the right employee is selected thus recruitment and selection are yet another important area of HRM.
4. Orientation and induction: Once the employees have been selected an induction or orientation program is conducted. This is another important area of HRM. The employees are informed about the background of the company, explain about the organizational culture and values and work ethics and introduce to the other employees.
5. Training and development: Every employee goes under training program which helps him to put up a better performance on the job. Training program is also conducted for existing staff that have a lot of experience. This is called refresher training. Training and development is one area were the company spends a huge amount.
b)      Problems of Human Resource Planning.
Ans: Disadvantages of human resource planning
Although human resource planning comes with so many advantages, it can also have some disadvantages, which sometimes prevent some organizations from engaging in it. Some of the disadvantages associated with human resource planning include the following:
1. The future is uncertain: The future in any country is uncertain i.e. there are political, cultural, technological changes taking place every day. This effects the employment situation. Accordingly the company may have to appoint or remove people. Therefore HRP can only be a guiding factor. We cannot rely too much on it and do every action according to it.
2. Conservative attitude of top management: Much top management adopts a conservative attitude and is not ready to make changes. The process of HRP involves either appointing. Therefore it becomes very difficult to implement HRP in organization because top management does not support the decisions of other department.
3. Problem of surplus staff: HRP gives a clear out solution for excess staff i.e. Termination, layoff, VRS,. However when certain employees are removed from company it mostly affects the psyche of the existing employee, and they start feeling insecure, stressed out and do not believe in the company. This is a limitation of HRP i.e. it does not provide alternative solution like re-training so that employee need not be removed from the company.
4. Time consuming activity: HRP collects information from all departments, regarding demand and supply of personnel. This information is collected in detail and each and every job is considered. Therefore the activity takes up a lot of time.
5. Expensive: Human resource planning can be quite expensive for some organizations to engage in. The huge cost involved in HR planning can be quite unbearable for some organizations especially for small organisation. In addition to money, businesses also invest a great deal of time towards human resource planning. Sometimes companies simply do not have the amount of time or money needed to be invested into human resource planning.
c)       Objectives of ‘job analysis’.
Ans: Job Analysis plays an important role in recruitment and selection, job evaluation, job designing, deciding compensation and benefits packages, performance appraisal, analyzing training and development needs, assessing the worth of a job and increasing personnel as well as organizational productivity.
Recruitment and Selection: Job Analysis helps in determining what kind of person is required to perform a particular job. It points out the educational qualifications, level of experience and technical, physical, emotional and personal skills required to carry out a job in desired fashion. The objective is to fit a right person at a right place.
Performance Analysis: Job analysis is done to check if goals and objectives of a particular job are met or not. It helps in deciding the performance standards, evaluation criteria and individual’s output. On this basis, the overall performance of an employee is measured and he or she is appraised accordingly.
Training and Development: Job Analysis can be used to assess the training and development needs of employees. The difference between the expected and actual output determines the level of training that need to be imparted to employees. It also helps in deciding the training content, tools and equipments to be used to conduct training and methods of training.
Compensation Management: Of course, job analysis plays a vital role in deciding the pay packages and extra perks and benefits and fixed and variable incentives of employees. After all, the pay package depends on the position, job title and duties and responsibilities involved in a job. The process guides HR managers in deciding the worth of an employee for a particular job opening.
d)      Proper placement.
e)      Significance of training policy.
Ans: Significance/Importance or Advantages of training programs/training to the company and employees:
The following are the advantages of training program to the company:
1. Increase in efficiency of worker: Training programs can help workers to increase their efficiency levels, improve quality and thereby increase sales for the company.
2. Reduced supervision: When workers have been formally trained they need not be supervised constantly. This reduces the work load on the supervisor and allows him to concentrate on other activities in the factory.
The following are the advantages of training program to the employee
1. Better career opportunities: Training programs provide the latest information, develops talent and due to this the employee is in a position to get better jobs in the same company or other companies.
2. High rewards: Effective training programs result in improved performance. When performance appraisal is done excellent performance from the employee is rewarded by giving him incentives and bonus.
f)       Compensation.
Ans: Meaning and Definition of Compensation
In layman’s language the word ‘compensation’ means something, such as money, given or received as payment for service. The word compensation may be defined as money received in the performance of work, plus the many kinds of benefits and services that organization provides their employee. It refers to wide range of financial and non-financial rewards to employee for their service rendered to the organization. It is paid in the form of wages, salaries , special allowance and employee benefits such as paid vacation, insurance, maternity leaves, free travel facility , retirement benefits etc.
According to Wendell French,” Compensation is a comprehensive term which includes wages, salaries and all other allowance and benefits.”
Wages are the remuneration paid for skilled, semi-skilled and unskilled operative workforce. Salary is the remuneration of those employees who provides mental labour to the employer such as supervisor, office staff, executive etc wages are paid on daily or hourly basis where as salary is paid on monthly basis.

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3. (a) Discuss the basic functions of Human Resource Management in an industrial organization.                            14
Ans: Functions of HRM:
The function performed by the resource management can broadly be classified into two categories, viz.
(1) Managerial functions, and
(2) Operative functions
(1) Managerial Functions:
Planning: Planning is a predetermined course of actions. It is a process of determining the organisational goals and formulation of policies and programmes for achieving them. Thus planning is future oriented concerned with clearly charting out the desired direction of business activities in future. Forecasting is one of the important elements in the planning process. Other functions of managers depend on planning function.
Organising: Organising is a process by which the structure and allocation of jobs are determined. Thus organising involves giving each subordinate a specific task establishing departments, delegating authority to subordinates, establishing channels of authority and communication, coordinating the work of subordinates, and so on.
Staffing: It is a process by which managers select, train, promote and retire their subordinates This involves deciding what type of people should be hired, recruiting prospective employees, selecting employees, setting performance standard, compensating employees, evaluating performance, counseling employees, training and developing employees.
Directing/Leading: Directing is the process of activating group efforts to achieve the desired goals. It includes activities like getting subordinates to get the job done, maintaining morale motivating subordinates etc. for achieving the goals of the organisation.
Controlling: It is the process of setting standards for performance, checking to see how actual performance compares with these set standards, and taking corrective actions as needed.
(2) Operative Functions: The operative, also called, service functions are those which are relevant to specific department. These functions vary from department to department depending on the nature of the department Viewed from this standpoint, the operative functions of HRM relate to ensuring right people for right jobs at right times. These functions include procurement, development, compensation, and maintenance functions of HRM.
Procurement: It involves procuring the right kind of people in appropriate number to be placed in the organisation. It consists of activities such as manpower planning, recruitment, selection placement and induction or orientation of new employees.
Development: This function involves activities meant to improve the knowledge, skills aptitudes and values of employees so as to enable them to perform their jobs in a better manner in future. These functions may comprise training to employees, executive training to develop managers, organisation development to strike a better fit between organisational climate/culture and employees.
Compensation: Compensation function involves determination of wages and salaries matching with contribution made by employees to organisational goals. In other words, this function ensures equitable and fair remuneration for employees in the organisation. It consists of activities such as job evaluation, wage and salary administration, bonus, incentives, etc.
Maintenance: It is concerned with protecting and promoting employees while at work. For this purpose virus benefits such as housing, medical, educational, transport facilities, etc. are provided to the employees. Several social security measures such as provident fund, pension, gratuity, group insurance, etc. are also arranged.
(b) Discuss the stages of development of Human Resource Management.                           14
Ans: Evolution and Growth of Human Resource management
People – The Principal Resource: The principal resource of any organization is people and managing people is the most important and challenging aspect of an organization. What we call human resource management today, dates back to 1800 B.C., which is evident from the inscriptions of Babylonian code of Hammurabi and Kautilya’s Arthasashtra, which explains in detail the importance of selection, incentives, performance evaluation, quality of a manager and wage rates. So, we understand that the concept of managing people has existed even in the previous eras through ancient literature and philosophy. India, China and Greece have been the origin points of human resource management concepts.

Evolution of Human Resource Management
Industrial Revolution:
Till, 1930’s, there was no such department called “personnel management” that was considered necessary to cater to the needs and welfare of the labor society. The factory manager was acting as a link between the workers and the management, and most of the time he had to comply with the rules of the management to satisfy them, even if it were against the welfare of the workers. Also proper attention was not given to areas like, worker safety, security and living conditions. Industrial revolution saw mass exodus of workers to urban areas in search of jobs.
Need for employment Department:
Application of science and technology in production made the rich owners even richer; the poor workers were not paid adequately and their life became miserable. Since the owners lost direct contact with the employees, managers came into the picture to take over control of production and administration. Machines ruled the industry and importance of labor got reduced. This condition existed for sometime until the advent of new and improved management concepts by people like F.W.Taylor who is considered to be the father of scientific management and B.F.Goodrich who was instrumental in forming the “employment department” which can be considered the fore runner of present human resource department.
Introduction of Scientific Management:
Scientific methods were introduced to make the workers perform the job with ease and perfection. It also saved enormous time and reduced the monotony of work. Job-designs, job-specification, training and development and human relations were given due importance and the owners slowly started realizing the importance of labor. Through 1940’s to 1970’s behavioral approach was applied to professional management, the major architects being Abraham Maslow, Herzberg and Douglas McGregor. This approach suggested managers to modify their leadership styles to suit the type of followers and motivate the workers.
Consequences of World War I and II:
World War I and II also had profound influence on Human resource development. The concepts of role playing, improved training methods, supervision and group discussions came into the fray. The advent of labor unions also established a clear pathway for the workers to claim their rights, ably supported by the labor laws enacted by various governments. International labor organization was formed in 1919 which created sensation in the worker community all over the world. All said and done, empowerment of workers has been achieved only in developed nations where “job security” is no more a great concern because job opportunities are more. But in unorganized and small sectors, employers continue to exploit workers because “supply” is more than “demand”. The responsibility to develop and empower the employees solely lies on the shoulders of human resource department. It should try to address the problems of workers to the management and amicably settle issues relating to wages, welfare, safety and security.
4. (a) Explain the concept and significance of Human Resource Planning.                                                             7+7=14
Ans: Meaning and Definition of Human Resource Planning
Human resource planning can be defined as the process of identifying the number of people required by an organization in terms of quantity and quality. All human resource management activities start with human resource planning. So we can say that human resource planning is the principle/primary activity of human resource management.
According to Gordon Mc Beath, “HRP is concerned with two things: Planning of manpower requirements and Planning of Manpower supplies”.
According to Beach, “HRP is a process of determining and assuming that the organization will have an adequate number of qualified persons, available at proper times, performing jobs which meet the needs of the enterprise and which provides satisfaction for the individuals involved”
Simply HRP can be understood as the process of forecasting an organization’s future demands for and supply of the right type of people in the right number. In other words HRP is the process of determining manpower needs and formulating plans to meet these needs.
Characteristics of Human Resource Planning
Characteristics of effective human resource planning are as follows:
1. Future Oriented: Human resource planning is prepared to assess the future requirement of manpower in the organization. It helps identify the size and composition of resources for future purpose.
2. Continuous Process: Human resource planning is a continuous process. The human resource planning prepared today may not be applicable for future due to ever changing external forces of the environment.
3. Optimum Utilization of Human Resources: Human resource planning focuses on optimum utilization of resources in the organization. It checks how the employees are utilized in a productive manner.
4. Right Kinds and Numbers: Human resource planning determines the right number and kind of people at the right time and right place that are capable of performing the required jobs.
5. Determination of Demand and Supply: Human resource planning is a process of determining demand for and supply of human resources in the organization.  Then a match between demand and supply estimates the optimum level of manpower.
Objectives of Human Resource Planning
1. To ensure optimum utilization of human resources currently available in the organization.
2. To assess or forecast the future skill requirement of the organization.
3. To provide control measures to ensure that necessary resources are available as and when required.
Significance or need or Importance of Human Resource Planning
Human resource planning aims at fulfilling the objectives of manpower requirement. It helps to mobilize the recruited resources for the productive activities. The human resource planning is and important process aiming to link business strategy and its operation. The importances of human resource planning are as follows:
1. Future Manpower Needs: Human resource planning ensures that people are available to provide the continued smooth operation of an organization. It means, human resource planning is regarded as a tool to assure the future availability of manpower to carry on the organizational activities. It determines the future needs of manpower in terms of number and kind.
2. Coping with Change: Human resource planning is important to cope with the change associated with the external environmental factors. It helps assess the current human resources through HR inventory and adapts it to changing technological, political, socio-cultural, and economic forces.
3. Recruitment of Talented Personnel: Another purpose of HR planning is to recruit and select the most capable personnel to fill job vacancies. It determines human resource needs, assesses the available HR inventory level and finally recruits the personnel needed to perform the job.
4. Development of Human Resources: Human resource planning identifies the skill requirements for various levels of jobs. Then it organizes various training and development campaigns to impart the required skill and ability in employees to perform the task efficiently and effectively.
5. Proper Utilization of Human Resources: Human resource planning measures that the organization acquires and utilizes the manpower effectively to achieve objectives. Human resource planning helps in assessing and recruiting skilled human resource. It focuses on the optimum utilization of human resource to minimize the overall cost of production.
6. Uncertainty Reduction: This is associated with reducing the impact of uncertainty which are brought by unsudden changes in processes and procedures of human resource management in the organization.
(b) What is meant by Job Design? Briefly explain the various techniques of Job design.                               4+10=14
Ans: Meaning and principles of Job design
Job design is of comparatively recent origin. The human resource managers have realized that the design of a job has considerable influence on the productivity and job satisfaction; poorly designed jobs often result in boredom to the employees, increased turnover, job dissatisfaction, low productivity and an increase in overall costs of the organization. All these negative consequences can be avoided with the help of proper job design.
Job design has been defined by Davis (1966) as: “The specification of the contents, methods, and relationships of jobs in order to satisfy technological and organizational requirements as well as the social and personal requirements of the job-holder.”
Michael Armstrong has defined job design as “the process of deciding on the content of a job in terms of its duties and responsibilities, on the methods to be used in carrying out the job, in terms of techniques, systems and procedures, and on the relationships that should exist between the job holder and his superiors, subordinates and colleagues.”
Job design is an attempt to create a match between job requirements and human attributes. It involves organizing the components of the job and the interaction patterns among the members of a work group. It helps in developing appropriate design of job to improve efficiency and satisfaction.
Techniques of Job design:
The various techniques of job design and redesign are discussed below:
1. Job Simplification: In job simplification, the complete job is broken down into small subparts; this is done so that employee can do these jobs without much specialized training. Moreover, small operations of the job can also be performed simultaneously so that the complete operation can be done more quickly. For job simplification, generally time and motion studies are used.
2. Job rotation: This method enables the company to train managerial personnel in departmental work. They are taught everything about the department. Starting from the lowest level job in the department to the highest level job. This helps when the person takes over as a manager and is required to check whether his juniors are doing the job properly or not. Every minute detail is studied.
3. Job Enlargement: Another means of increasing employee’s satisfaction with routine jobs is job enlargement, or increasing the number of tasks performed (i.e. increasing the scope of the job). Job enlargement, like job rotation, tries to eliminate short job cycles that create boredom. Unlike job rotation, job enlargement actually increases the job cycle. When a job is enlarged, either the tasks being performed are enlarged or several short tasks are given to one worker. Thus, the scope of the job is increased because there are many tasks to be performed by the same worker. Job enlargement programs change many methods of operation- in contrast to job rotation, in which the same work procedures are used by workers who rotate through work stations. Although job enlargement actually changes the pace of the work and the operation by reallocating tasks and responsibilities, it does not increase the depth of a job.
4. Job Enrichment: The concept of job enrichment has been derived from Herzberg’s two-factor theory of motivation in which he has suggested that job content is one of the basic factors of motivation. If the job is designed in such a manner that it becomes more interesting and challenging to the job performer and provides him opportunities for achievement, recognition, responsibility, advancement and growth, the job itself becomes a source of motivation to the individual.
According to P. Robbins, “Job enrichment refers to the vertical expansion of the jobs. It increases the degree to which the worker controls the planning, execution and evaluation of his work.”
In the words of Robert Albanese, “Job enrichment sometimes called. “Vertical job leading’ is a job redesign strategy that focuses on job depth.”
According to Mondy. Holmes, and Flippo, “Job enrichment refers to basic changes in the content and level of responsibility of a job so to provide for the satisfaction of the motivation needs of personnel.
5. (a) What do you mean by ‘recruitment’? Distinguish between recruitment and selection.      4+10=14
Ans: Meaning of recruitment: Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization. When more persons apply for job then there will be a scope for recruiting better persons. The job-seekers too on the other hand, are in search of organizations offering them employment. Recruitment is a linkage activity bringing together those with jobs and those seeking jobs.
Definitions: Flippo – “Recruitment is the process of searching prospective employees and stimulating them to apply for the jobs in the organization”
McFarland- “ The term recruitment applies to the process of attracting potential employees of the company.”
Thus recruitment may be considered as a positive action as it involves attracting the people towards organization.  The main purpose is to have a rich inventory of eligible persons from amongst whom the most suitable candidates can be selected for employment in the organization.
Difference between Recruitment and Selection: Difference between recruitment and selection has been described by Flippo as, “Recruitment is a process of searching for prospective employees and stimulating and encouraging them to apply for jobs in an organisation. It is often termed positive as is stimulates people to apply for jobs, selection on the other hand tends to be negative because it rejects a good number of those who apply, leaving only the best to be hired.” Recruitment and selection differs in following manner:
a)   Meaning
It is the process of searching and Motivating candidates to apply for Job.
It is that process of staffing which rejects the unsuitable candidates and choose the suitable candidates.
b)  Purpose
The basic purpose is to create a large pool of applicants for the jobs.
The basic purpose is to eliminate as many candidates as possible until the most suitable candidates get finalized.
c)   Scope
Recruitment is restricted to the extent of receipt of application.
Selection includes sorting of the candidates.
d)  Positive /Negative process
Recruitment is a positive process. As more and more applicant are sought to be attracted.
Selection is a negative process as more applicants are rejected than selected.
e)  Criteria
It gives freedom to applicants. Any one is free to apply.
It gives very little freedom to applicants. Applicants must meet the selection criteria.
f)    Outcomes
The outcome of recruitment is application pool which becomes input for
selection process.
The outcome of selection process is in the form of finalising candidates who will be
offered jobs.
(b) Discuss the significance of ‘employment tests’ in the selection of new employees.                                14
6. (a) Define ‘training’. Describe the importance of training in an individual organization.                           4+10=14
Ans: Meaning and definition of Training
Training refers to the imparting of specific skill, abilities and knowledge to  employee. System and practices get outdated due to new discoveries in technology, including technical, managerial and behavioral aspects. In this context training enhances the knowledge, skills and attitudes of employees to increase efficiency and effectiveness on the prsent job as well as expected future job.
Training is defined by Wayne Cascio as “training consists of planed programs undertaken to improve employee knowledge, skills, attitude, and social behavior so that the performance of the organization improves considerably.”
Training is normally viewed as a short process. It is applied to technical staff, lower, middle, senior level management. When applied to lower and middle management staff it is called as training and for senior level it is called managerial development program/executive development program/development program.
Significance/Importance or Advantages of training programs/training to the company and employees:
The following are the advantages of training program to the company:
1. Increase in efficiency of worker: Training programs can help workers to increase their efficiency levels, improve quality and thereby increase sales for the company.
2. Reduced supervision: When workers have been formally trained they need not be supervised constantly. This reduces the work load on the supervisor and allows him to concentrate on other activities in the factory.
3. Reduction in wastage: The amount of material wasted by a trained worker is negligible as compared to the amount of material wasted by an untrained worker. Due to this the company is able to reduce its cost its cost of production.
4. Less turnover of labour: One of the advantages of the training program is that it increases the confidence of employees and provides them with better career opportunities. Due to this employee generally do not leave the company. There by reducing labour turnover.
5. Training helps new employees: A person, who is totally new to the company, has no idea about its working. Training helps him to understand what is required from him and helps him to adjust to the new environment.
6. Union management relations: When employees are trained and get better career opportunities. The union starts having a possible attitude about the management. They feel that the management is genuinely interested in workers development. This improves union management relations.
The following are the advantages of training program to the employee
1. Better career opportunities: Training programs provide the latest information, develops talent and due to this the employee is in a position to get better jobs in the same company or other companies.
2. High rewards: Effective training programs result in improved performance. When performance appraisal is done excellent performance from the employee is rewarded by giving him incentives and bonus.
3. Increased motivation: Employees who have been trained are generally more confident as compared to others. Since their efforts will be rewarded in future they are very much interested in improving their performance. Therefore we can say that their motivation levels are very high.
4. Group efforts: Training programs are not only technical programs but are also conducted in areas like conflict management, group dynamics (formal and informal groups), behavioral skills, stress management etc. this enables employees to put in group effort without facing problems that groups normally face. In other words training teaches people to work in a group.
5. Promotion: People who attend training programs learn from them and improve themselves are generally considered for promotion. Thus training increases chances of promotion.
(b) Elaborate the role of financial and non-financial incentives in motivating employees of an organization. 7+7=14
Ans:  Ans:  Financial/Incentives Techniques of Motivation: Financial techniques refer to monetary rewards. Incentives are nothing but the inducements provided to employees in order to motivate them. There should be direct relationship between efforts and rewards, financial reward should be substantial in value and must be in parity with others.
Under -paying staff sends the message that your firm doesn’t value their work. Money is not a prime motivator but this should not be regarded as a signal to reward employees poorly or unfairly.
The financial incentives include:
1. Pay and Allowances: It includes basic pay, grade pay, and dearness allowance; travelling allowance, pay increments, etc. Good pay and allowances help the organization to retain and attract capable persons. However, good pay and allowances need not motivate all the people, especially who are enjoying security of job in government organizations and those for whom corruption is a way of life.
Some of the other issues are associated with bad attitudes, grievances, absenteeism, turnover, poor organizational citizenship, and adverse effect on employees’ mental and physical health.
2. Incentive Pay: Incentive pay plans are meant to increase output, which can be measured quantitatively. For incentive plan targets, the employees must have confidence that they can achieve the targets.
3. Gain Sharing: It is a reward system in which team members earn bonus for increasing productivity or reduce wastages. To illustrate, if the wastage is reduced from 5% to less the benefits may be shared equally with the team.
4. Profit Sharing: It means sharing of profits with the employees by way of distribution of bonus. Profit sharing plan has its shortcomings – one, that it has become a regular feature in government departments irrespective of performance and two, it may have no relation with individual efforts.
5. Stock Options: Many companies use employee stock options plans to compensate, retain, and attract employees. These plans are contracts between a company and its employees that give employees the right to buy a specific number of the company’s shares at a fixed price within a certain period of time.
Employees who are granted stock options hope to profit by exercising their options at a higher price than when they were granted. In India, stock options have primarily been used as a retention tool for a more selective group of employees.
6. Retirement Benefits: It includes the accumulated provident fund, gratuity, leave encashment and pension. The provision of terminal benefits provides assurance to employees during the service for their future
Non-financial Incentives/Techniques: Non-financial incentives do not involve money payments. These are also important in motivating employees as they bring in psychological and emotional satisfaction to them. These include so many techniques. People do work for money-but they work even more for meaning in their lives. In fact, they work to have fun.
Some of the important non-financial incentives include:
1. Job security: Nothing can motivate a worker, appointed temporarily, better than provision of job security. Even if a temporary worker puts in greater efforts, lack of job security will always pose a threat. If such a worker is given job security, he will be more committed to the organization.
2. Challenging work: Workers, who are dynamic in nature, do not show preference for routine jobs. They are always ready to accept challenging assignments, challenge can be brought through mentoring, job redesigning – job enlargement and job enrichment. Understand the capabilities of every individual in the organization and accordingly assign him work.
3. Recognition: It is important that the employer recognizes hard work. Even a word of appreciation from him would motivate the employees to maintain the same level of performance or do even better. Employees ranked a personal ‘thank you’ as the most sought after form of recognition, followed by a handwritten note of appreciation from the boss.
4. Better job Titles: Job titles do matter. Employees do show preference for certain designations. A salesman, for example, would like to be designated as a sales executive and a sweeper to be Sanitary Inspector.
5. Opportunities for Advancement: There should never be a stagnation point for any employee during the prime time of his career. The employer must always provide opportunities for his employees to perform well and move up in the hierarchy.
6. Empowerment: To stimulate an employee is his involvement in certain crucial decisions. For example, if the management decides to buy a new machinery for the factory, the workers’ viewpoints may be secured before making the final decision. The management should avoid unilateral decisions on such matters.
7. Competition: The management can encourage healthy competition among the employees. This would, certainly, motivate them to prove their capabilities. The management can also rank the employees according to performance. Such of those employees who have performed very well may be given merit certificates.
8. Job Rotation: By job rotation we mean that the employees will be exposed to different kinds of job. This certainly would break the monotony of employees. For example, in a bank an employee may work in the Savings Bank Section for sometime after which he may be posted to the cash section. Such a change not only motivates the employees to perform well but also prepares him to be versatile.