Sunday, October 29, 2017

Human Resource Management Solved Question Papers: November' 2014


2014 (November)
Commerce (General/Speciality)
Course: 301
Full Marks: 80
Time: 3 Hours
1. Answer the following questions briefly:
a) Write down two functions of Human Resource Development (HRD) manager.         2
Ans: a) HRD manager emphasizes mainly on training and development of employees. b) HRD manager focuses on upgrading the skills and competencies of the employees in order to improve the performance of the employees on the job.
b) Mention two points of distinction between recruitment and selection.                             2
Ans: Difference between Recruitment and Selection:
Basis
Recruitment
Selection
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.
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.
Write true or false:                                          1x4=4
c) Human Resource is a resource like any other natural resource.                              True
d) Job analysis means a process of obtaining all pertinent job facts.                          True
e) Job Rotation refers to change the position of an executive horizontally for increasing the skills and knowledge. False
f) Promotion means decrease in rank and demotion means increase in rank.              False

2. Write short notes on:                                               4x4=16

a) Need for scientific selection
Ans: A scientific recruitment and selection process involves job analysis, advertisements, written tests, personal interviews, medical examination, final selection, etc. It is conducted by different types of experts. It involves a lot of time, energy and money (cost). Even then most organisations use a scientific selection policy to select their employees. This is because of its various advantages. 
Need and Importance of Scientific Recruitment and Selection
The scientific selection policy is given importance due to these reasons:-
a)      Right job for the Right Person : Scientific selection policy helps to find the right man for the right job. It also helps to find the right job for the right person.
b)      Reduces Labour Absenteeism and Turnover : Labour absenteeism refers to the employees remaining absent from regular duty (work). Labour turnover refers to the employees leaving the company. Scientific selection policy helps to reduce both labour absenteeism and labour turnover. This is because it helps to select the right candidates for the right jobs. These candidates get job satisfaction, and they have a high morale. So they will not remain absent, and they will not leave the company.
c)       Reduces wastages, damages and accidents : The scientific selection policy results in the selection of qualified and interested employees. These employees will be very careful while handling machines and materials. This will reduce wastage, damages and accidents.
d)      Reduces Training and Supervision Costs : The scientific selection policy results in the selection of qualified and interested employees. These employees require less training and supervision. This will reduce the training and supervision cost.
e)      Improves Goodwill of the Company : Scientific selection policy results in the selection of interested employees. These employees will maintain very good relations with the shareholders, customers, public etc. This will improve the goodwill of the company.
f)       High Morale : The employees who are selected through scientific selection policy do get job satisfaction. This will increase their morale. High morale brings many benefits to the company.
g)      High Efficiency and Productivity : The employees selected through this policy will perform their jobs very efficiently. This will increase the productivity & profitability of the organisation.
b) Job enrichment
Ans: 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.
c) Importance of “Health and Safety measures”
d) Learning Process

3. (a) What do you understand by Human Resource Management (HRM)? Explain its significance.                         4+7=11
Ans: Meaning and Definition of Human Resource Management (HRM)
Human Resource Management (HRM) can be defined as the set of programs, functions, and activities designed and performed in order to maximize both employee as well as organizational effectiveness. It is a management function that helps organization in recruiting, selecting, training, developing and managing its members. HRM is concern with the management of people in the organization from Recruitment to Retirement.
According to Flippo, “human resource management is the   planning , organizing , directing and controlling of the procurement, development, compensation, integration, maintenance, and separation of human resource to the end that individual, organizational and social objectives are accomplished.”
According to the Invancevich and Glueck, “HRM is concerned with the most effective use of people to achieve organizational and individual goals. It is the way of managing people at work, so that they give their best to the organization”.
According to Dessler (2008) the policies and practices involved in carrying out the “people” or human resource aspects of a management position, including recruiting, screening, training, rewarding, and appraising comprises of HRM.
Generally HRM refers to the management of people in organizations. It comprises of the activities, policies, and practices involved in obtaining, developing, utilizing, evaluating, maintaining, and retaining the appropriate number and skill mix of employees to accomplish the organization’s objectives. The goal of HRM is to maximize employees’ contributions in order to achieve optimal productivity and effectiveness, while simultaneously attaining individual objectives (such as having a challenging job and obtaining recognition), and societal objectives (such as legal compliance and demonstrating social responsibility). In short Human Resource Management (HRM) can be defined as the art of procuring, developing and maintaining competent workforce to achieve the goals of an organization in an effective and efficient manner.
Significance/importance/need /Role of HRM
HRM becomes significant for business organization due to the following reasons.
1. Objective: HRM helps a company to achieve its objective from time to time by creating a positive attitude among workers. Reducing wastage and making maximum use of resources etc.
2. Facilitates professional growth: Due to proper HR policies employees are trained well and this makes them ready for future promotions. Their talent can be utilized not only in the company in which they are currently working but also in other companies which the employees may join in the future.
3. Better relations between union and management: Healthy HRM practices can help the organization to maintain co-ordinal relationship with the unions. Union members start realizing that the company is also interested in the workers and will not go against them therefore chances of going on strike are greatly reduced.
4. Helps an individual to work in a team/group: Effective HR practices teach individuals team work and adjustment. The individuals are now very comfortable while working in team thus team work improves.
5. Identifies person for the future: Since employees are constantly trained, they are ready to meet the job requirements. The company is also able to identify potential employees who can be promoted in the future for the top level jobs. Thus one of the advantages of HRM is preparing people for the future.
6. Allocating the jobs to the right person: If proper recruitment and selection methods are followed, the company will be able to select the right people for the right job. When this happens the number of people leaving the job will reduce as the will be satisfied with their job leading to decrease in labour turnover.
7. Improves the economy: Effective HR practices lead to higher profits and better performance by companies due to this the company achieves a chance to enter into new business and start new ventured thus industrial development increases and the economy improves.
Or
(b) Discuss in brief the evolution of Human Resource Management in India.                  11
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 importance of Human Resource Planning (HRP) to ensure effective utilisation of manpower in an organisation.                                                     11
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.
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.
4. A series of specified reasons are there that attaches importance to manpower planning and forecasting exercises. They are elaborated below:
Ø  To link manpower planning with the organizational planning
Ø  To determine recruitment levels.
Ø  To anticipate redundancies.
Ø  To determine optimum training levels.
Ø  To provide a basis for management development programs.
Ø  To cost the manpower.
Ø  To assist productivity bargaining.
Ø  To assess future accommodation requirement.
Ø  To study the cost of overheads and value of service functions.
Ø  To decide whether certain activity needs to be subcontracted, etc.
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.
Or
(b) What is “Job Analysis”? Discuss the various steps involved in the preparation of job analysis.                           4+7=11
Ans:  Meaning and Definition Job analysis:
The process of studying and collecting informations relating to the operations and responsibilities of a specific job. The immediate product of this analysis are job description and job specification. It analyze the content & characteristics of the job and requirements/ qualifications needed to perform those jobs.
According to Michael L. Jucius, “Job analysis refers to the process of studying the operations, duties and organizational aspects of jobs in order to derive specifications or as they called by some, job descriptions.”
According to DeCenzo and P. Robbins, “A job analysis is a systematic exploration of the activities within a job. It is a basic technical procedure, one that is used to define the duties, responsibilities, and accountabilities of a job.”
Thus, job analysis involves the process of identifying the nature of a job (job description) and the qualities of the likely job holder (job specification).
Steps in Job Analysis
The various steps of job analysis are given below:
1. Determine the Use of the Job Analysis Information: Start by identifying the use to which the information will be put, since this will determine the type of data you collect and the technique you use to collect them.
2. Collection of Background Information: According to Terry, “The make-up of a job, its relation to other jobs, and its requirements for competent performance are essential information needed for a job evaluation. This information can be had by reviewing available background information.
3. Selection of Jobs for Analysis: To do job analysis is a costly and time consuming process. It is hence, necessary to select a representative sample of jobs for purposes of analysis. Priorities of various jobs can also be determined. A job may be selected because it has undergone undocumented changes in job content. The request for analysis of a job may originate with the employee, supervisor, or a manager.
When the employee requests an analysis it is usually because new job demands have not been reflected in changes in wages. Employee’s salaries are, in part, based upon the nature of the work that they perform. Some organizations establish a time cycle for the analysis of each job. For example: A job analysis may be required for all jobs every three years. New jobs must also be subjected to analysis.
4. Collection of Job Analysis Data: Job data on features of the job, requited employee qualification and requirements, should be collected either form the employees who actually perform a job; or from other employees (such as foremen or supervisors) who watch the workers doing a job and there by acquire knowledge about it; or from the outside persons, known as the trade job analysis who are appointed to watch employees performing a job. The duties of such a trade job analyst are (i) to outline the complete scope of a job and to consider all the physical and mental activities involved in determining what the worker does.; (ii) find out why a worker does a job; and for this purpose he studies why each task is essential for the overall result; and (iii) the skill factor which may be needed in the worker to differentiate between jobs and establish the extent of the difficulty of any job.
5. Processing the Information: Once job analysis information has been collected, the next step is to place it in a form that will make it useful to those charged with the various personnel functions. Several issues arise with respect to this. First, how much detail is needed? Second, can the job analysis information be expressed in quantitative terms? These must be considered properly.
6. Preparing Job Descriptions and Job Classifications: Job information which has been collected must be processed to prepare the job description form. It is a statement showing full details of the activities of the job. Separate job description forms may be used for various activities in the job and may be compiled later on. The job analysis is made with the help of these description forms. These forms may be used as reference for the future.
7. Developing Job Specifications: Job specifications are also prepared on the basis of information collected. It is a statement of minimum acceptable qualities of the person to be placed on the job. It specifies the standard by which the qualities of the person are measured. Job analyst prepares such statement taking into consideration the skills required in performing the job properly. Such statement is used in selecting a person matching with the job.

5.  (a) Critically discuss the various sources of recruitment of employees.                                            11
Ans: Sources of Recruitment:
The finding out where suitable candidates are available and informing them about the openings in the organization is the most important aspect of recruitment process. The candidates may be available inside the organization as well outsider it. Recruitment sources can be described as: internal and external sources.
A. Internal Sources: Internal source is one of the important sources of recruitment the employees already working in the organization may be more suitable for higher jobs than those recruited from outside. The present employees may help in the recruitment of new persons also internal sources are discussed as follows:
Transfers: Transfer involves shifting of persons from present jobs to other similar places. These don't involve any change in rank, responsibility and prestige. The numbers of persons don't increase with transfer but vacant posts may be attended to.
Promotions: Promotions refers to shifting of persons to positions carrying better prestige, higher responsibilities and more salaries. The higher positions falling vacant may be filled up from within the organization. A promotion doesn't increase the number of persons in the organization. A person going to get a higher position will vacate his present position. Promotion avenues motivate employees to improve their performance so that they get promotions to higher position.
Present Employees: The present employees of an enterprise may be informed about likely vacant position. The employees recommend their relations or persons intimately known to them. Management is relieved of botheration for looking out prospective candidates. The persons recommended by the employees will be suitable for the job because they know the needs & requirement of various positions. The existing employees take full responsibility for those recommended by them and try to ensure their proper behavior and performance. This method of recruiting employees is suitable for lower position only. It may create nepotism and favoritism. The workers may be employees on the basis of their recommendations and not suitability.
Demerits of Internal Sources: Internal sources of recruitment have certain disadvantages as follows -
a)      Recruitment of internals leads to inbreeding and discourages new blood with new ideas from entering into the organization.
b)      It is possible that internal sources ultimately dry up and hence it may be difficult to find suitable persons from within the organization.
c)       In case of certain jobs such as advertising, style, designing, basic research etc recruitment from within is not desirable.
d)      As promotion is based on seniority, the danger is that really capable hands may not be chosen. The likes and dislikes of the management may also play an important role in the selection of personnel.
e)      Since the learner does not know more than the lecturer, no innovations worth the name can be made. Therefore, on jobs which require original thinking, this practice is not followed.
f)       Generally for middle level managers internal source is rarely used, however for promoting blue collar workers to white collar jobs internal source is more desirable.
B. 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.
Education Institutions: The jobs in trade and industry are becoming technical and complex. These jobs require certain amount of educational and technical qualifications. The employers maintain a close liaison with universities and technical institutions. The students are spotted during the course of their studies. Junior level, executives or managerial may be recruited in this way.
Unsolicited Applicants: Persons in search of employment may contact employers through telephone, by post or in person. Generally, employers with good reputation get unsolicited applications. If an opening is there or is likely to be there then these persons are considered for such jobs. Personnel department may maintain a record of unsolicited applications. When jobs suitable for these persons are available these persons are available these are considered for employment.
Casual Callers: Management may appoint persons who casually call on them for meeting short-term demands. This will avoid following a regular procedure of selection. These persons are appointed for short periods only. They need not be paid retrenchment or layoff allowance. This method of recruitment is economical because management does not incur a liability in pensions, insurance and fringe benefits.
Labour Contractors: It is quite common to engage contractors for the supply of labour. When workers are required for short period and are hired without going through the full procedure of selection etc.., contractors maintain regular contracts with works at their places and also bring them to the cities at their own expense. The persons hired under this system are generally unskilled workers.
Labour Unions: Labour unions are one of the sources of external recruitment. The job seekers are required to register with labour unions, & the labour unions are require to supply the names of persons for filing the vacancies. This method may encourage good co-operation between business firms and labour unions, active participation of persons in labour unions, the development of leadership qualities in workers, etc.,
Consulting Agencies: Consulting agencies are one of the important sources of recruitment, especially for big companies. Consulting agencies are specialised agencies which recruit people on behalf of their clients. They invite application for jobs specified by their clients from job seekers through advertisements, screen the application, interview the candidates and select the suitable candidate. They do these services for their clients for some Fees.
Educational Institutions: Universities, Colleges & Management institute are also one of the sources of recruitment of personnel, particularly for the posts of Scientists, Engineers & Management specialist. They have there own employment bureaus to help business organizations in recruiting the students for various jobs.
Present Employees: Present Employees are also one of the sources of recruitment of personnel. The present employees of the concern are asked by the management to recommend suitable persons for employment in the concern.
Disadvantages of External Sources:
a)      Orientation and training are required as the employees remain unfamiliar with the organisation.
b)      It is more expensive and time-consuming. Detailed screening is necessary as very little is known about the candidate.
c)       If new entrant fails to adjust himself to the working in the enterprise, it means yet more expenditure on looking for his replacement.
d)      Motivation, morale and loyalty of existing staff are affected, if higher level jobs are filled from external sources. It becomes a source of heart-burning and demoralisation among existing employees.
Or
(b) Describe in brief the significance of proper selection of personnel in a large organisation.                  11
Ans: The selection procedure is concerned with securing relevant information about an applicant. This information is secured in a number of steps or stages. The objective of selection process is to determine whether an applicant meets the qualification for a specific job and to choose the applicant who is most likely to perform well in that job. Selection is a long process, commencing from the preliminary interview of the applicants and ending with the contract of employment.
Importance of Scientific Recruitment and Selection
The scientific selection policy is given importance due to these reasons:-
a)      Right job for the Right Person : Scientific selection policy helps to find the right man for the right job. It also helps to find the right job for the right person.
b)      Reduces Labour Absenteeism and Turnover : Labour absenteeism refers to the employees remaining absent from regular duty (work). Labour turnover refers to the employees leaving the company. Scientific selection policy helps to reduce both labour absenteeism and labour turnover. This is because it helps to select the right candidates for the right jobs. These candidates get job satisfaction, and they have a high morale. So they will not remain absent, and they will not leave the company.
c)       Reduces wastages, damages and accidents : The scientific selection policy results in the selection of qualified and interested employees. These employees will be very careful while handling machines and materials. This will reduce wastage, damages and accidents.
d)      Reduces Training and Supervision Costs : The scientific selection policy results in the selection of qualified and interested employees. These employees require less training and supervision. This will reduce the training and supervision cost.
e)      Improves Goodwill of the Company : Scientific selection policy results in the selection of interested employees. These employees will maintain very good relations with the shareholders, customers, public etc. This will improve the goodwill of the company.
f)       High Morale : The employees who are selected through scientific selection policy do get job satisfaction. This will increase their morale. High morale brings many benefits to the company.
g)      High Efficiency and Productivity : The employees selected through this policy will perform their jobs very efficiently. This will increase the productivity & profitability of the organisation.
6. (a) Define the term ‘career’ and explain the steps in career development.                      4+7=11
Or
(b) Explain the essential steps of a good training programme.                                   11
Ans: Steps in Training process.
The steps of Training Process are as under:
a)      Organizational Objectives and Strategies: The first step in the training process is an organization in the assessment of its objectives and strategies. What business are we in? At what level of quality do we wish to provide this product or service? Where do we what to be in the future? Its only after answering these and other related questions that the organization must assess the strength and weakness of its human resources.
b)      Needs Assessment: Needs assessment diagnoses present problems and future challenge to be met through training and development. Needs assessment occurs at two levels i.e. group level and individual level, an individual obviously needs training when his or her performance falls short or standards that is when there is performance deficiency. Inadequate in performance may be due to lack of skills or knowledge or any other problem
c)      Training and Development Objectives: Once training needs are assessed, training and development goals must be established. Without clearly-set goals, it is not possible to design a training and development programme and after it has been implemented, there will be no way of measuring its effectiveness. Goals must be tangible, verifying and measurable. This is easy where skilled training is involved.
d)      Conducting Training Activities: Where is the training going to be conducted and how?
Ø  At the job itself.
Ø  On site but not the job for example in a training room in the company.
Ø  Off site such as a university, college classroom hotel, etc.
e)      Designing training and development program: Who are the trainees? Who are the trainers? What methods and techniques? What is the level of training? What are the principles of learning?  Where to conduct the program?
f)       Implementation of the training programme: Program implementation involves actions on the following lines :
Ø  Deciding the location and organizing training and other facilities.
Ø  Scheduling the training programme.
Ø  Conducting the programme.
Ø  Monitoring the progress of the trainees.
g)      Evaluation of the Results: The last stage in the training and development process is the evaluation of the results. Since huge sums of money are spent on training and development, how far the programme has been useful must be judge/determined. Evaluation helps determine the results of the training and development programme. In the practice, however organizations either overlook or lack facilities for evaluation.

7. (a) Discuss the concept of “Compensation”. What are the factors which affect compensation of employees in an industrial organisation?                                                               5+7=12
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.
Factors Affecting Compensation Planning
A combination of external and internal factors can influence, directly or indi­rectly, the rates at which employees are paid. Through their interaction these factors constitute the wage mix, as shown below.
A. External Factors: The major external factors that influence wage rates include labor market condi­tions, area wage rates, cost of living, legal requirements, and collective bargain­ing if the employer is unionized.
Labor Market Conditions: The labor market reflects the forces of supply and demand for qualified labor within an area. These forces help to influence the wage rates required to recruit or retain competent employees. It must be recognized, however, that counter-forces can reduce the full impact of supply and demand on the labor market. The economic power of unions, for example, may prevent employers from lowering wage rates even when unemployment is high among union members. Govern­ment regulations also may prevent an employer from paying at a market rate less than an established minimum.
Area Wage Rates: Data from area wage surveys can be used to prevent the rates for certain jobs from drifting too far above or below those of other employers in the region. When rates rise above existing area levels, an employer’s labor costs may become excessive. Conversely, if they drop too far below area levels, it may be difficult to recruit and retain competent personnel. Wage-survey data must also take into account indirect wages paid in the form of benefits.
Cost of Living: Because of inflation, compensation rates have had to be adjusted upward periodically to help employees maintain their purchasing power. This can be achieved through escalator clauses found in various labor agreements. These clauses provide for quarterly cost-of-living adjustments (COLA) in wages based on changes in the consumer price index (CPI). The CPI is a measure of the average change in prices over time in a fixed “market basket” of goods and services.
Collective Bargaining: One of the primary functions of a labor union is to bargain collectively over conditions of employment, the most important of which is compensation. The union’s goal in each new agreement is to achieve increases in real wages--wage increases larger than the increase in the CPI--thereby improving the purchasing power and standard of living of its members. This goal includes gaining wage settlements that equal if not exceed the pattern established by other unions within the area.
B. Internal Factors: The internal factors that influence wage rates are the employer's compensation policy, the worth of a job, an employee's relative worth in meeting job require­ments, and an employer's ability to pay.
Employer’s Compensation Policy: The compensation objectives of two organiza­tions can be quite different. One might strive to be an industry pay leader, while another seeks to be wage-competitive by paying employees at the seventy-fifth percentile of their competitors’ wages. Both employers strive to promote a compensation policy that is fair and competitive. All employers will establish nu­merous compensation objectives that affect the pay employees receive.
Worth of a Job: Organizations without a formal compensation program generally base the worth of jobs on the subjective opinions of people familiar with the jobs. In such in­stances, pay rates may be influenced heavily by the labor market or, in the case of unionized employers, by collective bargaining.
Employee’s Relative Worth: In industrial and office jobs, differences in employee performance can be recognized and rewarded through promotion and with various incentive systems. Superior performance can be rewarded by granting merit raises on the basis of steps within a rate range established for a job class.
Employer’s Ability to Pay: In the public sector, the amount of pay and benefits employees can receive is lim­ited by the funds budgeted for this purpose and by the willingness of taxpayers to provide them. In the private sector, pay levels are limited by profits and other fi­nancial resources available to employers. Thus an organization's ability to pay is determined in part by the productivity of its employees.
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(b) What do you mean by “compensation management”? Explain its importance.                          4+8=12
Ans: 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.
Objectives/Significance of Compensation Management
The compensation paid to employees is agency consideration. Each party to agency tries to fix this consideration in its own favor. The employers want to pay as little as possible to keep their costs low. Employees want to get as high as possible. The compensation management tries to strike a balance between these two with following specific objectives:
1. Attracting and Retaining Personnel: From organisation’s point of view, the compensation management aims at attracting and retaining right personnel in the organisation. In the Indian corporate scene, there is no dearth of personnel at operative levels but the problems come at the managerial and technical levels particularly for growing companies. Not only they require persons who are well qualified but they are also retained in the organisation. In the present day context, managerial turnover is a big problem particularly in high knowledge-based organisations.
2. Motivating Personnel: Compensation management aims at motivating personnel for higher productivity. Monetary compensation has its own limitations in motivating people for superior performance. Alfie Kohn (an American author and lecturer who has explored a number of topics in education, parenting, and human behavior.) has gone to the extent of arguing that corporate incentive plans not only fail to work as intended but also undermine the objectives they intend to achieve. He argues that this is due to inadequate psychological assumptions on which reward systems are based. His conclusions are as follows:
a.       Rewards punish people-their use confirms that someone else is in control of the employee.
b.      Rewards rupture relationships-they create competition where teamwork and collaboration are desired.
c.       Rewards ignore reasons-they relieve managers from the urgent need to explore why an employee is effective or ineffective.
d.      Rewards discourage risk taking-employees tend to do exactly what is required to earn the reward, and not any more.
e.      Rewards undermine interest-they distract both manager and the employee from consideration of intrinsic motivation.
f.        Notwithstanding these arguments, compensation management can be designed to motivate people through monetary compensation to some extent.
3. Optimizing Cost of Compensation: Compensation management aims at optimizing cost of compensation by establishing some kind of linkage with performance and compensation. It is not necessary that higher level of wages and salaries will bring higher performance automatically but depends on the kind of linkage that is established between performance and wages and salaries. Compensation management tries to attempt at this.
4. Consistency in Compensation: Compensation management tries to achieve consistency-both internal and external-in compensating employees. Internal consistency involves payment on the basis of criticality of jobs and employees’ performance on jobs. Thus, higher compensation is attached to higher-level jobs. Similarly, higher compensation is attached to higher performers in the same job. Level of jobs within an organisation is determined by job evaluation. External consistency involves similar compensation for a job in all organisations. Though there are many factors involved in the determination of wage and salary structure for a job in an organisation which may result into some kind of disparity in the compensation of a particular job as compared to other organisations, compensation management tries to reduce this disparity.

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