GROUPI Semester PGD HRM Examination, January/February

2011
(New Scheme)
Human Resource Management
HRM

Answers
I Semester PGD HRM Examination, January/February
2011
(New Scheme)
Human Resource Management
HRM

SECTION-A
Question-1

Distinguish between HR HRD and HRM

(6 marks)
Answer
HRM vs. HRD
Human

resources

are

an

essential

section

of

any

organization, company or institute. Recognizing this importance, separate

branches geared towards the development and the safeguarding of this
sector has evolved over time. HRD and HRM are two such subjects that
cater to this growing need today.
Meaning of HRD
HRD or Human Resource Development is a sort of framework that allows
and aids employees of an organization to develop their organizational and
personal skills as well as their knowledge and abilities. There are a myriad
of practices and opportunities involved in this field. Some of them can be
named as performance development and management, training, career
development, mentoring,

coaching,

succession

planning,

tuition

assistance, key employee identification, etc.

The main goal of Human Resource Development is to create the most
superior workforce possible so that the organization has the means to
fulfill their services towards their clientele better. Human Resource
Development can be formal or informal: formal being tutored in a
classroom or an organized effort while informal may be on the job training
by a manager.
Meaning of HRM
HRM or Human Resource Management is an organizational function that
has been thus introduced with the aim of maximizing the performance of
the employees. HRM focuses on policies and systems and deals primarily

in the manner in which people are managed within organizations. HRM

deals

with

number

of

training, recruitment, performance

activities

such

appraisals as

as
well

employee
as

duly

rewarding the employees. In doing so, HRM must also make sure that
organizational practices are kept in line with the rules and regulations of
governmental laws, thereby ensuring a balance between industrial
relations as well.
At the beginning of the human resources movement in the early 20th
century, HRM was defined by duties such as benefits and payroll
administration and transactional work whereas today with globalization,
HRM has come to focus upon strategic initiatives such as talent
management, succession planning, industrial and employee relations, and
inclusion and diversity.
In order to cater to the growing need of HRM, professionals, universities,
higher educational institutes all over the world have introduced various
courses and degrees that will allow individuals to gain the necessary
knowledge needed for this field. In order to be qualified for a position in
HRM, one needs to possess educational qualifications befitting their
position.
Difference between HRD and HRM
HRD and HRM are both practices that deal with human resources of a
company. Usually in large organizations, there exists entire departments
dedicated to HRM where trained professionals work together solely
towards the amelioration of this aspect, dealing with both HRD and HRM
functions. HRD is human resource development. HRM is human resource
management.
HRD deals with functions such as performance development and
management,

training,

career

development,

mentoring,

coaching,

succession planning, tuition assistance, key employee identification, etc.

HRM deals with functions such as employee training, recruitment,

performance appraisals as well as duly rewarding the employees.
HRD is a part of HRM. HRM deals with all HR initiatives while HRD only
deals with the development factor.
HRM functions are more formal than of HRD functions.

Question-2
Explain job analysis and job specification
(6 marks)
Answer
JOB ANALYSIS
Meaning
Job analysis is a detailed and systematic analysis of jobs to know the
nature and characteristics of people to be employed for each job.

Duties

job analysis

tasks

Responsibilities
Definition
Flippo defined job analyses as The process of studying and collecting
information relating to the operations and responsibilities of a specific
job.
Uses of job analysis

Human resource planning

Recruitment
Compensation
Training and development
Performance appraisal
Job evaluation

Employee counseling
Job design and Re-design
Safety and health
Discovering unassigned duties

Uses of job analysis

Recruiting and
selection

Componsation

Job analysis

Job description
and job
specification

Training and
developn
perfomance
appraisal

evaluation

counceling

The process of job analysis

Collection of material
information
Reviewing of relavant
background
information
selaction of
representative
position to be
analysed
Collection of job
analysis data

Preperation of job
description

Developing job
specification

JOB SPECIFICATION
Job specification is mainly focuses on the person that is job holder. It is a
written

statement

of

qualifications,

traits,

physical

and

mental

characteristics than an incumbent must passes to perform the job duties

and discharge responsibilities effectively.
Definition
Edwin B.Flippo defines job specification as a statement of minimum
acceptable human qualities necessary to perform a job properly.
Contents of job Specification
Physical qualifications: Such as height, weight, health, age, capacity
to use or operate machines, tools, equipment etc.,
Essential attributes : skill, knowledge and abilities,

judgment,

decision making skill, analytical view etc.,

Mental characteristics / behavioural characteristics : These includes
behavior, enthusiasm, leadership qualities etc.,
Qualification and experience : These include academic qualification,
experience, training etc.,

Question-3
What are the sources of recruitment
(6 marks)
Answer
Sources of Recruitment
The different sources of recruitment are classified into two categories, viz.,
1. Internal : sources of recruitment are from within the organisation.
2. External: sources of recruitment are from outside the organisation.

Internal Sources of Recruitment

The internal sources of recruitment are:-

1. Promotions : Promotion means to give a higher position, status, salary and

responsibility to the employee. So, the vacancy can be filled by promoting a suitable
candidate from the same organisation.
2. Transfers : Transfer means a change in the place of employment without any change
in the position, status, salary and responsibility of the employee. So, the vacancy can
be filled by transferring a suitable candidate from the same organisation.
3. Internal Advertisements : Here, the vacancy is advertised within the organisation.
The existing employees are asked to apply for the vacancy. So, recruitment is done
from within the organisation.
4. Retired Managers : Sometimes, retired managers may be recalled for a short period.
This is done when the organisation cannot find a suitable candidate.
5. Recall from Long Leave : The organisation may recall a manager who has gone on a
long leave. This is done when the organisation faces a problem which can only be
solved by that particular manager. After he solves the problem, his leave is extended.

Merits of Internal Sources

The benefits / advantages / merits of using internal sources of recruitment:1. It is time saving, economical, simple and reliable.
2. There is no need of induction training because the candidate already knows
everything about the organisation, the work, the employee, the rules and regulations,
etc.
3. It motivates the employees of work hard in order to get higher jobs in the same
organisation.
4. It increases the morale of the employees and it improves the relations in the
organisation.

5. It reduce executive turnover.

6. It develops loyalty and a sense of responsibility.
Demerits of Internal Sources
The limitations / demerits of using internal sources of recruitment:1. It prevents new blood from entering the organisation. New blood brings innovative
ideas, fresh thinking and dynamism into the organisation.
2. It has limited scope because it is not possible to fill up all types of vacancies from
within the organisation.
3. The position of the person who is promoted or transferred will be vacant.
4. There may be bias or partiality in promoting or transferring persons from within the
organisation.
5. Those who are not promoted will be unhappy.
6. The right person may be promoted or transferred only if proper confidential reports of
all employees are maintained. This involves a lot of time, money and energy.

External Sources of Recruitment

The external sources of recruitment are:1. Management Consultants : Management consultants are used for selecting higherlevel staff. They act as a representative of the employer. They make all the necessary

arrangements for recruitment and selection. In return for their services, they take a
service charge or commission.
2. Public Advertisements : The Personnel department of a company advertises the
vacancy in newspapers, the internet, etc. This advertisement gives information about
the company, the job and the required qualities of the candidate. It invites applications
from suitable candidates. This source is the most popular source of recruitment. This
is because it gives a very wide choice. However, it is very costly and time consuming.
3. Campus Recruitment : The organisation conducts interviews in the campuses of
Management institutes and Engineering Colleges. Final year students, who're soon to
get graduate, are interviewed. Suitable candidates are selected by the organisation
based on their academic record, communication skills, intelligence, etc. This source is
used for recruiting qualified, trained but inexperienced candidates.
4. Recommendations : The organisation may also recruit candidates based on the
recommendations received from existing managers or from sister companies.
5. Deputation Personnel : The organisation may also recruit candidates who are sent on
deputation by the Government or Financial institutions or by holding or subsidiary
companies.
Advantages of External Sources
The benefits / merits / advantages of using external sources of recruitment:1. It encourages young blood with new ideas to enter the organisation.
2. It offers wide scope for selection. This is because a large number of suitable
candidates will come for the selection process.
3. There are less chances of bias or partiality.
4. Here there is no need to maintain confidential records.

Limitations of External Sources

The demerits / limitations of using external sources of recruitment:1. It is very costly. This is because advertisements, test, medical examination etc., has to
be conducted.
2. It is very time consuming. This is because the selection process is very lengthy.
3. It may not develop loyalty among the existing managers.
4. The existing managers may leave the organisation if outsiders are given higher post.

Question-4
What is bonus? Explain min. and max. bonus payable under the
statue

(6 marks)

Answer
Definition of bonus
Additional compensation given to an employee above his/her normal
wage. A bonus can be used as a reward for achieving specific goals set by
the company, or for dedication to the company.
MINIMUM AND MAXIMUM BONUS PAYABLE
MINIMUM BONUS
The minimum bonus which an employer is required to pay even if he
suffers losses during the accounting year or there is no allocable surplus is
8.33 % of the salary during the accounting year, or Rs. 100 in case of
employees above 15 years and Rs 60 in case of employees below 15
years, whichever is higher

MAXIMUM BONUS
If in an accounting year, the allocable surplus, calculated after taking into
account the amount set on or the amount set of exceeds the minimum
bonus, the employer should pay bonus in proportion to the salary or
wages earned by the employee in that accounting year subject to a
maximum of 20% of such salary or wages.

Question-5
What is grievance? How to you redress grievance?
(6 marks)
Answer
Grievance can be defined as the dispute and formal dissatisfaction
between the employer and employee. Employees continue to complain
regarding many issues like salary, working environment, holiday and
many more. When these dissatisfaction and unhappiness is unattended
for long it leads to the explosion making it an official grievance. Employers
are continuously under pressure in dealing with grievance issues and they
must give extra precaution when trying to redress grievance.
In todays corporate world trade unions plays a vitally important and
significant role in shaping the labour related rules and regulation. If
grievance arises there is grievance procedure to be followed to redress
those grievance. Firstly, it is important that following the company policy
with regard to such issues is very important and a clause of grievance
should be stated in the employment contract. Which means the employer
and the employee has already agreed up on the mechanism to be
followed when such a situation arises.

Different organisation follows different procedures, however in general it

starts between the union representative and the employer. Both parties
can negotiate and try to compromise. These negotiation should be
conducted in the presence of the concerned employee. Which will build
more

confidence

and

reduce

suspicion

of

deal.

When

union

representatives and employer fail to reach an agreement then an

independent third party arbitrator will hear the case and make a decision,
which will be followed by both sides.
To avoid grievance it is important to formulate company policies and
employment contract in a way that would avoid such circumstances.
Rather than being fair, attention must be given to following the rules and
regulation. The employment contract must avoid usage of language and
terms which can be used legally against the company, like fairtreatment.
SECTION-B
Question 6
What are the factors affecting human resource planning?
(10 marks)

Answer
When it comes human resource planning there are several factors that
affect day-to-day operations. Adapting in this field is important because at
a moments notice new legislation can be passed with an immediate
effective date or corporate policies are changed where human resources
feel the brunt. Well-developed strategies for your human resources
department takes into consider external factors that might affect your
department.
Many factors influencing a company are out of its control. A companys
internal policies, however, directly impact how a business staffs its
workforce and are controllable. Human resources planning consider these
internal factors to ensure that the business gets the most talented

employees at the right time. Aligning planning decisions with strategic

goals helps the company maintain productivity. Otherwise, HR planning
reacts to external factors without understanding the internal impact.
EXTERNAL FACTORS THAT AFFECT HUMAN RESOURCE PLANNING
Government Regulations With the introduction of new workplace
compliance standards your human resources department is constantly
under pressure to stay within the law. These types of regulations influence
every

process

of

the

HR

department,

including

hiring,

training,

compensation, termination, and much more. Without adhering to such

regulations a company can be fined extensively which if it was bad
enough could cause the company to shut down.
Economic Conditions One of the biggest external influences is the
shape of the current economy. Not only does it affect the talent pool, but it
might affect your ability to hire anyone at all. One of the biggest ways to
prepare against economic conditions is to not only know whats happening
in the world around you, but also create a plan for when there is an
economic downturn. All companies can make due in a bad economy if
they have a rainy day fund or plan to combat the harsh environment.
Technological Advancements This is considered an external influence
because when new technologies are introduced the HR department can
start looking at how to downsize and look for ways to save money. A job
that used to take 2-4 people could be cut to one done by a single person.
Technology is revolutionizing the way we do business and not just from a
consumer standpoint, but from an internal cost-savings way.
Workforce Demographics As an older generation retires and a new
generation enters the workforce the human resources department must
look for ways to attract this new set of candidates. They must hire in a
different way and offer different types of compensation packages that
work for this younger generation. At the same time, they must offer a
work environment contusive to how this generation works.

Those involved in human resource management does more than hiring

and firing, they make sure that every type of external influence is listened
to and proper procedures are followed to avoid lawsuits and sanctions. If
youre in HR make sure that youre paying close attention to external
influences because there is a good chance theyre affecting your job and
the company you work for. So next time you talk to someone involved in
the human resource management process think twice about the amount
of factors that affect their job and how important it is for them to be on
top of their game.

INTERNAL FACTORS THAT AFFECT HUMAN RESOURCE PLANNING

Mission
A companys mission summarizes its purpose, values and vision. The
business sets a definitive direction by establishing clear goals and
objectives. Then, when the HR department goes to fill staff positions, it
can recruit, interview and hire individuals who possess similar values. For
example, a company that wants to adopt sustainable business practices to
protect the environment should seek individuals with similar interests.
Culture
Organizational culture defines how employees interact with each other.
Small businesses with one location usually expect personnel to work in the
office. Larger companies may permit employees to work at home.
Therefore, new employees at this bigger business must be comfortable
attending virtual meetings and dealing with co-workers over the
telephone. In general, human resources planning needs to take into
account the amount of flexibility in terms of hours, dress code and
formality tolerated by the company. Additionally, it ensures staff coverage
during all working hours defined by company operational policies. For
example, if the company promises customer support 24 hours a day,
human resources planning anticipates scheduling workers throughout the
day.

Structure
Organizational structure impacts human resources planning. Functional,
divisional or matrix structures require different staffing. In a functional
structure, employees perform specialized tasks. In a divisional structure,
each department has representation from each required function, such as
sales, marketing, development and support. In a matrix structure, an
employee reports to two different bosses, one represents her function and
the other managing the division. In each case, effective HR planning
ensures positions get filled to ensure productivity and adhere to company,
local, state and federal regulations for safety and security.
Funding
HR planning must occur within the budget allowed to maximize
profitability. Seasonal demands for additional staff may impact hiring
plans, so a small business needs to anticipate this. The need for
specialized skills may also impact planning. To meet short-term needs,
companies may outsource non-core activities. Meeting long-term needs
typically involves offering training and development opportunities to the
workforce. Additionally, to maximize productivity, morale and loyalty,
employers can plan events. If a small business lacks the financial
resources to offer comprehensive HR programs, it can provide lists of free
resources related to professional development, workforce wellness and
team-building. Adjusting to funding levels may make human resources
plan challenging for a small business.

Question 8

Explain the various off the job training methods

(10 marks)

Answer

Training and developments methods

There are number of training and development methods are used for
different types of employees at different levels. They are:
1) On the job method
2) Off the job method
1- On the job methods
a)

Job instruction Training (JIT)

b)

Apprenticeship program

c)

Coaching

d)

Job rotation

e)

Committee Assignments

f)

Mentoring

2-Off-the-job Training Methods:

Off-the-job training methods are conducted in separate from the job
environment, study material is supplied, there is full concentration on
learning rather than performing, and there is freedom of expression.
Important methods include:
1. Lectures and Conferences:
Lectures and conferences are the traditional and direct method of
instruction. Every training programme starts with lecture and conference.
Its a verbal presentation for a large audience. However, the lectures have
to be motivating and creating interest among trainees. The speaker must
have considerable depth in the subject. In the colleges and universities,
lectures and seminars are the most common methods used for training.
2. Vestibule Training:

Vestibule Training is a term for near-the-job training, as it offers access to

something new (learning). In vestibule training, the workers are trained in
a prototype environment on specific jobs in a special part of the plant.
An attempt is made to create working condition similar to the actual
workshop conditions. After training workers in such condition, the trained
workers may be put on similar jobs in the actual workshop.
This enables the workers to secure training in the best methods to work
and to get rid of initial nervousness. During the Second World War II, this
method was used to train a large number of workers in a short period of
time. It may also be used as a preliminary to on-the job training. Duration
ranges from few days to few weeks. It prevents trainees to commit costly
mistakes on the actual machines.
3. Simulation Exercises:
Simulation is any artificial environment exactly similar to the actual
situation. There are four basic simulation techniques used for imparting
training: management games, case study, role playing, and in-basket
training.
(a) Management Games:
Properly designed games help to ingrain thinking habits, analytical, logical
and reasoning capabilities, importance of team work, time management,
to make decisions lacking complete information, communication and
leadership capabilities. Use of management games can encourage novel,
innovative mechanisms for coping with stress.
Management games orient a candidate with practical applicability of the
subject. These games help to appreciate management concepts in a
practical way. Different games are used for training general managers and
the middle management and functional heads executive Games and
functional heads.
(b) Case Study:

Case studies are complex examples which give an insight into the context
of a problem as well as illustrating the main point. Case Studies are
trainee centered activities based on topics that demonstrate theoretical
concepts in an applied setting.
A case study allows the application of theoretical concepts to be
demonstrated, thus bridging the gap between theory and practice,
encourage active learning, provides an opportunity for the development of
key skills such as communication, group working and problem solving, and
increases the trainees enjoyment of the topic and hence their desire to
learn.
(c) Role Playing:
Each trainee takes the role of a person affected by an issue and studies
the impacts of the issues on human life and/or the effects of human
activities on the world around us from the perspective of that person.
It emphasizes the real- world side of science and challenges students to
deal with complex problems with no single right answer and to use a
variety of skills beyond those employed in a typical research project.
In particular, role-playing presents the student a valuable opportunity to
learn not just the course content, but other perspectives on it. The steps
involved in role playing include defining objectives, choose context &
roles, introducing the exercise, trainee preparation/research, the role-play,
concluding discussion, and assessment. Types of role play may be multiple
role play, single role play, role rotation, and spontaneous role play.
(d) In-basket training:
In-basket exercise, also known as in-tray training, consists of a set of
business papers which may include e-mail SMSs, reports, memos, and
other items. Now the trainer is asked to prioritise the decisions to be made
immediately and the ones that can be delayed.
4. Sensitivity Training:

Sensitivity training is also known as laboratory or T-group training. This

training is about making people understand about themselves and others
reasonably, which is done by developing in them social sensitivity and
behavioral flexibility. It is ability of an individual to sense what others feel
and think from their own point of view.
It reveals information about his or her own personal qualities, concerns,
emotional issues, and things that he or she has in common with other
members of the group. It is the ability to behave suitably in light of
understanding.
A groups trainer refrains from acting as a group leader or lecturer,
attempting instead to clarify the group processes using incidents as
examples to clarify general points or provide feedback. The group action,
overall, is the goal as well as the process.
Sensitivity training Program comprises three steps.

5. Transactional Analysis:
It provides trainees with a realistic and useful method for analyzing and
understanding the behavior of others. In every social interaction, there is
a motivation provided by one person and a reaction to that motivation
given by another person.

Question-8
What are the modern methods of performance appraisal
(10 marks)
Answer
Modern methods of performance appraisal

1. Assessment centre method: This method was used for the first
time in 1930 by the German army and then in 1960s by the British
army. This method tests a candidate in different social situations
using a number of assessor and procedures. The performance of an
employee an also his potential for a new job is evaluated in this
method by assessing his performance on job related simulations.
Characteristics that the concerned managers feel are important for
the success of a particular job are included in these simulations.
Techniques like business games role playing and in basket exercises
are used in this method. The employees are evaluated individually as
well as collectively on job related characteristics. Personal interview
and projective tests help in assessing the motivation, career
orientation and dependence on others of an employee. To measure
the intellectual capacity written tests are used. The evaluators in this
method consist of experienced manager working at different levels
who prepare a summary report for the management as well as for
the employees. This technique usually measures the planning ability
interpersonal skills and organizational skills of an employee.
2. Human Resource Accounting Method: Human resources are a
valuable asset for any organization and it can be valued in monetary
terms. This method evaluates the performance of an employee in
terms of costs and contributions. HR costs include expenses incurred
on HR planning recruitment selection induction and training. The
difference between this costs and the contribution by an employee
reflects the performance of that employee. This method is still
developing hence is not very popular at present.
3. Behaviorally anchored rating scale (BARS): This method
combines the graphic rating scale and the critical incident method. It
determines in advance the critical areas of the performance and the
most effective behavior to achieve the results. Then the actual job
behavior of an employee is evaluated against the predetermined
behavior.

The

following

steps

are

used

for

constructing

BARS.

1. Supervisor and other persons well acquainted with a job are asked
to described specific critical incidence of effective performance
behavior
2. Then these persons categorized the incidents into sets of
performance

dimensions

and

each

set

is

then

defined.

3. These people then reallocate the original critical incidents. They

are given the cluster definition and critical incidents and are asked to
re-design each incident to the dimensions that describes it the best.
A critical incidents is retain only a some percentage that is usually
between 50 80 percent of this group assigns the incidents to the
same

cluster

as

was

done

by

the

earlier

group.

4. The second group then rates each incident on a 7 9 point scale

where the rating is done on the basis of how well the behavior
described in the incidents represented the performance on the
appropriate

dimensions.

5. A sub set of incidents is used as behavior anchors for the

performance dimensions.
4 Appraisal through management by objectives (MBO): This
concept was introduced by Peter Drucker in 1954 who named it
management by objectives and self control. It is an effective way it is
also known as goal setting approach to appraisal .In this process the
supervisor and subordinate members jointly identify the common
goals of the organization and set the areas of the responsibility of
each individual in terms of results expected from that person. These
measures are use for operating the unit as well as for appraising the
performance of the employees.
5

The

360

degree

appraisal: The

360

degree

method

of

performance appraisal is used to make the appraisal process more

transparent, objective and participative. It introduced the concepts of
self appraisal subordinates appraisal, peer appraisal and appraisal by
customers. It is called a 360 degree method because it involves the

evaluation of an employee by persons above him, below him and

alongside

him.

Structured

questionnaires

are

used

to

collect

information from the seniors, subordinates and peers. The employee

to be evaluated thus acquires a central position and everyone around
him participates in the appraisal process in the 360 degree method.
The following four are the main components of 360 degree appraisal :
Self

appraisal: It

allows

an

employee

complete

freedom

in

accessing his or her strengths objectively and identifying the areas of

development. The employees get a chance to share the development
areas with their seniors based on their self appraisal and jointly
worked out a plan in tune with the organizational realities like the
availability of resources and time. It also gives a chance to the
employee to express his career plans which is in the interest of the
organization as it knows beforehand the aspirations of its employee.
Appraisal

by

superiors: An

appraisal

by

superiors

involves

providing constructive, feedback about the performance of any

employee as well as his development areas during the review period.
It helps in setting goals for the employees that help in achieve the
organizational goals and improve the performance of the employee.
The career aspirations of an employee are also put in proper
prospective.
Appraisal by subordinates: This is a unique feature of the 360
degree method of appraisal. As the subordinates play an important
role in the performance of the employee. The feedback by the
subordinates gives firsthand account of how they look at their
superior in terms of working style. The capability of a superior in
motivating, delegating the work, building a team and communicating
with them effectively form the basis of appraisal by the subordinates.
Peer appraisal: It also plays an important role in 360 degree
appraisal as the role of peers is quite important in life of an

employee. Selecting the right peers is very important and peers from
the departments that are directly related with the department of the
employee should also be included. It mainly focuses on feedback
about the style of functioning of the employee under review and can
also include his ability to work as team leader besides his cooperation and collaboration.
Potential appraisal: It is different from performance appraisal as it
refers to the abilities of the employees that are not being used at the
time of appraisal. It searches for the latent abilities of the employee
in discharging higher responsibilities in future. The potential of the
employees is judged on the basis of his present performance,
personality traits, past experience and age and qualification. It also
looks at the unused skills and knowledge of an employee. It aims at
informing the employee their future prospectus and helps the
organization in drawing your suitable successions plan. It also
requires updating the training efforts regularly and advised the
employees on things which they can do to improve their career
prospectus.

Question 9
What are the factors affecting wages and salaries
(10 marks)
Answer

The following factors should be taken into consideration in determining wage and
salary structure of workers:
(i) Labour Unions:
The labour unions attempt to work and influence the wages primarily by regulating or
affecting the supply of labour. The unions exert their influence for a higher wage and
allowances through collective bargaining with the representatives of the management.

If they fail in their attempt to raise the wage and other allowances through collective
bargaining, they resort to strike and other methods where by the supply of labour is restricted.
This exerts a kind of influence on the employees to concerned test partially the demands of
the labour unions.
(ii) Personal perception of wage:
Whether the wage is adequate and equitable depends not only upon the amount that is paid
but also upon the perceptions and the views of the recipients of the wage. Even though the
wage is above the going wage rate in the community if it is lower than that of fellow worker
deemed inferior, it will be regarded as inequitable in the eyes of the recipients of the wage. A
mans perception of the equity of his wage will undoubtedly affect his behaviour in joining
and continuing in the organisation.
(iii) Cost of living:
Another important factor affecting the wage is the cost of living adjustments of wages. This
approach tends to vary money wage depending upon the variations in the cost of living index
following rise or fall in the general price level and consumer price index. It is an essential
ingredient of long term labour contracts unless provision is made to reopen the wage clause
periodically.
There are measurement problems both in ascertaining productivity and cost of living
increases. This problem may lead to lack of understanding and unanimity on the part of the
management and the workers.
(iv) Government legislation:
The laws passed and the labour policies formed by the Government have an important
influence on wages and salaries paid by the employees. Wages and salaries cant be fixed
below the level prescribed by the government. The laws on minimum wages, hours of work,
equal pay for equal work, payment of dearness and other allowances, payment of bonus, etc.
have been enacted and enforced to bring about a measure of fairness in compensating the
working class.
(v) Ability to pay:
Labour unions have often demanded an increase in wages on the basis that the firm is
prosperous and able to pay. However, the fundamental determinants of the wage rate for the

individual firm emanate for supply and demand. If the firm is marginal and cannot afford to
pay competitive rates, its employees will generally leave it for better paying jobs. However,
this adjustment is neither immediate nor perfect because of problems of labour immobility
and lack of perfect knowledge of alternatives. If the firm is highly successful, there is little
need to pay for more than the competitive rates to obtain personnel.
(vi) Supply and demand:
As stated earlier, the wage is a price for the services rendered by a worker or employee. The
firm desires these services, and it must pay a price that will bring forth the supply, which is
controlled by the individual worker or by a group of workers acting together through their
unions. The practical result of the operation of this law of supply and demand is the creation
of going- wage rate.
It is not practicable to draw demand and supply curves for each job in an organisation even
though, theoretically, a separate curve exists for each job. But, in general, if anything works
to decrease the supply of labour such as restriction by a particular labour union, there will be
a tendency to increase the wage. The reverse of each situation is likely to result in a decrease
in employee wage, provided other factors, such is those discussed below, do not intervene.
(vii) Productivity:
Increasingly there is a trend towards gearing wage increases to productivity increases.
Productivity is the key factor in the operations of a company. High wages and low costs
are possible only when productivity increases appreciably. The above factors exercise a
kind of general influence on wage rates. In addition, there are several factors which do
affect the individual difference in wage rates.
The most important factors which affect the individual differences in wage rates are:
(a) Workers capacity and age;
(b) Educational qualifications;
(c) Worker experience;
(d) Hazards involved in work;

(e) Promotion possibilities;

(f) The prevailing wage in the community;
(g) Stability of employment;
(h) Demand for the product; and
(i) Profits or surplus earned by the organisation.
A sound wage policy is to adopt a job evaluation programme in order to establish fair
differentials in wages based upon differences in job contents. Beside the basic factors
provided by a job description and job evaluation, those that are usually taken into
consideration for wage and salary administration are:

The organizations ability to pay -Wage increases should be given by those organizations
which can afford them. Companies that have good sales and therefore high profits tend to pay
higher wages than those which are running at a loss or earning low profits because of the high
cost of production or low sales.
Supply and demand of labour -If the demand and certain skills are high and the supply is
low the result is rise in the price to be paid for these skills. The other alternative is to pay
higher wages if the labour supply is scarce and lower wages when it is excessive.
The cost of living -When the cost of living increases, workers and trade unions demand
adjusted wages to offset the erosion of real wages. However when living costs are stable or
decline the management does not resort with this argument as a reason for wage reduction.
The living wage -Employers feel that the level of living prescribed in workers budget is
opened to argument since it is based on subjective opinion.
Job requirements -Jobs are graded according to the relative skill responsibility and job
conditions required.
Trade unions bargaining power -Trade unions do affect the rate of wages. Generally the
stronger and more powerful trade union, higher the wages.

Productivity -Productivity is another criterion and is measured in terms of output man-hour.

It is not due to labour efforts alone. Technological improvements, greater ingenuity and skill
by the labour are all responsible for the increase in productivity.
Prevailing market rate -This is also known as comparable wages or going wage rate.
Reason behind this is competition demand that competitors adhere to the same relative wage
level.
Skill levels available in the market -With the rapid growth of industries, business trade
there is shortage of skilled resources. The technological development, automation has been
affecting the skilled levels at a faster rate.
Psychological and social factors -This determine in a significant measure how hard a person
will work for the compensation received or what pressures he will exert to get his
compensation increased. Psychologically, persons perceive the level of wages as a measure of
success in life. Sociologically and ethically, people feel that equal work should carry equal
that wages should be commensurate with their efforts, that they are not exploited, and that no
distinction is made on the basis of caste, color, sex or religion. To satisfy the conditions of
equity, fairness and justice, a management should take these factors into consideration.

Question 10
Explain the disciplinary procedure
dismissing a women for misconduct.
(10 marks)

to

be

followed

before

Answer

Dismissal refers to allowing someone to leave the job or organisation. In

other words, it is sacking or firing an employee. This is one of the most
challenging and difficult task faced by human resource personnel of the
corporate world. The dismissed employee most the time take the action
as unfair dismissal even though it is done according to the terms and
procedures stated in employment contract the company policy. Many a

times these kinds of cases are being taken to the court or arbitrators and
firms have to face loss. Therefore, this topic must be handles with extra
care and precaution. Unfair dismissal means the employee is sack against
the rules and regulation.
Sometimes managers think that they can fire any of their staff whenever
they want. This is however not a correct assumption to be made. Before
sacking someone from the job there should be events leading to that
situation. There are various reason why an organisation might consider for
a dismissal of an employee, which includes lower performance, tardiness,
misconduct etc.
Defining the situations and terms will again be a challenging task because
of the various interpretations that can associated to the situation. When
dismissing a women for misconduct it is very important to understand the
scale and intensity of the inappropriate behaviour. Some types of
misconduct and indiscipline requires immediate dismissal of the employee
provided that the same has been stated in the employment contract.
In general misconduct include manners like contemptuous disrespect to
company rules and boss, blatant show of refusal to follow orders from
supervisors etc. If such behaviour is observed from an employee it might
lead to dismissal of the employee if the same if not corrected. But there
are certain procedure to be followed. If a women is misbehaved for the
first time, based on the nature of the behaviour she should be advised by
her supervisor verbally. If the nature of the behaviour requires written
advice to be given then it should be done according to the employment
contract. When advice is given for the first time it is import to mention the
proceeding step to be followed if such a behaviour is repeated again. For
example if verbal advice is given first time, if the misconduct is repeated
then as a second action written advice can be given. As a third action
written warning can be given for the dismissal and if repeated fourth time
she can be dismissed.
The above mentioned procedure can be followed in dismissing the
employee for misconduct.

END